Financial Analysis

Note 2 Acquisitions Fiscal Year 2024 Transactions On October 6, 2023, the Company acquired an 80 % controlling ownership in Purple Wave, an online offsite heavy equipment auction company. The Company acquired the controlling ownership by issuing 2.5 million shares of the Companys common stock which was equal to the $ 108.0 million acquisition price divided by the 10-day volume average weighted price of the Companys common stock prior to closing. Under U.S. GAAP, the fair value of the merger consideration paid for Purple Wave was $ 112.1 million and was determined on the basis of the closing price of the Companys common stock on October 6, 2023. Substantially all of the merger consideration has been allocated to intangible assets, including goodwill. The fair value of the 20 % redeemable noncontrolling interest in Purple Wave was $ 25.2 million, and was estimated by applying the transaction method. Refer to NOTE 1 Summary of Significant Accounting Policies for more details regarding the redeemable noncontrolling interests. Acquisition costs reflected in the general administrative line on the income statement were $ 1.2 million. The Company has finalized the allocation of fair value for acquired assets and liabilities. The resulting impact to the balance sheet and income statement were immaterial. …

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NOTE 15 Commitments and Contingencies Commitments Letters of Credit Under the 2026 Credit Agreement, the Company had outstanding letters of credit of $ 22.5 million at July 31, 2026, which are primarily used to secure certain insurance obligations. Contingencies Legal Proceedings The Company is subject to threats of litigation and is involved in actual litigation and damage claims arising in the ordinary course of business, such as actions related to injuries, property damage, contract disputes, and handling or disposal of vehicles. In addition, from time to time, the Company receives communications from government or regulatory agencies concerning investigations or allegations of noncompliance with laws or regulations in jurisdictions in which the Company operates. Except as otherwise noted in this Note 15, there are no material pending legal proceedings to which the Company is a party, or with respect to which any of the Companys property is subject. The Company provides accruals for matters when a loss is probable and the amount can be reasonably estimated. The effect of the outcome of any such matters on the Companys future consolidated results of operations and cash flows cannot be predicted because any such effect depends on future results of operations and the amount and timing of the resolution of any such matters. The Company believes that any ultimate liability regarding existing litigation and claims would not have a material effect on its consolidated results of o …

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"NOTE 9 Long-Term Debt Credit Agreement On January 23, 2026, the Company entered into a Senior Revolving Credit Agreement (the ""2026 Credit Agreement"") by and among the Company, certain subsidiaries of the Company party thereto, the lenders party thereto, and Wells Fargo Bank, National Association, as administrative agent. The 2026 Credit Agreement provides for an unsecured revolving credit facility in an aggregate principal amount of up to $ 1,250 million, including subfacilities for standby letters of credit and swingline loans. The 2026 Credit Agreement matures on January 23, 2031 . The 2026 Credit Agreement replaced the previous secured credit facility under the credit agreement dated December 21, 2021 by and among the Company, certain subsidiaries of the Company party thereto, the lenders party thereto, and Bank of America, N.A., as the administrative agent (the Second Amended and Restated Credit Agreement), which was scheduled to mature on December 21, 2026. Borrowings under the 2026 Credit Agreement bear interest based on the Companys option, either (1) the applicable fixed rate plus 0.75 % to 1.125 % or (2) the daily rate plus 0.0 % to 0.125 %, in each case, depending on the Companys consolidated total net leverage ratio. Additionally, the unused revolving commitments under the 2026 Credit Agreement are subject to the payment of a customary commitment fee at a range of 0.05 % to 0.125 %, depending on the Companys consolidated total net leverage ratio. As of July 31, …

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Year Ended July 31, (In thousands) 2026 2025 2024 Service revenues United States $ 3,388,287 $ 3,451,558 $ 3,126,102 International 581,233 517,104 434,900 Total service revenues $ 3,969,520 $ 3,968,662 $ 3,561,002 Year Ended July 31, (In thousands) 2026 2025 2024 Vehicle sales United States $ 419,143 $ 403,546 $ 338,633 International 277,546 274,750 337,188 Total vehicle sales $ 696,689 $ 678,296 $ 675,821

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NOTE 13 Income Taxes Income before taxes consisted of the following: Year Ended July 31, (In thousands) 2026 2025 2024 U.S. $ 1,607,425 $ 1,686,794 $ 1,593,381 International 227,552 208,787 121,220 Total income before taxes $ 1,834,977 $ 1,895,581 $ 1,714,601 Income tax expense (benefit) from continuing operations consisted of the following: Year Ended July 31, (In thousands) 2026 2025 2024 Federal: Current $ 234,126 $ 272,836 $ 271,820 Deferred 51,982 ( 12,654 ) ( 1,174 ) 286,108 260,182 270,646 State: Current 15,248 37,487 49,539 Deferred ( 5,180 ) ( 2,576 ) ( 1,611 ) 10,068 34,911 47,928 International: Current 59,657 51,113 34,179 Deferred ( 1,253 ) 1,012 ( 499 ) 58,404 52,125 33,680 Income tax expense $ 354,580 $ 347,218 $ 352,254 A summary of the cash paid for income taxes is as follows: (In thousands) July 31, 2026 Income Taxes Paid Federal Taxes $ 292,999 State Taxes 61,492 Foreign Taxes United Kingdom 30,967 Other Foreign Jurisdictions 12,922 Total Cash Paid $ 398,380 A reconciliation of the expected U.S. statutory tax rate to the actual effective income tax rate for fiscal year 2026 is as follows: (In thousands) July 31, 2026 US Federal Statutory Tax Rate $ 385,345 21.0 % State and Local Income Taxes, Net of Federal Income Tax Effect (1) 21,493 1.2 % Foreign Tax Effects 10,618 0.6 % Effect of Changes in Tax Laws or Rate Enacted in the Current Period 0.0 % Effect of Cross-Border Tax Laws ( 45,948 ) - 2.5 % Foreign-Derived Intangible Income Deduction ( 46,712 ) - 2.5 % …

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"Recently Issued Accounting Pronouncements Adopted In December 2023, the FASB issued ASU 2023-09 ""Income Taxes (Topics 740): Improvements to Income Tax Disclosures"" to expand the disclosure requirements for income taxes, primarily related to the rate reconciliation and income taxes paid. ASU 2023-09 is effective for annual periods beginning after December 15, 2024. The Company adopted the provisions of ASU 2023-09 for the fiscal year ended July 31, 2026 and applied the provisions on a prospective basis . See NOTE 13 Income Taxes . Pending In November 2024, FASB issued Accounting Standards Update (ASU) 2024-03, Income StatementReporting Comprehensive IncomeExpense Disaggregation Disclosures (Subtopic 220-40). ASU 2024-03 requires disclosure of specified information about certain costs and expenses. ASU 2024-03 is effective for annual periods beginning after December 15, 2026, and interim reporting periods beginning after December 15, 2027. Early adoption is permitted, and the amendments may be applied either prospectively or retrospectively. Management is currently evaluating this ASU to determine its impact on the Company's disclosures. In July 2025, the FASB issued ASU No. 2025-05, Financial InstrumentsCredit Losses (Topic 326): Measurement of Credit Losses for Accounts Receivable and Contract Assets, which allows entities to elect a practical expedient permitting an entity to assume that conditions at the balance sheet date remain unchanged over the life of the asset when …

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NOTE 18 Employee Benefit Plan The Company sponsors defined contribution retirement plans for eligible employees in the United States and certain international locations. Employer contributions are determined in accordance with the provisions of the applicable plans. Expense recognized for these plans totaled $ 8.7 million, $ 5.7 million and $ 4.4 million for the year ended July 31, 2026, 2025, and 2024 , respectively, related to this plan. …

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NOTE 17 Related Party Transactions There were no amounts due to or from related parties as of July 31, 2026 and 2025 . …

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"NOTE 14 Segments and Other Geographic Reporting The Companys U.S. and International regions are considered two separate operating segments and are disclosed as two reportable segments. The segments represent geographic areas and reflect how the chief operating decision maker, or ""CODM"", the Company's Chief Executive Officer , allocates resources and measures results. The Company's CODM evaluates the performance of its reportable segments and allocates resources based on segment Operating Income. This measure is used to assess profitability, guide decisions regarding capital investment, and evaluate the performance of segment leadership. The following table presents financial information by segment. The specific line items in the tables represent the significant segment expenses reviewed by the CODM: Year Ended July 31, 2026 (In thousands) United States International Total Service revenues $ 3,388,287 $ 581,233 $ 3,969,520 Vehicle sales 419,143 277,546 696,689 Total service revenues and vehicle sales 3,807,430 858,779 4,666,209 Facility operations 1,634,412 331,476 1,965,888 Cost of vehicle sales 391,028 225,435 616,463 General and administrative 362,950 68,318 431,268 Operating income $ 1,419,040 $ 233,550 $ 1,652,590 Depreciation and amortization, excluding debt costs $ 194,749 $ 34,624 $ 229,373 Interest income 168,205 13,718 181,923 Capital expenditures, including acquisitions 256,965 85,402 342,367 Total assets 8,413,366 1,614,444 10,027,810 Goodwill 390,422 120,875 51 …

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NOTE 19 Subsequent Events On September 10, 2026, the Company entered into a definitive merger agreement to acquire ACV for $ 10.50 per share, net to the seller in cash, without interest, subject to any required withholding of taxes, representing an implied equity value of approximately $ 1.9 billion. The transaction is expected to close by the end of calendar year 2026. The consummation of such transaction is subject to the tender of a majority of the outstanding shares of ACV common stock, the expiration or termination of the waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, and other customary conditions. Because the transaction was entered into subsequent to July 31, 2026, it has not been reflected in the accompanying consolidated financial statements. The Company has not completed its evaluation of the accounting for the acquisition, including the determination of the fair values of assets acquired and liabilities assumed, and therefore cannot reasonably estimate the financial statement impact of the transaction. …

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