Stock-Based Compensation (Notes)

3 Months Ended

Oct. 31, 2023

Stockholders' Equity Note [Abstract]

Stockholders' Equity

Stock-Based Compensation

Incentive Stock Plans

The Company has an incentive stock plan under which the Board of Directors may grant nonqualified stock options to purchase shares of Class A Nonvoting Common Stock, restricted stock units ("RSUs"), performance-based restricted stock units ("PRSUs"), or restricted and unrestricted shares of Class A Nonvoting Common Stock to employees and non-employee directors. Certain awards may be subject to pre-established performance goals. The majority of the Company’s annual share-based awards are granted in the first quarter of the fiscal year.

Total stock-based compensation expense recognized during the three months ended October 31, 2023 and 2022 was $4,163 and $2,958, respectively. The total income tax benefit recognized in the condensed consolidated statements of income was $425 and $192 during the three months ended October 31, 2023 and 2022, respectively.

Stock Options

The stock options issued under the plan have an exercise price equal to the market price of the Company's stock at the date of the grant and generally vest ratably over three years, with one-third becoming exercisable one year after the grant date and one-third additional in each of the succeeding two years. Options issued under the plan, referred to herein as “time-based” options, generally expire ten years from the date of grant.

The Company has estimated the fair value of its time-based options granted during the three months ended October 31, 2023 and 2022, using the Black-Scholes option valuation model. The weighted-average assumptions used in the Black-Scholes valuation model are reflected in the following table:

	Three months ended October 31,
Black-Scholes Option Valuation Assumptions	2023		2022
Expected term (in years)	5.4		5.7
Expected volatility	30.2	%	29.6	%
Expected dividend yield	1.9	%	2.0	%
Risk-free interest rate	4.7	%	3.7	%

The following is a summary of stock option activity for the three months ended October 31, 2023:

Time-Based Options	Options Outstanding	Weighted Average Exercise Price		Weighted Average Remaining Contractual Term	Aggregate Intrinsic Value
Outstanding at July 31, 2023	1,546,783	$	42.05
Granted	52,097	54.80
Exercised	(174,370)	36.57
Forfeited	(5,433)	48.82
Outstanding at October 31, 2023	1,419,077	$	43.17	6.0	$	12,727
Exercisable at October 31, 2023	1,195,029	$	42.17	5.4	$	11,851

The following table summarizes additional stock option information:

	Three months ended October 31,
	2023		2022
Weighted-average fair value of options granted during the period	$	16.42	$	12.06
Intrinsic value of options exercised during the period (in thousands)	3,410		364
Fair value of options vested during the period (in thousands)	1,729		2,458
Cash received from the exercise of stock options during the period (in thousands)	2,598		349
Tax benefit on options exercised during the period (in thousands)	841		91

As of October 31, 2023, total unrecognized compensation cost related to stock options was $1,608 pre-tax, net of estimated forfeitures, which the Company expects to recognize over a weighted-average period of 2.1 years.

RSUs

RSUs issued under the plan have a grant date fair value equal to the market price of the Company's stock at the date of grant and generally vest ratably over three years, with one-third vesting one year after the grant date and one-third additional in each of the succeeding two years.

The following is a summary of RSU activity for the three months ended October 31, 2023:

	Number of Shares	Weighted Average Grant Date Fair Value
Non-vested RSUs as of July 31, 2023	133,868	$	46.55
Granted	86,286	54.80
Vested	(53,888)	45.23
Forfeited	(1,483)	48.92
Non-vested RSUs as of October 31, 2023	164,783	$	51.28

The RSUs granted during the three months ended October 31, 2022 had a weighted-average grant date fair value of $44.70. The total fair value of RSUs vested during three months ended October 31, 2023 and 2022 was $2,974 and $2,608, respectively.

As of October 31, 2023, total unrecognized compensation cost related to RSUs was $4,504 pre-tax, net of estimated forfeitures, which the Company expects to recognize over a weighted-average period of 2.3 years.

PRSUs

PRSUs are contingent on the achievement of predetermined market and performance targets. The PRSUs granted under the plan vest at the end of a three-year performance period provided the service period and specified performance targets are met. For the PRSUs granted during the three months ended October 31, 2023, awards will vest based on achievement of performance conditions relating to Company revenue and diluted EPS targets. For the PRSUs granted during the three months ended October 31, 2022 and 2021, the vesting criteria for 50% of the grant is based upon the Company's total shareholder return ("TSR") relative to the S&P 600 SmallCap Industrials Index over a three-year performance period, and the vesting criteria for the other 50% of the grant is based upon Company revenue targets.

The PRSUs granted during the three months ended October 31, 2023 had a fair value determined by the average of the high and low stock price on the date of the grant. For unvested awards with a market value condition, a third-party valuation is utilized to determine the fair value using a Monte Carlo simulation for that portion of the award.

The following is a summary of PRSU activity for the three months ended October 31, 2023:

	Number of Shares	Weighted Average Grant Date Fair Value
Non-vested PRSUs as of July 31, 2023	63,448	$	58.39
Granted	65,956	51.16
Vested	(2,786)	60.73
Forfeited	(19,436)	60.73
Non-vested PRSUs as of October 31, 2023	107,182	$	53.46

The PRSUs granted during the three months ended October 31, 2022 had a weighted-average grant date fair value of $55.77. The total fair value of PRSUs vested during three months ended October 31, 2023 and 2022 was $141 and $889, respectively.

As of October 31, 2023, total unrecognized compensation cost related to PRSUs was $4,167 pre-tax, net of estimated forfeitures, which the Company expects to recognize over a weighted-average period of 2.5 years.