What changed in this filing

/stocks — the workspaceLOADING

Item 2. Management’s Discussion and Analysis

2022-08-08 compared with 2022-05-05 · 145 added, 69 removed, 206 unchanged (51% of the section changed)

5 unchanged sentences

We do not assume any obligation to update or revise any forward-looking statements to reflect changed assumptions, the occurrence of anticipated or unanticipated events, new information or circumstances or otherwise, except as required by law.

We engineer, manufacture, market, and sell premium air conditioning and heating equipment consisting of standard, semi-custom, and custom rooftop units, data center cooling solutions, cleanroom systems, chillers, packaged outdoor mechanical rooms, air handling units, makeup air units, energy recovery units, condensing units, geothermal/water-source heat pump, coils, and controls.

These products are marketed and sold to retail, manufacturing, educational, lodging, supermarket, data centers, medical and pharmaceutical, and other commercial industries.

We market our products to all 50 states in the United States and certain provinces in Canada.

Foreign sales were approximately $6.0 million of our total net sales for the three months ended March 31, 2022 and $2.0 million of our sales during the same period of 2021.

Foreign sales were approximately $10.2 million of our total net sales for the six months ended June 30, 2022 and $5.8 million of our sales during the same period of 2021.

Our business can be affected by a number of economic factors, including the level of economic activity in the markets in which we operate.

The uncertainty of the economy has negatively impacted the commercial and industrial new construction markets in recent years.

However, the recent rise in architectural billings and nonresidential building construction starts signal a 2022 recovery in nonresidential building construction after experiencing a downturn in 2021.

Furthermore, general economic growth combined with pent-up demand from customers that delayed replacing old equipment is driving accelerated replacement demand.

However, both the new construction and replacement markets are cyclical.

However, architectural billings and nonresidential construction starts began rebounding in 2021, signaling a 2022 recovery in nonresidential construction.

Furthermore, general economic growth combined with pent-up demand from customers that delayed replacing old equipment in 2020 and 2021 has been driving accelerated replacement demand.

Nevertheless, both the new construction and replacement markets are cyclical.

If the domestic economy were to slow or enter a recession, this could result in a decrease in our sales volume and profitability.

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economy and global economy.

At March 31, 2022, the price (twelve month trailing average) for copper, galvanized steel, stainless steel and aluminum increased 41.2%, 67.8%, 61.8%, and 1.6%, respectively, as compared to the price (twelve month trailing average) at March 31, 2021.

At June 30, 2022, the price (twelve month trailing average) for copper, galvanized steel, stainless steel and aluminum increased 33.1%, 35.5%, 69.2%, and 8.1%, respectively, as compared to the price (twelve month trailing average) at June 30, 2021.

We attempt to limit the impact of price fluctuations on these materials by entering into cancellable and non-cancellable fixed price contracts with our major suppliers for periods of six to 18 months.

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In 2021, we implemented three price increases.

and on January 1, 2022, we implemented a fourth price increase.

Recent Developments

On December 10, 2021, we closed on the acquisition of all of the issued and outstanding equity ownership of BasX, LLC, doing business as BasX Solutions ("BasX") (Note 3).

We began including the results of BasX’s operations in our consolidated financial statements beginning December 11, 2021.

On December 29, 2021, BasX, LLC converted to a C-Corporation, BasX, Inc., and is subject to income tax.

In 2022, we implemented three additional price increases effective January 1, 2022, March 29, 2022, and June 1, 2022.

The following table shows our historical backlog levels:

2022 December 31,

2021 March 31,

2021 June 30,

(in thousands)

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The Company has increased our backlog both through the acquisition of BasX and organic growth.

Excluding BasX's backlog at March 31, 2022, organic backlog increased 305.0% compared to March 31, 2021, due in part to the completion of the Longview, Texas expansion in early 2021, price increases implemented throughout 2021 and our favorable lead times.

Excluding BasX's backlog at June 30, 2022, organic backlog increased 163.6% compared to June 30, 2021, due in part to price increases implemented throughout 2021 and 2022 and our favorable lead times.

Results of Operations

Three months ended

March 31, 2022 March 31, 2021

Three months ended June 30, Six months ended June 30,

2022 2021 2022 2021

(in thousands)

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• Our backlog is at a record level due primarily to strong end-market demand along with our ability to produce and meet customer lead times.

• Organic bookings increased 150% in the first quarter of 2022 compared to 2021 indicating a strong demand for our products.

• Sales in 2022 grew 57.8% to $182.8 million due to organic volume growth of $24.6 million, addition of BasX revenue of $21.0 million, and price increases of $16.5 million.

• Gross profit as a percentage of sales decreased in 2022 to 25.2% from 28.6% in 2021 due to the offset of increased sales by increased material costs and the adverse effect of supply chain issues on operations.

• Our warranty expense decreased 21.1% in the first quarter of 2022 compared to 2021 as a result of the quality control efforts the Company has put in place in the past few years.

• We continue to invest in the future growth of the Company evidenced by our $14.0 million in capital expenditures.

• Sales for the three and six months ended June 30, 2022 grew due to organic growth, the addition of BasX revenues, and price increases realized during the periods.

• Gross profit as a percentage of sales decreased for the three and six months ended June 30, 2022 due to increased material costs and the adverse effect of supply chain issues on operations.

• In 2022, we continue to invest in projects that will improve our production capabilities and efficiencies evidenced by our $27.2 million in capital expenditures.

We report our financial results based on three reportable segments:

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The CODM does not evaluate operating segments using asset or liability information.

Segment Operating Results for Three Months Ended March 31, 2022 and Three Months Ended March 31, 2021

Segment Operating Results for Three Months Ended June 30, 2022 and Three Months Ended June 30, 2021

Three Months Ended

March 31, 2022 Percent of Sales 2

March 31, 2021 Percent of Sales 2

June 30, 2022 Percent of Sales 2

June 30, 2021 Percent of Sales 2

$ Change % Change

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1 BasX was acquired on December 10, 2021.

We have included the results of BasX's operations in our consolidated financial statements for the three months ended March 31, 2022.

We have included the results of BasX's operations in our consolidated financial statements for the three months ended June 30, 2022.

2 Cost of sales and gross profit for each segment are calculated as a percentage of the respective segment's net sales.

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3 Presented after intercompany eliminations.

Total net sales increased $67.0 million or 57.8%, due in part to increased organic volumes of $24.6 million.

The quarter also benefited from $16.5 million of price increases put in place throughout 2021 that only now were realized.

The acquisition of BasX in December 2021 added $21.0 million to net sales for the three months ended March 31, 2021.

AAON Coil Products saw a 40.0% increase in units sold, or approximately $3.2 million, due to the increase in capacity with the completion of the new manufacturing building at our Longview, Texas facility in early 2021.

During the three months ended March 31, 2021, several production days were lost due to planned maintenance and due to impacts of bad weather at both AAON Oklahoma and AAON Coil Products, resulting in lower volumes.

Additionally, the expansion at our Longview facility was completed and production began during the first quarter of 2021.

As shown in the table below, we've experienced increases in the cost of our raw materials.

Total net sales increased $64.9 million or 45.1%, with the addition of BasX sales being the largest contributing factor to our growth.

Excluding BasX sales of $24.6 million, net sales grew through price increases of $22.5 million and organic volume of $14.8 million.

AAON Coil Products had an increase of 43.3% in organic unit sales, or $4.7 million, during the three months ended June 30, 2022 due to the increase in capacity with the completion of the new manufacturing building at our Longview, Texas facility in early 2021.

As shown in the table below, we've experienced year over year increases in the cost of our raw materials.

We implemented multiple price increases during 2021 and 2022 to counteract the increased cost of material.

Some of the 2022 price increases have yet to be realized.

Additionally, in order to attract new employees, we increased starting wages for our production workforce by 7.0% in July 2021;

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In March 2022, we awarded annual merit raises for an overall 3.0% increase to wages.

While our gross profit has declined, we did see sequential improvement in our margin during the second quarter of 2022.

The backlog for AAON Coil Products had better pricing which shows in their improved gross margin of 31.7% for the quarter as they are able to realize price increases faster than AAON Oklahoma.

BasX has been able to reprice their backlog in order to maintain a healthy gross profit of 29.2% for the quarter.

AAON Oklahoma continued to work through its remaining lower

priced backlog and as a result had costs increases in excess of realized price increases during the quarter that impacted its gross profit.

Raw Material Costs

Twelve-month average raw material cost per pound as of June 30:

2022 2021 % Change

Copper $ 5.35 $ 4.02 33.1 %

Galvanized steel $ 1.03 $ 0.76 35.5 %

Stainless steel $ 2.47 $ 1.46 69.2 %

Aluminum $ 2.14 $ 1.98 8.1 %

Selling, General and Administrative Expenses

Three Months Ended Percent of Sales

2022 June 30,

(in thousands)

Warranty $ 2,353 $ 2,028 1.1 % 1.4 %

Profit sharing 2,146 2,919 1.0 % 2.0 %

Salaries & benefits 10,383 6,025 5.0 % 4.2 %

Stock compensation 2,014 1,368 1.0 % 1.0 %

Advertising 1,290 261 0.6 % 0.2 %

Depreciation & amortization 2,062 635 1.0 % 0.4 %

Insurance 866 730 0.4 % 0.5 %

Professional fees 900 682 0.4 % 0.5 %

Subscriptions as a service 974 514 0.5 % 0.4 %

Other 3,945 1,733 1.9 % 1.2 %

Total SG&A $ 26,933 $ 16,895 12.9 % 11.7 %

Excluding salaries and benefits at BasX of $3.0 million, salaries and benefits increased $1.4 million due to pay increases that went into effect during the third and fourth quarters of 2021 and first quarter of 2022.

Advertising increased $1.0 million due various sponsorships and customer promotions, which were still mostly on hold during early 2021 due to COVID-19 restrictions.

Depreciation and amortization expense at BasX was $1.1 million, accounting for the majority of the change from period to period.

Excluding $1.0 million of Other SG&A at BasX, Other SG&A increased $1.2 million attributable mostly to consulting services and increased travel expenses due to decreased COVID-19 restrictions during 2022.

Three Months Ended Effective Tax Rate

2022 June 30,

(in thousands)

Income tax provision $ 4,177 $ 4,632 20.8 % 18.3 %

The Company’s estimated annual 2022 effective tax rate, excluding discrete events, is expected to be approximately 25%.

During the three months ended June 30, 2022, the Company recorded an excess tax benefit of $0.2 million as compared to $0.5 million during the same period in 2021, a decrease of 56.8%.

The decrease was primarily due to timing of stock awards as a result of our high stock price during the three months ended June 30, 2021.

Segment Operating Results for Six Months Ended June 30, 2022 and Six Months Ended June 30, 2021

Six Months Ended

June 30, 2022 Percent of Sales 2

June 30, 2021 Percent of Sales 2

$ Change % Change

(in thousands)

AAON Oklahoma $ 297,348 75.9 % $ 226,242 87.1 % $ 71,106 31.4 %

AAON Coil Products 48,689 12.4 % 33,422 12.9 % 15,267 45.7 %

45,548 11.6 % — — 45,548 —

Net sales $ 391,585 $ 259,664 $ 131,921 50.8 %

Cost of Sales 3

AAON Oklahoma $ 231,775 77.9 % 158,247 69.9 % $ 73,528 46.5 %

AAON Coil Products 32,909 67.6 % 26,153 78.3 % 6,756 25.8 %

33,461 73.5 % — — 33,461 —

Cost of sales $ 298,145 76.1 % $ 184,400 71.0 % $ 113,745 61.7 %

Gross Profit 3

AAON Oklahoma $ 65,573 22.1 % $ 67,995 30.1 % $ (2,422) (3.6) %

AAON Coil Products 15,780 32.4 % 7,269 21.7 % 8,511 117.1 %

12,087 26.5 % — — 12,087 —

Gross profit $ 93,440 23.9 % $ 75,264 29.0 % $ 18,176 24.1 %

1 BasX was acquired on December 10, 2021.

We have included the results of BasX's operations in our consolidated financial statements for the six months ended June 30, 2022.

2 Cost of sales and gross profit for each segment are calculated as a percentage of the respective segment's net sales.

Total cost of sales and total gross profit are calculated as a percentage of total net sales.

3 Presented after intercompany eliminations.

Total net sales increased $131.9 million or 50.8%, due in part to increased organic volumes of $39.5 million.

AAON Coil Products saw a 41.9% increase in units sold, or approximately $7.9 million, during the six months ended June 30, 2022 due to the increase in capacity with the completion of the new manufacturing building at our Longview, Texas facility in early 2021.

The quarter also benefited from $39.0 million of price increases put in place throughout 2021 and early 2022 which began being realized at end of the six months ended June 30, 2021.

The acquisition of BasX in December 2021 added $45.5 million to net sales for the six months ended June 30, 2022.

During the six months ended June 30, 2021, several production days were lost due to planned maintenance and due to impacts of bad weather at both AAON Oklahoma and AAON Coil Products, resulting in lower volumes.

Additionally, the expansion at our Longview facility was completed and production began during the first quarter of 2021.

As shown in the table below, we've experienced increases in the cost of our raw materials.

We implemented multiple price increases during 2021 and 2022 to counteract the increased cost of material;

however, it has taken longer than expected for our price increases to roll out of the backlog into production causing erosion of our gross profit.

As already mentioned, we also have put multiple wage increases in place in late 2021 and early 2022 that have increased our labor costs.

Additionally, during the first quarter of 2022, a review of the Company’s useful lives for certain sheet metal manufacturing equipment at AAON Coil Products resulted in a change in estimate (Note 1) that increased the useful lives from between ten and twelve years to fifteen years.

1 unchanged sentence

Raw Material Costs

Twelve-month average raw material cost per pound as of March 31:

Twelve-month average raw material cost per pound as of June 30:

2022 2021 % Change

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Selling, General and Administrative Expenses

Three Months Ended Percent of Sales

2022 March 31,

Six Months Ended Percent of Sales

2022 June 30,

(in thousands)

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Professional fees 2,382 1,407 0.6 % 0.5 %

Donations 189 (47) 0.1 % — %

Bad debt expense 288 (13) 0.2 % — %

Subscriptions as a service 1,773 1,093 0.5 % 0.4 %

Other 7,092 3,565 1.8 % 1.4 %

Total SG&A $ 49,989 $ 31,591 12.8 % 12.2 %

Excluding salaries and benefits at BasX of $2.7 million, salaries and benefits increased $1.6 million due to pay increases that went into effect during the second and third quarters of 2021.

Additionally, profit sharing increased due to higher pre-tax income for the three months ended March 31, 2022.

Excluding salaries and benefits at BasX of $5.7 million, salaries and benefits increased $3.0 million due to pay increases that went into effect during the third and fourth quarters of 2021 and the first quarter of 2022.

Advertising increased $1.1 million due various sponsorships and customer promotions, which were still mostly on hold during early 2021 due to COVID-19 restrictions.

Depreciation and amortization expense at BasX was $2.0 million, accounting for the majority of the change from period to period.

Professional fees increased mostly due to continued transaction costs and audit fees.

Three Months Ended Effective Tax Rate

2022 March 31,

Excluding $2.0 million of Other SG&A at BasX, Other SG&A increased $1.5 million attributable mostly to consulting services and increased travel expenses due to decreased COVID-19 restrictions.

Six Months Ended Effective Tax Rate

2022 June 30,

(in thousands)

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The Company’s estimated annual 2022 effective tax rate, excluding discrete events, is expected to be approximately 25%.

During the three months ended March 31, 2022, the Company recorded an excess tax benefit of $0.5 million as compared to $2.9 million during the same period in 2021, a decrease of 82.1%.

The increase was primarily due to timing of stock awards as a result of our high stock price during the three months ended March 31, 2021.

During the six months ended June 30, 2022, the Company recorded an excess tax benefit of $0.7 million as compared to $3.4 million during the same period in 2021, a decrease of 78.8%.

The decrease was primarily due to timing of stock awards as a result of our high stock price during the six months ended June 30, 2021.

Liquidity and Capital Resources

Our working capital and capital expenditure requirements are generally met through net cash provided by operations and the use of the revolving bank line of credit based on our current liquidity at the time.

Working Capital - Our unrestricted cash increased $2.8 million from December 31, 2021 to March 31, 2022 and totaled $5.6 million at March 31, 2022.

Working Capital - Our unrestricted cash increased $14.8 million from December 31, 2021 to June 30, 2022 and totaled $17.6 million at June 30, 2022.

Revolving Line of Credit - Our revolving credit facility ("Revolver"), as amended and restated, provides for maximum borrowings of $200.0 million.

As of March 31, 2022 and December 31, 2021, we had $65.0 million and $40.0 million, respectively, outstanding under the Revolver.

We had one standby letter of credit totaling $0.8 million as of March 31, 2022.

At March 31, 2022, we have $34.2 million of borrowings available under the Revolver.

The Revolver expires November 24, 2026.

As of June 30, 2022 and December 31, 2021, we had $106.2 million and $40.0 million, respectively, outstanding under the Revolver.

We had one standby letter of credit totaling $0.8 million as of June 30, 2022.

At June 30, 2022, we have $92.9 million of borrowings available under the Revolver.

The Revolver expires May 27, 2027.

Any outstanding loans under the Revolver bear interest at the daily compounded secured overnight financing rate ("SOFR") plus the applicable margin.

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The applicable fee percentage is determined quarterly based on the Company's leverage ratio.

At March 31, 2022, the weighted average interest rate of the Revolver was 1.3%.

Fees associated with the unused portion of the committed amount are included in interest expense on our consolidated statements of income and were not material for the three months ended March 31, 2022.

The weighted average interest rate on borrowings outstanding on our the Revolver was 1.9% and 1.7% for the three and six months ended June 30, 2022.

Fees associated with the unused portion of the committed amount are included in interest expense on our consolidated statements of income and were not material for the three and six months ended June 30, 2022.

If SOFR cannot be determined pursuant to the definition, as defined by the Revolver agreement, any outstanding effected loans will be deemed to have been converted into alternative base rate ("ABR") loans.

ABR loans would bear interest at a rate per annum equal to the highest of (a) the Prime Rate in effect on such day, (b) the Federal Funds Rate in effect on such day plus 0.50%, or (c) daily simple SOFR for a one-month tenor in effect on such day plus 1.00%.

At March 31, 2022, we were in compliance with our financial covenants, as defined by the Revolver.

At June 30, 2022, we were in compliance with our financial covenants, as defined by the Revolver.

These covenants require that we meet certain parameters related to our leverage ratio.

At March 31, 2022, our leverage ratio was 0.63 to 1.0, which meets the requirement of not being above 3 to 1.

As of May 5, 2022, we had $75.0 million of outstanding borrowings under our Revolver.

At June 30, 2022, our leverage ratio was 1.06 to 1.0, which meets the requirement of not being above 3 to 1.

As of August 4, 2022, we had $102.5 million of outstanding borrowings under our Revolver.

New Market Tax Credit Obligation - On October 24, 2019, the Company entered into a transaction with a subsidiary of an unrelated third-party financial institution (the “Investor”) and a certified Community Development Entity under a qualified New Markets Tax Credit (“NMTC”) program pursuant to Section 45D of the Internal Revenue Code of 1986, as amended, related to an investment in plant and equipment to facilitate the expansion of our Longview, Texas manufacturing operations (the “Project”).

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The Company is authorized to effectuate repurchases of the Company's common stock on terms and conditions approved in advance by the Board.

The Company also has a stock repurchase arrangement by which employee-participants in our 401(k) savings and investment plan are entitled to have shares in AAON, Inc.

The Company also had a stock repurchase arrangement by which employee-participants in our 401(k) savings and investment plan were entitled to have shares in AAON, Inc.

stock in their accounts sold to the Company.

The maximum number of shares to be repurchased is contingent upon the number of shares sold by employee-participants.

The 401(k) Plan was amended in June 2022 to discontinue this program.

No additional shares have been purchased by the Company under this arrangement since June 2022.

Lastly, the Company repurchases shares of AAON, Inc.

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Our repurchase activity is as follows:

Three Months Ended

March 31, 2022 March 31, 2021

Six Months Ended

June 30, 2022 June 30, 2021

(in thousands, except share and per share data)

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Our repurchase activity since Company inception, including our current authorized stock repurchase programs, are as follows:

Inception to March 31, 2022

Inception to June 30, 2022

(in thousands, except share and per share data)

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November 9, 2021 November 26, 2021 December 17, 2021 $0.19

May 18, 2022 June 3, 2022 July 1, 2022 $0.19

Based on historical performance and current expectations, we believe our cash and cash equivalents balance, the projected cash flows generated from our operations, our existing committed revolving credit facility (or comparable financing) and our expected ability to access capital markets will satisfy our working capital needs, capital expenditures, and other liquidity requirements associated with our operations in 2022 and the foreseeable future.

Statement of Cash Flows

The following table reflects the major categories of cash flows for the three months ended March 31, 2022 and 2021.

The following table reflects the major categories of cash flows for the six months ended June 30, 2022 and 2021.

For additional details, see the consolidated financial statements.

Three Months Ended

2022 March 31,

Six Months Ended

2022 June 30,

(in thousands)

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Contract assets (2,820) —

Prepaid expenses and other (3,588) 108

Prepaid expenses and other long-term assets (3,066) 799

Accounts payable 6,490 10,650

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Deferred revenue 421 574

Accrued liabilities & donations 2,511 58

Accrued liabilities & other long-term assets 7,123 300

Net cash (used in) provided by operating activities (1,580) 62,912

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Capital expenditures (27,227) (33,157)

Cash paid for building (see Note 3 )

Cash paid in business combination, net of cash acquired (249) —

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Borrowings under revolving credit facility 94,900 —

Payments under revolving credit facility (28,651) —

Principal payments on financing lease (28) —

Stock options exercised 6,385 11,848

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Collections and payments cycles are on a normal pattern and fluctuate due to timing of receipts and payments.

The decrease in cash flows from receivables was a result of increased sales, both as a result of 2021 price increases realized during the period and volumes, in the three months ended March 31, 2022 that have not been collected.

The decrease in cash flows from receivables was a result of increased sales, both as a result of 2021 and 2022 price increases realized during the period and volumes, in the six months ended June 30, 2022 that have not been collected.

The Company has also increased the purchase of inventory to take advantage of favorable pricing opportunities and also to mitigate the impact of future supply chain disruptions on our operations.

Payment terms for BasX jobs typically require upfront cash to fund the job resulting in cash inflows related to our contract liabilities.

Cash Flows Used in Investing Activities

The capital expenditures for the three months ended March 31, 2022 relate to our continued investment in our production capabilities.

The capital expenditures for the three months ended March 31, 2021 related to the completion of the expansion at our Longview, Texas facility, which became operational during early 2021.

The capital expenditures for the six months ended June 30, 2022 relate to our continued investment in our production capabilities.

The cash paid for building during the six months ended June 30, 2022 related to the purchase of the BasX office

and manufacturing facility related to the December 2021 acquisition (see Note 3).

The capital expenditures for the six months ended June 30, 2021 related to the completion of the expansion at our Longview, Texas facility, which became operational during early 2021.

The capital expenditure program for 2022 is estimated to be approximately $73.3 million.

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Cash flows from financing activities is historically affected by the timing of stock options exercised by our employees and repurchases of the Company's stock.

However, the increase in cash from financing activities is primarily related to borrowings under our revolving credit facility to manage our working capital needs, especially strategic purchases of inventory to avoid future supply chain delays, after our available cash on hand was used to fund the BasX acquisition.

Stock options exercised decreased due to the decrease in the number of employee options exercised and decrease in our average stock price during the three months ended March 31, 2022 compared to the three months ended March 31, 2021.

However, for the six months ended June 30, 2022 the increase in cash from financing activities is primarily related to borrowings under our revolving credit facility to manage our working capital needs, especially strategic purchases of inventory to avoid future supply chain delays, and the funding for the purchase of the BasX building in the second quarter.

Stock options exercised decreased due to the decrease in the number of employee options exercised and decrease in our average stock price during the six months ended June 30, 2022 compared to the six months ended six months ended June 30, 2021.

Off-Balance Sheet Arrangements

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Contractual Obligations

We had no material contractual purchase obligations as of March 31, 2022.

We had no material contractual purchase obligations as of June 30, 2022 except as described below.

On April 27, 2022, the Company entered into a purchase sales agreement with a third party manufacturer to purchase the intellectual property rights to design and manufacture fan wheels for the purchase price of approximately $6.5 million.

The purchase price will be paid in three installments over the next 18 months.

As of August 4, 2022 we have paid approximately $1.0 million related to this agreement.

Critical Accounting Policies

There have been no material changes in the Company’s critical accounting policies during the three months ended March 31, 2022.

There have been no material changes in the Company’s critical accounting policies during the six months ended June 30, 2022.

Recent Accounting Pronouncements

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Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 2. Management’s Discussion and Analysis