What changed in this filing

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Item 7. Management’s Discussion and Analysis

2023-11-17 compared with 2022-11-18 · 74 added, 75 removed, 391 unchanged (28% of the section changed)

19 unchanged sentences

A stronger United States economy and robust non-residential construction generally increase demand for our products.

In fiscal 2022, our sales and cost of sales continued to be impacted by high prices of the raw materials used in our products.

We generally sell our products on a spot basis and as such, were able to pass some of these increases on to our customers.

Additionally, we participated in the broader economic recovery from the COVID-19 pandemic as our customers began to resume their operations at pre-pandemic levels of activity.

In fiscal 2023, our sales and cost of sales were impacted by pricing normalization in certain raw materials used in our products.

We generally sell our products on a spot basis and as such, were exposed to sales prices on our products that decreased faster than the cost for the related raw materials.

We believe that our business and demand for our products is influenced by two main economic indicators:

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During those periods, our MR&R demand as a percentage of total demand typically increases, providing a more consistent revenue stream for our business.

Additionally, central bank interest rate increases, inflation and the Russia-Ukraine conflict, are creating additional uncertainty in the global economy, generally, and in the markets in which we operate.

COVID-19, the Russia-Ukraine conflict and other factors have had and will continue to have adverse effects on global supply chains, which may impact some aspects of our business.

Additionally, central bank interest rate increases, inflation, and conflicts in Ukraine and the Middle East are creating additional uncertainty in the global economy, generally, and in the markets in which we operate.

The aforementioned conflicts and other factors have had and will continue to have adverse effects on global supply chains, which may impact some aspects of our business.

Furthermore, we are mindful of the effects that adverse weather, such as hurricanes, can have on our domestic supply chain.

Raw Materials.

We use a variety of raw materials in the manufacture of our products, which primarily include steel, copper and PVC resin.

We use a variety of raw materials in the manufacture of our products, which primarily include steel, copper, PVC and HDPE resin.

We believe that sources for these raw materials are well established, generally available and are in sufficient quantity that we may avoid disruption in our business.

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Interest expense, net 35,232 30,676 4,556 14.9 %

Loss on extinguishment of debt — 4,202 (4,202) (100.0) %

Other income, net (490) (18,152) 17,662 (97.3) %

Other (income) and expense, net 7,969 (490) 8,459 (1,726.3) %

Income before income taxes 850,290 1,203,620 (353,330) (29.4) %

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Net income $ 689,899 $ 913,434 $ (223,535) (24.5) %

Volume (3.2) %

Average selling prices (16.5) %

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Net sales (10.1) %

Net sales for fiscal 2022 increased $985.9 million to $3,913.9 million, an increase of 33.7%, compared to $2,928.0 million for fiscal 2021.

The increase in net sales is primarily attributed to increased average selling prices of $996.2 million which were mostly driven by the plastic pipe and conduit category within the Electrical segment and increased net sales of $96.4 million from companies acquired during fiscal 2021 and 2022.

These increases are offset by decreased sales volume of $94.8 million across varying product categories within both the Electrical and the Safety & Infrastructure segments.

Pricing for PVC products, as well as other products, has begun to decline from historic highs.

Net sales for fiscal 2023 decreased $395.2 million to $3,518.8 million, a decrease of 10.1%, compared to $3,913.9 million for fiscal 2022.

The decrease in net sales is primarily attributed to lower average selling prices of $646.6 million, the economic value of solar tax credits to be transferred to certain customers of $30.4 million and the unfavorable impact of foreign exchange rates of $15.1 million.

These decreases are partially offset by increased net sales of $168.9 million from companies acquired during fiscal 2022 and 2023 and higher sales volume of $125.1 million across varying product categories within both the Electrical and the Safety & Infrastructure segments.

Cost of sales

Volume (2.9) %

Average input costs (15.0) %

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Cost of sales (4.2) %

Cost of sales increased $471.5 million, or 26.2%, to $2,273.9 million for fiscal 2022 compared to $1,802.4 million for fiscal 2021.

The increase was primarily due to higher input costs of steel, copper and PVC resin of $405.5 million and recent acquisitions during fiscal 2021 and 2022 of $70.4 million partially offset by lower sales volume of $52.8 million across varying product categories within both the Electrical and the Safety & Infrastructure segments.

Cost of sales decreased $94.7 million, or 4.2%, to $2,179.3 million for fiscal 2023 compared to $2,273.9 million for fiscal 2022.

The decrease was primarily due to lower input costs of steel, copper and PVC resin of $337.8 million and the impact of foreign exchange rates of $13.0 million partially offset by recent acquisitions during fiscal 2022 and 2023 of $130.3 million and higher sales volume of $107.7 million.

Selling, general and administrative

Selling, general and administrative expenses increased $18.2 million, or 4.9%, to $388.2 million for fiscal 2023 compared to $370.0 million for fiscal 2022.

The increase was primarily due to higher sales commission expense of $21.1 million, increased general spending on business improvement initiatives of $29.8 million, higher variable compensation of $6.5 million, transaction costs of $2.6 million, and recent acquisitions in fiscal 2021 and 2022 of $7.4 million.

The remaining increase of $9.6 million is spread across a variety of other spend categories.

The increase was primarily due to increased headcount of $16.6 million, digital initiatives of $16.1 million, recent acquisitions in fiscal 2022 and 2023 of $14.6 million, and stock compensation of $3.8 million.

These increases were partially offset by lower variable compensation of $15.4 million, lower sales commission expense of $9.9 million, lower transaction costs of $2.5 million and $5.1 million is spread across a variety of other spend categories.

Intangible asset amortization

Intangible asset amortization expense increased $21.6 million, or 59.8%, to $57.8 million for fiscal 2023 compared to $36.2 million for fiscal 2022.

The increase in intangible asset amortization is primarily driven by the acquisition of definite-lived intangible assets in fiscal 2022.

The increase in intangible asset amortization is primarily driven by the acquisition of definite-lived intangible assets through businesses acquired in fiscal 2022 and 2023.

Interest expense, net

Interest expense, net, decreased $2.2 million, or 6.8% to $30.7 million for fiscal 2022, compared to $32.9 million for fiscal 2021.

The decrease is primarily due to debt refinancing and principal prepayments in the second half of 2021 resulting in a lower average principal balance in fiscal 2022 from which interest expense was derived.

Other income, net

Other income, net decreased $17.7 million to income of $0.5 million for fiscal 2022, compared to income of $18.2 million for fiscal 2021.

The decrease was primarily due to a $15.5 million business interruption insurance recovery from a flood at one of the Company’s manufacturing facilities recognized in fiscal 2021.

See Note 15, “Commitments and Contingencies” and Note 6, “Other Income, net” to the accompanying consolidated financial statements included elsewhere in this Annual Report.

Interest expense, net, increased $4.6 million, or 14.9% to $35.2 million for fiscal 2023, compared to $30.7 million for fiscal 2022.

The increase is primarily due to increased interest rates on the Company’s New Senior Secured Term Loan Facility.

Other (income) and expense, net

Other (income) and expense, net increased $8.5 million to expense of $8.0 million for fiscal 2023, compared to income of $0.5 million for fiscal 2022.

The increase in expense was primarily due to impairments recognized in connection with the Company’s plans to exit from operations in Russia of $7.5 million.

Income tax expense

Income tax expense increased $98.0 million to $290.2 million, compared to $192.1 million for fiscal 2021.

Income tax expense decreased $129.8 million to $160.4 million, compared to $290.2 million for fiscal 2022.

The Company's income tax rate decreased to 18.9% for fiscal 2023, compared to 24.1% for fiscal 2022.

The increase in income tax expense is due to higher income before taxes, while the decrease in effective tax rate was primarily due to a decrease in state income taxes.

The decrease in income tax expense is due to lower income before taxes and solar tax credits generated during fiscal 2023, while the decrease in effective tax rate was primarily due to solar tax credits generated during fiscal 2023.

See Note 7, “Income Taxes” to the accompanying consolidated financial statements included elsewhere in this Annual Report.

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Net sales (11.2) %

Net sales increased by $780.5 million, or 34.9%, to $3,013.8 million for fiscal 2022 compared to $2,233.3 million for fiscal 2021.

The increase in net sales is primarily attributed to increased average selling prices of $788.8 million which were mostly driven by the plastic pipe and conduit category and increased net sales of $78.0 million from companies acquired during fiscal 2021 and 2022.

These increases were partially offset by decreased sales volume of $67.4 million.

Pricing for PVC products, as well as other products, has begun to decline from historic highs.

Net sales decreased by $338.7 million, or 11.2%, to $2,675.1 million for fiscal 2023 compared to $3,013.8 million for fiscal 2022.

The decrease in net sales is primarily attributed to lower average selling prices of $475.6 million, the unfavorable impact of foreign exchange rates of $14.1 million and decreased sales volume of $9.2 million.

These decreases were partially offset by increased net sales of $159.7 million from companies acquired during fiscal 2022 and 2023.

Adjusted EBITDA

Adjusted EBITDA increased $399.5 million, or 45.7%, to $1,273.4 million for fiscal 2022 compared to $873.9 million for fiscal 2021.

The increase in Adjusted EBITDA was largely due to the increase in average selling prices and acquisitions offset by volume declines as discussed above.

Adjusted EBITDA decreased $268.6 million, or 21.1%, to $1,004.9 million for fiscal 2023 compared to $1,273.4 million for fiscal 2022.

The decrease in Adjusted EBITDA was largely due to lower average selling prices over input costs.

Safety & Infrastructure

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Average selling prices (19.1) %

Other (2.2) %

Net sales (6.3) %

Net sales increased $202.3 million, or 29.0%, to $900.6 million for fiscal 2022 compared to $698.3 million for fiscal 2021.

The increase is primarily attributed to increased average selling prices of $207.4 million

and increased net sales of $18.4 million from companies acquired during fiscal 2022, partially offset by lower volumes of $27.3 million across various steel product categories.

Net sales decreased $56.4 million, or 6.3%, to $844.2 million for fiscal 2023 compared to $900.6 million for fiscal 2022.

The decrease is primarily attributed to lower average selling prices of $171.0 million and the economic value of solar tax credits to be transferred to certain customers of $30.4 million partially offset by higher volumes of $134.2 million and increased net sales of $9.2 million from companies acquired during fiscal 2022.

Adjusted EBITDA

Adjusted EBITDA increased $56.6 million, or 69.1%, to $138.4 million for fiscal 2022 compared to $81.8 million for fiscal 2021.

The Adjusted EBITDA increase was primarily due to the increase in average selling prices and acquisitions, offset by volume declines as discussed above.

Adjusted EBITDA decreased $35.2 million, or 25.4%, to $103.2 million for fiscal 2023 compared to $138.4 million for fiscal 2022.

The Adjusted EBITDA decrease was primarily due to lower average selling prices and over input costs and the impacts of solar tax credits transferred to certain customers.

Fiscal 2022 Compared to Fiscal 2021

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Loss on extinguishment of debt — 4,202 (4,202) (100.0) %

Other income, net (18,152) (2,777) (15,375) 553.7 %

Other (income) and expense, net (490) (18,152) 17,662 (97.3) %

Income before income taxes 1,203,620 780,001 423,619 54.3 %

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Net income $ 913,434 $ 587,857 $ 325,577 55.4 %

Volume (3.2) %

Average selling prices 34.0 %

Foreign exchange 1.0 %

Acquisitions 3.3 %

Other (0.4) %

Net sales 33.7 %

Net sales for fiscal 2022 increased $985.9 million to $3,913.9 million, an increase of 33.7%, compared to $2,928.0 million for fiscal 2021.

The increase in net sales is primarily attributed to increased average selling prices of $977.9 million, which were mostly driven by the plastic pipe and conduit category within the Electrical segment and increased net sales of $79.1 million due to the acquisitions of Queen City Plastics and FRE Composites Group.

Pricing for PVC products, as well as other parts of the business, are expected to return to more normal historical levels over time, but that time is uncertain.

The increase in net sales was also driven by an increase in sales volume of $88.4 million across the majority of product categories within both the Electrical and the Safety & Infrastructure segments.

These increases are offset by decreased sales volume of $94.8 million across varying product categories within both the Electrical and the Safety & Infrastructure segments.

Pricing for PVC products, as well as other products, has begun to decline from historic highs.

Cost of sales

Volume (2.9) %

Average input costs 22.5 %

Foreign exchange 1.2 %

Acquisitions 3.9 %

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Cost of sales increased $471.5 million, or 26.2%, to $2,273.9 million for fiscal 2022 compared to $1,802.4 million for fiscal 2021.

The increase was primarily due to higher input costs of steel, copper and PVC resin of $386.5 million, higher sales volume of $64.0 million and the acquisitions of Queen City Plastics and FRE Composites Group of $32.5 million.

The increase was primarily due to higher input costs of steel, copper and PVC resin of $405.5 million and recent acquisitions during fiscal 2021 and 2022 of $70.4 million, partially offset by lower sales volume of $52.8 million across varying product categories within both the Electrical and the Safety & Infrastructure segments.

Selling, general and administrative

Selling, general and administrative expenses increased $77.0 million, or 26.3%, to $370.0 million for fiscal 2022 compared to $293.0 million for fiscal 2021.

The increase was primarily due to higher variable compensation of $24.1 million, higher sales commission expense of $22.4 million, increased general spending on business improvement initiatives of $10.8 million, the acquisitions of Queen City Plastics and the FRE Composites Group of $5.4 million, and higher stock compensation expense of $3.5 million partially offset by productivity efficiencies of $4.1 million.

The majority of the remaining increase was primarily driven by the tight controls on expenditures put into place in fiscal 2020 at the onset of the COVID-19 pandemic.

The remaining increase of $9.6 million is spread across a variety of other spend categories.

Intangible asset amortization

Intangible asset amortization expense increased $2.5 million, or 7.5%, to $36.2 million for fiscal 2022 compared to $33.6 million for fiscal 2021.

The increase in intangible asset amortization is primarily due to the 2021 acquisition of FRE Composites Group.

The increase in intangible asset amortization is primarily driven by the acquisition of definite-lived intangible assets in fiscal 2022.

Interest expense, net

Interest expense, net, decreased $2.2 million, or 6.8% to $30.7 million for fiscal 2022, compared to $32.9 million for fiscal 2021.

The decrease is primarily due to a lower average principal balance in fiscal 2021 from which interest expense was derived.

See Note 13, “Debt” to the accompanying consolidated financial statements included elsewhere in this Annual Report.

Other income, net

Other (income) and expense, net

Other income, net increased $17.7 million to $0.5 million for fiscal 2022, compared to income of $18.2 million for fiscal 2021.

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Income tax expense increased $98.0 million to $290.2 million, compared to $192.1 million for fiscal 2021.

The Company's income tax rate remained consistent at 24.6% for fiscal 2021, compared to 24.6% for fiscal 2020.

The increase in tax expense is due to higher income before taxes.

The Company's income tax rate decreased to 24.1% for fiscal 2022, compared to 24.6% for fiscal 2021.

The increase in income tax expense is due to higher income before taxes, while the decrease in effective tax rate was primarily due to a decrease in state income taxes.

See Note 7, “Income Taxes” to the accompanying consolidated financial statements included elsewhere in this Annual Report.

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Adjusted EBITDA Margin 42.3 % 39.1 %

Volume (3.1) %

Average selling prices 35.2 %

Foreign exchange 1.5 %

Acquisitions 3.5 %

Other (0.7) %

Net sales 34.9 %

Net sales increased by $780.5 million, or 34.9%, to $3,013.8 million for fiscal 2022 compared to $2,233.3 million for fiscal 2021.

The increase in net sales is primarily attributed to increased average selling prices of $817.4 million, which were mostly driven by the plastic pipe and conduit and the metal electrical conduit and fittings product categories, increased sales volume across most product categories and increased net sales of $78.8 million from the acquisitions of Queen City Plastics and FRE Composites Group.

These increases were partially offset by decreased sales volume of $67.4 million.

Pricing for PVC products, as well as other products, has begun to decline from historic highs.

Adjusted EBITDA

Adjusted EBITDA increased $399.5 million, or 45.7%, to $1,273.4 million for fiscal 2022 compared to $873.9 million for fiscal 2021.

The increase in Adjusted EBITDA was largely due to the increase in sales volume and average selling prices discussed above.

The increase in Adjusted EBITDA was largely due to the increase in average selling prices and acquisitions offset by volume declines as discussed above.

Safety & Infrastructure

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Adjusted EBITDA Margin 15.4 % 11.7 %

Volume (4.1) %

Average selling prices 29.9 %

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Net sales increased $202.3 million, or 29.0%, to $900.6 million for fiscal 2022 compared to $698.3 million for fiscal 2021.

The increase is primarily attributed to increased average selling prices of $160.4 million primarily driven by higher input costs of steel as well as increases in sales volumes across most product categories.

The increase is primarily attributed to increased average selling prices of $207.4 million and increased net sales of $18.4 million from companies acquired during fiscal 2022, partially offset by lower volumes of $27.3 million across various steel product categories.

Adjusted EBITDA

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Liquidity and Capital Resources

On November 17, 2023, we announced that our board of directors approved a quarterly dividend program under which the Company intends to pay quarterly cash dividends on our common stock.

The quarterly dividend program and the subsequent consideration, declaration and payment of each quarterly cash dividend will be subject to our board’s approval.

Our board of directors retain the power to modify, suspend, or cancel the dividend program in any manner and at any time that our board may deem necessary or appropriate.

We believe we have sufficient liquidity to support our ongoing operations and to invest in future growth and create value for stockholders.

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Capital expenditures have historically been necessary to expand and update the production capacity and improve the productivity of our manufacturing operations and IT initiatives aimed to facilitate the ease of doing business with Atkore.

During fiscal 2022, we made an investment of $24.4 million in new mills for our Hobart, Indiana facility.

Additionally, we purchased new land and buildings for $34.2 million in Dallas, Texas to expand our operations.

In FY23, $142.7 million was spent on equipment related to growth initiatives in solar, plastics and regional services centers.

We have purchase commitments of $127.8 million and $3.8 million for the years 2023 and 2024, which represent purchases of raw materials in the normal course of business for which all significant terms have been confirmed.

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Limitations on Distributions and Dividends by Subsidiaries

AI, AII, and AIH are each holding companies, and as such have no independent operations or material assets other than ownership of equity interests in their respective subsidiaries.

AI and AII are each holding companies, and as such have no independent operations or material assets other than ownership of equity interests in their respective subsidiaries.

Each company depends on its respective subsidiaries to distribute funds to them so that they may pay obligations and expenses, including satisfying obligations with respect to indebtedness.

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Further, AII's subsidiaries are permitted under the terms of the Credit Facilities to incur additional indebtedness that may restrict or prohibit the making of distributions, the payment of dividends or the making of loans by such subsidiaries to AII and, in turn, to us.

The Senior Secured Term Loan Facility requires AII to meet a certain consolidated coverage ratio on an incurrence basis in connection with additional indebtedness.

The New Senior Secured Term Loan Facility requires AII to meet a certain consolidated coverage ratio on an incurrence basis in connection with additional indebtedness.

The ABL Credit Facility contains limits on additional indebtedness based on various conditions for incurring the additional debt.

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During fiscal 2023, operating activities provided $807.6 million of cash, compared to $786.8 million during fiscal year 2022.

The $213.9 million increase was primarily driven by improved operating income of $434.9 million year over year and was partially offset by increased tax impacts of $224.8 million, with cash used in working capital relatively flat year over year.

Cash provided by operating activities increased by $20.8 million primarily driven by less cash used in working capital of $105.8 million, tax impacts of $229.3 million and partially offset by lower operating income of $340.3 million.

Investing activities

During fiscal 2023, we used $302.2 million of cash for investing activities compared to $442.8 million during fiscal 2022.

The $344.8 million increase in cash used by investing activities was primarily driven by $264.6 million in increased cash used for acquisitions in fiscal 2022 over the prior year as well as increased capital expenditures of $71.3 million, which includes the purchase of facilities in Dallas, Texas.

The $140.7 million decrease in cash used by investing activities was primarily driven by $224.4 million in decreased cash used for acquisitions in fiscal 2022, partially offset by increased capital expenditures of $83.1 million.

Financing Activities

During fiscal 2023, we used $506.8 million for financing activities compared to $524.2 million during fiscal 2022.

Cash used for financing activities during fiscal 2022 was primarily driven by repurchases of shares of $500.2 million as compared to $135.1 million of share repurchases in fiscal 2021.

The decrease in cash used for financing activities during fiscal 2023 was primarily driven by repurchases of shares of $491.0 million in fiscal 2023 as compared to $500.2 million of share repurchases in fiscal 2022.

The table below summarizes cash flow information derived from our statements of cash flows for the fiscal years ended September 30, 2022 and September 30, 2021.

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During fiscal 2022, operating activities provided $786.8 million of cash, compared to $572.9 million during fiscal year 2021.

The $324.1 million increase was primarily driven by improved operating income of $559.4 million year over year was partially offset by an increase of $137.7 million in net working capital balances.

Investing activities

During fiscal 2022, we used $442.8 million of cash for investing activities compared to $98.0 million during fiscal 2021.

The $70.4 million increase in cash used by investing activities was primarily driven by $43.2 million in cash used for acquisitions in fiscal 2021 as well as increased capital expenditures of $30.7 million primarily driven by additional investments in productivity and digital initiatives.

Financing Activities

During fiscal 2022, we used $524.2 million for financing activities compared to $184.5 million during fiscal 2021.

Cash used for financing activities during fiscal 2021 was primarily driven by payments of debt of $839.1 million and repurchases of shares of $135.1 million offset by proceeds from the issuance of debt of $798.0 million.

For additional discussion of the debt transactions, see Note 13, “Debt” to the accompanying consolidated financial statements included elsewhere in this Annual Report.

Cash used for financing activities during fiscal 2022 was primarily driven by repurchases of shares of $500.2 million as compared to $135.1 million of share repurchases in fiscal 2021.

Critical Accounting Estimates

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Valuations related to tax accruals and assets can be impacted by changes in accounting regulations, changes in tax codes and rulings, changes in statutory tax rates, and changes in our forecasted future taxable income.

Any reduction in future taxable income, including but not limited to any future restructuring activities, may require that we record an additional valuation allowance against our deferred tax assets.

Any reduction in future taxable income, including but not limited to any future

restructuring activities, may require that we record an additional valuation allowance against our deferred tax assets.

An increase in the valuation allowance could result in additional income tax expense in such period and could have a significant impact on our future earnings.

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The Discount Rate is developed using market observable inputs, as well as considering whether or not there is a measure of risk related to the specific reporting unit’s forecasted performance.

The key uncertainties in these calculations are the assumptions used in determining the reporting unit’s forecasted future performance, including revenue growth and EBITDA margins, as well as the perceived risk associated with those forecasts.

with those forecasts.

Fair value under the guideline public company method is determined for each reporting unit by applying market multiples for comparable public companies to the reporting unit’s financial results.

Fair value under the comparable transaction method is determined based on exchange

prices in actual transactions and on asking prices for controlling interests in public or private companies currently offered for sale by applying market multiples for comparable public companies to the unit’s financial results.

Fair value under the comparable transaction method is determined based on exchange prices in actual transactions and on asking prices for controlling interests in public or private companies currently offered for sale by applying market multiples for comparable public companies to the unit’s financial results.

The key uncertainties in the guideline public company method and the comparable transaction method calculations are the assumptions used in determining the reporting unit's comparable public companies, comparable transactions and the selection of the market multiples.

The Company did not record any goodwill impairments in fiscal 2022 or 2021.

As of September 30, 2022, the fair values of the reporting units exceeded their respective carrying amount by 10% or more.

In 2023, as a result of the Company’s plan to exit operations in Russia and expectation to sell the related business at a loss, the Company recognized a $1.7 million goodwill impairment on the related reporting unit on a relative fair value basis.

Excluding the goodwill impairment on the Company’s Russia business, as of September 30, 2023, the fair values of the reporting units exceeded their respective carrying amount by 10% or more.

A 10% decrease in the discounted cash flows utilized in quantitative impairment assessment for each of the reporting units would not have changed our determination that the fair value of each reporting unit was in excess of its carrying value.

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Special Note Regarding Forward-Looking Statements and Information

This Annual Report on Form 10-K contains forward-looking statements and cautionary statements within the meaning of the Private Securities Litigation Reform Act of 1995 that are based on

management's beliefs and assumptions and information currently available to management.

This Annual Report on Form 10-K contains forward-looking statements and cautionary statements within the meaning of the Private Securities Litigation Reform Act of 1995 that are based on management's beliefs and assumptions and information currently available to management.

Some of the forward-looking statements can be identified by the use of forward-looking terms such as “believes,” “expects,” “may,” “will,” “shall,” “should,” “would,” “could,” “seeks,” “aims,” “projects,” “is optimistic,” “intends,” “plans,” “estimates,” “anticipates” or other comparable terms.

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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-K

Item 7. Management’s Discussion and Analysis