What changed in this filing

/stocks — the workspaceLOADING

Item 2. Management’s Discussion and Analysis

2023-02-07 compared with 2022-11-08 · 98 added, 101 removed, 234 unchanged (46% of the section changed)

15 unchanged sentences

In August 2022, our Board of Directors authorized the repurchase of up to $300 million of Haemonetics common stock from time to time, based on market conditions, over the next three years.

Subsequent to our announcement of the share repurchase program, in August 2022, the Company entered into an accelerated share repurchase agreement (“ASR”) with Citibank N.A.

(“Citibank”) to repurchase $75.0 million of the Company's common stock.

Pursuant to the terms of the ASR, we paid Citibank $75.0 million in cash and received an initial delivery of 0.8 million shares of the Company's common stock based on a closing market price on the New York Stock Exchange on August 16, 2022 of $76.32.

This initial delivery of shares represented approximately 80% of the notional amount of the ASR.

The ASR was completed in November 2022 and approximately 0.2 million additional shares were delivered upon settlement.

As of October 1, 2022, the total remaining authorization for repurchase of the Company’s common stock was $225 million.

In November 2022, the Company completed a $75.0 million repurchase of its common stock pursuant to an accelerated share repurchase agreement (“ASR”) entered into with Citibank N.A.

(“Citibank”) in August 2022.

The total number of shares repurchased under the ASR was 1.0 million at an average price per share upon final settlement of $75.20.

As of December 31, 2022, the total remaining authorization for repurchase of the Company’s common stock was $225 million.

Debt Issuance and Repayment

8 unchanged sentences

The majority of charges will result in cash outlays, including severance and other employee costs, and will be incurred as the specific actions required to execute these initiatives are identified and approved.

During the three and six months ended October 1, 2022 , the Company incurred $3.1 million and $6.6 million , respectively, of restructuring and restructuring related costs under this program.

Total cumulative charges under this program are $62.3 million as of October 1, 2022.

During the three and nine months ended December 31, 2022, the Company incurred $4.1 million and $10.7 million, respectively, of restructuring and restructuring related costs under this program.

Total cumulative charges under this program are $66.4 million as of December 31, 2022.

Financial Summary

Three Months Ended Six Months Ended

(In thousands, except per share data) October 1,

2022 October 2,

2021 % Increase October 1,

2022 October 2,

2021 % Increase

Three Months Ended Nine Months Ended

(In thousands, except per share data) December 31,

2022 January 1,

2022 % Increase/ (Decrease) December 31,

2022 January 1,

2022 % Increase/ (Decrease)

Net revenues $ 305,301 $ 259,769 17.5 % $ 864,244 $ 728,194 18.7 %

12 unchanged sentences

Net income per share - diluted $ 0.64 $ 0.45 42.2 % $ 1.67 $ 0.65 156.9 %

Net reven ues increased 24.0% and 19.3% during the three and six months ended October 1, 2022, respectively, as compared with the same periods of fiscal 2022.

Without the effect of foreign exchange, net revenues increased 27.0% and 21.9% during the three and six months ended October 1, 2022, respectively, as co mpared with the same periods of fiscal 2022.

Revenue increases in our Plasma and Hospital businesses, primarily related to volume and price, drove the overall increase in revenue during the three and six months ended October 1, 2022.

Operating income increased during the three and six months ended October 1, 2022 as compared with the same period of fiscal 2022, primarily due to increased revenues in Plasma and Hospital, savings from the 2020 Program and decreased spending on acquisitions in the current year periods, partially offset by lower revenues in Blood Center, increased freight costs in our global supply chain, increased sales and marketing expense and higher performance-based compensation.

Net revenues increased 17.5% and 18.7% during the three and nine months ended December 31, 2022, respectively, as compared with the same periods of fiscal 2022.

Without the effect of foreign exchange, net revenues increased 20.8% and 21.5% during the three and nine months ended December 31, 2022, respectively, as compared with the same periods of fiscal 2022.

Revenue increases in our Plasma and Hospital businesses, primarily related to volume and price, drove the overall increase in revenue during the three and nine months ended December 31, 2022.

Operating income increased during the three and nine months ended December 31, 2022 as compared with the same period of fiscal 2022, primarily due to increased revenues in Plasma and Hospital, savings from the 2020 Program and decreased spending on acquisitions in the current year periods, partially offset by lower revenues in Blood Center, increased freight costs in our global supply chain, increased sales and marketing expense and higher performance-based compensation.

Management’s Use of Non-GAAP Measures

7 unchanged sentences

Three Months Ended

(In thousands) October 1,

2022 October 2,

(In thousands) December 31,

2022 January 1,

2022 Reported growth Currency impact Constant currency growth (1)

4 unchanged sentences

See “ Management’s Use of Non-GAAP Measures.

Six Months Ended

(In thousands) October 1,

2022 October 2,

Nine Months Ended

(In thousands) December 31,

2022 January 1,

2022 Reported growth Currency impact Constant currency growth (1)

6 unchanged sentences

Our products are marketed in approximately 90 countries around the world through a combination of our direct sales force, independent distributors and agents.

During the three and six months ended October 1, 2022 our revenue generated outside the U.S .

was 28.8% and 29.6% of total net revenues, respectively, as compared with 36.6% and 37.4% during the three and six months ended October 2, 2021, respectively.

During the three and nine months ended December 31, 2022 our revenue generated outside the U.S.

was 26.6% and 28.5% of total net revenues, respectively, as compared with 35.6% and 36.8% during the three and nine months ended January 1, 2022, respectively.

International sales are generally conducted in local currencies, primarily Japanese Yen, Euro, Chinese Yuan and Australian Dollars.

4 unchanged sentences

Three Months Ended

(In thousands) October 1,

2022 October 2,

(In thousands) December 31,

2022 January 1,

2022 Reported growth Currency impact Constant currency growth (1)

6 unchanged sentences

See “ Management’s Use of Non-GAAP Measures.

(2) Hospital revenue includes Hemostasis Management revenue of $34.3 million and $31.5 million during the three months ended October 1, 2022 and October 2, 2021, respectivel y.

Hemostasis Management revenue increased 8.9% in the second quarter of fiscal 2023, as compared with the same period of fiscal 2022.

Without the effect of foreign exchange, Hemostasis Management revenue increased 11.2% in the second quarter of fiscal 2023, as compared with the same period of fiscal 2022.

Vascular Closure revenue increased 42.1% in the second quarter of fiscal 2023 as compared with the same period of fiscal 2022.

Six Months Ended

(In thousands) October 1,

2022 October 2,

(2) Hospital revenue includes Hemostasis Management revenue of $34.9 million and $33.5 million during the three months ended December 31, 2022 and January 1, 2022, respectively.

Hemostasis Management revenue increased 4.2% in the third quarter of fiscal 2023, as compared with the same period of fiscal 2022.

Without the effect of foreign exchange, Hemostasis Management revenue increased 7.3% in the third quarter of fiscal 2023, as compared with the same period of fiscal 2022.

Vascular Closure revenue increased 32.6% in the third quarter of fiscal 2023 as compared with the same period of fiscal 2022.

Nine Months Ended

(In thousands) December 31,

2022 January 1,

2022 Reported growth Currency impact Constant currency growth (1)

6 unchanged sentences

See “ Management’s Use of Non-GAAP Measures.

(2) Hospital revenue includes Hemostasis Management revenue of $67.8 million and $63.7 million during the six months ended October 1, 2022 and October 2, 2021, respectively.

Hemostasis Management revenue increased 6.5% in the first six months of fiscal 2023, as compared with the same period of fiscal 2022.

Without the effect of foreign exchange, Hemostasis Management revenue increased 8.5% in the first six months of fiscal 2023, as compared with the same period of fiscal 2022.

Vascular Closure revenue increased 38.9% in the first six months of fiscal 2023 as compared with the same period of fiscal 2022.

Plasma revenue increased 56.1% and 49.7% during the three and six months ended October 1, 2022, respectively, as compared with the same periods of fiscal 2022.

Without the effect of foreign exchange, Plasma revenue increased 57.2% and 50.8% during the three and six months ended October 1, 2022, respectively, as compared with the same periods of fiscal 2022.

The increases during the three and six months ended October 1, 2022, as compared with the same period of fiscal 2021 were driven by volume and price.

During the third quarter of fiscal 2022, we amended our supply agreement with CSL Plasma, Ltd.

(“CSL”), which CSL had previously notified us of its intent not to renew and was initially set to expire in June 2022, to allow CSL to continue to use our PCS2 plasma collection system devices and purchase disposable plasmapheresis kits through December 2023.

The extension provides CSL the ability to utilize our devices and disposables in their collection centers on a non-exclusive basis and includes an $88.0 million minimum purchase commitment in fiscal 2023.

Blood Center revenue decreased 4.0% and 6.9% during the three and six months ended October 1, 2022, respectively, as compared with the same periods of fiscal 2022.

Without the effect of foreign exchange, Blood Center revenue increased 0.5% and decreased 3.2% during the three and six months ended October 1, 2022, respectively, as compared with the same periods of fiscal 2022 .

The decreases during the three and six months ended October 1, 2022 as compared with the same periods of fiscal 2022 was primarily driven by a decline in the volume of apheresis disposables.

Hospital revenue increased 19.1% and 15.9% during the three and six months ended October 1, 2022, respectively, as compared with the same periods of fiscal 2022.

Without the effect of foreign exchange, Hospital revenue increased 21.9% and 18.4% during the three and six months ended October 1, 2022, respectively, as compared with the same periods of fiscal 2022.

The increase during the three and six months ended October 1, 2022 was primarily attributable to Vascular Closure revenue, as well as increases in Transfusion Management revenue and TEG disposables revenue.

Three Months Ended Six Months Ended

(In thousands) October 1,

2022 October 2,

2021 % Increase October 1,

2022 October 2,

(2) Hospital revenue includes Hemostasis Management revenue of $102.7 million and $97.2 million during the nine months ended December 31, 2022 and January 1, 2022, respectively.

Hemostasis Management revenue increased 5.7% in the first nine months of fiscal 2023, as compared with the same period of fiscal 2022.

Without the effect of foreign exchange, Hemostasis Management revenue increased 8.1% in the first nine months of fiscal 2023, as compared with the same period of fiscal 2022.

Vascular Closure revenue increased 36.6% in the first nine months of fiscal 2023 as compared with the same period of fiscal 2022.

Plasma revenue increased 40.4% and 46.2% during the three and nine months ended December 31, 2022, respectively, as compared with the same periods of fiscal 2022.

Without the effect of foreign exchange, Plasma revenue increased 41.2% and 47.1% during the three and nine months ended December 31, 2022, respectively, as compared with the same periods of fiscal 2022.

The increases during the three and nine months ended December 31, 2022, as compared with the same period of fiscal 2022 were driven by volume and price.

During the third quarter of fiscal 2022, we amended our supply agreement with CSL Plasma Inc.

During the third quarter of fiscal 2023, we further amended our supply agreement with CSL to extend the term through December 2025.

Blood Center revenue decreased 3.1% and 5.6% during the three and nine months ended December 31, 2022, respectively, as compared with the same periods of fiscal 2022.

Without the effect of foreign exchange, Blood Center revenue increased 3.1% and decreased 1.1% during the three and nine months ended December 31, 2022, respectively, as compared with the same periods of fiscal 2022.

The increase during the three months ended December 31, 2022, as compared to the same period of fiscal 2022 was primarily due to an increase in our whole blood business.

The decrease during the nine months ended December 31, 2022, as compared with the same period of fiscal 2022 was primarily driven by a decline in the volume of apheresis disposables.

Hospital revenue increased 11.3% and 14.3% during the three and nine months ended December 31, 2022, respectively, as compared with the same periods of fiscal 2022.

Without the effect of foreign exchange, Hospital revenue increased 14.4% and 17.0% during the three and nine months ended December 31, 2022, respectively, as compared with the same periods of fiscal 2022.

The increase during the three and nine months ended December 31, 2022 was primarily attributable to Vascular Closure revenue, as well as increases in Hemostasis Management disposables revenue and Transfusion Management revenue.

Three Months Ended Nine Months Ended

(In thousands) December 31,

2022 January 1,

2022 % Increase December 31,

2022 January 1,

2022 % Increase

1 unchanged sentence

% of net revenues 52.0 % 53.3 % 53.1 % 50.7 %

Gross profit increased 28.8% for both the three and six months ended October 1, 2022 as compared with the same periods of fiscal 2022.

Without the effect of foreign exchange, gross profit increased 34.7% and 34.6% during the three and six months ended October 1, 2022, respectively, as compared with the same periods of fiscal 2022.

The increase during the three and six months ended October 1, 2022 was primarily driven by volume and mix and productivity savings from the 2020 Program, partially offset by inflationary pressures in our global manufacturing and supply chain and increased depreciation expense.

Gross profit increased 14.5% and 24.3% for the three and nine months ended December 31, 2022, respectively, as compared with the same periods of fiscal 2022.

Without the effect of foreign exchange, gross profit increased 18.4% and 28.5% during the three and nine months ended December 31, 2022, respectively, as compared with the same periods of fiscal 2022.

The increase during the three and nine months ended December 31, 2022 was primarily driven by volume, price and productivity savings from the 2020 Program, partially offset by inflationary pressures in our global manufacturing and supply chain and increased depreciation expense.

Operating Expenses

Three Months Ended Six Months Ended

(In thousands) October 1,

2022 October 2,

Three Months Ended Nine Months Ended

(In thousands) December 31,

2022 January 1,

2022 % Increase/

(Decrease) October 1,

2022 October 2,

(Decrease) December 31,

2022 January 1,

2022 % Increase/

5 unchanged sentences

% of net revenues 2.6 % 4.7 % 2.9 % 4.9 %

Gains on divestiture $ (382) $ — n/m $ (382) $ (9,603) (96.0) %

Gains on divestiture $ — $ — — % $ (382) $ (9,603) (96.0) %

% of net revenues — % — % — % (1.3) %

2 unchanged sentences

Research and Development

Research and development expenses increased 0.4% and decreased 7.5% during the three and six months ended October 1, 2022, respectively, as compared with the same periods of fiscal 2022.

Without the effect of foreign exchange, research and development expenses increased 0.8% and decreased 6.9% during the three and six months ended October 1, 2022, respectively, as compared with the same periods of fiscal 2022.

This increase for the three months ended October 1, 2022, was due to continued growth investments.

The decrease in the six months ended October 1, 2022, was primarily due to the timing of investments across quarters and cost savings related to the 2020 Program.

Research and development expenses increased 26.4% and 2.7% during the three and nine months ended December 31, 2022, respectively, as compared with the same periods of fiscal 2022.

Without the effect of foreign exchange, research and development expenses increased 26.9% and 3.2% during the three and nine months ended December 31, 2022, respectively, as compared with the same periods of fiscal 2022.

This increase was due to increased investments into product innovation.

Selling, General and Administrative

Sell ing, general and administrative expenses increased 21.9% and 10.6% during the three and six months ended October 1, 2022, respectively, as compared with the same periods of fiscal 2022.

Without the effect of foreign exchange, selling, general, and administrative expenses increased 24.4% an d 12.4% during the three and six months ended October 1, 2022, respectively, as compared with the same periods of fiscal 2022.

The increase during the three and six months ended October 1, 2022 was primarily driven by inflationary pressures and higher freight costs in our global supply chain, higher investments in sales and marketing and higher performance-based compensation, partially offset by cost savings related to the 2020 Program and decreased acquisition related costs in the current year.

Selling, general and administrative expenses increased 17.3% and 12.7% during the three and nine months ended December 31, 2022, respectively, as compared with the same periods of fiscal 2022.

Without the effect of foreign exchange, selling, general, and administrative expenses increased 19.7% and 14.7% during the three and nine months ended December 31, 2022, respectively, as compared with the same periods of fiscal 2022.

The increase during the three and nine months ended December 31, 2022 was primarily driven by inflationary pressures and higher freight costs in our global supply chain, higher investments in sales and marketing and higher performance-based compensation, partially offset by cost savings related to the 2020 Program and decreased acquisition related costs in the current year.

Amortization of Intangible Assets

We recognized amortization expense of $8.2 million and $16.6 million during the three and six months ended October 1, 2022, respectively, and $11.4 million and $23.8 million during the three and six months ended October 2, 2021, respectively.

We recognized amortization expense of $8.1 million and $24.7 million during the three and nine months ended December 31, 2022, respectively, and $12.2 million and $35.9 million during the three and nine months ended January 1, 2022, respectively.

The decrease is primarily the result of intangible assets that became fully amortized during fiscal 2022.

Gains on Divestiture

We recognized gains on divestiture of $0.4 million during the three and six months ended October 1, 2022 and $9.6 million during the six months ended October 2, 2021.

We recognized gains on divestiture of $0.4 million during the nine months ended December 31, 2022 and $9.6 million during the nine months ended January 1, 2022.

Interest and Other Expense, Net

Interest and other expenses increased 23.6% and 21.8% during the three and six months ended October 1, 2022, respectively, as compared with the same period of fiscal 2022.

Without the effects of foreign exchange, interest and other expenses increased 20.7% and 19.5% during the three and six months ended October 1, 2022, respectively, as compared with the same periods of fiscal 2022.

The increase was primarily driven by higher foreign currency impact due to market and rate volatility and higher interest rates which impacted the interest incurred on our term loan.

Interest and other expenses decreased 75.3% and 9.4% during the three and nine months ended December 31, 2022, respectively, as compared with the same period of fiscal 2022.

Without the effects of foreign exchange, interest and other expenses decreased 73.1% and 10.5% during the three and nine months ended December 31, 2022, respectively, as compared with the same periods of fiscal 2022.

The decrease was primarily driven by foreign currency impact due to market and rate volatility, partially offset by higher interest rates which impacted the interest incurred on our term loan.

We conduct business globally and report our results of operations in a number of foreign jurisdictions in addition to the United States.

1 unchanged sentence

statutory tax rate.

For the three and six months ended October 1, 2022, we reported income tax expense of $7.9 million and $13.5 million, respectively, representing effective tax rates of 19.1% and 20.3%, respectively.

The effective tax rate for the six months ended October 1, 2022, include a discrete tax benefit of $0.5 million related to tax rate changes enacted during the quarter and $0.3 million of discrete tax expense relating to stock compensation shortfalls.

The effective tax rate for the three months ended October 1, 2022, include a discrete tax benefit of $0.5 million related to tax rate changes enacted during the quarter and $0.3 million of discrete tax benefit relating to stock compensation windfalls.

For the three and six months ended October 2, 2021, we reported income tax expense of $5.1 million and $6.5 million, respectively, representing effective tax rates of 25.4% and 38.5%, respectively.

The effective tax rate for the three and six months ended October 2, 2021 includes discrete tax expense relating to stock compensation shortfalls of $0.1 million and $0.9 million, respectively.

For the three and nine months ended December 31, 2022, we reported income tax expense of $9.3 million and $22.8 million, respectively, representing effective tax rates of 22.0% and 20.9%, respectively.

The effective tax rate for the three months ended December 31, 2022 includes $0.1 million of discrete tax expense relating to stock compensation shortfalls.

The effective tax rate for the nine months ended December 31, 2022 includes a discrete tax benefit of $0.5 million related to tax rate changes enacted in the period and $0.4 million of discrete tax expense relating to stock compensation shortfalls.

For the three and nine months ended January 1, 2022, we reported income tax expense of $8.2 million and $14.7 million, respectively, representing effective tax rates of 26.0% and 30.4%, respectively.

The effective tax rate for the nine months ended January 1, 2022 includes discrete tax expense relating to stock compensation shortfalls of $0.9 million, with no discrete tax expense relating to stock compensation shortfalls recorded in the three months ended January 1, 2022.

Liquidity and Capital Resources

The following table contains certain key performance indicators we believe depict our liquidity and cash flow position:

(Dollars in thousands) October 1,

(Dollars in thousands) December 31,

2022 April 2,

8 unchanged sentences

We believe these sources are sufficient to fund our cash requirements over at least the next twelve months.

Our expected cash outlays relate primarily to acquisitions, investments, capital expenditures, including enhancements to our North American manufacturing facilities, share repurchases, cash payments under our revised credit agreement and restructuring initiatives.

Our expected cash outlays relate primarily to acquisitions, investments, capital expenditures, including enhancements to our North American manufacturing facilities, share repurchases and cash payments under our revised credit agreement.

In March 2021, the Company issued $500.0 million aggregate principal amount of 0% convertible senior notes due 2026, or the 2026 Notes.

3 unchanged sentences

The 2026 Notes will mature on March 1, 2026, unless earlier converted, redeemed or repurchased.

The 2026 Notes have an effective interest rate of 0.5% as of October 1, 2022.

As of October 1, 2022, we had $241.2 million in cash and cash equivalents, the majority of which is held in the U.S.

The 2026 Notes have an effective interest rate of 0.5% as of December 31, 2022.

As of December 31, 2022, we had $224.0 million in cash and cash equivalents, the majority of which is held in the U.S.

or in countries from which it can be repatriated to the U.S.

7 unchanged sentences

The principal amount of the term loan under the Revised Credit Facilities is repayable quarterly through the maturity date at a rate of 2.5% for the first year and 5% thereafter, with the unpaid balance due at maturity.

As of October 1, 2022, $278.3 million was outstanding under the term loan with an effective interest rate of 4.2%.

There was $50.0 million outstanding under the revolving credit facility at October 1, 2022, which the Company repaid in full in October 2022.

We also had $19.6 million of uncommitted operating lines of credit to fund our global operations under which there were no outstanding borrowings as of October 1, 2022.

Additionally, the Company was in compliance with the leverage and interest coverage ratios specified in the amended and restated credit agreement as well as all other bank covenants as of October 1, 2022.

As of December 31, 2022, $276.5 million was outstanding under the term loan with an effective interest rate of 6.0%.

There were no borrowings outstanding under the revolving credit facility at December 31, 2022.

We also had $21.4 million of uncommitted operating lines of credit to fund our global operations under which there were no outstanding borrowings as of December 31, 2022.

The Company has scheduled principal payments of $1.8 million required during the remainder of fiscal 2023.

2 unchanged sentences

These charges, the majority of which will result in cash outlays, including severance and other employee costs, will be incurred as the specific actions required to execute these initiatives are identified and approved and are expected to be substantially completed by the end of fiscal 2025.

During the three and six months ended October 1, 2022, we incurred $3.1 million and $6.6 million, respectively, of restructuring and restructuring related costs under this program.

Six Months Ended

(In thousands) October 1,

2022 October 2,

During the three and nine months ended December 31, 2022, we incurred $4.1 million and $10.7 million, respectively, of restructuring and restructuring related costs under this program.

Nine Months Ended

(In thousands) December 31,

2022 January 1,

Net cash provided by (used in):

8 unchanged sentences

GAAP, we have removed the effect of foreign currency throughout our cash flow statement, except for its effect on our cash and cash equivalents.

Net cash provided by operating activities increased by $87.3 million during the six months ended October 1, 2022, as compared with the six months ended October 2, 2021.

Net cash provided by operating activities increased by $89.2 million during the nine months ended December 31, 2022, as compared with the nine months ended January 1, 2022.

The increase in cash provided by operating activities was primarily the result of an increase in net income, a decrease in inventories driven by NexSys PCS device placements and higher other net working capital, including higher performance-based compensation.

Net cash used in investing activities increased by $52.9 million during the six months ended October 1, 2022, as compared with the six months ended October 2, 2021.

The increase in cash used in investing activities was primarily the result of an increase in capital expenditures, driven by NexSys PCS device placements, and other investments made in the current year period, which was partially offset by increased sales of property, plant and equipment.

Net cash used in financing activities increased by $44.1 million during the six months ended October 1, 2022, as compared with the six months ended October 2, 2021, primarily due to share repurchases and acquisition-related contingent consideration payments made in the current year, partially offset by the $50.0 million draw down on the revolving credit facility.

Net cash used in investing activities increased by $73.9 million during the nine months ended December 31, 2022, as compared with the nine months ended January 1, 2022.

Net cash used in financing activities increased by $91.8 million during the nine months ended December 31, 2022, as compared with the nine months ended January 1, 2022, primarily due to share repurchases and acquisition-related contingent consideration payments made in the current year.

Concentration of Credit Risk

9 unchanged sentences

If the financial condition of customers or the countries’ healthcare systems deteriorate such that their ability to make payments is uncertain, allowances may be required in future periods.

We experienced rising inflationary pressures in our global supply chain that had an impact on our results of operations during the three and six months ended October 1, 2022.

We experienced rising inflationary pressures in our global supply chain that had an impact on our results of operations during the three and nine months ended December 31, 2022.

We continue to monitor inflationary pressures generally and raw materials indices that may affect our procurement and production costs.

3 unchanged sentences

Foreign Exchange

During the three and six months ended October 1, 2022, 28.8% and 29.6%, respectively, of our sales were generated outside the U.S., generally in foreign currencies, yet our reporting currency is the U.S.

During the three and nine months ended December 31, 2022, 26.6% and 28.5%, respectively, of our sales were generated outside the U.S., generally in foreign currencies, yet our reporting currency is the U.S.

We also incur certain manufacturing, marketing and selling costs in international markets in local currency.

36 unchanged sentences

Risk Factors in our most recent Annual Report on Form 10-K.

variants and mitigating the economic effects of the pandemic, including inflationary pressures and higher freight costs in our global supply chain;

• The effect of the ongoing COVID-19 pandemic, or outbreaks of communicable diseases, on our business, financial conditions and results of operations, including the time it will take for vaccines to be broadly distributed and administered worldwide, and the effectiveness of such vaccines in slowing or stopping the spread of COVID-19 and its variants and mitigating the economic effects of the pandemic, including inflationary pressures and higher freight costs in our global supply chain;

• Failure to achieve our long-term strategic and financial-improvement goals;

28 unchanged sentences

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