H&R BLOCK INC 10-Q

ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS RESULTS OF OPERATIONS Our subsidiaries provide assisted and do-it-yourself (DIY) tax preparation solutions through multiple channels (including in-person, online and mobile applications, virtual, and desktop software) and distribute H&R Block-branded products and services, including those of our bank partners, to the general public primarily in the United States (U.S.), Canada and Australia. Tax returns are either prepared by H&R Block tax professionals (in company-owned or franchise offices, virtually or via an internet review) or prepared and filed by our clients through our DIY tax solutions. We also offer small business solutions through our company-owned and franchise offices and online through Wave. We report a single segment that includes all of our continuing operations. 16 Q2 FY2024 Form 10-Q| H&R Block, Inc. Table of Contents Consolidated – Financial Results (in 000s, except per share amounts) Three months ended December 31, 2023 2022 $ Change % Change Revenues: U.S. tax preparation and related services: Assisted tax preparation $ 48,342 $ 41,216 $ 7,126 17.3 % Royalties 5,454 4,946 508 10.3 % DIY tax preparation 13,111 12,150 961 7.9 % Refund Transfers 813 1,542 (729) (47.3) % Peace of Mind® Extended Service Plan 17,440 17,320 120 0.7 % Tax Identity Shield® 4,694 5,350 (656) (12.3) % Other 9,592 8,513 1,079 12.7 % Total U.S. tax preparation and related services 99,446 91,037 8,409 9.2 % Financial services: Emerald Card® and Spruce SM 11,700 12,478 (778) (6.2) % Interest and fee income on Emerald Advance SM 15,235 12,903 2,332 18.1 % Total financial services 26,935 25,381 1,554 6.1 % International 29,569 28,046 1,523 5.4 % Wave 23,133 21,941 1,192 5.4 % Total revenues $ 179,083 $ 166,405 $ 12,678 7.6 % Compensation and benefits: Field wages 77,795 76,204 (1,591) (2.1) % Other wages 74,671 70,530 (4,141) (5.9) % Benefits and other compensation 36,063 34,277 (1,786) (5.2) % 188,529 181,011 (7,518) (4.2) % Occupancy 101,194 101,173 (21) — % Marketing and advertising 11,305 15,142 3,837 25.3 % Depreciation and amortization 30,107 32,723 2,616 8.0 % Bad debt 21,754 22,416 662 3.0 % Other 93,626 97,143 3,517 3.6 % Total operating expenses 446,515 449,608 3,093 0.7 % Other income (expense), net 5,922 4,185 1,737 41.5 % Interest expense on borrowings (21,364) (18,985) (2,379) (12.5) % Pretax loss (282,874) (298,003) 15,129 5.1 % Income tax benefit (93,758) (77,140) 16,618 21.5 % Net loss from continuing operations (189,116) (220,863) 31,747 14.4 % Net loss from discontinued operations (639) (2,716) 2,077 76.5 % Net loss $ (189,755) $ (223,579) $ 33,824 15.1 % BASIC AND DILUTED LOSS PER SHARE: Continuing operations $ (1.33) $ (1.43) $ 0.10 7.0 % Discontinued operations — (0.02) 0.02 ** Consolidated $ (1.33) $ (1.45) $ 0.12 8.3 % Adjusted diluted EPS (1) $ (1.27) $ (1.37) $ 0.10 7.3 % EBITDA (1) $ (231,403) $ (246,295) $ 14,892 6.0 % (1) All non-GAAP measures are results from continuing operations. See " Non-GAAP Financial Information " at the end of this item for a reconciliation of non-GAAP measures. H&R Block, Inc. |Q2 FY2024 Form 10-Q 17 Table of Contents Three months ended December 31, 2023 compared to December 31, 2022 Revenues increased $12.7 million, or 7.6%, from the prior year. U.S. assisted tax preparation revenues increased $7.1 million, or 17.3%, due to higher volumes and a higher net average charge in the current year. Other revenues increased $1.1 million, or 12.7%, primarily due to higher extension filing and bookkeeping fees. Interest and fee income on Emerald Advance SM (EA) increased $2.3 million, or 18.1%, due to an increase in EA Loans and an earlier start to the offering period in the current year. International revenues increased $1.5 million, or 5.4%, primarily due to higher tax return volumes in Australia. Wave revenues increased $1.2 million, or 5.4%, due to higher small business payments processing volumes. Total operating expenses decreased $3.1 million, or 0.7%, from the prior year. Other wages increased $4.1 million, or 5.9%, primarily due to higher corporate wages from higher headcount in the current year. Marketing and advertising expense decreased $3.8 million, or 25.3%, primarily due to vendor refunds for expired customer incentives. Depreciation and amortization expense decreased $2.6 million, or 8.0%, primarily due to lower amortization of capitalized software. Other operating expenses decreased $3.5 million, or 3.6%. The components of other expenses are as follows: (in 000s) Three months ended December 31, 2023 2022 $ Change % Change Consulting and outsourced services $ 16,267 $ 22,452 $ 6,185 27.5 % Bank partner fees (1,113) (778) 335 43.1 % Client claims and refunds 3,107 5,445 2,338 42.9 % Employee and travel expenses 12,375 14,701 2,326 15.8 % Technology-related expenses 27,261 24,489 (2,772) (11.3) % Credit card/bank charges 17,768 17,322 (446) (2.6) % Insurance 2,076 (349) (2,425) ** Legal fees and settlements 5,421 2,184 (3,237) (148.2) % Supplies 4,355 3,940 (415) (10.5) % Other 6,109 7,737 1,628 21.0 % $ 93,626 $ 97,143 $ 3,517 3.6 % Consulting and outsourced services expense decreased $6.2 million, or 27.5%, primarily due to lower contract labor in the current year. Technology-related expenses increased $2.8 million, or 11.3%, due to higher costs of technology in the current year. Legal fees and settlements expense increased $3.2 million, or 148.2%, primarily due to higher legal settlements in the current year. We recorded an income tax benefit of $93.8 million in the current year compared to $77.1 million in the prior year. The effective tax rate for the three months ended December 31, 2023, and 2022 was 33.1% and 25.9%, respectively. 18 Q2 FY2024 Form 10-Q| H&R Block, Inc. Table of Contents Consolidated - Financial Results (in 000s, except per share amounts) Six months ended December 31, 2023 2022 $ Change % Change Revenues: U.S. tax preparation and related services: Assisted tax preparation $ 87,605 $ 77,528 $ 10,077 13.0 % Royalties 11,155 11,174 (19) (0.2) % DIY tax preparation 16,959 15,308 1,651 10.8 % Refund Transfers 1,955 2,826 (871) (30.8) % Peace of Mind® Extended Service Plan 42,287 42,090 197 0.5 % Tax Identity Shield® 9,274 10,517 (1,243) (11.8) % Other 20,572 17,873 2,699 15.1 % Total U.S. tax preparation and related services 189,807 177,316 12,491 7.0 % Financial services: Emerald Card® and Spruce SM 20,333 24,090 (3,757) (15.6) % Interest and fee income on Emerald Advance SM 15,533 13,517 2,016 14.9 % Total financial services 35,866 37,607 (1,741) (4.6) % International 90,134 86,880 3,254 3.7 % Wave 47,076 44,587 2,489 5.6 % Total revenues $ 362,883 $ 346,390 $ 16,493 4.8 % Compensation and benefits: Field wages 140,230 137,877 (2,353) (1.7) % Other wages 146,769 134,283 (12,486) (9.3) % Benefits and other compensation 71,311 69,109 (2,202) (3.2) % 358,310 341,269 (17,041) (5.0) % Occupancy 200,479 198,763 (1,716) (0.9) % Marketing and advertising 16,786 25,791 9,005 34.9 % Depreciation and amortization 60,332 66,347 6,015 9.1 % Bad debt 26,552 22,745 (3,807) (16.7) % Other 174,182 183,789 9,607 5.2 % Total operating expenses 836,641 838,704 2,063 0.2 % Other income (expense), net 15,758 7,796 7,962 102.1 % Interest expense on borrowings (37,234) (34,809) (2,425) (7.0) % Pretax loss (495,234) (519,327) 24,093 4.6 % Income tax benefit (143,245) (131,097) 12,148 9.3 % Net loss from continuing operations (351,989) (388,230) 36,241 9.3 % Net loss from discontinued operations (1,248) (3,770) 2,522 66.9 % Net loss $ (353,237) $ (392,000) $ 38,763 9.9 % BASIC AND DILUTED LOSS PER SHARE: Continuing operations $ (2.44) $ (2.48) $ 0.04 1.6 % Discontinued operations (0.01) (0.02) 0.01 50.0 % Consolidated $ (2.45) $ (2.50) $ 0.05 2.0 % Adjusted diluted EPS (1) $ (2.31) $ (2.36) $ 0.05 2.1 % EBITDA (1) $ (397,668) $ (418,171) $ 20,503 4.9 % (1) All non-GAAP measures are results from continuing operations. See " Non-GAAP Financial Information " at the end of this item for a reconciliation of non-GAAP measures. H&R Block, Inc. |Q2 FY2024 Form 10-Q 19 Table of Contents Six months ended December 31, 2023 compared to December 31, 2022 Revenues increased $16.5 million, or 4.8%, from the prior year. U.S. assisted tax preparation revenues increased $10.1 million, or 13.0%, due to a higher net average charge and higher volumes in the current year. Other revenues increased $2.7 million, or 15.1%, primarily due to higher extension filing and bookkeeping fees. Emerald Card® and Spruce SM revenues decreased $3.8 million, or 15.6%, due to lower Emerald Card® activity in the current year as a result of less funds being loaded on the cards. Interest and fee income on Emerald Advance SM increased $2.0 million, or 14.9%, due to an increase in EA Loans and an earlier start to the offering period in the current year. International revenues increased $3.3 million, or 3.7%, primarily due to higher tax return volumes in Australia. Wave revenues increased $2.5 million, or 5.6%, due to higher small business payments processing volumes. Total operating expenses decreased $2.1 million, or 0.2%, from the prior year period. Other wages increased $12.5 million, or 9.3%, primarily due to higher corporate wages from higher headcount in the current year. Marketing and advertising expense decreased $9.0 million, or 34.9%, primarily due to vendor refunds for expired customer incentives. Depreciation and amortization expense decreased $6.0 million, or 9.1%, primarily due to lower amortization of capitalized software. Bad debt expense increased $3.8 million, or 16.7%, due to an increase in EA loans compared to the prior year. Other operating expenses decreased $9.6 million, or 5.2%. The components of other expenses are as follows: (in 000s) Six months ended December 31, 2023 2022 $ Change % Change Consulting and outsourced services $ 29,401 $ 40,505 $ 11,104 27.4 % Bank partner fees (1,065) (797) 268 33.6 % Client claims and refunds 9,346 12,215 2,869 23.5 % Employee and travel expenses 18,061 20,769 2,708 13.0 % Technology-related expenses 50,339 50,404 65 0.1 % Credit card/bank charges 34,937 33,523 (1,414) (4.2) % Insurance 5,426 3,369 (2,057) (61.1) % Legal fees and settlements 8,429 4,470 (3,959) (88.6) % Supplies 7,118 7,335 217 3.0 % Other 12,190 11,996 (194) (1.6) % $ 174,182 $ 183,789 $ 9,607 5.2 % Consulting and outsourced services expense decreased $11.1 million, or 27.4%, due to lower contract labor and call center expenses in the current year. Legal fees and settlements expense increased $4.0 million, or 88.6%, primarily due to higher legal settlements in the current year. Other income (expense), net increased $8.0 million, or 102.1%, due to higher interest income in the current year. We recorded an income tax benefit of $143.2 million in the current year compared to $131.1 million in the prior year. The effective tax rate for the six months ended December 31, 2023, and 2022 was 28.9% and 25.2%, respectively. See Item 1, note 7 to the consolidated financial statements for additional discussion. FINANCIAL CONDITION These comments should be read in conjunction with the consolidated balance sheets and consolidated statements of cash flows included in Part 1, Item 1 . 20 Q2 FY2024 Form 10-Q| H&R Block, Inc. Table of Contents CAPITAL RESOURCES AND LIQUIDITY – OVERVIEW – Our primary sources of capital and liquidity include cash from operations (including changes in working capital), draws on our unsecured committed line of credit (CLOC), and issuances of debt. We use our sources of liquidity primarily to fund working capital, service and repay debt, pay dividends, repurchase shares of our common stock, and acquire businesses. Our operations are highly seasonal and substantially all of our revenues and cash flow are generated during the period from February through April in a typical year. Therefore, we normally require the use of cash to fund losses and working capital needs, periodically resulting in a working capital deficit, during the months of May through January. We typically have relied on available cash balances from the prior tax season and borrowings to meet liquidity needs. Given the likely availability of a number of liquidity options discussed herein, we believe that, in the absence of any unexpected developments, our existing sources of capital as of December 31, 2023 are sufficient to meet our operating, investing and financing needs. DISCUSSION OF CONSOLIDATED STATEMENTS OF CASH FLOWS – The following table summarizes our statements of cash flows for the six months ended December 31, 2023 and 2022. See Item 1 for the complete consolidated statements of cash flows for these periods. (in 000s) Six months ended December 31, 2023 2022 Net cash provided by (used in): Operating activities $ (942,166) $ (780,458) Investing activities (71,045) (99,090) Financing activities 335,448 128,813 Effects of exchange rates on cash 671 (7,790) Net decrease in cash and cash equivalents, including restricted balances $ (677,092) $ (758,525) Operating Activities. Cash used in operations totaled $942.2 million for the six months ended December 31, 2023 compared to $780.5 million in the prior year period. The change is primarily due to the receipt of income tax receivables in the prior year and higher EA receivables in the current year, partially offset by lower bonus and payroll tax payments in the current year. Investing Activities. Cash used in investing activities totaled $71.0 million for the six months ended December 31, 2023 compared to $99.1 million in the prior year period. The change is primarily due to lower payments to acquire businesses and capital expenditures in the current year. Financing Activities. Cash provided by financing activities totaled $335.4 million for the six months ended December 31, 2023 compared to $128.8 million in the prior year period. The change is primarily due to borrowings on our CLOC in the current year. CASH REQUIREMENTS – Dividends and Share Repurchases. Returning capital to shareholders in the form of dividends and the repurchase of outstanding shares is, and has historically been, a significant component of our capital allocation plan. We have consistently paid quarterly dividends. Dividends paid totaled $89.9 million and $89.2 million for the six months ended December 31, 2023 and 2022, respectively. Although we have historically paid dividends and plan to continue to do so, there can be no assurances that circumstances will not change in the future that could affect our ability or decisions to pay dividends. During the six months ended December 31, 2023, we repurchased $350.1 million of our common stock at an average price of $43.66 per share, excluding excise taxes in connection with such repurchases. In the prior year period, we repurchased $350.1 million of our common stock at an average price of $42.86 per share. Our current share repurchase program has remaining authorization of $350.0 million, which is effective through June 2025. H&R Block, Inc. |Q2 FY2024 Form 10-Q 21 Table of Contents Share repurchases may be effectuated through open market transactions, some of which may be effectuated under SEC Rule 10b5-1. The Company may cancel, suspend, or extend the period for the purchase of shares at any time. Any repurchases will be funded primarily through available cash and cash from operations. Although we may continue to repurchase shares, there is no assurance that we will purchase up to the full Board authorization. Capital Investment. Capital expenditures totaled $32.7 million and $41.5 million for the six months ended December 31, 2023 and 2022, respectively. Our capital expenditures relate primarily to recurring improvements to retail offices, as well as investments in computers, software and related assets. In addition to our capital expenditures, we also made payments to acquire businesses. We acquired franchisee and competitor businesses totaling $27.2 million and $39.8 million during the six months ended December 31, 2023 and 2022, respectively. See Item 1, note 5 for additional information on our acquisitions. FINANCING RESOURCES – The CLOC has capacity up to $1.5 billion and is scheduled to expire in June 2026. Proceeds under the CLOC may be used for working capital needs or for other general corporate purposes. We had an outst anding balance of $800.0 million under our CLOC and amounts available to borrow were not limited by the debt-to-EBITDA covenant as of December 31, 2023. The following table provides ratings for debt issued by Block Financial LLC (Block Financial) as of December 31, 2023 and June 30, 2023: As of December 31, 2023 June 30, 2023 Short-term Long-term Outlook Short-term Long-term Outlook Moody's P-3 Baa3 Stable P-3 Baa3 Positive S&P A-2 BBB Stable A-2 BBB Stable Other than described above, there have been no material changes in our borrowings from those reported as of June 30, 2023 in our Annual Report on Form 10-K. CASH AND OTHER ASSETS – As of December 31, 2023, we held cash and cash equivalents, excluding restricted amounts, of $321.0 million, including $140.0 million held by our foreign subsidiaries. Foreign Operations. Seasonal borrowing needs of our Canadian operations are typically funded by our U.S. operations. To mitigate foreign currency risk, we sometimes enter into foreign exchange forward contracts. There were no forward contracts outstanding as of December 31, 2023. We do not currently intend to repatriate non-borrowed funds held by our foreign subsidiaries in a manner that would trigger a material tax liability. The impact of changes in foreign exchange rates during the period on our international cash balances resulted in an increase of $0.7 million during the six months ended December 31, 2023 and a decrease of $7.8 million during the six months ended December 31, 2022. CONTRACTUAL OBLIGATIONS AND COMMERCIAL COMMITMENTS – EAs are originated by Pathward. We purchase a 90% participation interest, at par, in all EAs originated by Pathward in accordance with our participation agreement. Effective October 20, 2023, we amended the Program Management Agreement and entered into a new participation agreement related to EAs originated by Pathward. We purchased participation interests of $341.8 million during the six months ended December 31, 2023. There have been no other material changes in our contractual obligations and commercial commitments from those reported in our June 30, 2023 Annual Report on Form 10-K. SUMMARIZED GUARANTOR FINANCIAL STATEMENTS – Block Financial is a 100% owned subsidiary of H&R Block, Inc. Block Financial is the Issuer and H&R Block, Inc. is the full and unconditional Guarantor of our Senior Notes, CLOC and other indebtedness issued from time to time. 22 Q2 FY2024 Form 10-Q| H&R Block, Inc. Table of Contents The following table presents summarized financial information for H&R Block, Inc. (Guarantor) and Block Financial (Issuer) on a combined basis after intercompany eliminations and excludes investments in and equity earnings in non-guarantor subsidiaries. SUMMARIZED BALANCE SHEET - GUARANTOR AND ISSUER (in 000s) As of December 31, 2023 June 30, 2023 Current assets $ 380,296 $ 37,407 Noncurrent assets 2,189,621 1,725,234 Current liabilities 81,405 78,259 Noncurrent liabilities 2,291,912 1,494,010 SUMMARIZED STATEMENTS OF OPERATIONS - GUARANTOR AND ISSUER (in 000s) Six months ended December 31, 2023 Twelve months ended June 30, 2023 Total revenues $ 38,176 $ 160,236 Income from continuing operations before income taxes 5,580 40,258 Net income from continuing operations 4,242 31,713 Net income 2,994 23,613 The table above reflects $2.1 billion and $1.7 billion of non-current intercompany receivables due to the Issuer from non-guarantor subsidiaries as of December 31, 2023 and June 30, 2023, respectively. REGULATORY ENVIRONMENT There have been no material changes in our regulatory environment from what was reported in our June 30, 2023 Annual Report on Form 10-K. NON-GAAP FINANCIAL INFORMATION Non-GAAP financial measures should not be considered as a substitute for, or superior to, measures of financial performance prepared in accordance with U.S. generally accepted accounting principles (GAAP). Because these measures are not measures of financial performance under GAAP and are susceptible to varying calculations, they may not be comparable to similarly titled measures for other companies. We consider our non-GAAP financial measures to be performance measures and a useful metric for management and investors to evaluate and compare the ongoing operating performance of our business. We make adjustments for certain non-GAAP financial measures related to amortization of intangibles from acquisitions and goodwill impairments. We may consider whether other significant items that arise in the future should be excluded from our non-GAAP financial measures. We measure the performance of our business using a variety of metrics, including earnings before interest, taxes, depreciation and amortization (EBITDA) from continuing operations, adjusted EBITDA from continuing operations, adjusted diluted earnings per share from continuing operations, free cash flow and free cash flow yield. We also use EBITDA from continuing operations and pretax income of continuing operations, each subject to permitted adjustments, as performance metrics in incentive compensation calculations for our employees. H&R Block, Inc. |Q2 FY2024 Form 10-Q 23 Table of Contents The following is a reconciliation of net loss to EBITDA from continuing operations, which is a non-GAAP financial measure: (in 000s) Three months ended December 31, Six months ended December 31, 2023 2022 2023 2022 Net loss - as reported $ (189,755) $ (223,579) $ (353,237) $ (392,000) Discontinued operations, net 639 2,716 1,248 3,770 Net loss from continuing operations - as reported (189,116) (220,863) (351,989) (388,230) Add back: Income tax benefit (93,758) (77,140) (143,245) (131,097) Interest expense 21,364 18,985 37,234 34,809 Depreciation and amortization 30,107 32,723 60,332 66,347 (42,287) (25,432) (45,679) (29,941) EBITDA from continuing operations $ (231,403) $ (246,295) $ (397,668) $ (418,171) The following is a reconciliation of our results from continuing operations to our adjusted results from continuing operations, which is a non-GAAP financial measure: (in 000s, except per share amounts) Three months ended December 31, Six months ended December 31, 2023 2022 2023 2022 Net loss from continuing operations - as reported $ (189,116) $ (220,863) $ (351,989) $ (388,230) Adjustments: Amortization of intangibles related to acquisitions (pretax) 12,269 12,839 24,824 25,535 Tax effect of adjustments (1) (3,087) (2,787) (6,022) (6,008) Adjusted net loss from continuing operations $ (179,934) $ (210,811) $ (333,187) $ (368,703) Diluted loss per share from continuing operations - as reported $ (1.33) $ (1.43) $ (2.44) $ (2.48) Adjustments, net of tax 0.06 0.06 0.13 0.12 Adjusted diluted loss per share from continuing operations $ (1.27) $ (1.37) $ (2.31) $ (2.36) (1) Tax effect of adjustments is the difference between the tax provision calculated on a GAAP basis and on an adjusted non-GAAP basis. FORWARD-LOOKING INFORMATION This report and other documents filed with the Securities and Exchange Commission (SEC) may contain forward-looking statements. In addition, our senior management may make forward-looking statements orally to analysts, investors, the media and others. Forward-looking statements can be identified by the fact that they do not relate strictly to historical or current facts. They often include words or variation of words such as "expects," "anticipates," "intends," "plans," "believes," "commits," "seeks," "estimates," "projects," "forecasts," "targets," "would," "will," "should," "could," "may" or other similar expressions. Forward-looking statements provide management's current expectations or predictions of future conditions, events or results. All statements that address operating performance, events or developments that we expect or anticipate will occur in the future are forward-looking statements. They may include estimates of revenues, client trajectory, income, effective tax rate, earnings per share, cost savings, capital expenditures, dividends, share repurchases, liquidity, capital structure, market share, industry volumes or other financial items, descriptions of management's plans or objectives for future operations, services or products, or descriptions of assumptions underlying any of the above. They may also include the expected impact of external events beyond the Company's control, such as outbreaks of infectious disease (including the coronavirus (COVID-19) pandemic), severe weather events, natural or manmade disasters, or changes in the regulatory environment in which we operate. 24 Q2 FY2024 Form 10-Q| H&R Block, Inc. Table of Contents All forward-looking statements speak only as of the date they are made and reflect the Company's good faith beliefs, assumptions and expectations, but they are not guarantees of future performance or events. Furthermore, the Company disclaims any obligation to publicly update or revise any forward-looking statement to reflect changes in underlying assumptions, factors, or expectations, new information, data or methods, future events or other changes, except as required by law. By their nature, forward-looking statements are subject to risks and uncertainties that could cause actual results to differ materially from those suggested by the forward-looking statements. Factors that might cause such differences include, but are not limited to, a variety of economic, competitive, operational and regulatory factors, many of which are beyond the Company's control. In addition, factors that may cause the Company’s actual effective tax rate to differ from estimates include the Company’s actual results from operations compared to current estimates, future discrete items, changes in interpretations and assumptions the Company has made, future actions of the Company, and increases in applicable tax rates in jurisdictions where the Company operates. Investors should understand that it is not possible to predict or identify all such factors and, consequently, should not consider any such list to be a complete set of all potential risks or uncertainties. Details about risks, uncertainties and assumptions that could affect various aspects of our business are included throughout our Annual Report on Form 10-K for the fiscal year ended June 30, 2023 and are also described from time to time in other filings with the SEC. Investors should carefully consider all of these risks, and should pay particular attention to Item 1A, "Risk Factors," and Item 7 under "Critical Accounting Policies" of our Annual Report on Form 10-K for the fiscal year ended June 30, 2023. ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK There have been no material changes in our market risks from those reported in our June 30, 2023 Annual Report on Form 10-K.