What changed in this filing

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Item 2. Management’s Discussion and Analysis

2025-06-06 compared with 2025-03-07 · 107 added, 50 removed, 149 unchanged (51% of the section changed)

13 unchanged sentences

We have both significant foreign sales and significant foreign manufacturing operations.

During the first three months of fiscal 2025, approximately 47% of our revenues were attributable to customers in Europe, where we typically sell more of our higher-performance, higher-priced VMX series machines.

During the first six months of fiscal 2025, approximately 50% of our revenues were attributable to customers in Europe, where we typically sell more of our higher-performance, higher-priced VMX series machines.

Additionally, approximately 12% of our revenues were attributable to customers in the Asia Pacific region, where we encounter greater pricing pressures.

We operate in a cyclical industry where sales and order trends often change periodically and can vary from region to region.

Sales and service fees in the first quarter of fiscal 2025 increased by 3% compared to the first quarter of fiscal 2024.

This increase in sales occurred primarily in the Americas and Asia Pacific regions and was partially offset by a decrease in sales in the European region.

Orders in the first quarter of fiscal 2025 decreased by 20% from the same period in fiscal 2024, reflecting a decrease in orders in the Americas and European regions.

Changes in trade policies, tariffs, and other import/export regulations of the U.S.

and other nations did not have a material impact on our financial results for the three and six months ended April 30, 2025.

However, we do have sales in, and purchases from, foreign countries that could be negatively impacted by recent or future tariff actions.

Sales and service fees in the first six months of fiscal 2025 decreased by 3%, compared to the same period in fiscal 2024.

The decrease in sales occurred primarily in the European region.

Orders in the first six months of fiscal 2025 decreased by 11% from the same period in fiscal 2024, reflecting a decrease in orders in the Americas and European regions, partially offset by an increase in orders in Asia Pacific region.

We have three brands of CNC machine tools in our product portfolio:

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RESULTS OF OPERATIONS

Three Months Ended January 31, 2025 Compared to Three Months Ended January 31, 2024

Three Months Ended April 30, 2025 Compared to Three Months Ended April 30, 2024

Sales and Service Fees.

Sales and service fees for the first quarter of fiscal year 2025 were $46.4 million, an increase of $1.4 million, or 3%, compared to the corresponding prior year period, and included an unfavorable currency impact of $0.4 million, or 1%, when translating foreign sales to U.S.

Sales and service fees for the second quarter of fiscal year 2025 were $40.9 million, a decrease of $4.3 million, or 10%, compared to the corresponding prior year period, and included a favorable currency impact of $0.2 million, or less than 1%, when translating foreign sales to U.S.

dollars for financial reporting purposes.

Sales and Service Fees by Geographic Region

The following table sets forth sales and service fees by geographic region for the first fiscal quarter ended January 31, 2025 and 2024 (dollars in thousands):

The following table sets forth sales and service fees by geographic region for the second fiscal quarter ended April 30, 2025 and 2024 (dollars in thousands):

Three Months Ended

Sales in the Americas for the first quarter of fiscal year 2025 increased by 9%, compared to the corresponding period in fiscal year 2024, primarily due to an increased volume of shipments of Hurco and Milltronics machines.

The increase in sales was mostly attributable to increased shipments of VM and toolroom machines, as well as lathes.

European sales for the first quarter of fiscal year 2025 decreased by 5%, compared to the corresponding period in fiscal year 2024, and included an unfavorable currency impact of 1%, when translating foreign sales to U.S.

Sales in the Americas for the second quarter of fiscal year 2025 decreased by 9%, compared to the corresponding period in fiscal year 2024, primarily due to decreased shipments of Hurco and Takumi machines and reduced sales of other original equipment manufacturer (“OEM”) machines by our wholly-owned domestic distributors.

The decrease in machine sales was mostly attributable to decreased shipments of Hurco VMX and Takumi bridge mill and horizontal machines.

European sales for the second quarter of fiscal year 2025 decreased by 5%, compared to the corresponding period in fiscal year 2024, and included a favorable currency impact of 1%, when translating foreign sales to U.S.

dollars for financial reporting purposes.

The decrease in European sales for the first quarter of fiscal year 2025 was primarily attributable to a decreased volume of shipments of higher performance Hurco VMX machines and lathes in France and Italy, partially offset by increased shipments of higher-performance 5-axis Hurco machines in the United Kingdom and Milltronics vertical milling machines throughout the European region.

In addition to the decreased machine sales for the quarter, European sales also reflected a decline in shipment of accessories manufactured by our wholly owned subsidiary, LCM.

Asian Pacific sales for the first quarter of fiscal year 2025 increased by 18%, compared to the corresponding period in fiscal year 2024, and included an unfavorable currency impact of 2%, when translating foreign sales to U.S.

The decrease in European sales for the second quarter of fiscal year 2025 was primarily attributable to a decreased volume of shipments of higher performance Hurco and Takumi machines in Germany, France, and Italy, as well as decreased volume of shipments of LCM electro-mechanical components and accessories, partially offset by increased shipment of higher performance Hurco machines in the United Kingdom.

Asian Pacific sales for the second quarter of fiscal year 2025 decreased by 29%, compared to the corresponding period in fiscal year 2024, and included an unfavorable currency impact of 1%, when translating foreign sales to U.S.

dollars for financial reporting purposes.

The increase in Asian Pacific sales primarily resulted from a higher volume of shipments of Hurco and Takumi machines in China and India.

The decrease in Asian Pacific sales primarily resulted from decreased sales of higher-performance and 5-axis Hurco and Takumi machines in India, partially offset by increased shipment volume of Hurco VM and Takumi bridge mill and horizontal machines in China and Southeast Asia.

Sales and Service Fees by Product Category

The following table sets forth sales and service fees by product group and services for the first fiscal quarter ended January 31, 2025 and 2024 (dollars in thousands):

The following table sets forth sales and service fees by product group and services for the second quarter ended April 30, 2025 and 2024 (dollars in thousands):

Three Months Ended

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† Amounts shown do not include computer control systems and software sold as an integrated component of computerized machine tools.

Sales of computerized machine tools for the first quarter of fiscal year 2025 increased by 6%, compared to the corresponding prior year period, primarily due to an increased volume of shipments of Hurco and Milltronics machines in the Americas and Hurco machines in the United Kingdom and China.

Sales of computer control systems and software for the first quarter of fiscal year 2025 increased by 13%, compared to the corresponding prior year period, due mainly to increased software sales in the United Kingdom.

Sales of service parts for the first quarter of fiscal year 2025 decreased by 12%, compared to the corresponding prior year period, primarily due to decreases in aftermarket service parts sales in the Americas, Germany and the United Kingdom.

Services fees for the first quarter of fiscal year 2025 increased by 2%, compared to the corresponding prior year period, primarily due increased aftermarket service fees in the Americas.

Sales for all product lines included an unfavorable currency impact of 1% when translating foreign sales to U.S.

Sales of computerized machine tools for the second quarter of fiscal year 2025 decreased by 10%, compared to the corresponding prior year period, primarily due to a decreased volume of shipments of Hurco and Takumi machines in all geographic regions.

Sales of computer control systems and software for the second quarter of fiscal year 2025 increased by 12%, compared to the corresponding prior year period, due mainly to increased software sales in the United Kingdom.

Sales of service parts for the second quarter of fiscal year 2025 decreased by 14%, compared to the corresponding prior year period, primarily due to decreases in aftermarket service parts sales in Europe.

Services fees for the second quarter of fiscal year 2025 increased by 7%, compared to the corresponding prior year period, primarily due to increased aftermarket service fees in Germany and Italy.

Sales for all product lines included a favorable currency impact of less than 1% when translating foreign sales to U.S.

dollars for financial reporting purposes.

Orders for the first quarter of fiscal year 2025 were $40.1 million, a decrease of $10.1 million, or 20%, compared to the corresponding period in fiscal year 2024, and included an unfavorable currency impact of $0.4 million, or less than 1%, when translating foreign orders to U.S.

The following table sets forth new orders booked by geographic region for the fiscal quarter ended January 31, 2025, and 2024 (dollars in thousands):

Orders for the second quarter of fiscal year 2025 were $43.7 million, a decrease of $0.5 million, or 1%, compared to the corresponding period in fiscal year 2024, and included an immaterial favorable currency impact of $0.1 million, or less than 1%, when translating foreign orders to U.S.

The following table sets forth new orders booked by geographic region for the fiscal quarter ended April 30, 2025 and 2024 (dollars in thousands):

Three Months Ended

Orders in the Americas for the first quarter of fiscal year 2025 decreased by 30%, compared to the corresponding period in fiscal year 2024, primarily due to decreased customer demand for Hurco and Milltronics machines, particularly the higher-performance VMX machines.

European orders for the first quarter of fiscal year 2025 decreased by 18%, compared to the corresponding prior year period, and included an unfavorable currency impact of 1%, when translating foreign orders to U.S.

The decrease in orders was driven primarily by decreased customer demand for electro-mechanical components and accessories manufactured by our wholly-owned subsidiary, LCM, as well as decreased customer demand for Hurco and Takumi machines in France and Italy.

The decrease in Hurco machines was primarily due to decreased demand for higher-performance VMX and 5-axis machines.

Asian Pacific orders for the first quarter of fiscal year 2025 increased by 3%, compared to the corresponding prior year period, and included an unfavorable currency impact of 2%, when translating foreign orders to U.S.

The increase in Asian Pacific orders was driven primarily by an increase in customer demand for Hurco machines in China, partially offset by decreased customer demand for Hurco and Takumi machines in India.

Orders in the Americas for the second quarter of fiscal year 2025 decreased by 1%, compared to the corresponding period in fiscal year 2024, primarily due to reduced demand for OEM machines sold by our wholly-owned domestic distributors, partially offset by increased customer demand for Milltronics machines.

European orders for the second quarter of fiscal year 2025 decreased by 12%, compared to the corresponding prior year period, and included a favorable currency impact of less than 1%, when translating foreign orders to U.S.

The decrease in orders was driven primarily by decreased customer demand for Hurco and Takumi machines in Germany and the United Kingdom, partially offset by increased customer demand for Hurco machines in Italy and electro-mechanical components and accessories manufactured by LCM.

Asian Pacific orders for the second quarter of fiscal year 2025 increased by 74%, compared to the corresponding prior year period, and included an unfavorable currency impact of 3%, when translating foreign orders to U.S.

The increase in Asian Pacific orders was driven primarily by an increase in customer demand for Hurco and Takumi machines across the Asian Pacific region where our customers are located.

Gross Profit.

Gross profit for the first quarter of fiscal year 2025 was $8.3 million, or 18% of sales, compared to $9.7 million, or 22% of sales, for the corresponding prior year period.

The year-over-year decrease in gross profit as a percentage of sales was primarily due to the lower volume of sales of vertical milling machines in the Americas and Europe where we typically sell more of our higher-performance VMX series machines and lathes.

Additionally, gross profit was negatively impacted by the allocation of fixed costs on lower margin sales and lower production volumes.

Gross profit for the second quarter of fiscal year 2025 was $7.8 million, or 19% of sales, compared to $8.0 million, or 18% of sales, for the corresponding prior year period.

The year-over-year increase in gross profit as a percentage of sales was primarily due to an increase of European sales contributions to total sales of 3% and lower fixed costs allocated to overhead related to cost savings implemented in the second half of fiscal 2024.

Operating Expenses.

Selling, general, and administrative expenses for the first quarter of fiscal year 2025 were $10.4 million, or 22% of sales, compared to $11.5 million, or 26% of sales, in the corresponding fiscal year 2024 period, and included a favorable currency impact of $0.1 million, when translating foreign expenses to U.S.

Selling, general, and administrative expenses for the second quarter of fiscal year 2025 were $10.9 million, or 27% of sales, compared to $11.5 million, or 25% of sales, in the corresponding fiscal year 2024 period, and included an immaterial unfavorable currency impact of less than $0.1 million, when translating foreign expenses to U.S.

dollars for financial reporting purposes.

1 unchanged sentence

Operating Income/Loss.

Operating loss for the first quarter of fiscal year 2025 was $2.1 million, compared to $1.8 million for the corresponding period in fiscal year 2024.

The change was primarily due to the lower volume of sales of vertical milling machines in the Americas and Europe where we typically sell more of our higher-performance VMX series machines and lathes, as well as the negative impact of allocation of fixed costs on lower margin sales and lower production volumes.

Operating loss for the second quarter of fiscal year 2025 was $3.1 million, compared to $3.4 million for the corresponding period in fiscal year 2024.

The change was primarily due to a higher concentration of machines sales in Europe and lower fixed costs allocated to overhead and operating expenses related to cost savings implemented in the second half of 2024, partially offset by the lower volume of sales of vertical milling machines.

Other (Expense) Income, Net.

Other expense, net for the first quarter of fiscal year 2025 was $0.4 million compared to $0.5 million for the corresponding period in fiscal year 2024, due mainly to a decrease in foreign currency exchange loss in the first quarter of fiscal year 2025 compared to the same period in fiscal year 2024.

Other expense, net for the second quarter of fiscal year 2025 was $0.6 million compared to $0.5 million for the corresponding period in fiscal year 2024, due mainly to a decrease in income from our equity investment.

Income Taxes.

Income tax expense for the first quarter of fiscal year 2025 was $2.0 million, compared to an income tax benefit of $0.6 million, for the corresponding prior year period.

Income tax expense for the second quarter of fiscal year 2025 was $0.5 million, compared to an income tax expense of less than $0.1 million, for the corresponding prior year period.

The year-over-year change was primarily due to a $1.3 million non-cash valuation allowance recorded on our Italian, U.S.

and China deferred tax assets, as well as changes in geographic mix of income and loss that includes jurisdictions with differing tax rates, and discrete items related to unvested stock compensation.

and Chinese deferred tax assets, as well as changes in geographic mix of income and loss that include jurisdictions with differing tax rates, and discrete items related to unvested stock compensation.

Because we have a valuation allowance recorded against our Italian, U.S.

and China deferred tax assets, we did not record a tax benefit of $1.2 million for our U.S., Italy and China pre-tax losses for the three months ended January 31, 2025.

The valuation allowance recorded during the first quarter of fiscal 2025 reflected a full valuation allowance of the U.S.

and Chinese deferred tax assets, we did not record a tax benefit of $1.3 million for our U.S., Italian and Chinese pre-tax losses for the three months ended April 30, 2025.

The valuation allowance recorded during the second quarter of fiscal 2025 reflected a full valuation allowance of the U.S.

and Italian deferred tax assets and was recorded after evaluating changes to tax laws, statutory tax rates, and our cumulative three-year income (loss) levels for the U.S.

and Italy for the first quarter of fiscal year 2025.

and Italy for the first six months of fiscal year 2025.

Six Months Ended April 30, 2025, Compared to Six Months Ended April 30, 2024

Sales and Service Fees.

Sales and service fees for the first six months of fiscal year 2025 were $87.3 million, a decrease of $3.0 million, or 3%, compared to the corresponding prior year period, and included an unfavorable currency impact of $0.2 million, or less than 1%, when translating foreign sales to U.S.

dollars for financial reporting purposes.

Sales and Service Fees by Geographic Region

The following table sets forth sales and service fees by geographic region for the six months ended April 30, 2025 and 2024 (dollars in thousands):

Six Months Ended

Sales in the Americas for the first six months of fiscal year 2025 decreased by less than 1%, compared to the corresponding period in fiscal year 2024, primarily due to decreased shipments of Hurco and Takumi machines and reduced sales of OEM machines by our wholly-owned domestic distributors.

The decrease in machine sales was mostly attributable to decreased shipments of Hurco VMX and Takumi bridge mill and horizontal machines.

European sales for the first six months of fiscal year 2025 decreased by 5%, compared to the corresponding period in fiscal year 2024, and included an unfavorable currency impact of less than 1%, when translating foreign sales to U.S.

dollars for financial reporting purposes.

The decrease in European sales for the first six months of fiscal year 2025 was primarily attributable to a decreased volume of shipments of Hurco and Takumi machines in Germany, France, and Italy, as well as a decreased volume of shipments of LCM electro-mechanical components and accessories, partially offset by increased shipments of higher performance Hurco machines in the United Kingdom.

Asian Pacific sales for the first six months of fiscal year 2025 decreased by 5%, compared to the corresponding period in fiscal year 2024, and included an unfavorable currency impact of 2%, when translating foreign sales to U.S.

dollars for financial reporting purposes.

Sales and Service Fees by Product Category

The following table sets forth sales and service fees by product group and services for the six months ended April 30, 2025 and 2024 (dollars in thousands):

Six Months Ended

Computerized Machine Tools

Computer Control Systems and Software †

Service Parts

† Amounts shown do not include computer control systems and software sold as an integrated component of computerized machine tools.

Sales of computerized machine tools for the first six months of fiscal year 2025 decreased by 2%, compared to the corresponding prior year period, primarily due to a decreased volume of shipments of Hurco and Takumi machines in all geographic regions.

Sales of computer control systems and software for the first six months of fiscal year 2025 increased by 12%, compared to the corresponding prior year period, due mainly to increased software sales in the United Kingdom.

Sales of service parts for the first six months of fiscal year 2025 decreased by 13%, compared to the corresponding prior year period, primarily due to decreases in aftermarket service parts sales in the Americas and Europe.

Services fees for the first six months of fiscal year 2025 increased by 5%, compared to the corresponding prior year period, primarily due to increased aftermarket service fees in the Americas, Germany, and France.

Sales for all product lines included an unfavorable currency impact of less than 1% when translating foreign sales to U.S.

dollars for financial reporting purposes.

Orders for the first six months of fiscal year 2025 were $83.8 million, a decrease of $10.6 million, or 11%, compared to the corresponding period in fiscal year 2024, and included an unfavorable currency impact of $0.3 million, or less than 1%, when translating foreign orders to U.S.

The following table sets forth new orders booked by geographic region for the six months ended April 30, 2025, and 2024 (dollars in thousands):

Six Months Ended

Orders in the Americas for the first six months of fiscal year 2025 decreased by 17%, compared to the corresponding period in fiscal year 2024, primarily due to decreased customer demand for Hurco and Takumi machines and reduced demand for OEM machines sold by our wholly-owned domestic distributors, partially offset by increased customer demand for Milltronics machines.

European orders for the first six months of fiscal year 2025 decreased by 15%, compared to the corresponding prior year period, and included an unfavorable currency impact of less than 1%, when translating foreign orders to U.S.

The year-over-year decrease was primarily due to decreased customer demand for Hurco machines in Germany, the United Kingdom, and France, and decreased customer demand for electro-mechanical components and accessories manufactured by LCM, partially offset by increased customer demand for Hurco machines in Italy.

Asian Pacific orders for the first six months of fiscal year 2025 increased by 28%, compared to the corresponding prior year period, and included an unfavorable currency impact of 2%, when translating foreign orders to U.S.

The increase in Asian Pacific orders was driven primarily by increased customer demand for Hurco and Takumi machines across the Asian Pacific region where our customers are located.

Gross Profit.

Gross profit for the first six months of fiscal year 2025 was $16.1 million, or 18% of sales, compared to $17.7 million, or 20% of sales, for the corresponding prior year period.

Operating Expenses.

Selling, general, and administrative expenses for the first six months of fiscal year 2025 were $21.3 million, or 24% of sales, compared to $23.0 million, or 25% of sales, in the corresponding fiscal year 2024 period, and included an immaterial favorable currency impact of less than $0.1 million, when translating foreign expenses to U.S.

dollars for financial reporting purposes.

The year-over-year reduction in selling, general and administrative expenses for the first six months of fiscal year 2025 reflected lower levels of discretionary spending, reduced sales commissions, and reduced employee health insurance costs.

Operating Income/Loss.

Operating loss for the first six months of fiscal year 2025 was $5.2 million, compared to $5.3 million for the corresponding period in fiscal year 2024.

The change was primarily due to lower fixed costs allocated to overhead and operating expenses related to cost savings implemented in the second half of fiscal 2024, partially offset by the lower volume of sales of vertical milling machines.

Other (Expense) Income, Net.

Other expense, net for the first six months of fiscal year 2025 was $1.0 million compared to $1.0 million for the corresponding period in fiscal year 2024.

Income Taxes.

Income tax expense for the first six months of fiscal year 2025 was $2.6 million, compared to an income tax benefit of $0.6 million, for the corresponding prior year period.

The year-over-year change was primarily due to a $3.7 million non-cash valuation allowance recorded on our Italian, U.S.

and Chinese deferred tax assets, as well as changes in geographic mix of income and loss that includes jurisdictions with differing tax rates and discrete items related to unvested stock compensation.

Because we have a valuation allowance recorded against our Italian, U.S.

and Chinese deferred tax assets, we did not record a tax benefit of $2.4 million for our U.S., Italian and Chinese pre-tax losses for the six months ended April 30, 2025.

The valuation allowance recorded during the first six months of fiscal 2025 reflected a full valuation allowance of the U.S.

and Italian deferred tax assets and was recorded after evaluating changes to tax laws, statutory tax rates, and our cumulative three-year income (loss) levels for the U.S.

and Italy for the first six months of fiscal year 2025.

LIQUIDITY AND CAPITAL RESOURCES

At January 31, 2025, we had cash and cash equivalents of $41.8 million, compared to $33.3 million at October 31, 2024.

At April 30, 2025, we had cash and cash equivalents of $43.8 million, compared to $33.3 million at October 31, 2024.

Approximately 27% of the $43.8 million of cash and cash equivalents was denominated in U.S.

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We do not believe that the indefinite reinvestment of these funds offshore impairs our ability to meet our domestic working capital needs.

Working capital was $172.6 million at January 31, 2025, compared to $180.8 million at October 31, 2024.

Working capital was $175.9 million at April 30, 2025, compared to $180.8 million at October 31, 2024.

The decrease in working capital was primarily driven by decreases in inventories and accounts receivable, net, partially offset by an increase in cash and cash equivalents.

Capital expenditures of $0.6 million during the first three months of fiscal year 2025 were primarily for software development costs and capital improvements in existing facilities.

Capital expenditures of $1.4 million during the first six months of fiscal year 2025 were primarily for software development costs and capital improvements in existing facilities.

We funded these expenditures with cash on hand.

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The program may be amended, suspended, or discontinued at any time and does not commit us to repurchase any shares of our common stock.

We did not repurchase any shares during the first three months of fiscal 2025.

As of January 31, 2025, $21.7 million remained available under the program.

We did not repurchase any shares during the first six months of fiscal 2025.

As of April 30, 2025, $21.7 million remained available under the program.

On June 14, 2024, we announced a temporary suspension of our regular quarterly cash dividend as we seek to enhance our financial flexibility and improve our ability to manage market volatility while focusing on strengthening our balance sheet, reinvesting in our core business and research and development related to emerging technologies, and returning value to shareholders via the appropriate channels in both the near and long-term.

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In February and December 2023, NHML and HML, respectively, renewed the above-referenced credit facilities on substantially similar terms and identical maximum aggregate limits.

As of January 31, 2025, our existing credit facilities consisted of a €1.5 million revolving credit facility in Germany, the 150 million New Taiwan Dollars Taiwan credit facility, the 32.5 million Chinese Yuan China credit facility and the $40.0 million revolving credit facility under the 2018 Credit Agreement.

We had no debt or borrowings under any of our credit facilities at January 31, 2025.

At January 31, 2025, we had an aggregate of approximately $50.6 million available for borrowing under our credit facilities and were in compliance with all covenants relating thereto.

As of April 30, 2025, our existing credit facilities consisted of a €1.5 million revolving credit facility in Germany, the 150 million New Taiwan Dollars Taiwan credit facility, the 32.5 million Chinese Yuan China credit facility and the $40.0 million revolving credit facility under the 2018 Credit Agreement.

We had no debt or borrowings under any of our credit facilities at April 30, 2025.

At April 30, 2025, we had an aggregate of approximately $50.8 million available for borrowing under our credit facilities and were in compliance with all covenants relating thereto.

We have an international cash pooling strategy that generally provides access to available cash deposits and credit facilities when needed in the U.S., Europe, or Asia Pacific.

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Our critical accounting estimates, which are described in our Annual Report on Form 10-K for the fiscal year ended October 31, 2024, are frequently evaluated as our judgment and estimates are based upon historical experience and on various other assumptions that we believe to be reasonable under the circumstances.

During the first three months of fiscal year 2025, there were no material changes to our critical accounting estimates as described in the MD&A included in our Annual Report on Form 10-K for the year ended October 31, 2024.

During the first six months of fiscal year 2025, there were no material changes to our critical accounting estimates as described in the MD&A included in our Annual Report on Form 10-K for the year ended October 31, 2024.

CONTRACTUAL OBLIGATIONS AND COMMITMENTS

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We follow FASB guidance for accounting for guarantees (codified in ASC 460).

As of January 31, 2025, we had eight outstanding third party payment guarantees totaling approximately $0.8 million.

As of April 30, 2025, we had seven outstanding third party payment guarantees totaling approximately $0.8 million.

The terms of these guarantees are consistent with the underlying customer financing terms.

34 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