What changed in this filing

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Item 2. Management’s Discussion and Analysis

2024-07-25 compared with 2024-04-25 · 161 added, 55 removed, 194 unchanged (53% of the section changed)

1 unchanged sentence

The following discussion should be read in conjunction with our audited consolidated financial statements and notes thereto in our Annual Report.

This Quarterly Report on Form 10-Q contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Exchange Act, including, in particular, statements about the impact of future events, future financial performance, plans (including our executive succession plan), strategies, expectations, prospects, competitive environment, regulation, labor matters, supply chain issues, inflation, and availability of raw materials.

This Quarterly Report on Form 10-Q contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Exchange Act, including, in particular, statements about the impact of future events, future financial performance, plans, strategies, business combinations, expectations, prospects, competitive environment, regulation, labor matters, supply chain issues, inflation, and availability of raw materials.

Forward-looking statements include all statements that are not historical facts and can be identified by the use of forward-looking terminology such as “outlook,” “guidance,” “anticipate,” “expect,” “believe,” “could,” “estimate,” “feel,” “forecast,” “intend,” “may,” “plan,” “potential,” “project,” “should,” “target,” “will,” “would,” and similar words, phrases or expressions and variations or negatives of these words in this Quarterly Report on Form 10-Q.

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KDP is a leading beverage company in North America that manufactures, markets, distributes, and sells hot and cold beverages and single serve brewing systems.

We have a broad portfolio of iconic beverage brands, including Dr Pepper, Canada Dry, Mott's, A&W, Snapple, Peñafiel, 7UP, Green Mountain Coffee Roasters, Core Hydration, and The Original Donut Shop, as well as the Keurig brewing system.

We have a broad portfolio of iconic beverage brands, including Keurig, Dr Pepper, Canada Dry, Mott's, A&W, Snapple, Peñafiel, 7UP, Green Mountain Coffee Roasters, Clamato, Core Hydration, and The Original Donut Shop.

KDP has some of the most recognized beverage brands in North America, with significant consumer awareness levels and long histories that evoke strong emotional connections with consumers.

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EXECUTIVE SUMMARY

Financial Overview - First Quarter of 2024 as compared to First Quarter of 2023

Financial Overview - Second Quarter of 2024 as compared to Second Quarter of 2023

As Reported, in millions (except EPS)

Key Events During the First Quarter of 2024

March 2024 Debt Issuance

In March 2024, we completed the issuance of an aggregate principal amount of $3 billion of senior unsecured notes.

The proceeds were used to repay the 2024 Notes at maturity, to repurchase KDP shares as described below, to repay outstanding commercial paper, and for general corporate purposes.

Repurchase of KDP Shares

In March 2024, JAB BevCo B.V., a subsidiary of JAB, sold 100 million shares of KDP’s common stock through an underwritten secondary offering.

In connection with this offering, we repurchased 35 million shares at the per-share price paid by the underwriter, for a total of $1,012 million, which was effected under our existing share repurchase program.

Key Events During the Second Quarter of 2024

Acquisition of Strategic Assets from Kalil Bottling Company

In May 2024, we announced an agreement to acquire all production, sales, and distribution assets of an independent bottler, Kalil Bottling Company.

Pursuant to the agreement, our DSD operations would gain new bottling and distribution rights in Arizona to key KDP brands, including Canada Dry, 7UP, A&W, Snapple, and Core Hydration.

The business combination is expected to close in the third quarter of 2024.

RESULTS OF OPERATIONS

First Quarter of 2024 Compared to First Quarter of 2023

Second Quarter of 2024 Compared to Second Quarter of 2023

Consolidated Operations

The following table sets forth our unaudited condensed consolidated results of operations for the first quarter of 2024 and 2023:

First Quarter Dollar Change Percentage Change

The following table sets forth our unaudited condensed consolidated results of operations for the second quarter of 2024 and 2023:

Second Quarter Dollar Percentage

($ in millions, except per share amounts) 2024 2023 Change Change

Net sales $ 3,922 $ 3,789 $ 133 3.5 %

Cost of sales 1,750 1,748 2 0.1

Gross profit 2,172 2,041 131 6.4

Selling, general and administrative expenses 1,295 1,272 23 1.8

Other operating expense, net 16 — 16 NM

Income from operations 861 769 92 12.0

Interest expense, net 204 172 32 18.6

Other income, net (15) (16) 1 (6.3)

Income before provision for income taxes 672 613 59 9.6

Provision for income taxes 157 110 47 NM

Net income $ 515 $ 503 12 2.4

Earnings per common share:

Basic $ 0.38 $ 0.36 $ 0.02 5.6 %

Diluted 0.38 0.36 0.02 5.6

Gross margin 55.4 % 53.9 % 150 bps

Operating margin 22.0 % 20.3 % 170 bps

Effective tax rate 23.4 % 17.9 % 550 bps

Sales Volume.

The following table provides the percentage change in sales volume for the second quarter of 2024 compared to the prior year period:

Percentage Change

K-Cup pods 1.1

Net sales increased $133 million, or 3.5%, to $3,922 million for the second quarter of 2024 compared to $3,789 million in the prior year period.

This performance reflected favorable volume/mix of 1.8%, favorable net price realization of 1.6% and favorable FX translation of 0.1%.

Gross Profit.

Gross profit increased $131 million, or 6.4%, to $2,172 million for the second quarter of 2024 compared to $2,041 million in the prior year period.

This performance primarily reflected a net benefit from changes in ingredients, materials, and productivity (3 percentage points) and the gross profit impact of net sales growth (3 percentage points).

Gross margin increased 150 bps versus the prior year period to 55.4%.

Selling, General and Administrative Expenses.

SG&A expenses increased $23 million, or 1.8%, to $1,295 million for the second quarter of 2024 compared to $1,272 million in the prior year period, primarily driven by higher people costs.

Other operating expense, net.

Other operating expense of $16 million for the second quarter of 2024 primarily reflected losses on the disposal of assets related to our 2024 Network Optimization program.

Income from Operations.

Income from operations increased $92 million, or 12.0%, to $861 million for the second quarter of 2024 compared to $769 million in the prior year period, primarily driven by the increase in gross profit.

Interest Expense.

Interest expense increased $32 million, or 18.6%, to $204 million for the second quarter of 2024 compared with $172 million in the prior year period.

This change reflected increased weighted average borrowings (29 percentage points), partially offset by favorable year-over-year changes in unrealized mark-to-market activity (12 percentage points).

Effective Tax Rate .

The effective tax rate was 23.4% for the second quarter of 2024, compared to 17.9% in the prior year period, primarily driven by the unfavorable comparison to the prior year tax benefit received from a non-cash adjustment (460 bps) and a shift in the mix of income from lower tax jurisdictions to higher tax jurisdictions (170 bps).

Net income increased $12 million, or 2.4%, to $515 million for the second quarter of 2024 as compared to $503 million in the prior year period, as increased income from operations was partially offset by increases in interest expense and our effective tax rate.

Diluted EPS increased 5.6% to $0.38 per diluted share for the second quarter of 2024 as compared to $0.36 in the prior year period, primarily driven by reduced weighted average shares outstanding.

Results of Operations by Segment

The following tables set forth net sales and income from operations for our segments for the second quarter of 2024 and 2023, as well as other amounts necessary to reconcile our segment results to our consolidated results presented in accordance with U.S.

Second Quarter

(in millions) 2024 2023

Refreshment Beverages $ 2,407 $ 2,330

Coffee 950 970

International 565 489

Total net sales $ 3,922 $ 3,789

Income from operations

Refreshment Beverages $ 717 $ 629

Coffee 228 250

International 150 112

Unallocated corporate costs (234) (222)

Income from operations $ 861 $ 769

REFRESHMENT BEVERAGES

The following table provides selected information about our U.S.

Refreshment Beverages segment's results:

Second Quarter Dollar Change Percentage Change

(in millions) 2024 2023

Net sales $ 2,407 $ 2,330 $ 77 3.3 %

Income from operations 717 629 88 14.0

Operating margin 29.8 % 27.0 % 280 bps

Sales Volume.

Sales volume for the second quarter of 2024 decreased 2.6% compared to the prior year period, as the contributions from partnerships, including Electrolit and C4, and growth in select carbonated soft drinks was more than offset by softness in other parts of our portfolio.

Net sales increased 3.3% to $2,407 million for the second quarter of 2024, compared to $2,330 million in the prior year period, driven by favorable net price realization of 2.9% and favorable volume/mix of 0.4%.

Income from Operations.

Income from operations increased $88 million, or 14.0%, to $717 million for the second quarter of 2024, compared to $629 million for the prior year period.

This performance primarily reflects a net benefit from changes in ingredients, materials, and productivity (7 percentage points) and the gross profit impact of net sales growth (6 percentage points).

Operating margin improved 280 bps versus the prior year period to 29.8%.

The following table provides selected information about our U.S.

Coffee segment's results:

Second Quarter Dollar Change Percentage Change

(in millions) 2024 2023

Net sales $ 950 $ 970 $ (20) (2.1) %

Income from operations 228 250 (22) (8.8)

Operating margin 24.0 % 25.8 % (180) bps

Sales Volume.

K-Cup pod volume increased 0.2% in the second quarter of 2024 compared to the prior year period.

Appliance volume increased 2.1% compared to the prior year period, driven by Keurig market share momentum.

Net sales decreased 2.1% to $950 million for the second quarter of 2024 compared to net sales of $970 million in the prior year period, reflecting unfavorable net price realization of 2.9%, partially offset by favorable volume/mix of 0.8%.

Income from Operations.

Income from operations decreased $22 million, or 8.8%, to $228 million for the second quarter of 2024, compared to $250 million for the prior year period, primarily reflecting the gross profit impact of the decrease in net sales (9 percentage points) and losses on the disposal of assets related to our 2024 Network Optimization program (8 percentage points), partially offset by the net benefit from changes in ingredients, materials, and productivity (7 percentage points).

Operating margin declined 180 bps versus the year ago period to 24.0%.

INTERNATIONAL

The following table provides selected information about our International segment's results:

Second Quarter Dollar Change Percentage Change

(in millions) 2024 2023

Net sales $ 565 $ 489 $ 76 15.5 %

Income from operations 150 112 38 33.9

Operating margin 26.5 % 22.9 % 360 bps

Sales volume.

The following table provides the percentage change in sales volume for the International segment compared to the prior year period:

Percentage Change

K-Cup pods 7.3

Net sales increased 15.5% to $565 million in the second quarter of 2024, compared to $489 million for the prior year period, reflecting volume/mix growth of 10.4%, higher net price realization of 4.3%, and favorable FX translation impacts of 0.8%.

Income from Operations.

Income from operations increased $38 million, or 33.9%, to $150 million for the second quarter of 2024 compared to $112 million in the prior year period.

This performance primarily reflected the gross profit impact of the growth in net sales (44 percentage points), partially offset by higher marketing investment (9 percentage points) and higher transportation and warehousing expenses (7 percentage points).

Operating margin increased 360 bps from the prior year period to 26.5%.

First Six Months of 2024 Compared to First Six Months of 2023

Consolidated Operations

The following table sets forth our unaudited condensed consolidated results of operations for the first six months of 2024 and 2023:

First Six Months Dollar Change Percentage Change

($ in millions, except per share amounts) 2024 2023

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Selling, general and administrative expenses 2,471 2,437 34 1.4

Other operating income, net (1) (5) 4 NM

Other operating expense (income), net 15 (5) 20 NM

Income from operations 1,626 1,353 273 20.2

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K-Cup pods 0.2

Net sales increased $115 million, or 3.4%, to $3,468 million for the first quarter of 2024 compared to $3,353 million in the prior year period.

This performance reflected favorable net price realization (3.1%) and favorable FX translation (0.6%), slightly offset by unfavorable volume/mix (0.3%).

Net sales increased $248 million, or 3.5%, to $7,390 million for the first six months of 2024 compared to $7,142 million in the prior year period.

This performance reflected favorable net price realization of 2.3%, favorable volume/mix of 0.8%, and favorable FX translation of 0.4%.

Gross Profit.

Gross profit increased $196 million, or 11.2%, to $1,940 million for the first quarter of 2024 compared to $1,744 million in the prior year period.

This performance primarily reflected the impact to gross profit of the strong growth in net sales (6 percentage points), the benefit from the earned equity from the achievement of milestones associated with certain distribution agreements (3 percentage points), and a net benefit from changes in ingredients, materials, and productivity (2 percentage points).

Gross profit increased $327 million, or 8.6%, to $4,112 million for the first six months of 2024 compared to $3,785 million in the prior year period.

This performance primarily reflected the gross profit impact of net sales growth (5 percentage points) and a net benefit from changes in ingredients, materials, and productivity (3 percentage points).

Gross margin increased 260 bps versus the prior year period to 55.6%.

Other operating expense (income), net .

Other operating expense (income), net reflected an unfavorable change of $20 million from the prior year period, primarily driven by losses on the disposal of assets related to our 2024 Network Optimization program.

Selling, general and administrative expenses .

SG&A expenses increased $34 million, or 1.4%, to $2,471 million for the first six months of 2024 compared to $2,437 million in the prior year period, primarily driven by higher people costs.

Income from Operations.

Income from operations increased $181 million, or 31.0%, to $765 million for the first quarter of 2024 compared to $584 million in the prior year period, primarily driven by increased gross profit.

Income from operations increased $273 million, or 20.2%, to $1,626 million for the first six months of 2024 compared to $1,353 million in the prior year period, primarily driven by increased gross profit.

Operating margin increased 310 bps from the prior year period to 22.0%.

Interest Expense.

Interest expense increased $155 million to $178 million for the first quarter of 2024 compared to $23 million for the prior year period, primarily driven by the unfavorable change in unrealized mark-to-market activity on interest rate contracts, resulting from increasing interest rates.

Interest expense increased $187 million to $382 million for the first six months of 2024 compared to $195 million for the prior year period, primarily driven by the unfavorable year-over-year change in unrealized mark-to-market activity (54 percentage points), as well as increased weighted average borrowings (42 percentage points).

Effective Tax Rate.

The effective tax rate increased 400 bps to 23.6% for the first quarter of 2024, compared to 19.6% in the prior year period, driven by a shift in the mix of income from lower tax jurisdictions to higher tax jurisdictions (210 bps) and the unfavorable comparison to the prior year tax benefit received from favorable adjustments upon foreign tax return filing (150 bps).

Net income decreased $13 million, or 2.8%, to $454 million for the first quarter of 2024 as compared to $467 million in the prior year period, as increased interest expense and unfavorable changes in our effective tax rate offset our increased income from operations.

Diluted EPS was flat relative to the prior year period at $0.33 per diluted share.

The effective tax rate increased 470 bps to 23.5% for the first six months of 2024, compared to 18.8% in the prior year period, primarily driven by the unfavorable comparison to the prior year tax benefit received from a non-cash adjustment (290 bps) and a shift in the mix of income from lower tax jurisdictions to higher tax jurisdictions (130 bps).

Net income decreased $1 million, or 0.1%, to $969 million for the first six months of 2024 as compared to $970 million in the prior year period, as increased interest expense and unfavorable changes in our effective tax rate more than offset our increased income from operations.

Diluted EPS increased 1.4% to $0.70 per diluted share for the first six months of 2024 as compared to $0.69 in the prior year period, primarily driven by reduced weighted average shares outstanding.

Results of Operations by Segment

The following tables provide net sales and income from operations for our reportable segments for the first quarter of 2024 and 2023, as well as the other amounts necessary to reconcile our total segment results to our consolidated results presented in accordance with U.S.

First Quarter

The following tables provide net sales and income from operations for our reportable segments for the first six months of 2024 and 2023, as well as the other amounts necessary to reconcile our total segment results to our consolidated results presented in accordance with U.S.

First Six Months

(in millions) 2024 2023

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Refreshment Beverages segment's results:

First Quarter Dollar Change Percentage Change

First Six Months Dollar Change Percentage Change

(in millions) 2024 2023

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Sales Volume.

Sales volume for the first quarter of 2024 decreased approximately 1.7% compared to the prior year period, as growth in Canada Dry and C4 Energy, combined with the launch of Electrolit within our distribution network, was more than offset by softness in the remainder of our portfolio.

Net sales increased 4.3% to $2,093 million in the first quarter of 2024, compared to $2,007 million in the prior year period, driven by favorable net price realization (5.6%), which was partially offset by unfavorable volume/mix (1.3%).

Sales volume for the first six months of 2024 decreased approximately 2.2% compared to the prior year period, as the contributions from partnerships, including Electrolit and C4, and growth in select carbonated soft drinks was more than offset by softness in other parts of our portfolio.

Net sales increased 3.8% to $4,500 million in the first six months of 2024, compared to $4,337 million in the prior year period, driven by favorable net price realization of 4.2%, which was partially offset by unfavorable volume/mix of 0.4%.

Income from Operations.

Income from operations increased $125 million, or 25.5%, to $615 million for the first quarter of 2024 compared to $490 million for the prior year period.

This performance was led by the benefits to gross profit from net sales growth (17 percentage points) and earned equity from the achievement of milestones associated with certain distribution agreements (9 percentage points), as well as a net benefit from changes in ingredients, materials, and productivity (2 percentage points).

Income from operations increased $213 million, or 19.0%, to $1,332 million for the first six months of 2024 compared to $1,119 million for the prior year period.

This performance was led by the gross profit impact of net sales growth (11 percentage points) and a net benefit from changes in ingredients, materials, and productivity (4 percentage points), as well as earned equity from the achievement of milestones associated with certain distribution agreements (4 percentage points).

Operating margin improved 380 bps versus the year ago period to 29.6%.

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Coffee segment's results:

First Quarter Dollar Change Percentage Change

First Six Months Dollar Change Percentage Change

(in millions) 2024 2023

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Sales Volume.

K-Cup pod volume decreased 1.1% for the first quarter of 2024 compared to the prior year period, reflecting softer at-home coffee category trends.

Appliance volume increased 26.1% in the first quarter of 2024, driven by Keurig market share momentum.

Net sales decreased 2.1% to $911 million for the first quarter of 2024 compared to $931 million in the prior year period, driven by unfavorable volume/mix (1.8%) and net price realization (0.3%).

K-Cup pod volume decreased 0.4% for the first six months of 2024 compared to the prior year period.

Appliance volume increased 11.0% in the first six months of 2024, driven by Keurig market share momentum.

Net sales decreased 2.1% to $1,861 million for the first six months of 2024 compared to $1,901 million in the prior year period, driven by unfavorable net price realization of 2.4%, partially offset by favorable volume/mix of 0.3%.

Income from Operations.

Income from operations increased $16 million, or 6.9%, to $248 million for the first quarter of 2024, compared to $232 million in the prior year period, driven by a net benefit from changes in ingredients, materials, and productivity (10 percentage points) and reduced costs associated with productivity projects (6 percentage points), partially offset by the impact to gross profit of the decrease in net sales (8 percentage points).

Income from operations decreased $6 million, or 1.2%, to $476 million for the first six months of 2024, compared to $482 million in the prior year period, driven by the gross profit impact of the net sales decrease (8 percentage points), partially offset by a net benefit from changes in ingredients, materials, and productivity (7 percentage points).

Operating margin improved 20 bps versus the year ago period to 25.6%.

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The following table provides selected information about our International segment's results:

First Quarter Dollar Change Percentage Change

First Six Months Dollar Change Percentage Change

(in millions) 2024 2023

6 unchanged sentences

K-Cup pods 5.0

Net sales increased 11.8% to $464 million in the first quarter of 2024, compared to $415 million in the prior year period, reflecting volume/mix growth (4.8%), favorable FX translation (4.8%), and higher net price realization (2.2%).

Net sales increased 13.8% to $1,029 million in the first six months of 2024, compared to $904 million in the prior year period, reflecting volume/mix growth of 7.9%, higher net price realization of 3.3%, and favorable FX translation of 2.6%.

Income from Operations.

Income from operations increased $32 million, or 40.0%, to $112 million for the first quarter of 2024 compared to $80 million in the prior year period.

This performance reflected the impact to gross profit of higher net price realization and volume/mix growth (30 percentage points) and favorable FX impacts (9 percentage points).

Income from operations increased $70 million, or 36.5%, to $262 million for the first six months of 2024 compared to $192 million in the prior year period.

This performance reflected the gross profit impact of net sales growth (49 percentage points), partially offset by higher marketing investment (8 percentage points).

Operating margin improved 430 bps versus the year ago period to 25.5%.

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to have a material effect on our overall business, liquidity, financial condition or results of operations for the foreseeable future.

The following summarizes our cash activity for the first quarter of 2024 and 2023:

The following summarizes our cash activity for the first six months of 2024 and 2023:

Principal Sources of Capital Resources

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Sources of Liquidity - Operations

Net cash provided by operating activities increased $14 million for the first quarter of 2024, as compared to the first quarter of 2023, driven by an increase in working capital.

Net cash provided by operating activities increased $290 million for the first six months of 2024, as compared to the first six months of 2023, driven by the favorable comparison in working capital versus the prior year period.

Cash Conversion Cycle

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Cash conversion cycle 4 (37)

Our cash conversion cycle increased 48 days to approximately 2 days as of March 31, 2024 as compared to (46) days as of March 31, 2023, which was primarily driven by the decrease in DPO, reflecting the reduction of payment terms for certain suppliers.

Our cash conversion cycle increased 41 days to approximately 4 days as of June 30, 2024 as compared to (37) days as of June 30, 2023, which was primarily driven by the decrease in DPO, reflecting the reduction of payment terms for certain suppliers.

Accounts Payable Program

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A downgrade of one or both of our debt and commercial paper ratings could increase our interest expense and decrease the cash available to fund anticipated obligations.

As of March 31, 2024, we were in compliance with all debt covenants and we have no reason to believe that we will be unable to satisfy these covenants.

As of June 30, 2024, we were in compliance with all debt covenants and we have no reason to believe that we will be unable to satisfy these covenants.

Principal Uses of Capital Resources

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Regular Quarterly Dividends

We have declared total dividends of $0.215 per share and $0.20 per share for the first quarter of 2024 and 2023, respectively.

We have declared total dividends of $0.43 per share and $0.40 per share for the first six months of 2024 and 2023, respectively.

Repurchases of Common Stock

Our Board authorized a four-year share repurchase program, ending December 31, 2025, of up to $4 billion of our outstanding common stock.

We repurchased and retired $1,105 million of common stock during the first quarter of 2024.

As of March 31, 2024, $1,810 million remained available for repurchase under the authorized share repurchase program.

We repurchased and retired $1,105 million of common stock during the first six months of 2024.

As of June 30, 2024, $1,810 million remained available for repurchase under the authorized share repurchase program.

Capital Expenditures

We continue to invest in state-of-the-art manufacturing and warehousing facilities, including expansive investments in facilities in Spartanburg, South Carolina, in order to optimize our supply chain network.

Purchases of property, plant and equipment were $158 million and $62 million for the first quarter of 2024 and 2023, respectively.

Capital expenditures, which includes both purchases of property, plant and equipment and amounts included in accounts payable and accrued expenses, for the first quarter of 2024 and 2023 primarily related to investments in manufacturing capabilities.

Capital expenditures included in accounts payable and accrued expenses were $189 million and $222 million for the first quarter of 2024 and 2023, respectively, which primarily related to these investments.

Purchases of property, plant and equipment were $273 million and $149 million for the first six months of 2024 and 2023, respectively.

Capital expenditures, which includes both purchases of property, plant and equipment and amounts included in accounts payable and accrued expenses, for the first six months of 2024 and 2023 primarily related to investments in manufacturing capabilities, both in the U.S.

and internationally.

Capital expenditures included in accounts payable and accrued expenses were $173 million and $214 million for the first six months of 2024 and 2023, respectively, which primarily related to these investments.

Investments in Unconsolidated Affiliates

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These transactions are generally accounted for as an asset acquisition, as the majority of the transaction price represents the acquisition of an intangible asset.

Purchases of intangible assets were $31 million and $51 million for the first quarter of 2024 and 2023, respectively.

Purchases of intangible assets were $49 million and $55 million for the first six months of 2024 and 2023, respectively.

Uncertainties and Trends Affecting Liquidity

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The summarized financial information for the Parent and Guarantors were as follows:

(in millions) For the First Quarter of 2024

(in millions) For the First Six Months of 2024

Net sales $ 4,684

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Net income 969

(in millions) March 31, 2024 December 31, 2023

(in millions) June 30, 2024 December 31, 2023

Current assets $ 2,198 $ 1,957

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$ 25,085 $ 23,438

(1) Includes $157 million and $56 million of intercompany receivables due to the Parent and Guarantors from the Non-Guarantors as of March 31, 2024 and December 31, 2023, respectively.

(2) Includes $1,388 million and $1,399 million of intercompany payables due to the Non-Guarantors from the Parent and Guarantors as of March 31, 2024 and December 31, 2023, respectively.

(1) Includes $97 million and $56 million of intercompany receivables due to the Parent and Guarantors from the Non-Guarantors as of June 30, 2024 and December 31, 2023, respectively.

(2) Includes $1,476 million and $1,399 million of intercompany payables due to the Non-Guarantors from the Parent and Guarantors as of June 30, 2024 and December 31, 2023, respectively.

Quantitative and Qualitative Disclosures About Market Risk

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

What changed 10-Q

Item 2. Management’s Discussion and Analysis