What changed in this filing

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Item 2. Management’s Discussion and Analysis

2024-03-08 compared with 2023-09-01 · 67 added, 145 removed, 138 unchanged (61% of the section changed)

Management’s Discussion and Analysis of Financial Condition and Results of Operations

The following discussion and analysis should be read in conjunction with the accompanying unaudited condensed consolidated financial statements and related notes as of July 31, 2023, and for the three and nine months ended July 31, 2023 and 2022, included elsewhere herein.

The following discussion and analysis should be read in conjunction with the accompanying unaudited condensed consolidated financial statements and related notes as of January 31, 2024, and for the three months ended January 31, 2024 and 2023, included elsewhere herein.

For additional information pertaining to our business, including risk factors which should be considered before investing in our common stock, refer to our Annual Report on Form 10-K for the fiscal year ended October 31, 2023.

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In connection with the Acquisition, we amended our existing finance lease with Lauren Real Estate Holding LLC for the purpose of adding an additional lease renewal option and increasing rental space by approximately 60,000 square feet of rental space which was added to the 313,595 square feet of rentable area located in Cambridge, Ohio.

and global markets are experiencing volatility and disruption following the escalation of geopolitical tensions and the military conflict between Russia and Ukraine.

Although the length and impact of the ongoing military conflict is highly unpredictable, the conflict in Ukraine could lead to market or operational disruptions, including significant volatility in commodity prices, credit and capital markets, as well as supply chain interruptions.

and global markets are experiencing volatility and disruption following the escalation of geopolitical tensions and the military conflicts currently ongoing in Ukraine and Gaza.

Although the length and impact of these ongoing military conflicts are highly unpredictable, the conflicts could lead to market or operational disruptions, including significant volatility in commodity prices, credit and capital markets, as well as supply chain interruptions.

Russia, Europe’s largest provider of natural gas, has significantly reduced the export of natural gas compared to the beginning of the conflict resulting in the increase in natural gas prices and the potential for natural gas shortages.

If this trend continues, this would not only negatively impact our

European manufacturing facilities, this may also impact our customers and their demand for our products.

In addition, one of the suppliers of a vapor barrier used in the

production of our insulating glass spacers is located in Israel and may experience a disruption as a result of the ongoing conflict in Gaza.

If these trends continues, this would not only negatively impact our European manufacturing facilities, this may also impact our customers and their demand for our products.

We continue to monitor these situations and their impact on our business.

The war in Ukraine and the impact on the global economy including inflation and the price of raw materials, supply chain disruptions, and the volatility in interest rates including home mortgage rates are unpredictable and there may be developments outside our control requiring us to adjust our operating plan.

The conflicts in Ukraine and Gaza and their impacts on the global economy, including inflation and the price of raw materials, supply chain disruptions, and the volatility in interest rates including home mortgage rates, are unpredictable and there may be developments outside our control requiring us to adjust our operating plan.

Market Overview and Outlook

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residential wood cabinet demand.

In August 2023 , the NAHB forecasted calendar-year housing starts to be 1.4 million in the 2023 and 2024 calendar-years and 1.5 million in 2025.

In August 2023 , the Ducker forecast indicated that total window shipments are expected to decrease 6.6% in calendar-year 2023 and increase 2.9% in 2024.

In February 2024 , the NAHB forecasted calendar-year housing starts to be 1.4 million in the 2024 and 2025 calendar-years.

In February 2024 , the Ducker forecast indicated that total window shipments are expected to decrease 7.6% in calendar-year 2023 and 1.2% in 2024.

Several commodities in our business are subject to pricing fluctuations, including polyvinyl resin (PVC), titanium dioxide (TiO2), petroleum products, aluminum and wood.

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Results of Operations

Three Months Ended July 31, 2023 Compared to Three Months Ended July 31, 2022

Three Months Ended July 31,

2023 2022 Change $ % Variance

(Dollars in thousands)

Net sales $ 299,640 $ 324,037 $ (24,397) (8) %

Cost of sales (excluding depreciation and amortization) 221,065 251,446 (30,381) 12 %

Selling, general and administrative 30,516 28,822 1,694 (6) %

Depreciation and amortization 10,596 9,734 862 (9) %

Operating income 37,463 34,035 3,428 10 %

Interest expense (2,068) (724) (1,344) (186) %

Other, net 402 398 4 1 %

Income tax expense (4,099) (7,801) 3,702 47 %

Net income $ 31,698 $ 25,908 $ 5,790 22 %

Our period-over-period results by reportable segment follow.

Changes Related to Operating Income by Reportable Segment:

NA Fenestration

Three Months Ended July 31,

2023 2022 $ Change % Variance

(Dollars in thousands)

Net sales $ 177,081 $ 184,744 $ (7,663) (4)%

Cost of sales (excluding depreciation and amortization) 135,126 142,970 (7,844) 5%

Selling, general and administrative 14,254 14,644 (390) 3%

Depreciation and amortization 5,033 4,044 989 (24)%

Operating income $ 22,668 $ 23,086 $ (418) (2)%

Operating income margin 13 % 12 %

Net s ales decreased $7.7 million, or 4%, for the three months ended July 31, 2023 compared to the same period in 2022, which was primarily driven by a $22.3 million decrease in volumes mainly due to softer market demand, a return to normal seasonality, and a decrease in price and raw material surcharges of $5.2 million, partially offset by a $19.8 million contribution from the addition of LMI in 2023.

Cost of Sales.

The cost of sales decreased $7.8 million, or 5%, for the three months ended July 31, 2023 compared to the same period in 2022.

Cost of sales, including labor, decreased primarily due to lower volumes and deflation of raw materials during the period partially offset by LMI’s cost of sales in 2023.

Selling, General and Administrative.

S elling, general and administrative expenses decreased $0.4 million, or 3%, for the three months ended July 31, 2023 compared to the same period in 2022 primarily due to decreases in labor costs and professional fees year-over-year.

Depreciation and Amortization.

Depreciation and amortization expense increased $1.0 million, or 24%, for the three months ended July 31, 2023 as compared to the same period in 2022, primarily due to the acquisition of LMI’s property, plant and equipment and intangible assets.

EU Fenestration

Three Months Ended July 31,

2023 2022 $ Change % Variance

(Dollars in thousands)

Net sales $ 67,889 $ 67,613 $ 276 —%

Cost of sales (excluding depreciation and amortization) 41,266 47,212 (5,946) 13%

Selling, general and administrative 8,039 8,256 (217) 3%

Depreciation and amortization 2,434 2,327 107 (5)%

Operating income $ 16,150 $ 9,818 $ 6,332 64%

Operating income margin 24 % 15 %

Net sales increased $0.3 million for the three months ended July 31, 2023 compared to the same period in 2022, w hich was primarily driven by a $2.2 million benefit from foreign currency rate change and $2.1 million of base price inc reases, partially offset by a $4.0 million decrease in volumes largely due to softer market demand, and a return to normal seasonality.

Cost of Sales.

The cost of sales decreased $5.9 million, or 13%, for the three months ended July 31, 2023 compared to the same period in 2022.

Cost of sales decreased primarily due to deflation of the price of raw materials and lower volumes partially offset by foreign currency rate changes during the period.

Selling, General and Administrative.

Selling, general and administrative expense decreased $0.2 million, or 3%, for the three months ended July 31, 2023 compared to the same period in 2022.

The decrease is primarily due to a decrease in insurance expense and foreign currency impacts, partially offset by an increase in labor costs year-over-year.

NA Cabinet Components

Three Months Ended July 31,

2023 2022 $ Change Variance %

(Dollars in thousands)

Net sales $ 55,385 $ 72,480 $ (17,095) (24)%

Cost of sales (excluding depreciation and amortization) 44,935 61,543 (16,608) 27%

Selling, general and administrative 5,095 5,335 (240) 4%

Depreciation and amortization 3,084 3,273 (189) 6%

Operating income $ 2,271 $ 2,329 $ (58) (2)%

Operating income margin 4 % 3 %

N et sales decreased $17.1 million, or 24%, for the three months ended July 31, 2023 compared to the same period in 2022, which was driven by an $11.5 million decrease in volumes due to softer market demand driven by weaker consumer confidence and a $5.6 million decrease in price and raw material indexes.

Cost of Sales .

Cost of sales decreased $16.6 million, or 27%, for the three months ended July 31, 2023 compared to the same period in 2022.

Cost of sales decreased primarily due to lower volumes during the period and lumber price deflation.

Selling, General and Administrative .

Selling, general and administrative expense decreased $0.2 million, or 4%, for the three months ended July 31, 2023 compared to the same period in 2022 primarily due to a decrease in labor costs year-over-year.

Depreciation and Amortization.

Depreciation and amortization expense decreased $0.2 million , or 6% , for the three months ended July 31, 2023 as compared to the same period in 2022, reflecting the run-off of depreciation expense related to existing assets.

Unallocated Corporate & Other

Three Months Ended July 31,

2023 2022 $ Change Variance %

(Dollars in thousands)

Net sales $ (715) $ (800) $ 85 11%

Cost of sales (excluding depreciation and amortization) (262) (279) 17 (6)%

Selling, general and administrative 3,128 587 2,541 (433)%

Depreciation and amortization 45 90 (45) 50%

Operating loss $ (3,626) $ (1,198) $ (2,428) (203)%

Net sales for Unallocated Corporate & Other represents the elimination of inter-segment sales for the three months ended July 31, 2023 and 2022.

Cost of Sales .

Cost of sales for Unallocated Corporate & Other consists of the elimination of inter-segment sales, profit in inventory, and other costs.

Selling, General and Administrative .

Selling, general and administrative expenses increased $2.5 million, or 433%, for the three months ended July 31, 2023 compared to the same period in 2022.

This increase is primarily attributable to an increase in medical claims expense and higher compensation expense including the valuations of our stock-based compensation awards during the three months ended July 31, 2023 as compared to the prior year period.

Changes related to Non-Operating Items:

Interest Exp ense .

Interest expense increased $1.3 million for the three months ended July 31, 2023 compared to the same period in 2022 as a result of higher borrowings outstanding during the period and an increase in interest rates.

Income Taxes .

We recorded inco me tax expense of $4.1 million on pre-tax income of $35.8 million for the three months ended July 31, 2023, an effective rate of 11.5%, and income tax expense of $7.8 million on pre-tax income of $33.7 million for the three months ended July 31, 2022, an effective rate of 23.1%.

The decrease in income tax expense year-over-year was primarily driven by a benefit for tax provision accrual to tax return filings, as well as a shift of income to lower tax jurisdictions.

Nine Months Ended July 31, 2023 Compared to Nine Months Ended July 31, 2022

Nine Months Ended July 31,

Three Months Ended January 31, 2024 Compared to Three Months Ended January 31, 2023

Three Months Ended January 31,

2024 2023 Change $ % Variance

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NA Fenestration

Nine Months Ended July 31,

Three Months Ended January 31,

2024 2023 $ Change % Variance

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Operating income margin 6 % 6 %

Ne t sales decreased $22.2 million, or 4%, for the nine months ended July 31, 2023 compared to the same period in 2022, which was primarily driven by a $70.5 million decrease in volumes mainly due to softer market demand, a return to normal seasonality, customer destocking, and a decrease in price and raw material surcharges of $5.7 million, partially offset by a $54.0 million contribution from the addition of LMI in 2023.

Ne t sales decreased $5.0 million, or 3%, for the three months ended January 31, 2024 compared to the same period in 2023, which was primarily driven by a $4.3 million decrease in volumes mainly due to softer market demand and a return to normal seasonality and a $0.7 million decrease in price and raw material surcharges.

Cost of Sales.

The cost of sales decreased $14.2 million, or 4%, for the nine months ended July 31, 2023 as compared to the same period in 2022.

Cost of sales, including labor, decreased primarily due to lower volumes and deflation of raw materials during the period partially offset by LMI’s cost of sales in 2023.

The cost of sales decreased $6.3 million, or 5%, for the three months ended January 31, 2024 as compared to the same period in 2023.

Cost of sales, including labor, decreased primarily due to lower volumes and deflation of raw materials during the period.

Selling, General and Administrative.

S elling, general and administrative expenses decreased $1.4 million, or 3%, for the nine months ended July 31, 2023 as compared to the same period in 2022 primarily due to decreases in labor costs and professional fees year-over-year.

Depreciation and Amortization.

Depreciation and amortization expense increased $3.1 million, or 25%, for the nine months ended July 31, 2023 as compared to the same period in 2022, primarily due to the acquisition of LMI’s property, plant and equipment and intangible assets.

S elling, general and administrative expenses increased $2.6 million, or 20%, for the three months ended January 31, 2024 as compared to the same period in 2023.

The increase is primarily due to increases in labor costs year-over-year.

EU Fenestration

Nine Months Ended July 31,

Three Months Ended January 31,

2024 2023 $ Change Variance %

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Operating income margin 15 % 13 %

Net sales decreased $13.4 million, or 7%, comparing the nine months ended July 31, 2023 to the same period in 2022, which was primarily driven by a $16.1 million decrease in volumes largely due to softer market demand, a return to normal seasonality, and customer destocking, and $8.6 million of foreign currency rate change, partially offset by $11.3 million of base price increases.

Net sales decreased $5.5 million, or 10%, comparing the three months ended January 31, 2024 to the same period in 2023, which was primarily driven by a $6.8 million decrease in volumes largely due to softer market demand and a return to normal seasonality, partially offset by $1.0 million of foreign currency rate change and $0.3 million of base price increases.

Cost of Sales.

The cost of sales decreased $18.7 million, or 14%, for the nine months ended July 31, 2023 compared to the same period in 2022.

The cost of sales decreased $6.0 million, or 16%, for the three months ended January 31, 2024 compared to the same period in 2023.

Cost of sales decreased primarily due to a decrease in volumes, deflation in the price of raw materials and foreign currency impacts.

Selling, General and Administrative.

Selling, general and administrative expense decreased $0.2 million, or 1%, for the nine months ended July 31, 2023 compared to the same period in 2022.

The decrease is primarily due to a decrease in professional fees and foreign currency impacts, partially offset by an increase in labor costs year-over-year.

Selling, general and administrative expense increased $0.2 million, or 3%, for the three months ended January 31, 2024 compared to the same period in 2023.

The increase is primarily due to increases in labor costs year-over-year.

NA Cabinet Components

Nine Months Ended July 31,

Three Months Ended January 31,

2024 2023 $ Change Variance %

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Depreciation and amortization 3,065 2,934 131 4%

Operating income $ 1,928 $ 1,444 $ 484 34%

Operating income margin 1 % 1 %

Net sales decreased $44.1 million, or 21%, for the nine months ended July 31, 2023 compared to the same period in 2022, which was driven by a $40.6 million decrease in volumes due to softer market demand driven by weaker consumer confidence partially offset by a $3.5 million decrease in raw material indexes.

Operating loss $ (3,797) $ (1,189) $ (2,608) 219%

Operating loss margin (9) % (2) %

Net sales decreased $11.5 million, or 21%, for the three months ended January 31, 2024 compared to the same period in 2023, which was driven by a $6.4 million decrease in volumes due to softer market demand driven by weaker consumer confidence and a $5.1 million decrease in raw material indexes.

Cost of Sales .

Cost of sales decreased $43.1 million, or 24%, for the nine months ended July 31, 2023 compared with the same period in 2022, primarily as a result of lower volumes year-over-year and lumber price deflation.

Cost of sales decreased $9.3 million, or 19%, for the three months ended January 31, 2024 compared with the same period in 2023, primarily as a result of lower volumes year-over-year.

Selling, General and Administrative .

Selling, general and administrative expense increased $0.1 million, or 1%, for the nine months e nded July 31, 2023 compared to the same period in 2022.

This increase is primarily due to a the loss on an asset caused by wind damage to a manufacturing facility and an increase in professional fees partially offset by a decrease in labor costs.

Depreciation and Amortization.

Depreciation and amortization expense decreased $1.7 million , or 16%, for the nine months ended July 31, 2023 as compared to the same period in 2022, reflecting the run-off of depreciation expense related to existing assets.

Selling, general and administrative expense increased $0.3 million, or 5%, for the three months e nded January 31, 2024 compared to the same period in 2023.

This increase is primarily due to due to increases in labor costs year-over-year.

Unallocated Corporate & Other

Nine Months Ended July 31,

Three Months Ended January 31,

2024 2023 $ Change Variance %

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Operating loss $ (3,959) $ (11,527) $ 7,568 (66)%

Net sales for Unallocated Corporate & Other represents the elimination of inter-segment sales for the nine months ended July 31, 2023 and 2022.

Net sales for Unallocated Corporate & Other represents the elimination of inter-segment sales for the three months ended January 31, 2024 and 2023.

Cost of Sales .

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Selling, General and Administrative .

Selling, general and administrative expenses increased $8.3 million, or 177%, for the nine months ended July 31, 2023 compared to the same period in 2022.

This increase is primarily attributable to an increase in transaction fees and compensation expense including the valuations of our stock-based compensation awards during the nine months ended July 31, 2023 as compared to the prior year period.

Selling, general and administrative expenses decreased $7.5 million, or 68%, for the three months ended January 31, 2024 compared to the same period in 2023.

This decrease is primarily attributable to a decrease in transaction fees and compensation expense including the valuations of our stock-based compensation awards during the three months ended January 31, 2024 as compared to the prior year period.

Changes related to Non-Operating Items:

Interest Exp ense .

Interest expense increased $4.7 million for the nine months ended July 31, 2023 compared to the same period in 2022 as a result of higher borrowings outstanding during the period and an increase in interest rates.

Interest expense decreased $1.2 million for the three months ended January 31, 2024 compared to the same period in 2023 primarily as a result of lower borrowings outstanding during the three months ended January 31, 2024 as compared to the prior year period.

Income Taxes .

We recorded income tax expense of $10.1 million on pre-tax income of $65.2 million for the nine months ended July 31, 2023, an effective rate of 15.5%, and income tax expense of $18.1 million on a pre-tax income of $81.8 million for the nine months ended July 31, 2022, an effective rate of 22.1%.

The decrease in income tax expense year-over-year was primarily driven by a benefit for tax provision accrual to tax return filings, as well as a shift of income to lower tax jurisdictions.

We recorded income tax expense of $1.6 million on pre-tax income of $7.9 million for the three months ended January 31, 2024, an effective rate of 20.8%, and income tax expense of $0.5 million on a pre-tax income of $2.4 million for the three months ended January 31, 2023, an effective rate of 19.2%.

The increase in income tax expense year-over-year was primarily driven by the differences in discrete items.

Liquidity and Capital Resources

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We maintain a $325.0 million revolving credit facility (the Credit Facility) that matures in 2027 (5-year term) and requires interest payments calculated at a variable market rate depending upon our Consolidated Net Leverage Ratio.

The applicable rate during the nine months ended July 31, 2023 was RFR Rate + 1.25%.

The applicable rate during the three months ended January 31, 2024 was RFR Rate + 1.25%.

Our cost of capital could increase depending upon the Consolidated Net Leverage Ratio at the end of any given quarter.

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For further details of the Credit Facility, refer to Note 5, “Debt and Finance Lease Obligations” to the accompanying unaudited condensed consolidated financial statements contained elsewhere herein.

As of July 31, 2023, we had $73.3 million of cash and equivalents, $55.0 million outstanding under the Credit Facility, $5.1 million of outstanding letters of credit and $55.8 million outstanding under finance leases and other debt.

As of January 31, 2024, we had $44.4 million of cash and equivalents, $10.0 million outstanding under the Credit Facility, $5.1 million of outstanding letters of credit and $55.2 million outstanding under finance leases and other debt.

Of the $55.2 million outstanding under finance leases and other debt, $51.7 million relates to real estate leases.

We had $264.9 million available for use under the Credit Facility at July 31, 2023.

We had $309.9 million available for use under the Credit Facility at January 31, 2024.

During December 2021, our Board of Directors approved a stock repurchase program that authorized the repurchase of up to $75.0 million worth of shares of our common stock.

Repurchases under the program will be made in open market transactions or privately negotiated transactions, subject to market conditions, applicable legal requirements and other relevant factors.

During the three months ended July 31, 2023, we did not purchase any shares under this program and as of July 31, 2023 we had a maximum of $62.8 million available to purchase shares under this program.

During the three months ended January 31, 2024, we did not purchase any shares under this program and as of

January 31, 2024 we had a maximum of $62.8 million available to purchase shares under this program.

The program does not have an expiration date or a limit on the number of shares that may be purchased.

We repatriated $30.2 million and $18.2 million of f oreign cash during the nine months ended July 31, 2023 and 2022, respectively.

We repatriated $3.6 million and $4.3 million of f oreign cash during the three months ended January 31, 2024 and 2023, respectively.

We expect to repatriate excess cash moving forward and use the funds to retire debt or meet current working capital needs.

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Analysis of Cash Flow

The following table summarizes our cash flow results for the nine months ended July 31, 2023 and 2022:

Nine Months Ended

The following table summarizes our cash flow results for the three months ended January 31, 2024 and 2023:

Three Months Ended

(Dollars in thousands)

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Cash used for investing activities $ (9,549) $ (99,484)

Cash provided by (used for) financing activities $ 26,687 $ (17,937)

Cash (used for) provided by financing activities $ (9,117) $ 83,314

Operating A ctivities .

Cash provided by operating activities increased $52.7 million for the nine months ended July 31, 2023 compared to the nine months ended July 31, 2022.

The increase in operating cash flows is primarily due to favorable changes to working capital partially offset by lower net income year-over-year due to a decrease in customer demand.

The favorable changes in working capital were largely driven by a decrease in inventory value due to raw material price deflation and a decrease in accounts receivable partially offset by a decrease in accounts payable.

Cash provided by operating activities increased $0.7 million for the three months ended January 31, 2024 compared to the three months ended January 31, 2023.

The increase in operating cash flows is primarily due to an increase net income year-over-year due to an improvement in gross margin efficiency and a decrease in transaction fees partially offset by unfavorable changes to working capital.

The unfavorable changes in working capital were largely driven by an increase in inventory due to inventory build partially offset by a lower payout of accrued incentives.

Investing Activities.

Cash used f or investing activities increased $94.2 million for the nine months ended July 31, 2023 compared to the same period in 2022, primarily as a result of the Acquisition of LMI.

Cash used f or investing activities decreased $89.9 million for the three months ended January 31, 2024 compared to the same period in 2023, primarily as a result of no business acquisitions in 2024 compared to the acquisition of LMI in 2023.

Financing Activities.

Cash provided by financing activities was $26.7 million for the nine months ended July 31, 2023, which included $40.0 million of net borrowings of long-term debt, $8.0 million of dividends paid to our shareholders, and $5.6 million related to the purchase of treasury stock.

Cash used for financing activities was $9.1 million for the three months ended January 31, 2024 compared to cash provided by financing activities of $83.3 million for the same period in 2023.

The change in investing cash flows is primarily as a result of a decrease in net borrowings of long-term debt.

During the three months ended January 31, 2023, $92.0 million of the borrowings of long-term debt was related to the acquisition of LMI.

Liquidity Requirements

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Other uses of cash include paying cash dividends to our shareholders and repurchasing our common stock.

During the nine months ended July 31, 2023 and 2022, we repatriated $30.2 million and $18.2 million, respectively, of foreign earnings from our foreign locations.

We maintain cash balances in foreign countries which total $21.2 million as of July 31, 2023.

During the three months ended January 31, 2024 and 2023, we repatriated $3.6 million and $4.3 million, respectively, of foreign earnings from our foreign locations.

We maintain cash balances in foreign countries which total $17.5 million as of January 31, 2024.

Critical Accounting Policies and Estimates

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For a description of our critical accounting policies and estimates, see our Annual Report on Form 10-K for the fiscal year ended October 31, 2023.

Our critical accounting policies and estimates have not changed materially during the nine months ended July 31, 2023.

Our critical accounting policies and estimates have not changed materially during the three months ended January 31, 2024.

New Accounting Pronouncements

From time to time, new accounting pronouncements are issued by the Financial Accounting Standards Board (“FASB”) or other standards setting bodies that we adopt as of the specified effective date.

We did not adopt any new accounting pronouncements during the three and nine months ended July 31, 2023.

As of July 31, 2023, we believe the impact of any recently issued standards that are not yet effective are either not applicable to us at this time or will not have a material impact on our condensed consolidated financial statements upon adoption.

We did not adopt any new accounting pronouncements during the three months ended January 31, 2024.

Accounting Standards Not Yet Adopted

In November 2023, the FASB issued “Segment Reporting (Topic 280):

Improvements to Reportable Segment Disclosures,” which is intended to improve reportable segment disclosure requirements, primarily through enhanced disclosures about significant segment expenses.

The guidance is effective for fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024 with early adoption is permitted.

The guidance is to be applied retrospectively to all prior periods presented in the financial statements.

We are currently evaluating the potential impact of adopting this new guidance on our consolidated financial statements and related disclosures.

In December 2023, the FASB issued “Income Taxes (Topic 740):

Improvements to Income Tax Disclosures,” which includes updates to the income tax disclosures related to the rate reconciliation and disaggregation of income taxes paid by jurisdiction.

The guidance is effective for fiscal years beginning after December 15, 2024 with early adoption permitted.

The amendments should be applied prospectively, however retrospective application is permitted.

We are currently evaluating the potential impact of adopting this new guidance on our consolidated financial statements and related disclosures.

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