What changed in this filing

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Item 2. Management’s Discussion and Analysis

2023-11-08 compared with 2023-08-04 · 80 added, 91 removed, 343 unchanged (33% of the section changed)

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This Management’s Discussion and Analysis

provides a comparison of our performance for the three and six month periods ended June 30, 2023 with the corresponding three and six

month periods ended June 30, 2022 and reviews our financial position as of June 30, 2023.

The following discussion related to our consolidated financial statements should be read in conjunction with the financial statements and the notes thereto appearing elsewhere in this Quarterly Report on Form 10-Q and in our Annual Report.

provides a comparison of our performance for the three- and nine-month periods ended September 30, 2023 with the corresponding three- and nine-month periods ended September 30, 2022 and reviews our financial position as of September 30, 2023.

FORWARD-LOOKING STATEMENTS

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(i) economic, market, political and social impact of, and uncertainty relating to, any catastrophic events, including pandemics, epidemics or other outbreaks of disease, natural disasters and extreme weather events, terrorism and other armed hostilities, as well as cybersecurity threats and technology disruptions;

(ii) a failure of conditions or performance regarding any event or transaction described herein, (iii) resolution of legal proceedings involving us and/or ESRT;

(ii) a failure of conditions or performance regarding any event or transaction described herein;

(iii) resolution of legal proceedings involving us and/or ESRT;

(iv) reduced demand for office, multifamily or retail space, including as a result of the changes in the use of office space and remote work;

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and (xxi) accuracy of our methodologies and estimates regarding ESG metrics and goals, tenant willingness and ability to collaborate in reporting ESG metrics and meeting ESG goals, and impact of governmental regulation on our ESG efforts.

For a further discussion of these and other factors that could impact the Operating Partnership’s future results, performance or transactions, see the section entitled “Risk Factors” in our Annual Report and other risks described in documents subsequently filed by us from time to time with the Securities and Exchange Commission.

While forward-looking statements reflect the Company's good faith beliefs, they do not guarantee of future performance.

For a further discussion of these and other factors that could impact the Operating Partnership’s future results, performance or transactions, see the section entitled “Risk Factors” in our Annual Report, and other risks described in documents subsequently filed by us from time to time with the Securities and Exchange Commission (the "SEC").

While forward-looking statements reflect the Company's good faith beliefs, they do not guarantee future performance.

Any forward-looking statement speaks only as of the date on which it was made, and we assume no obligation to update or revise publicly any forward-looking statement to reflect changes in underlying assumptions or factors, new information, data or methods, future events, or other changes after the date of this Quarterly Report on Form 10-Q, except as required by applicable law.

Prospective investors should not place undue reliance on any forward-looking statements, which are based only on information currently available to the Company (or to third parties making the forward-looking statements).

Highlights for the three months ended June 30, 2023

Highlights for the three months ended September 30, 2023

• Net income attributable to common unitholders of $18.8 million.

• Core Funds From Operations attributable to common unitholders ("Core FFO") of $69.2 million.

• Commercial portfolio 90.3% leased, Manhattan office portfolio 91.6% leased.

• Core Funds From Operations ("Core FFO") of $65.9 million attributable to common unitholders.

• Signed a total of 248,479 rentable square feet of new, renewal, and expansion leases.

• Commercial portfolio 90.5% leased, Manhattan office portfolio 91.9% leased.

• Empire State Building Observatory generated $28.1 million of net operating income.

• ESRT repurchased $7.4 million of its common stock in the second quarter of 2023 and through July 25, 2023.

Results of Operations

The discussion below relates to our results of operations for the three and six months ended June 30, 2023 and 2022, respectively.

Three Months Ended June 30, 2023 Compared to the Three Months Ended June 30, 2022

The following table summarizes our historical results of operations for the three months ended June 30, 2023 and 2022, respectively (amounts in thousands):

Three Months Ended June 30,

The discussion below relates to our results of operations for the three and nine months ended September 30, 2023 and 2022, respectively.

Three Months Ended September 30, 2023 Compared to the Three Months Ended September 30, 2022

The following table summarizes our historical results of operations for the three months ended September 30, 2023 and 2022, respectively (amounts in thousands):

Three Months Ended September 30,

2023 2022 Change %

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(25,382) — (25,382) (25,516) — (25,516) 134 0.5

Gain on disposition of property

13,565 — 13,565 27,170 — 27,170 (13,605) —

Income before income taxes

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Private perpetual preferred unit distributions (1,050) — (1,050) (1,050) — (1,050) — —

Net loss (income) attributable to non-controlling interests in other partnerships (1) — (1) 159 — 159 (160) (100.6)

Net (income) loss attributable to non-controlling interests in other partnerships (111) — (111) 49 — 49 160 326.5

Net income attributable to common unitholders

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Rental Revenue

The increase in rental revenue was primarily attributable to the reversal in the three months ended June 30, 2023 of a one-time straight-line rent receivable reserve recorded in the three months ended March 31, 2023 tied to Signature Bank entering receivership.

See "Financial Statements - Note 8.

Leases" for more information.

Property Operating Expenses

The increase in property operating expenses reflects higher repairs and maintenance, cleaning, and payroll costs.

Real Estate Taxes

Higher real estate taxes were primarily attributable to higher assessed values for multiple properties and the inclusion of real estate taxes from our most recently acquired multifamily property net of real estate taxes from disposed properties.

Depreciation and Amortization

The decrease in depreciation and amortization reflects accelerated depreciation at one property recorded in the three months ended June 30, 2022 and depreciation expense in the three months ended June 30, 2022 on properties that were sold prior to June 30, 2023.

The increase in rental revenue was primarily attributable to a $5.5 million increase in base rent from new or renewed tenants and higher rents and higher tenant escalations and a net $2.3 million decrease in revenue from our recent transaction activity as disclosed in "Financial Statements - Note 3.

Acquisitions and Dispositions."

Interest Income

The increase in interest income in the three months ended June 30, 2023 reflects higher interest rates compared to the three months ended June 30, 2022.

Gain on Disposition of Property

Reflects the gain on disposition of 500 Mamaroneck in Westchester County, New York in April 2023.

The increase in interest income in the three months ended September 30, 2023 reflects higher interest rates compared to the three months ended September 30, 2022.

Observatory Segment

Observatory Revenue

Observatory revenues were higher driven by increased visitation as compared to the three months ended June 30, 2022.

Observatory revenues were higher driven by increased visitation and revenue per visitor during the three months ended September 30, 2023 as compared to the three months ended September 30, 2022.

Observatory Expenses

The increase in observatory expenses was driven by increased operating hours, which increased variable costs such as marketing, labor and maintenance costs compared to the three months ended June 30, 2022.

The increase in income tax expense was attributable to higher taxable income for the observatory segment for the three months ended June 30, 2023.

Six Months Ended June 30, 2023 Compared to the Six Months Ended June 30, 2022

The following table summarizes our historical results of operations for the six months ended June 30, 2023 and 2022 (amounts in thousands):

Six Months Ended June 30,

Nine Months Ended September 30, 2023 Compared to the Nine Months Ended September 30, 2022

The following table summarizes our historical results of operations for the nine months ended September 30, 2023 and 2022 (amounts in thousands):

Nine Months Ended September 30,

2023 2022 Change %

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29,261 — 29,261 27,170 — 27,170 2,091 7.7

Income (loss) before income taxes

Income before income taxes

61,282 8,218 69,500 37,561 4,255 41,816 27,684 66.2

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Private perpetual preferred unit distributions (3,151) — (3,151) (3,151) — (3,151) — —

Net loss attributable to non-controlling interests in other partnerships 42 — 42 222 — 222 (180) (81.1)

Net (income) loss attributable to non-controlling interests in other partnerships (69) — (69) 271 — 271 340 125.5

Net income attributable to common unitholders

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Rental Revenue

The decrease in rental revenue was primarily attributable to our dispositions of 383 Main Avenue, 10 Bank Street, 69-97 and 103-107 Main Street, and 500 Mamaroneck in April 2022, December 2022, February 2023, and April 2023, respectively.

The increase in rental revenue was primarily attributable to a $7.1 million increase in base rent from new or renewed tenants and higher rents and higher tenant escalations, and a net $6.1 million decrease in revenue from our recent transaction activity as disclosed in "Financial Statements - Note 3.

Acquisitions and Dispositions."

Property Operating Expenses

The increase in property operating expenses reflects higher repairs and maintenance, cleaning, and payroll costs.

The increase in property operating expenses is primarily due to higher repair and maintenance costs, higher cleaning costs, and higher payroll costs in 2023 relating to increased building utilization.

General and Administrative Expenses

The increase in general and administrative expenses primarily reflects higher payroll and equity compensation costs.

The increase in general and administrative expenses primarily reflects higher payroll due to year-over-year wage growth.

Real Estate Taxes

Higher real estate taxes primarily attributable to higher assessed values for multiple properties and the inclusion of real estate taxes from our most recently acquired multifamily property net of real estate taxes from disposed properties.

The increase in real estate taxes was primarily attributable to a $4.1 million increase in real estate tax expense due to higher assessed values for multiple properties, partially offset by a net $0.4 million decrease from our recent transaction activity as disclosed in "Financial Statements - Note 3.

Acquisitions and Dispositions."

Depreciation and Amortization

The decrease in depreciation and amortization reflects accelerated depreciation at one property recorded in the six months ended June 30, 2022 and depreciation expense in the six months ended June 30, 2022 on properties that were sold prior to June 30, 2023.

The decrease in depreciation and amortization reflects accelerated depreciation during the nine months ended September 30, 2022 relating to the transfer of 383 Main Avenue back to the lender in a consensual foreclosure and depreciation expense in the nine months ended September 30, 2022 on properties that were sold prior to September 30, 2023.

Interest Income

The increase reflects higher interest rates in the six months ended June 30, 2023 compared to the six months ended June 30, 2022.

The increase reflects higher interest rates in the nine months ended September 30, 2023 compared to the nine months ended September 30, 2022.

Gain on Disposition of Property

Reflects the gain on disposition of 500 Mamaroneck in Westchester County, New York in April 2023 and 69-97 and 103-107 Main Street in Westport, Connecticut in February 2023.

The gain for the nine months ended September 30, 2023 reflects the gain on disposition of 500 Mamaroneck in Harrison, New York in April 2023 and 69-97 and 103-107 Main Street in Westport, Connecticut in February 2023 while the gain for the nine months ended September 30, 2022 represents a gain on the disposition of 383 Main Avenue in Norwalk, Connecticut in April 2022.

Observatory Segment

Observatory Revenue

Observatory revenues were higher driven by increased visitation as compared to the six months ended June 30, 2022.

Observatory revenues were higher driven by increased visitation and revenue per visitor during the nine months ended September 30, 2023 as compared to the nine months ended September 30, 2022.

Observatory Expenses

The increase in observatory expenses was driven by increased operating hours, which increased variable costs such as marketing, labor and maintenance costs.

The decrease in income tax benefit was attributable to lower taxable loss for the observatory segment for the six months ended June 30, 2023.

The increase in income tax expense was attributable to a $3.9 million increase in income before taxes for the observatory segment for the nine months ended September 30, 2023.

Liquidity and Capital Resources

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ESRT's charter does not restrict the amount of leverage that we may use.

At June 30, 2023, we had $315.4 million available in cash and cash equivalents, and $850 million available under our unsecured revolving credit facility.

As of June 30, 2023, we had approximately $2.3 billion of total consolidated indebtedness outstanding, with a weighted average interest rate of 3.9% and a weighted average maturity of 5.9 years.

As of June 30, 2023, excluding principal amortization, we have no outstanding debt maturing until November 2024.

At September 30, 2023, we had $354.0 million available in cash and cash equivalents, and $850 million available under our unsecured revolving credit facility.

As of September 30, 2023, we had approximately $2.2 billion of total consolidated indebtedness outstanding, with a weighted average interest rate of 3.9% and a weighted average maturity of 5.7 years.

As of September 30, 2023, excluding principal amortization, we have no outstanding debt maturing until November 2024.

Portfolio Transaction Activity

On February 1, 2023, we closed on the sale of 69-97 and 103-107 Main Street in Westport, Connecticut at a gross asset valuation of $40.0 million.

On April 5, 2023, we closed on the sale of 500 Mamaroneck Avenue in Harrison, NY at a gross asset valuation of $53.0 million.

On April 5, 2023, we closed on the sale of 500 Mamaroneck Avenue in Harrison, New York at a gross asset valuation of $53.0 million.

On September 14, 2023, we closed on the acquisition of a Williamsburg retail property located on the corner of North 6 th Street and Wythe Avenue in Brooklyn, New York, for a purchase price of $26.4 million.

Unsecured Revolving Credit and Term Loan Facilities

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Mortgage Debt

As of June 30, 2023, our consolidated mortgage notes payable amounted to $896.4 million.

The first maturity is in November 2024.

As of September 30, 2023, our consolidated mortgage notes payable amounted to $893.9 million.

We have no debt maturity until November 2024.

See "Financial Statements - Note 5.

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The agreements also contain customary events of default (subject in certain cases to specified cure periods), including but not limited to non-payment, breach of covenants, representations or warranties, cross defaults, bankruptcy or other insolvency events, judgments, ERISA events, the occurrence of certain change of control transactions and loss of real estate investment trust qualification.

As of June 30, 2023, we were in compliance with the covenants under the outstanding senior unsecured notes.

As of September 30, 2023, we were in compliance with the covenants under the outstanding senior unsecured notes.

Financial Covenants

As of June 30, 2023, we were in compliance with the following financial covenants:

Financial covenant Required June 30, 2023 In Compliance

As of September 30, 2023, we were in compliance with the following financial covenants:

Financial covenant Required September 30, 2023 In Compliance

Maximum total leverage < 60% 33.2 % Yes

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Office Properties

Six Months Ended June 30,

Nine Months Ended September 30,

Total New Leases, Expansions, and Renewals 2023 2022

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Retail Properties

Six Months Ended June 30,

Nine Months Ended September 30,

Total New Leases, Expansions, and Renewals 2023 2022

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Total square feet

14,263 45,655

Leasing commission costs per square foot (2)

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_______________

(1) Excludes an aggregate of 497,786 and 496,311 rentable square feet of retail space in our Manhattan office properties in 2023 and 2022, respectively.

Includes the Empire State Building broadcasting licenses and observatory operations.

(1) Presents a renewed and expansion lease as one lease signed.

(2) Presents all tenant improvement and leasing commission costs as if they were incurred in the period in which the lease was signed, which may be different than the period in which they were actually paid.

(4) Includes an aggregate of 497,786 and 496,311 rentable square feet of retail space in our Manhattan office properties in 2023 and 2022, respectively.

Excludes the Empire State Building broadcasting licenses and observatory operations.

Six Months Ended June 30,

Nine Months Ended September 30,

Total Portfolio

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(1) Excludes tenant improvements and leasing commission costs.

As of June 30, 2023, we expect to incur additional costs relating to obligations under existing lease agreements of approximately $138.4 million for tenant improvements and leasing commissions.

As of September 30, 2023, we expect to incur additional costs relating to obligations under existing lease agreements of approximately $139.3 million for tenant improvements and leasing commissions.

We intend to fund the tenant improvements and leasing commission costs through a combination of operating cash flow, cash on hand, additional property level mortgage financings and borrowings under the unsecured revolving credit facility.

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Off-Balance Sheet Arrangements

As of June 30, 2023, we did not have any off-balance sheet arrangements.

As of September 30, 2023, we did not have any off-balance sheet arrangements.

Distribution Policy

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federal income tax purposes or otherwise, we must first meet both our operating requirements and obligations to make payments of principal and interest, if any.

However, under some circumstances, we may be required to use cash reserves, incur debt or liquidate assets at rates or times that we regard as unfavorable or make a taxable distribution of our shares in order to satisfy REIT distribution requirements.

However, under some circumstances, we may be required to

use cash reserves, incur debt or liquidate assets at rates or times that we regard as unfavorable or make a taxable distribution of our shares in order to satisfy REIT distribution requirements.

Distribution to Equity Holders

Distributions and dividends amounting to $20.3 million and $21.6 million have been made to equity holders for the six months ended June 30, 2023 and 2022, respectively.

Distributions and dividends amounting to $30.8 million and $32.2 million have been made to equity holders for the nine months ended September 30, 2023 and 2022, respectively.

Stock and Publicly Traded Operating Partnership Unit Repurchase Program

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Under the program, ESRT may purchase ESRT Class A common stock and we may purchase our Series ES, Series 250 and Series 60 operating partnership units in accordance with applicable securities laws from time to time in the open market or in privately negotiated transactions.

The timing, manner, price and amount of any repurchases will be determined by ESRT and us at our discretion and will be subject to stock price, availability, trading volume and general market conditions.

The timing, manner, price and amount of any repurchases will be determined by ESRT and us at our discretion and will be subject to stock price, availability, trading volume, general market conditions, and applicable securities laws.

The authorization does not obligate ESRT or us to acquire any particular amount of securities, and the program may be suspended or discontinued at ESRT and our discretion without prior notice.

There were no purchases of equity securities in the three months ended September 30, 2023.

See "Financial Statements - Note 10.

Capital" for a summary of ESRT's purchases of equity securities in each of the three months ended June 30, 2023.

Comparison of Six Months Ended June 30, 2023 to the Six Months Ended June 30, 2022

Cash and cash equivalents and restricted cash were $395.8 million and $412.8 million, respectively, as of June 30, 2023 and 2022.

The decrease was primarily due to the acquisition of real estate property in December 2022 and higher spending for capital expenditures, partially offset by net proceeds from the disposition of properties in December 2022 and February and April 2023 and lower repurchases of common shares.

Comparison of Nine Months Ended September 30, 2023 to the Nine Months Ended September 30, 2022

Cash and cash equivalents and restricted cash were $421.0 million and $439.8 million, respectively, as of September 30, 2023 and 2022.

The decrease was primarily due to the acquisition of real estate property in December 2022 and September 2023 and increased spending for capital expenditures, partially offset by net proceeds from the disposition of properties in December 2022 and February and April 2023 and lower repurchases of common shares.

Operating activities .

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Investing activities .

Net cash provided by investing activities increased by $69.3 million to $12.7 million primarily due to net proceeds from the disposition of 69-97 and 103-107 Main Street in Westport, Connecticut, and 500 Mamaroneck in Harrison, New York.

Net cash used in investing activities decreased by $49.7 million to $39.4 million primarily due to net proceeds from the disposition of 69-97 and 103-107 Main Street in Westport, Connecticut in February 2023, and 500 Mamaroneck in Harrison, New York in April 2023.

Financing activities .

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The following table presents a reconciliation of our net income, the most directly comparable GAAP measure, to NOI for the periods presented (amounts in thousands):

Three Months Ended June 30, Six Months Ended June 30,

Three Months Ended September 30, Nine Months Ended September 30,

2023 2022 2023 2022

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There can be no assurance that FFO presented by us is comparable to similarly titled measures of other REITs.

FFO does not represent cash generated from operating activities and should not be considered as an alternative to net income (loss) determined in accordance with GAAP or to cash flow from operating activities determined in accordance with GAAP.

FFO does not represent cash generated from operating activities and should not be considered as an alternative to net income

(loss) determined in accordance with GAAP or to cash flow from operating activities determined in accordance with GAAP.

FFO is not indicative of cash available to fund ongoing cash needs, including the ability to make cash distributions.

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The following table presents a reconciliation of our net income, the most directly comparable GAAP measure, to FFO, Modified FFO and Core FFO for the periods presented (amounts in thousands):

Three Months Ended June 30, Six Months Ended June 30,

Three Months Ended September 30, Nine Months Ended September 30,

2023 2022 2023 2022

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65,898 56,535 178,054 184,861

Loss on early extinguishment of debt

Core FFO attributable to common unitholders

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Due to the relatively small number of leases that are signed in any particular quarter, one or more larger leases may have a disproportionately positive or negative impact on average rent, tenant improvement and leasing commission costs for that period.

As a result, we believe it is more appropriate when analyzing trends in average rent and tenant improvement and leasing commission costs to review activity over multiple quarters or years.

Tenant improvement costs include expenditures for general improvements occurring concurrently

with, but that are not directly related to, the cost of installing a new tenant.

As a result, we believe it is more appropriate when analyzing trends in average rent and tenant improvement and leasing commission costs to review

activity over multiple quarters or years.

Tenant improvement costs include expenditures for general improvements occurring concurrently with, but that are not directly related to, the cost of installing a new tenant.

Leasing commission costs are similarly subject to significant fluctuations depending upon the length of leases being signed and the mix of tenants from quarter to quarter.

As of June 30, 2023, there were approximately 0.9 million rentable square feet of space in our portfolio available to lease (excluding leases signed but not yet commenced) representing 9.7% of the net rentable square footage of the properties in our portfolio.

As of September 30, 2023, there were approximately 0.9 million rentable square feet of space in our portfolio available to lease (excluding leases signed but not yet commenced) representing 9.5% of the net rentable square footage of the properties in our portfolio.

In addition, leases representing 2.9% and 5.3% of net rentable square footage of the properties in our portfolio will expire in 2023 and in 2024, respectively.

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Observatory Operations

For the three months ended June 30, 2023, the observatory hosted 666,000 visitors, compared to 573,000 visitors for the three months ended June 30, 2022.

Our return of attendance to pre-pandemic levels is closely tied to national and international travel trends, our new reservations-only model of operation, and our desire to provide a better experience with fewer crowds to visitors from whom we receive higher revenues per person.

Observatory revenue for the three months ended June 30, 2023 was $33.4 million, compared to $27.4 million for the three months ended June 30, 2022.

For the three months ended September 30, 2023, the observatory hosted 743,000 visitors, compared to 687,000 visitors for the three months ended September 30, 2022.

Our return of attendance to pre-pandemic levels is closely tied to domestic and international travel trends, our new reservations-only model of operation, and our desire to provide a better experience with fewer crowds to visitors from whom we receive higher revenues per person.

Observatory revenue for the three months ended September 30, 2023 was $37.6 million, compared to $33.1 million for the three months ended September 30, 2022.

The observatory revenue increase was driven by higher visitation levels in 2023.

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and (v) weather trends.

The first half of 2023 saw sustained demand for our properties, marked by solid leasing activity and observatory performance.

The global economy, including the real estate sector, currently navigates an environment of uncertainty around inflation, rising interest rates, weakness in real estate loans from institutional lenders, questions on the direction of capital markets, risk of recession and geopolitical unrest.

In particular, there have been concerns about the softening of the commercial real estate market, and particularly the office, amidst refinancing challenges of existing low interest rate loans and associated reduced new loan availability and increased costs of loans and related increased expectations of equity returns, coupled with the gradual pace of return-to-office and its impact on the physical utilization of space and asset valuations.

Year to date in 2023, ESRT has seen sustained demand for our properties, marked by solid leasing activity and observatory performance.

We believe the global economy, including the real estate sector, currently navigates an environment of uncertainty around inflation, rising interest rates, reduced commercial real estate new loans, questions on the direction of capital markets, risk of recession and geopolitical unrest.

In particular, there have been concerns about the softening of the commercial real estate market, and particularly the office real estate market, amidst refinancing challenges of existing low interest rate loans and associated reduced new loan availability and increased costs of loans and related increased expectations of equity returns, coupled with the gradual pace of return-to-office and its impact on the physical utilization of space and asset valuations.

Additionally, the risk of a global economic recession could impact the number of visitors to the Empire State Building Observatory, as well as our pricing power.

Despite this global economic backdrop, we believe that our modernized, amenitized, energy efficient New York City-focused portfolio with indoor environmental quality initiatives, characterized by its competitive rental rates, strong leased percentage, sustainability leadership and diversified drivers of income across office, retail, multifamily and the Empire State Building Observatory, is in a good competitive position.

Our business is further fortified by the continued performance of our Observatory, which was ranked the #1 attraction in the U.S.

Despite this global economic backdrop, we believe that ESRT is in a good competitive position with diversified drivers of income across office, retail, multifamily and the Empire State Building Observatory.

ESRT’s New York City-focused portfolio is modernized, amenitized, well-located and energy efficient, with indoor environmental quality, competitive rental rates and strong leased percentages.

We believe our business is further fortified by the continued performance of our Observatory, which was ranked the #1 attraction in the U.S.

by Tripadvisor’s 2023 Travelers’ Choice Best of the Best Awards for a second consecutive year.

In addition to our diversified portfolio, our business is supported by leading balance sheet strength, modest leverage and access to liquidity as set forth herein.

The absence of near term debt maturities or floating rate debt exposure gives us an added degree of security in a rising rate environment.

In addition to our diversified portfolio, our business is supported by a well-positioned balance sheet, modest leverage and access to liquidity as set forth herein.

The absence of near term debt maturities or floating rate debt exposure provides an added degree of security in a rising rate environment.

We have been able to execute on capital recycling, acquisitions, and buybacks.

As we navigate these uncertain times, we continue to be prepared for various challenges and economic scenarios.

As we navigate these uncertain times, we remain prepared for various challenges and situations.

Critical Accounting Estimates

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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