What changed in this filing

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Item 2. Management’s Discussion and Analysis

2022-04-05 compared with 2022-01-04 · 93 added, 59 removed, 122 unchanged (55% of the section changed)

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All financial information for our subsidiaries in Brazil is included in our consolidated financial statements on a one-month lag because their fiscal years end on July 31 of each year.

All tabular dollar amounts are in millions, except per share amounts.

All tabular dollar amounts are in millions.

Since our inception over 30 years ago, SGH has grown into a diversified group of businesses focused on the design and manufacture of specialty solutions for the computing, memory and LED markets.

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With our most recent acquisition of the LED Business in 2021, we have organized the Company into three lines of business:

Memory Solutions, Intelligent Platform Solutions (“IPS”) and LED Solutions.

Memory Solutions, Intelligent Platform Solutions and LED Solutions.

In addition to driving growth organically and through acquisitions, we use the SGH operating system to support and drive operational efficiency and performance.

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Acquisition of LED Business

In March 2021, we completed the acquisition of the LED business (“LED Business”) of Cree, Inc., a corporation now known as Wolfspeed, Inc.

In March 2021, we completed the acquisition of the LED Business of Cree, Inc., a corporation now known as Wolfspeed, Inc.

The acquisition of the LED Business, a leader in LED lighting technology, further enhances our growth and diversification strategy and fits well with our other specialty businesses in computing and memory.

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Our total operating expenses grew in 2021, primarily as a result of the addition of the LED Solutions business.

We expect to continue to see increased operating expenses in 2022 as we record a full year of operating expenses for the LED Solutions business, continue to increase our investment in new products and services for the IPS business and potentially experience the phase-out of certain Brazil financial tax credits, which would result in an increase in operating expense in Memory Solutions.

Macro-economic Demand Factors.

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By contrast, our IPS group has shown solid growth, but is subject to greater variability in its sales and margin profile from period to period, as recognition of revenue is tied to customer decisions as to the completion of delivery and system go-live events, and margin is driven by the extent to which higher margin software and managed services comprise IPS sales.

In addition, while we have experienced favorable demand and overall margin uplift compared to the rest of our businesses from our LED Solutions group to date, this group is the newest segment of our business, and we may be subject to unforeseen changes in its business and operating results.

In addition, while we have experienced favorable demand and overall margin uplift compared to the rest of our businesses from our LED Solutions business to date, this is our newest segment, and it may be subject to unforeseen changes in its business and operating results.

Our resource commitments and planning for each segment are relatively fixed in the short term and, as such, variability in expected revenue mix will have direct implications for our operating income and margins.

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A substantial portion of our growth over the last several years has been driven by acquisitions, and we intend to continue to use corporate development as an engine for growth.

Within our existing segments, we plan to pursue acquisitions to expand features and functionality, expand into adjacent businesses and grow our customer base and geographic footprint.

From time to time, we may seek to expand our addressable market by

entering new business segments where, as we did with our LED B usiness, we identify a business opportunity at scale with a path to being accretive to our overall operations in the near term.

Within our existing segments, we plan to pursue acquisitions to expand features and functionality, expand into

adjacent businesses and grow our customer base and geographic footprint.

From time to time, we may seek to expand our addressable market by entering new business segments where, as we did with our LED Business, we identify a business opportunity at scale with a path to being accretive to our overall operations in the near term.

If we are unable to identify and complete attractive acquisitions, we may not be successful in growing our revenue and/or expanding our margins.

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Disruptions in Our Supply Chain May Adversely Affect Our Businesses.

We depend on third-party suppliers for key components of our products, such as commodity DRAM components from offshore foundries that we use in our specialty memory products and third-party wafers that we use in our memory and LED businesses.

We depend on third-party suppliers for key components of our products, such as commodity DRAM components from offshore foundries that we use in our specialty memory products, third-party wafers that we use in our memory and LED businesses and electronic components and accessories used in our IPS business.

We have adopted this “fab-lite” business model to reduce our capital expenditures and operating expenses, while affording greater flexibility in adapting to shifts in demand and other market trends.

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If such disruptions worsen or are prolonged, or if there is meaningful disruption in our supply arrangement with any of our third-party suppliers, our operating results and financial condition could be adversely affected.

The outbreak of hostilities in Ukraine may exacerbate certain risks we face.

Russia’s invasion of Ukraine and the global response, including the imposition of sanctions by the United States and other countries, could create or exacerbate risks facing our business.

We have evaluated our operations, vendor contracts and customer arrangements, and at present we do not expect the outbreak to directly have a material and adverse effect on our financial condition or results of operations.

However, if the hostilities persist, escalate or expand, our operating results and financial condition could be adversely affected.

For example, if our supply or customer arrangements are disrupted due to expanded sanctions or involvement of countries where we have operations or relationships, our business could be materially disrupted.

Further, the use of state-sponsored cyberattacks could expand as part of the conflict, which could adversely affect our ability to maintain or enhance our cyber security and data protection measures.

Results of Operations

Three months ended

Three Months Ended Six Months Ended

February 25, 2022 February 26, 2021 February 25, 2022 February 26, 2021

Memory Solutions $ 260,081 57.9 % $ 218,597 71.9 % $ 499,482 54.3 % $ 444,421 74.6 %

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Cost of sales 336,458 74.9 % 250,553 82.4 % 684,201 74.4 % 489,606 82.2 %

Gross profit 112,713 25.1 % 53,456 17.6 % 234,914 25.6 % 106,099 17.8 %

Operating expenses:

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Income tax provision 7,586 1.7 % 1,200 0.4 % 15,341 1.7 % 4,475 0.8 %

Net income 2,972 0.7 % 5,844 1.9 % 23,670 2.6 % 7,871 1.3 %

Net income attributable to noncontrolling interest 514 0.1 % — — % 1,185 0.1 % — — %

Net income attributable to SGH $ 2,458 0.5 % $ 5,844 1.9 % $ 22,485 2.4 % $ 7,871 1.3 %

Summations of percentages may not compute precisely due to rounding.

Percentages represent percentage of total net sales.

Summations pf percentages may not compute precisely due to rounding.

Net Sales, Cost of Sales and Gross Profit

Net sales increased by $178.2 million, or 61.1 %, in the first quarter of 2022 compared to same period in the prior year, primarily due to $111.9 million of revenue in the first quarter of 2022 from our recent acquisition of the LED Business and to strong performance in our IPS and Memory Solutions businesses.

IPS net sales increased by $52.8 million, or 80.1%, primarily due to higher volumes of sales in our Penguin Computing business.

Memory Solutions sales increased by $13.6 million, or 6.0%, primarily due to a 13.5% higher volume of DRAM products and a 34.0% increase in average selling prices for Brazil DRAM products.

Cost of sales increased by $108.7 million, or 45.5%, in the first quarter of 202 2 compared to the same period in the prior year , primarily due to our acquisition of the LED Business and from higher cost of materials and production costs due to a higher level of sales for our IPS and Memory Solutions segments .

Gross profit margin increased to 26.0% in the first quarter of 2022 compared to 18.0% in the first quarter of 2021 primarily due to inclusion of higher margin LED Solutions products in 2022 as well as process and efficiency improvement in the Memory Solutions and IPS segments compared to the prior year.

Segment Operating Income

Three months ended

November 26, 2021

November 27, 2020

Segment operating income:

Memory Solutions

Intelligent Platform Solutions

LED Solutions

Total segment operating income

Net sales increased by $145.2 million, or 47.7%, in the second quarter of 2022 compared to the same period in the prior year, and by $323.4 million, or 54.3%, for the first six months of 2022 compared to the same period in the prior year.

These increases were primarily due to $106.8 million and $218.7 million of revenue in the second quarter and six months of 2022, respectively, from our acquisition of the LED Business, and to strong performance in our Memory Solutions and IPS businesses.

Memory Solutions sales increased by $41.5 million, or 19.0%, in the second quarter of 2022 compared to the same period in the prior year, primarily due to increases in average selling prices for Brazil DRAM and Specialty DRAM products of 77.5% and 13.2%, respectively.

Memory Solutions sales increased by $55.1 million, or 12.4%, for the first six months of 2022 compared to the same period in the prior year, primarily due to a 4.1% higher volume of DRAM products, a 52.8% increase in average selling prices for Brazil DRAM products and higher logistics sales.

IPS net sales increased by $49.6 million, or 32.8%, in the first six months of 2022 primarily due to higher volumes of sales in our Penguin Computing business.

Cost of sales increased by $85.9 million, or 34.3%, in the second quarter of 2022 compared to the same period in the prior year, and by $194.6 million, or 39.7%, for the first six months of 2022 compared to the same period in the prior year, primarily due to our acquisition of the LED Business and from higher cost of materials and production costs due to a higher level of sales for our IPS and Memory Solutions segments.

Gross margin increased to 25.1% in the second quarter of 2022 compared to 17.6% in the same period in the prior year, and also increased to 25.6% in the first six months of 2022 compared to 17.8% in the first six months of 2021, primarily due to inclusion of higher margin LED Solutions products in 2022 as well as process and efficiency improvement in the Memory Solutions and IPS segments compared to the prior year.

Non-GAAP Measure of Segment Operating Income

Below is a table of our operating income, measured on a non-GAAP basis, which SGH management uses to supplement SGH's financial results under GAAP to analyze its operations and make decisions as to future operational plans, and believes that this supplemental non-GAAP information is useful to investors in analyzing and assessing the Company's past and future operating performance.

These non-GAAP measures exclude certain items, such as share-based compensation expense, amortization of acquisition-related intangible assets (consisting of amortization of developed technology, customer relationships, trademarks/trade names and backlog acquired in connection with business combinations), acquisition-related inventory adjustments, acquisition-related expenses, restructure charges and integration expenses, changes in the fair value of contingent consideration, and other infrequent or unusual items.

While amortization of acquisition-related intangible assets is excluded, the revenues from acquired companies is reflected in our non-GAAP measures and these intangible assets contribute to revenue generation.

Financial Information – Item 1.

Financial Statements – Notes to Consolidated Financial Statements – Segment and Other Information.”

Non-GAAP financial measures should not be considered as a substitute for, or superior to, measures of financial performance prepared in accordance with GAAP, as they exclude important information about our financial results, as noted above.

The presentation of these adjusted amounts varies from amounts presented in accordance with GAAP and therefore may not be comparable to amounts reported by other companies.

Three Months Ended Six Months Ended

2022 February 26,

2021 February 25,

2022 February 26,

GAAP operating income $ 16,805 $ 12,940 $ 51,599 $ 20,563

Share-based compensation expense 9,973 5,398 19,748 16,486

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Change in fair value of contingent consideration 24,000 — 41,200 —

Total unallocated

Consolidated operating income

Percentages represent segment operating income as a percentage of segment net sales.

Out of period import tax expense — 4,345 — 4,345

Other 828 1,064 1,866 2,681

Non-GAAP operating income $ 57,435 $ 27,160 $ 126,585 $ 50,902

Non-GAAP operating income by segment:

Memory Solutions $ 32,496 $ 18,238 $ 69,166 $ 39,099

Intelligent Platform Solutions 7,702 8,922 21,882 11,803

LED Solutions 17,237 — 35,537 —

Total non-GAAP operating income by segment $ 57,435 $ 27,160 $ 126,585 $ 50,902

In the fourth quarter of 2021, we reorganized SGH into three business units:

Memory Solutions, Intelligent Platforms Solutions and LED Solutions.

Two of our previous segments, specialty memory products and Brazil products, have been combined to become Memory Solutions.

Two of our previous segments, specialty memory products and Brazil products, were combined to become Memory Solutions.

Intelligent Platform Solutions was formerly referred to as specialty compute and storage solutions.

All prior year information in the table above has been revised to reflect the change to our three reportable segments.

Memory Solutions operating income increased by $15.8 million, or 75.8%, in the first quarter of 2022 compared to the same period in the prior year, primarily due to higher sales and gross profit, partially offset by higher operating expenses mainly driven by higher research and development expense due to less Brazil financial credits.

IPS operating income increased by $11.3 million, or 392.2%, in the first quarter of 2022 compared to same period in the prior year, primarily due to higher sales and gross profit, partially offset by higher operating expenses mainly driven by personnel-related expenses due to increased headcount to support the revenue growth.

LED Solutions operating income of $18.3 million in the first quarter of 2022 was due to our acquisition of the LED Business in March 2021.

Memory Solutions operating income increased by $14.3 million, or 78.2%, in the second quarter of 2022 compared to the same period in the prior year, and by $30.1 million, or 76.9%, in the first six months of 2022 compared to the same period in the prior year, primarily due to higher sales and gross profit, partially offset by higher operating expenses mainly driven by higher research and development expense due to less Brazil financial credits.

IPS operating income increased by $10.1 million, or 85.4%, in the first six months of 2022 compared to same period in the prior year, primarily due to higher sales and gross profit, partially offset by higher operating expenses mainly driven by personnel-related expenses due to increased headcount to support the revenue growth.

LED Solutions operating income of $35.5 million in the first six months of 2022 was due to our acquisition of the LED Business in March 2021.

Operating and Non-operating (Income) Expense

Research and Development

Research and development expense increased by $10.7 million, or 153.5%, in the first quarter of 2022 compared to the same period in the prior year, primarily due to additional costs from the acquisition of the LED Business as well as lower Brazil financial credits.

We expect research and development expense to increase in absolute dollars in 2022 as compared to 2021 primarily because we will include the full year of operations for our LED Solutions segment and may include the effects of the termination of certain Brazil financial credits, currently scheduled to occur in January 2022.

Research and development expense increased by $9.9 million, or 112.3%, in the second quarter of 2022 compared to the same period in the prior year, and by $20.6 million, or 130.5%, for the first six months of 2022 compared to the same period in the prior year, primarily due to additional costs from the acquisition of the LED Business as well as lower Brazil financial credits.

We expect research and development expense to be higher in 2022 as compared to 2021 primarily because we will include the full year of operations for our LED Solutions segment.

In addition, we expect to have lower Brazil financial credits in future periods resulting from a shift in sales mix to products sourced from our new Manaus, Brazil facility.

Selling, General and Administrative

Selling, general and administrative expense increased by $14.5 million, or 38.1%, in the first quarter of 2022 compared to the same period in the prior year, primarily due to additional costs from the acquisition of the LED Business as well as higher personnel-

related expenses due to increased headcount , professional services and acquisition expenses associated with the acquisition.

We expect selling, general and administrative expense to increase in absolute dollars in 2022 as we include the full year of operations for our LED Solutions segment.

Selling, general and administrative expense increased by $21.5 million, or 67.7%, in the second quarter of 2022 compared to the same period in the prior year, and by $35.9 million, or 51.6%, in the first six months of 2022 compared to the same period in the prior year, primarily due to additional costs from the acquisition of the LED Business as well as higher personnel-related expenses due to increased headcount and higher professional services.

We expect selling, general and administrative expense to be higher in 2022 as compared to 2021 as we include the full year of operations for our LED Solutions segment.

Change in Fair Value of Contingent Consideration

Our acquisition of the LED Business included contingent consideration, which we estimated the fair value as of the date of acquisition to be $28.1 million.

During the first quarter of 2022, we recorded a charge of $17.2 million to adjust the amount of contingent consideration to its fair value as of November 26, 2021.

In 2021, and in the first and second quarters of 2022, we recorded charges of $32.4 million, $17.2 million and $24.0 million, respectively, to adjust the amount of contingent consideration to its fair value.

Financial Information – Item 1.

Financial Statements – Notes to Consolidated Financial Statements – Business Acquisition – LED Business.”

Interest Expense, Net

Interest expense, net increased by $2.1 million in the first six months of 2022 compared to the same period in the prior year primarily due to interest incurred related to the LED Purchase Price Note from the LED acquisition.

In February 2022, we entered into a Credit Facility with a syndicate of banks pursuant to which we borrowed $275 million under a term loan, which matures in February 2027.

In connection therewith, we repaid the $125 million outstanding balance of the LED Purchase Price Note and the outstanding balance under our previous line of credit.

In addition, the LED Earnout Note will begin to bear interest in the third quarter of 2022.

As a result of these items, we expect net interest expense to increase in future periods.

Financial Information – Item 1.

Financial Statements – Notes to Consolidated Financial Statements – Business Acquisition” and “PART I.

Financial Information – Item 1.

Financial Statements – Notes to Consolidated Financial Statements – Debt.”

Other Non-operating (Income) Expense

Other non-operating (income) expense in the first quarters of 2022 and 2021 primarily reflected foreign currency (gains) and losses relate primarily to our Brazil operating subsidiaries, as well as higher interest expense mainly due to the seller note from the LED acquisition.

Other non-operating (income) expense in the second quarter and first six months of both 2022 and 2021 primarily reflected foreign currency (gains) and losses related primarily to our Brazil operating subsidiaries.

Income Tax Provision

Our provision for income taxes increased by $4.5 million in the first quarter of 2022 compared to the same period in the prior year, primarily due to higher income in non-U.S.

Our provision for income taxes increased by $10.9 million in the first six months of 2022 compared to the same period in the prior year, primarily due to higher income in non-U.S.

jurisdictions subject to tax.

Liquidity and Capital Resources

At November 26, 2021, we had cash and cash equivalents of $233.1 million, of which $181.3 million was held outside of the United States.

Our principal uses of cash and capital resources have been acquisitions, debt service requirements as described below, capital expenditures, research and development expenditures and working capital requirements.

At February 25, 2022, we had cash and cash equivalents of $365.8 million, of which $187.9 million was held outside of the United States.

Our principal uses of cash and capital resources have been acquisitions, debt service requirements, capital expenditures, research and development expenditures and working capital requirements.

We expect that future capital expenditures will focus on expanding capacity of our operations, expanding our research and development activities, manufacturing equipment upgrades, acquisitions and IT infrastructure and software upgrades.

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We do not enter into investments for trading or speculative purposes.

We expect that our existing cash and cash equivalents, borrowings available under our credit facilities and cash generated by operating activities will be sufficient to fund our operations for at least the next twelve months.

We expect that our existing cash and cash equivalents, borrowings available under our credit facility and cash generated by operating activities will be sufficient to fund our operations for at least the next twelve months.

We may from time to time seek additional equity or debt financing.

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If we are unable to raise additional capital or generate cash flows necessary to expand our operations and invest in continued product innovation, we may not be able to compete successfully, which would harm our business, operations and financial condition.

On February 7, 2022, we entered into a Credit Facility with a syndicate of banks that provides for (i) a term loan credit facility in an aggregate principal amount of $275.0 million (the "2027 TLA") and (ii) a revolving credit facility in an aggregate principal amount of $250.0 million (the "2027 Revolver"), in each case, maturing on February 7, 2027 (subject to certain earlier “springing maturity” dates upon certain conditions specified in the Credit Agreement).

The Credit Agreement provides that up to $35.0 million of the revolving credit facility is available for issuances of letters of credit.

In February 2020, we issued $250.0 million in aggregate principal amount of 2.25% convertible senior notes due 2026 (the “2026 Notes”).

The initial conversion rate of the 2026 Notes is 24.6252 ordinary shares per $1,000 principal amount of notes, which represents an initial conversion price of approximately $40.61 per ordinary share.

The closing price of our ordinary shares exceeded 130% of the conversion price for our 2026 Notes for at least 20 trading days in the 30 consecutive trading days ended on November 26, 2021.

As a result, the 2026 Notes are convertible by holders through February 25, 2022.

The conversion rate of the 2026 Notes is 49.2504 ordinary shares per $1,000 principal amount of notes, which represents a conversion price of approximately $20.30 per ordinary share.

The closing price of our ordinary shares exceeded 130% of the conversion price for our 2026 Notes for at least 20 trading days in the 30 consecutive trading days ended on February 25, 2022.

As a result, the 2026 Notes are convertible by holders through May 27, 2022.

For information regarding our debt obligations, see “PART I.

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Financial Statements – Notes to Consolidated Financial Statements – Commitments and Contingencies.”

Three months ended

Six Months Ended February 25,

2022 February 26,

Net cash provided by operating activities $ 47,311 $ 55,990

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Effect of changes in currency exchange rates (1,421) (1,496)

Net increase in cash and cash equivalents

Net increase (decrease) in cash and cash equivalents $ 142,782 $ (11,008)

Operating Activities :

Cash flows from operating activities reflects net income adjusted for certain non-cash items, including depreciation and amortization expense, share-based compensation, adjustments for changes in the fair value of contingent consideration, gains and losses from investing or financing activities and from the effects of changes in operating assets and liabilities.

Net cash provided by operating activities in the three months ended November 26, 2021 was $15.1 million, comprised primarily of net income of $20.7 million, adjusted for non-cash items of $47.5 million.

Operating cash flows were also affected by a $53.1 million decrease in our net operating assets and liabilities, consisting primarily of an increase of $36.1 million in accounts receivable and a decrease of $53.8 million in accounts payable and accrued expenses, offset by a decrease of $39.6 million in inventories.

The decrease in both inventories and accounts payable and accrued expenses was primarily due to lower inventory primarily in our Memory Solutions and IPS segments, and the increase in accounts receivable was primarily due to higher gross sales in the same segments.

Net cash provided by operating activities in the three months ended November 27, 2020 was $35.6 million, comprised primarily of net income of $2.0 million, adjusted for non-cash items of $23.3 million.

Operating cash flows were also affected by a $10.3 million increase in our net operating assets and liabilities, consisting primarily of a decrease of $12.9 million in inventories and an increase of $10.1 million in accounts payable and accrued expenses, partially offset by an increase of $9.3 million in other current assets.

Cash flows from operating activities reflects net income adjusted for certain items, including depreciation and amortization expense, share-based compensation, adjustments for changes in the fair value of contingent consideration, gains and losses from investing or financing activities and the effects of changes in operating assets and liabilities.

Net cash provided by operating activities in the first six months of 2022 was $47.3 million, comprised primarily of net income of $23.7 million, adjusted for non-cash items of $104.2 million.

Operating cash flows were adversely affected by $80.6 million from changes in our net operating assets and liabilities, consisting primarily of an increase of $75.6 million in accounts receivable and a decrease of $31.6 million in accounts payable and accrued expenses, partially offset by a decrease of $26.4 million in inventories.

The decrease in both inventories and accounts payable and accrued expenses was primarily due to lower inventories primarily in our Memory Solutions segment, and the increase in accounts receivable was primarily due to higher gross sales in the same segments.

Net cash provided by operating activities in the first six months of 2021 was $56.0 million, comprised primarily of net income of $7.9 million, adjusted for non-cash items of $41.8 million.

Operating cash flows were also favorably affected by $6.3 million from changes in our net operating assets and liabilities, consisting primarily of a $45.9 million increase in accounts payable and accrued expenses and a $10.1 million decrease in accounts receivables, partially offset by increases of $28.1 million in inventories and $19.1 million in other assets.

Investing Activities :

Net cash used in investing activities in the first quarter of 2022 was $13.4 million, consisting primarily of purchases of property and equipment.

Net cash used in investing activities during the three months ended November 27, 2020 was $14.6 million consisting primarily of purchases of property and equipment and deposits.

Net cash used for investing activities in the first six months of 2022 was $20.8 million, consisting primarily of purchases of property and equipment.

Net cash used for investing activities in the first six months of 2021 was $34.6 million, consisting primarily of purchases of property and equipment and deposits.

Financing Activities :

Net cash provided by financing activities in the first quarter of 2022 was $12.4 million, consisting primarily of $10.0 million in net proceeds from borrowing under our line of credit, $5.0 million in proceeds from issuance of ordinary shares from our equity plans, partially offset by $2.7 million for the repurchase of ordinary shares.

Net cash used for financing activities in the first quarter of 2021 was $0.4 million, consisting primarily of $3.5 million for the repurchase of ordinary shares, partially offset by $3.1 million in proceeds from issuance of ordinary shares from our equity plans.

Net cash provided by financing activities in the first six months of 2022 was $117.7 million, consisting primarily of $270.8 million in net proceeds from issuance of a term loan and $7.5 million in proceeds from the issuance of ordinary shares from our equity plans, partially offset by $125.0 million in principal repayment of the LED Purchase Price Note and $25.0 million in net repayments of borrowings under our line of credit.

Net cash used for financing activities in the first six months of 2021 was $30.9 million, consisting primarily of $48.0 million for the repurchase of ordinary shares, partially offset by $11.4 million in proceeds from debt and $5.7 million in proceeds from the issuance of ordinary shares from our equity plans.

Critical Accounting Estimates

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We evaluate our estimates and judgments on an ongoing basis.

Our management believes the accounting policies below are critical in the portrayal of our financial condition and results of operations and require management’s most difficult, subjective or complex judgments.

Our management believes these estimates and judgments are critical in the portrayal of our financial condition and results of operations and require management’s most difficult, subjective or complex judgments.

There have been no material changes to our critical accounting estimates from those described in “PART II.

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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