Item 2. Management’s Discussion and Analysis
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operation s
References to the “Company,” “our,” “us” or “we” refer to CPI Card Group Inc. and its subsidiaries. For an understanding of the significant factors that influenced our results, the following discussion should be read in conjunction with our unaudited condensed consolidated financial statements and related notes appearing elsewhere in this Quarterly Report on Form 10-Q for the quarter ended March 31, 2023. This management’s discussion and analysis should also be read in conjunction with the management’s discussion and analysis and consolidated financial statements included in our Annual Report on Form 10-K for the year ended December 31, 2022 filed with the Securities and Exchange Commission (“SEC”).
Cautionary Statement Regarding Forward-Looking Information
Certain statements and information in this Quarterly Report on Form 10-Q for the quarter ended March 31, 2023 (as well as information included in other written or oral statements we make from time to time) may contain or constitute “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995, Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. The words “believe,” “estimate,” “project,” “expect,” “anticipate,” “plan,” “intend,” “foresee,” “should,” “would,” “could,” “continue,” “committed,” “attempt,” “target,” “objective,” “guides,” “seek,” “focus,” “provides guidance,” “provides outlook” or other similar expressions are intended to identify forward-looking statements, which are not historical in nature. These forward-looking statements, including statements about our strategic initiatives and market opportunities, are based on our current expectations and beliefs concerning future developments and their potential effect on us and other information currently available. Such forward-looking statements, because they relate to future events, are by their very nature subject to many important risks and uncertainties that could cause actual results or other events to differ materially from those contemplated.
These risks and uncertainties include, but are not limited to: adverse conditions in the banking system and financial markets, including the failure of banks and financial institutions; a deterioration in general economic conditions, including rising inflation and resulting in reduced consumer confidence and business spending, and a decline in consumer credit worthiness impacting demand for our products; a disruption or other failure in our supply chain, including as a result of the Russia-Ukraine conflict and with respect to single source suppliers, or the failure or inability of suppliers to comply with our code of conduct or contractual requirements, or political unrest in countries in which our suppliers operate, resulting in increased costs and inability to pass those costs on to our customers and extended production lead times and difficulty meeting customers’ delivery expectations; our failure to retain our existing customers or identify and attract new customers; the unpredictability of our operating results, including an inability to anticipate changes in customer inventory management practices and its impact on our business; our status as an accelerated filer and complying with Section 404 of the Sarbanes-Oxley Act of 2002 and the costs associated with such compliance and implementation of procedures thereunder; our failure to maintain effective internal control over financial reporting; our inability to recruit, retain and develop qualified personnel, including key personnel; the potential effects of COVID-19 and responses thereto on our business, including our supply chain, customer demand, workforce, operations; system security risks, data protection breaches and cyber-attacks; interruptions in our operations, including our information technology systems, or in the operations of the third parties that operate computing infrastructure on which we rely; our inability to develop, introduce and commercialize new products; our substantial indebtedness, including inability to make debt service payments or refinance such indebtedness; the restrictive terms of our indebtedness and covenants of future agreements governing indebtedness and the resulting restraints on our ability to pursue our business strategies; disruptions in production at one or more of our facilities; defects in our software; environmental, social and governance preferences and demands of various stakeholders and our ability to conform to such preferences and demands and to comply with any related regulatory requirements; the effects of climate change, negative perceptions of our products due to the impact of our products and production processes on the environment and other ESG-related risks; disruptions in production due to weather conditions, climate change, political instability or social unrest; our inability to adequately protect our trade secrets and intellectual property rights from misappropriation, infringement claims brought against us and risks related to open source software; our limited ability to raise capital; problems in production quality, materials and process; costs and impacts to our financial results relating to the obligatory collection of sales tax and claims for uncollected sales tax in states that impose sales tax collection requirements on out-of-state businesses or unclaimed property, as well as potential new U.S. tax legislation increasing the corporate income tax rate and challenges to our income tax positions; our inability to successfully execute on our divestitures or acquisitions; our inability to realize the full value of our long-lived assets; costs relating to product defects and any related product liability and/or warranty claims; our inability to renew licenses with key technology licensors; the highly competitive,
16
Table of Contents
saturated and consolidated nature of our marketplace; the effects of restrictions, delays or interruptions in our ability to source raw materials and components used in our products from foreign countries; the effects on the global economy of the ongoing military action by Russia in Ukraine; costs and potential liabilities associated with compliance or failure to comply with regulations, customer contractual requirements and evolving industry standards regarding consumer privacy and data use and security; new and developing technologies that make our existing technology solutions and products obsolete or less relevant or our failure to introduce new products and services in a timely manner; quarterly variation in our operating results; our failure to operate our business in accordance with the Payment Card Industry Security Standards Council security standards or other industry standards; our failure to comply with environmental, health and safety laws and regulations that apply to our products and the raw materials we use in our production processes; risks associated with the majority stockholders’ ownership of our stock; potential conflicts of interest that may arise due to our board of directors being comprised in part of directors who are principals of our majority stockholders; the influence of securities analysts over the trading market for and price of our common stock; failure to meet the continued listing standards of the Nasdaq Global Market; the impact of stockholder activism or securities litigation on the trading price and volatility of our common stock; certain provisions of our organizational documents and other contractual provisions that may delay or prevent a change in control and make it difficult for stockholders other than our majority stockholders to change the composition of our board of directors; our ability to comply with a wide variety of complex laws and regulations and the exposure to liability for any failure to comply; the effect of legal and regulatory proceedings; and other risks that are described in Part I, Item 1A – Risk Factors in our Annual Report on Form 10-K for the year ended December 31, 2022 filed with the SEC on March 8, 2023, in Part II, Item 1A – Risk Factors of this Quarterly Report on Form 10-Q and our other reports filed from time to time with the SEC.
We caution and advise readers not to place undue reliance on forward-looking statements, which speak only as of the date hereof. These statements are based on assumptions that may not be realized and involve risks and uncertainties that could cause actual results or other events to differ materially from the expectations and beliefs contained herein. We undertake no obligation to publicly update or revise any forward-looking statements after the date they are made, whether as a result of new information, future events or otherwise.
Overview
We are a payment technology company and leading provider of comprehensive Financial Payment Card solutions in the United States. We define “Financial Payment Cards” as credit, debit and Prepaid Debit Cards (as defined below) issued on the networks of the “Payment Card Brands” (Visa, Mastercard ® , American Express ® and Discover ® ). We define “Prepaid Debit Cards” as debit cards issued on the networks of the Payment Card Brands, but not linked to a traditional bank account. We also offer an instant card issuance solution, which provides customers the ability to issue a personalized debit or credit card within the bank branch to individual cardholders. We have established a leading position in the Financial Payment Card solutions market through more than 20 years of experience.
We serve a diverse set of several thousand customers which includes direct customers and indirect customer relationships, whereby CPI provides Financial Payment Card solutions to a customer through a Group Service Provider (as defined below). Our customers include some of the largest issuers of debit and credit cards in the United States, the largest Prepaid Debit Card program managers in the United States, numerous financial technology companies (“fintechs”), as well as independent community banks, credit unions and Group Service Providers. We define “Group Service Providers” as reseller or card processor organizations that assist small card issuers, such as credit unions, with managing their credit and debit card programs, including managing the Financial Payment Card issuance process, core banking operations and other financial services.
We serve our customers through a network of high-security production and card services facilities in the United States, each of which is audited for compliance with the standards of the Payment Card Industry Security Standards Council (the “PCI Security Standards Council”) by one or more of the Payment Card Brands. Many of our customers require us to comply with PCI Security Standards Council requirements that relate to the provision of our products and services. Our network of high-security production facilities allows us to optimize our solutions offerings and to serve the needs of our diverse customer base.
Driven by a combination of our strong relationships, quality, technology, innovation, and supply-chain management, we believe we have strong positions in the following markets:
● the U.S. prepaid debit market, including the largest U.S. Prepaid Debit Card program managers;
17
Table of Contents
● the U.S. small-to mid-sized financial institutions market, which includes independent community banks and credit unions;
● the U.S. large issuer market, serving some of the largest U.S. debit and credit card issuers; and
● the U.S. fintech market, where we produce and personalize Financial Payment Cards for financial technology companies.
Our business consists of the following reportable segments:
● Debit and Credit, which primarily produces Financial Payment Cards and provides integrated card services to card-issuing financial institutions primarily in the United States;
● Prepaid Debit, which primarily provides integrated prepaid card services to Prepaid Debit Card program managers primarily in the United States; and
● “Other,” which includes corporate expenses.
Trends and Key Factors Affecting our Financial Performance
We believe the following key factors may have a meaningful impact on our business performance and may negatively influence our financial and operating results:
● We believe some customers have reduced demand for our products and services and we may experience reduced demand from customers in the future due to the following:
o Certain economic indicators continue to point towards the likelihood that the U.S. economy will experience a recession in the near future, which may cause our customers to have concerns about the broader economic environment and reduce overall spending, including on card programs or other products and services we offer.
o Certain banks have recently experienced negative liquidity events, including some being taken over by industry regulators and others experiencing deposit outflows, deteriorating share prices and limited access to capital, leading to cautionary signals and uncertainty in the financial services industry. Following these events, we experienced reduced demand in the Debit and Credit segment.
o Some of our customers may have anticipated supply-chain-related delays and correspondingly increased their own inventory of the Company’s products on hand during 2022.
● We have experienced inflationary pressure in our supply chain, as well as delays and difficulties in sourcing key materials and components needed for our products. We have seen improvements in many areas and our production lead times have improved significantly, however we continue to have challenges in some areas which have resulted in increased costs of certain raw materials and components, longer supplier lead times and unpredictability. We continue to take actions to limit the impact of these dynamics.
18
Table of Contents
Results of Operations
The following table presents the components of our condensed consolidated statements of operations for each of the periods presented:
Three Months Ended
March 31,
2023
2022
$ Change
% Change
(dollars in thousands)
Net sales: (1)
Products
$
75,790
$
68,316
$
7,474
10.9
%
Services
45,062
43,108
1,954
4.5
%
Total net sales
120,852
111,424
9,428
8.5
%
Cost of sales (1)
77,758
72,146
5,612
7.8
%
Gross profit
43,094
39,278
3,816
9.7
%
Operating expenses
22,496
21,297
1,199
5.6
%
Income from operations
20,598
17,981
2,617
14.6
%
Other expense, net:
Interest, net
(6,781)
(7,865)
1,084
(13.8)
%
Other expense, net
(114)
(396)
282
(71.2)
%
Income before taxes
13,703
9,720
3,983
41.0
%
Income tax expense
(2,830)
(3,718)
888
(23.9)
%
Net income
$
10,873
$
6,002
$
4,871
81.2
%
Gross profit margin
35.7%
35.3%
(1) For the three months ended March 31, 2023 and 2022, net sales and cost of sales each include $0.3 million and less than $0.1 million of intersegment eliminations, respectively.
The following discussion of our consolidated results of operations and segment results refers to the three months ended March 31, 2023 compared to the corresponding period in the prior year. The results of operations should be read in conjunction with the discussion of our segment results of operations, which provide more detailed discussions concerning certain components of the Condensed Consolidated Statements of Income.
Net Sales:
Net sales increased $9.4 million, or 8.5%, for the three months ended March 31, 2023 compared to the corresponding period in the prior year, driven by the Debit and Credit segment. The increase was primarily due to increased sales of higher-priced contactless card products and personalization services and includes benefits from price increases.
Gross Profit and Gross Profit Margin:
Gross profit increased $3.8 million, or 9.7%, for the three months ended March 31, 2023 compared to the corresponding period in the prior year. Gross profit margin was 35.7%, compared to 35.3% in the corresponding period in the prior year. The increase in gross profit was primarily due to operating leverage from higher net sales, including benefits from price increases, partially offset by inflationary impacts on materials costs and expenses associated with a production staffing model change in our Prepaid business.
Operating Expenses:
Operating expenses increased $1.2 million, or 5.6%, for the three months ended March 31, 2023 compared to the corresponding period in the prior year, primarily due to a $1.9 million increase in compensation expenses, mainly in the “Other” segment, as a result of increased employee headcount and salary increases, partially offset by a $0.7 million decrease in professional services and other costs.
19
Table of Contents
Interest, net :
Interest expense decreased $1.1 million, or 13.8%, for the three months ended March 31, 2023 compared to the corresponding period in the prior year, primarily due to lower outstanding principal balances on our borrowings.
Other Expense, net:
Other expense, net decreased $0.3 million, or 71.2%, for the three months ended March 31, 2023 compared to the corresponding period in the prior year, primarily due to lower unamortized deferred financing cost write-offs as a result of reduced retirements of our 8.625% Senior Secured Notes due 2026 (the “Senior Notes”) compared to the corresponding period in the prior year.
Income Tax Expense:
Our effective tax rate on pre-tax income was 20.7% and 38.2% for the three months ended March 31, 2023 and 2022, respectively. The decrease in our effective tax rate for the three months ended March 31, 2023 compared to the corresponding period in the prior year, was a result of increased deductibility of interest costs due to a tax election made by the Company in the third quarter of 2022 and the reduction of a valuation allowance in the first quarter of 2023 related to a state’s law change.
Segment Discussion
Debit and Credit:
Three Months Ended
March 31,
2023
2022
$ Change
% Change
(dollars in thousands)
Net sales
$
101,985
$
92,015
$
9,970
10.8
%
Gross profit
$
38,184
$
32,230
$
5,954
18.5
%
Income from operations
$
30,026
$
24,110
$
5,916
24.5
%
Gross margin
37.4%
35.0%
Net Sales:
Net sales for Debit and Credit increased $10.0 million, or 10.8%, for the three months ended March 31, 2023 compared to the corresponding period in the prior year. Products net sales increased primarily due to increased sales from existing customers, including benefits from the transition to contactless cards and price increases. Services net sales increased as a result of higher personalization sales due to higher sales from existing customers, including benefits from prices increases, and higher Card@Once services driven by a higher printer install base.
Gross Profit and Gross Profit Margin:
Gross profit for Debit and Credit increased $6.0 million, or 18.5%, for the three months ended March 31, 2023 compared to the corresponding period in the prior year, primarily due to the net sales increase described above. Gross profit margin increased to 37.4% during the three months ended March 31, 2023, compared to 35.0% in the corresponding period in the prior year. The increase in gross margin was primarily due to operating leverage from higher net sales, including the benefit of price increases, partially offset by inflationary impacts on materials costs .
Income from Operations:
Income from operations for Debit and Credit increased $5.9 million, or 24.5%, for the three months ended March 31, 2023 compared to the corresponding period in the prior year, due primarily to the factors discussed in “Gross Profit and Gross Profit Margin” above.
20
Table of Contents
Prepaid Debit:
Three Months Ended
March 31,
2023
2022
$ Change
% Change
(dollars in thousands)
Net sales
$
19,130
$
19,461
$
(331)
(1.7)
%
Gross profit
$
4,910
$
7,048
$
(2,138)
(30.3)
%
Income from operations
$
3,677
$
5,968
$
(2,291)
(38.4)
%
Gross margin
25.7%
36.2%
Net Sales:
Net sales for Prepaid Debit decreased $0.3 million, or 1.7%, for the three months ended March 31, 2023 compared to the corresponding period in the prior year, primarily due to decreased volumes partially offset by the benefit of price increases.
Gross Profit and Gross Profit Margin:
Gross profit for Prepaid Debit decreased $2.1 million, or 30.3%, for the three months ended March 31, 2023 compared to the corresponding period in the prior year. Gross profit margin for Prepaid Debit decreased to 25.7% for the three months ended March 31, 2023 compared to 36.2% in the corresponding period in the prior year. The decreases were primarily due to expenses incurred related to a change in our production staffing model, as we transitioned positions staffed with temporary workers to permanent employees, and lower net sales.
Income from Operations:
Income from operations for Prepaid Debit decreased $2.3 million, or 38.4%, for the three months ended March 31, 2023 compared to the corresponding period in the prior year, primarily due to lower gross profit and an increase in operating expenses due to increased compensation costs.
Other:
As the Other segment is comprised entirely of corporate expenses, income from operations for Other consists of operating expenses shown below.
Three Months Ended
March 31,
2023
2022
$ Change
% Change
(dollars in thousands)
Operating expenses
$
13,105
$
12,097
$
1,008
8.3
%
Operating Expenses:
Other operating expenses increased $1.0 million, or 8.3%, for the three months ended March 31, 2023 compared to the corresponding period in the prior year, primarily due to a $1.5 million increase in compensation expenses due to the factors described in the consolidated discussion above, partially offset by a $0.5 million decrease in professional services and other costs.
Liquidity and Capital Resources
At March 31, 2023, we had $14.2 million of cash and cash equivalents.
Our ability to make investments in and grow our business, service our debt and improve our debt leverage ratios, while maintaining strong liquidity, will depend upon our ability to generate excess operating cash flows through our operating subsidiaries. Although we can provide no assurances, we believe that our cash flows from operations,
21
Table of Contents
combined with our current cash levels, will be adequate to fund debt service requirements and provide cash, as required, to support our ongoing operations, capital expenditures, lease obligations and working capital needs.
Senior Notes
On March 15, 2021, we completed a private offering of $310.0 million aggregate principal amount of the Senior Notes and related guarantees at an issue price of 100%. The Senior Notes bear interest at a rate of 8.625% per annum and mature on March 15, 2026. Interest is payable on the Senior Notes on March 15 and September 15 of each year.
The Company has obligations to make an offer to repay the Senior Notes, requiring prepayment in advance of the maturity date, upon the occurrence of certain events including a change of control, certain asset sales and based on an annual excess cash flow calculation. The annual excess cash flow calculation is determined based on an adjusted net income calculation pursuant to the terms of the indenture, and varies based on the Company’s annual net leverage ratio. The Company is required to offer to pay 50% of excess cash flow if the net leverage ratio exceeds 4.5 to 1; 25% if the net leverage ratio is between 4 to 1 and 4.5 to 1, and 0% if the net leverage ratio is no more than 4 to 1. Any required prepayments are to be made within 125 days after the issuance of the Company’s annual financial statements. No such payment was required to be made in 2023 based on the Company’s operating results for the year ended December 31, 2022.
As permitted by the indenture governing the Senior Notes, the Company may from time to time repurchase some or all of the Senior Notes in open market transactions, in privately negotiated transactions or otherwise. The Company may redeem some or all of the Senior Notes pursuant to the terms of the indenture at a redemption price initially set at 104.313% of the principal amount of the notes to be redeemed, and reducing over time to 100%, in each case plus accrued and unpaid interest. The timing and amount of any such redemptions or repurchases will depend upon market conditions, contractual commitments, the Company’s capital needs and other factors.
As of the three months ended March 31, 2023, the Company had $277.0 million aggregate principal amount outstanding on the Senior Notes, plus accrued and unpaid interest.
ABL
On March 15, 2021, we entered into a Credit Agreement with Wells Fargo Bank, National Association providing for an ABL Revolver of up to $50.0 million. On March 3, 2022, we entered into Amendment No. 1 to the Credit Agreement, which amended the ABL Revolver to among other things, increased the available borrowing capacity to $75.0 million, increased the uncommitted accordion feature to $25.0 million and revised the interest rate provisions to replace the prior LIBOR benchmark with updated benchmark provisions using the secured overnight financing rate (“SOFR”) as administered by the Federal Reserve Bank of New York. On October 11, 2022, we entered into Amendment No. 2 to the Credit Agreement, which amended the ABL Revolver to adjust certain monthly document delivery terms and to clarify the treatment of certain inventory.
Borrowings under the amended ABL Revolver bear interest at a rate per annum equal to the applicable term SOFR adjusted for a credit spread, plus an applicable interest rate margin. We may select a one, three or six month term SOFR, which is adjusted for a credit spread of 0.10% to 0.30% depending on the term selected. Through March 31, 2023, the applicable interest rate margin ranges from 1.50% to 1.75% depending on the average excess availability of the facility for the most recently completed quarter. The unused portion of the ABL Revolver commitment accrues a monthly unused line fee, 0.50% per annum through March 31, 2023, multiplied by the aggregate amount of Revolver commitments less the average Revolver usage during the immediately preceding month. The interest rate margin and unused line fee percentage changed, effective April 1, 2023, to between 1.25% and 1.75% (interest rate margin) and 0.375% and 0.50% (unused line fee).
Amounts borrowed and outstanding under the ABL Revolver are required to be repaid in full, together with any accrued and unpaid interest, on the earliest to occur of March 15, 2026 and the date that is 90 days prior to the maturity of the Senior Notes (and may be subject to earlier mandatory prepayment upon certain events).
As of the three months ended March 31, 2023, the Company had $13.0 million in ABL Revolver borrowings outstanding, plus accrued and unpaid interest.
22
Table of Contents
Operating Activities
Cash provided by operating activities for the three months ended March 31, 2023 was $8.0 million compared to cash used in operating activities of $16.0 million during the three months ended March 31, 2022. Cash generated from earnings for the three months ended March 31, 2023 was partially offset by a decrease in accrued expenses of $11.4 million, primarily related to payments on accrued interest and employee performance incentive compensation during the period, and an increase in inventories by $1.5 million. These changes were partially offset by a decrease in accounts receivable of $4.3 million primarily due to lower net sales in the first quarter of 2023 compared to the fourth quarter of 2022.
Investing Activities
Cash used in investing activities for the three months ended March 31, 2023 was $4.1 million, compared to $3.1 million during the three months ended March 31, 2022. Cash used in investing activities was related primarily to capital expenditures, including investments to support the business, such as machinery and information technology equipment. As presented in our supplemental disclosures of non-cash information on the statement of cash flows, finance leases were executed for the acquisition of right-of-use machinery and equipment assets totaling $2.2 million during the three months ended March 31, 2023, compared to $3.5 million during the corresponding period in the prior year.
Financing Activities
During the three months ended March 31, 2023, cash used in financing activities was $0.8 million. Proceeds from the ABL Revolver were $8.0 million, we retired $8.0 million of Senior Notes and we paid $0.8 million of principal on financing leases.
During the three months ended March 31, 2022, cash provided by financing activities was $10.6 million. Proceeds from the ABL Revolver were $30.0 million and in connection with the ABL Amendment, we paid $0.3 million of debt issuance costs. A portion of the proceeds from the ABL Revolver were used to redeem $20.0 million of Senior Notes and to pay $0.6 million of early redemption costs. We received $2.1 million under financing leases and we paid $0.6 million of principal on financing leases.
Working Capital
Our working capital as of March 31, 2023 was $110.9 million, compared to $99.6 million as of March 31, 2022. The increase in our working capital as of March 31, 2023 was primarily due to a decrease in accrued expenses of $10.6 million, an increase in cash of $3.1 million and increased inventories of $1.3 million, partially offset by decreased accounts receivable of $4.4 million. Our working capital needs are typically highest in the first and third quarters due to the timing of payments for interest on outstanding borrowings and employee incentive compensation. The majority of our interest payments are due in the first and third quarters.
Material Cash Requirements
Our material cash requirements include interest payments on our long-term debt, operating and finance lease payments, and purchase obligations to support our operations.
Debt Service Requirements
As of March 31, 2023, the total projected principal and interest payments on our borrowings were $363.5 million, primarily related to the Senior Notes, of which $25.0 million of interest is expected to be paid in the next 12 months. The remaining interest payments are expected to be paid over the remaining term of the Senior Notes, which mature in 2026, and the principal is due upon maturity. We have estimated our future interest payments assuming no additional borrowings under the ABL Revolver, no early redemptions of principal on the Senior Notes, no early voluntary or required repayment of the borrowings under the ABL Revolver within the next twelve months, and no debt issuances or renewals upon the maturity dates of our notes. However, we may borrow additional amounts under the ABL Revolver, redeem principal on the Senior Notes early or refinance all or a portion of our borrowings in future periods.
23
Table of Contents
Leases
We lease real property for production and services, in addition to equipment. Refer to Part II, Item 8, Financial Statements and Supplementary Data , Note 9, Financing and Operating Leases, in our Annual Report on Form 10-K for the year ended December 31, 2022 for details on our leasing arrangements, including future maturities of our operating lease liabilities.
Purchase Obligations
A purchase obligation is an agreement to purchase goods or services that is enforceable, legally binding, and specifies all significant terms. As of March 31, 2023, there have not been any material changes to the purchase obligations disclosed in our Annual Report on Form 10-K for the fiscal year ended December 31, 2022.
Critical Accounting Policies and Estimates
The preparation of financial statements in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect the amounts and disclosures in the financial statements and accompanying notes. Actual results could differ from those estimates. Our Critical Accounting Policies and Estimates disclosed in our Annual Report on Form 10-K for the year ended December 31, 2022, for which there were no material changes as of March 31, 2023, included:
● Revenue recognition, including estimates of work performed but not completed , and
● Income taxes, including estimates regarding future compensation for covered individuals, valuation allowances and uncertain tax positions.
Text extracted from the filing as submitted to EDGAR. Formatting, tables and exhibits are simplified for reading; the original document is authoritative for anything you rely on.