What changed in this filing

/stocks — the workspaceLOADING

Item 2. Management’s Discussion and Analysis

2023-02-03 compared with 2022-11-04 · 109 added, 71 removed, 167 unchanged (52% of the section changed)

12 unchanged sentences

We commenced operations in 1993 and have been profitable every year since inception.

Our net income for the three months ended September 30, 2022 increased to $184.4 million from $25.4 million for the corresponding period in the prior year.

Our net income for the three months ended December 31, 2022 increased to $176.2 million from $41.9 million for the corresponding period in the prior year.

In order to increase our sales and profits, we believe that we must continue to develop flexible and application optimized server and storage solutions and be among the first to market with new features and products.

We must also continue to expand our software and customer service and support offerings, particularly as we increasingly focus on larger enterprise customers.

Additionally, we must focus on development of our sales partners and distribution channels to further expand our market share.

We also believe that we must continue to expand our software and customer service and support offerings, particularly as we increasingly focus on AI/ML applications and larger enterprise customers.

Additionally, we intend to focus on development of our sales partners and distribution channels to further expand our market share.

We measure our financial success based on various indicators, including growth in net sales, gross profit margin and operating margin.

Among the key non-financial indicators of our success is our ability to rapidly introduce new products and deliver the latest application-optimized server and storage solutions.

In this regard, we work closely with microprocessor and other key component vendors to take advantage of new technologies as they are introduced.

Historically, our ability to introduce new products rapidly has allowed us to benefit from technology transitions such as the introduction of new microprocessors and storage technologies, and as a result, we monitor the introduction cycles of NVIDIA Corporation, Intel Corporation, Advanced Micro Devices, Inc., Samsung Electronics Company Limited, Micron Technology, Inc.

In this regard, we work closely with microprocessor, GPU and other key component vendors to take advantage of new technologies as they are introduced.

Historically, our ability to introduce new products rapidly has allowed us to benefit from technology transitions such as the introduction of new microprocessor, GPU, memory and storage technologies, and as a result, we monitor the introduction cycles of NVIDIA Corporation, Intel Corporation, Advanced Micro Devices, Inc., Samsung Electronics Company Limited, Micron Technology, Inc.

and others closely and carefully.

2 unchanged sentences

Financial Highlights

The following is a summary of our financial highlights of the first quarter of fiscal year 2023:

• Net sales increased by 79.3% in the three months ended September 30, 2022 as compared to the three months ended September 30, 2021.

• Gross margin increased to 18.8% in the three months ended September 30, 2022 from 13.4% in the three months ended September 30, 2021.

• Operating expense s increased by 16.9% as compared to the three months ended September 30, 2021 and were equal to 6.9% and 10.6% of net sales in the three months ended September 30, 2022 and 2021, respectively.

• Effective tax rate increased to 17.4% in the three months ended September 30, 2022 from 11.7% in the three months ended September 30, 2021.

The following is a summary of our financial highlights of the second quarter of fiscal year 2023:

• Net sales increased by 53.8% in the three months ended December 31, 2022 as compared to the three months ended December 31, 2021.

• Gross margin increased to 18.7% in the three months ended December 31, 2022 from 14.0% in the three months ended December 31, 2021.

• Operating expense s increased by 8.5% as compared to the three months ended December 31, 2021 and were equal to 6.7% and 9.6% of net sales in the three months ended December 31, 2022 and 2021, respectively.

• Effective tax rate decreased to 14.3% in the three months ended December 31, 2022 from 15.4% in the three months ended December 31, 2021.

Critical Accounting Policies and Estimates

11 unchanged sentences

Three Months Ended

September 30,

December 31, Six Months Ended

2022 2021 2022 2021

Net sales 100.0 % 100.0 % 100.0 % 100.0 %

3 unchanged sentences

Research and development

3.9 % 5.6 % 4.0 % 5.9 %

Sales and marketing

1.6 % 1.9 % 1.6 % 2.0 %

General and administrative

1.2 % 2.2 % 1.2 % 2.2 %

Total operating expenses 6.7 % 9.6 % 6.8 % 10.1 %

7 unchanged sentences

Net sales consist of sales of our server and storage solutions, including systems and related services and subsystems and accessories.

The main factors that impact net sales of our server and storage systems are the number of compute nodes sold and the average selling prices per node.

The main factors that impact net sales of our server and storage systems are the number of systems and compute nodes sold and the average selling prices per system and node.

The number of nodes and systems shipped will vary each quarter depending on our customers specific server application or workload.

The main factors that impact net sales of our subsystems and accessories are units shipped and the average selling price per unit.

The prices for our server and storage systems range widely depending upon the configuration, including the number of compute nodes in a server system as well as the level of integration of key components such as SSDs and memory.

The prices for our subsystems and accessories can also vary widely based on whether a customer is purchasing power supplies, server boards, chassis or other accessories.

1 unchanged sentence

The number of compute nodes sold, which can vary by product, is an important metric we use to track our business.

Measuring volume using compute nodes enables more consistent measurement across different server form factors and across different vendors.

As with most electronics-based product life cycles, average selling prices typically are highest at the time of introduction of new products that utilize the latest technology and tend to decrease over time as such products mature in the market and are replaced by next generation products.

1 unchanged sentence

SMCI | Q2 2023 Form 10-Q | 35

The following table presents net sales by product type for the three months ended September 30, 2022 and 2021 (dollars in millions):

Three Months Ended September 30, Change

The following table presents net sales by product type for the three and six months ended December 31, 2022 and 2021 (dollars in millions):

Three Months Ended December 31, Change Six Months Ended December 31, Change

2022 2021 $ % 2022 2021 $ %

6 unchanged sentences

Subsystems and accessories are comprised of server-boards, chassis and accessories.

Comparison of Three Months Ended September 30, 2022 and 2021

Comparison of Three Months Ended December 31, 2022 and 2021

The period-over-period increase in net sales of our server and storage systems was due to a 20.6% increase in the number of units of compute nodes sold and a 41.1% increase in the average selling price.

The period-over-period decrease in net sales for our subsystems and accessories of 24.0% is primarily due to recent supply chain constraints and higher sales of complete systems.

The following table presents net sales by geographic region for the three months ended September 30, 2022 and 2021 (dollars in millions):

Three Months Ended September 30, Change Change

The period-over-period decrease in net sales for our subsystems and accessories of 23.6% was primarily due to the focus on allocating constrained components as a result of supply chain shortage to build and ship server and storage systems rather than selling them as part of subsystems and accessories.

Comparison of Six Months Ended December 31, 2022 and 2021

The period-over-period increase in net sales of our server and storage systems was due to a 27.8% increase in the number of units of compute nodes sold and a 45.7% increase in the average selling price.

The increase in the number of units of compute nodes shipped was primarily due to increased demand of GPU systems.

The period-over-period decrease in net sales for our subsystems and accessories of 23.8% was primarily due to the focus on allocating constrained components as a result of supply chain shortage to build and ship server and storage systems rather than selling them as part of subsystems and accessories.

The following table presents net sales by geographic region for the three and six months ended December 31, 2022 and 2021 (dollars in millions):

Three Months Ended December 31, Change Change Six Months Ended December 31, Change Change

2022 2021 $ % 2022 2021 $ %

8 unchanged sentences

Total net sales $ 1,803.2 $ 1,172.4 $ 3,655.3 $ 2,205.1

Comparison of Three Months Ended September 30, 2022 and 2021

The period-over-period increase in overall net sales is the result of increased selling prices, led by higher GPU based products and quantities of product shipments.

The increase in the United States is primarily due to higher sales driven by high demand of GPU based server and storage systems.

The increase of net sales in Europe was primarily due to increases in net sales in the Netherlands, UK and Germany.

SMCI | Q2 2023 Form 10-Q | 36

Comparison of Three Months Ended December 31, 2022 and 2021

The period-over-period increase in overall net sales is the result of increased selling prices led primarily by higher priced GPU based products and increased quantity of overall product shipments.

The increase in the United States is primarily due to higher sales driven by high demand of GPU based server and storage systems.

The increase of net sales in Europe was primarily due to increases in net sales in Netherlands, UK and Germany.

Comparison of Six Months Ended December 31, 2022 and 2021

The period-over-period increase in overall net sales is the result of increased selling prices led primarily by higher priced GPU based products and increased quantity of overall product shipments.

The increase in the United States is primarily due to higher sales driven by high demand of GPU based server and storage systems.

The increase of net sales in Europe was primarily due to increases in net sales in Netherlands, UK and Germany.

Cost of Sales and Gross Margin

Cost of sales primarily consists of the costs to manufacture our products, including the costs of materials, contract manufacturing, shipping, personnel expenses, including salaries, benefits, stock-based compensation and incentive bonuses, equipment and facility expenses, warranty costs and inventory excess and obsolescence provisions.

The primary factors that impact our cost of sales are the mix of products sold and cost of materials, which include purchased parts and material costs, shipping costs, salary and benefits and overhead costs related to production.

Cost of sales as a percentage of net sales may increase or decrease over time if the changes in average selling prices are not matched by corresponding changes in our costs.

4 unchanged sentences

We also outsource to Compuware, also a related party, a portion of our design activities and a significant part of the manufacturing of components, particularly power supplies.

Cost of sales and gross margin for the three months ended September 30, 2022 and 2021 are as follows (dollars in millions):

Three Months Ended September 30, Change

Cost of sales and gross margin for the three and six months ended December 31, 2022 and 2021 are as follows (dollars in millions):

Three Months Ended December 31, Change Six Months Ended December 31, Change

2022 2021 $ % 2022 2021 $ %

2 unchanged sentences

Gross margin 18.7 % 14.0 % 4.7 % 18.7 % 13.7 % 5.0 %

Comparison of Three Months Ended September 30, 2022 and 2021

The period-over-period increase in cost of sales was primarily attributed to an increase of $583.8 million in costs of materials and contract manufacturing expenses primarily related to the increase in net sales volume, a $19.4 million increase in overhead costs, a $6.2 million increase in excess and obsolete inventory charges and a $0.6 million increase in freight costs.

The period-over-period increase in the gross margin percentage was primarily due to sales price increases and recent price drop in key components.

Throughout the COVID-19 pandemic, we experienced an increase in costs of sales, logistics costs as well as direct labor costs to retain our employees.

For the quarter ended September 30, 2022, the cost of freight and some components started to decrease.

Comparison of Three Months Ended December 31, 2022 and 2021

The period-over-period increase in cost of sales was primarily attributed to an increase of $433.1 million in costs of materials and contract manufacturing expenses primarily related to the increase in net sales volume, a $22.1 million increase in overhead costs, a $15.8 million increase in inventory charges offset by a $13.9 million decrease in freight costs.

The period-over-period increase in the gross margin percentage was primarily due to a reduction in the cost of freight and certain key components as well as efficiencies or leverage gained from higher production volume in our facilities.

These key components included hard disk drives, solid-state drives, motherboards and other components.

SMCI | Q2 2023 Form 10-Q | 37

Comparison of Six Months Ended December 31, 2022 and 2021

The period-over-period increase in cost of sales was primarily attributed to an increase of $1,017.2 million in costs of materials and contract manufacturing expenses primarily related to the increase in net sales volume, a $41.5 million increase in overhead costs, a $21.7 million increase in excess and obsolete inventory charges offset by a $13.3 million decrease in freight costs.

These key components included hard disk drives, solid-state drives, motherboards and other components.

Operating Expenses

10 unchanged sentences

Spending on cooperative marketing, reimbursed by our suppliers, typically increases in connection with new product releases by our suppliers.

SMCI | Q1 2023 Form 10-Q | 35

General and administrative expenses consist primarily of general corporate costs, including personnel expenses such as salaries, benefits, stock-based compensation and incentive bonuses, and related expenses for our general and administrative personnel, financial reporting, information technology, corporate governance and compliance, outside legal, audit, tax fees, insurance and bad debt reserves on accounts receivable.

Operating expenses for the three months ended September 30, 2022 and 2021 are as follows (dollars in millions):

Three Months Ended September 30, Change

Operating expenses for the three and six months ended December 31, 2022 and 2021 are as follows (dollars in millions):

Three Months Ended December 31, Change Six Months Ended December 31, Change

2022 2021 $ % 2022 2021 $ %

7 unchanged sentences

Percentage of total net sales 6.7 % 9.6 % 6.8 % 10.1 %

Comparison of Three Months Ended September 30, 2022 and 2021

SMCI | Q2 2023 Form 10-Q | 38

Comparison of Three Months Ended December 31, 2022 and 2021

Research and development expenses.

The period-over-period increase in research and development expenses was primarily due to a $7.6 million increase in personnel expenses and a higher headcount, a $1.4 million increase in product development costs and $0.1 million lower research and development credits from certain suppliers and customers towards our development efforts.

The period-over-period increase in research and development expenses was primarily due to a $12.6 million increase in personnel expenses primarily due to increase in headcount and equity grants partially offset by $7.4 million higher in research and development credits provided from certain suppliers and customers for our development efforts.

Sales and marketing expenses.

The period-over-period increase in sales and marketing expenses was primarily due to a $5.6 million increase in personnel expenses and a higher headcount and a $2.2 million increase in advertising and other expenses.

The period-over-period increase in sales and marketing expenses was primarily due to a $6.7 million increase in personnel expenses primarily due to increased headcount partially offset by $0.3 million lower in advertising and other expenses.

General and administrative expenses.

The period-over-period increase in general and administrative expenses was primarily due to a $1.6 million increase in personnel expenses and a higher headcount.

Interest Expense and Other Income, Net

Other income, net consists primarily of interest earned on our investment and cash balances and foreign exchange gains and losses.

The period-over-period decrease in general and administrative expenses was primarily due to a $2.3 million decrease in legal and litigation settlement expenses partially offset by an increase of $0.1 million in personnel related expenses and other expenses.

Comparison of Six Months Ended December 31, 2022 and 2021

Research and development expenses.

The period-over-period increase in research and development expenses was primarily due to a $20.3 million increase in personnel expenses, a $1.4 million increase in product development costs partially offset by $7.3 million higher research and development credits provided by certain suppliers and customers for our development efforts.

Sales and marketing expenses.

The period-over-period increase in sales and marketing expenses was primarily due to a $12.2 million increase in personnel expenses as a result of a higher head count and an increase of $1.3 million in advertising and other expenses.

General and administrative expenses.

The period-over-period decrease in general and administrative expenses was primarily due to a $2.3 million decrease in legal and litigation settlement expenses partially offset by an increase of $1.7 million in personnel expenses and other expenses.

Interest Expense and Other (Expense) Income, Net

Other (expense) income, net consists primarily of interest earned on our investment and cash balances and foreign exchange gains and losses.

Interest expense represents interest expense on our term loans and lines of credit.

Interest expense and other income, net for the three months ended September 30, 2022 and 2021 are as follows (dollars in millions):

Interest expense and other (expense) income, net for the three and six months ended December 31, 2022 and 2021 are as follows (dollars in millions):

Three Months Ended

September 30, Change

December 31, Change Six Months Ended

December 31, Change

2022 2021 $ % 2022 2021 $ %

Other income, net $ 8.1 $ 0.1 $ 8.0 8,000.0 %

Other (expense) income, net $ (6.3) $ (0.6) $ (5.7) 950.0 % $ 1.7 $ (0.6) $ 2.3 (383.3) %

Interest expense (1.8) (1.2) (0.6) 50.0 % (5.7) (2.0) (3.7) 185.0 %

Interest expense and other income, net $ 4.2 $ (0.7) $ 4.9 (700.0) %

Interest expense and other (expense) income, net $ (8.1) $ (1.8) $ (6.3) 350.0 % $ (4.0) $ (2.6) $ (1.4) 53.8 %

SMCI | Q2 2023 Form 10-Q | 39

Comparison of Three Months Ended September 30, 2022 and 2021

The change of $4.9 million in interest expense and other income, net was primarily attributable to a $8.0 million increase in foreign exchange gain due to favorable currency fluctuations offset by a $3.1 million increase in interest expense due to increase in average loan balances and interest rates.

Comparison of Three Months Ended December 31, 2022 and 2021

The change of $6.3 million in interest expense and other expense, net was primarily attributable to a $5.7 million increase in foreign exchange loss due to unfavorable currency fluctuations and $0.6 million increase in interest expense due to both an increase in average loan balances and interest rates.

Comparison of Six Months Ended December 31, 2022 and 2021

The change of $1.4 million in interest expense and other (expense) income, net was primarily attributable to a $2.3 million increase in foreign exchange gain due to favorable currency fluctuations offset by a $3.7 million increase in interest expense due to both an increase in average loan balances and interest rates.

Income Tax Provision

1 unchanged sentence

Our effective tax rate differs from the statutory rate primarily due to research and development tax credits, certain non-deductible expenses, tax benefits from foreign derived intangible income and stock-based compensation.

Provision for income taxes and effective tax rates for the three months ended September 30, 2022 and 2021 are as follows (dollars in millions):

Provision for income taxes and effective tax rates for the three and six months ended December 31, 2022 and 2021 are as follows (dollars in millions):

Three Months Ended

September 30, Change

December 31, Change Six Months Ended

December 31, Change

2022 2021 $ % 2022 2021 $ %

2 unchanged sentences

Effective tax rate 14.3 % 15.4 % 15.9 % 14.1 %

Comparison of Three Months Ended September 30, 2022 and 2021

Comparison of Three Months Ended December 31, 2022 and 2021

Our quarterly effective income tax rate is based on the estimated annual income tax rate forecast and discrete tax items recognized in the period.

The income tax provision and effective tax rate for the three months ended September 30, 2022 is higher than that for the three months ended September 30, 2021, primarily due to a significant increase in annual forecasted taxable income while the deductible expenses and the quarter discrete items kept at a much lower rate of growth.

The effective tax rate for the three months ended December 31, 2022, is lower than that for the three months ended December 31, 2021, primarily due to an increase of stock compensation tax deduction for the three months ended December 31, 2022, and due to the release of tax reserves.

Comparison of Six Months Ended December 31, 2022 and 2021

The income tax provision and effective tax rate for the six months ended December 31, 2022 is higher than that for the six months ended December 31, 2021, primarily due to significant increase in taxable income in the first two quarters of fiscal year 2023, whereas the income tax deduction for items such as R&D credit and foreign tax deduction comparably did not increase in the same proportion.

Share of (Loss) Income from Equity Investee, Net of Taxes

Share of (loss) income from equity investee, net of taxes represents our share of income from the Corporate Venture in which we have 30% ownership.

Share of (loss) income from equity investee, net of taxes for the three months ended September 30, 2022 and 2021 are as follows (dollars in millions):

SMCI | Q2 2023 Form 10-Q | 40

Share of (loss) income from equity investee, net of taxes for the three and six months ended December 31, 2022 and 2021 are as follows (dollars in millions):

Three Months Ended

September 30, Change

December 31, Change Six Months Ended

December 31, Change

2022 2021 $ % 2022 2021 $ %

Share of (loss) income from equity investee, net of taxes $ (0.9) $ 0.4 $ (1.3) (325.0)%

Share of (loss) income from equity investee, net of taxes $ (1.4) $ 0.2 $ (1.6) n/m (1)

$ (2.2) $ 0.6 $ (2.8) n/m (1)

Percentage of total net sales (0.1) % — % (0.1) % — %

Comparison of Three Months Ended September 30, 2022 and 2021

(1) n/m - Not meaningful

Comparison of Three Months Ended December 31, 2022 and 2021

The period-over-period decrease of $1.6 million in share of (loss) income from equity investee, net of taxes was primarily due to less net income recognized by the Corporate Venture.

SMCI | Q1 2023 Form 10-Q | 37

Comparison of Six Months Ended December 31, 2022 and 2021

The period-over-period decrease of $2.8 million in share of (loss) income from equity investee, net of taxes was primarily due to less net income recognized by the Corporate Venture.

Liquidity and Capital Resources

We have financed our growth primarily with funds generated from operations, in addition to utilizing borrowing facilities.

The credit facilities were related to an increase in the need for working capital due to increasing sales, longer supply chain manufacturing and delivery times as well as the financing of property, plant and equipment acquisitions.

We have financed our growth primarily with funds generated from increased profits from operations, in addition to utilizing borrowing facilities.

We draw on our credit facilities to fund working capital requirements due to the higher level of inventories and accounts receivable based on increasing sales as well as financing the acquisition of property, plant and equipment.

We also received funds from the exercise of employee stock options.

Our cash and cash equivalents were $238.3 million and $267.4 million as of September 30, 2022 and June 30, 2022, respectively.

Our cash in foreign locations was $128.2 million a nd $169.5 million as of September 30, 2022 and June 30, 2022, respectively.

Our cash and cash equivalents were $304.6 million and $267.4 million as of December 31, 2022 and June 30, 2022, respectively.

Our cash in foreign locations was $168.5 million a nd $169.5 million as of December 31, 2022 and June 30, 2022, respectively.

Amounts held outside of the U.S.

13 unchanged sentences

The share repurchase program is effective until January 31, 2024 or until the maximum amount of common stock is repurchased, whichever occurs first.

SMCI | Q2 2023 Form 10-Q | 41

Our key cash flow metrics were as follows (dollars in millions):

Three Months Ended

September 30, Change

Six Months Ended

December 31, Change

Net cash provided by (used in) operating activities $ 474.7 $ (187.7) $ 662.4

1 unchanged sentence

Net cash (used in) provided by financing activities $ (415.8) $ 227.2 $ (643.0)

Net (decrease) increase in cash, cash equivalents and restricted cash $ (29.8) $ 37.8 $ (67.6)

Net increase in cash, cash equivalents and restricted cash $ 36.5 $ 15.1 $ 21.4

Operating Activities

Net cash provided by operating activities increased by $448.2 million for the three months ended September 30, 2022 as compared to the three months ended September 30, 2021.

The increase was primarily due to an increase of net income of $160.2 million offset by $9.2 million of unrealized gain and $6.8 million of various non-cash items, faster collection of accounts receivable as well as the prepayment by customers for products.

Net cash provided by operating activities increased by $662.4 million for the six months ended December 31, 2022 as compared to the six months ended December 31, 2021.

The increase was primarily due to an increase of $369.2 million of various non-cash items, including the collection of accounts receivables from the higher sales as well lower levels of inventory needed from an improved supply chain in the quarter ended December 31, 2022, and an increase in net income of $293.2 million.

Investing Activities

Net cash used in investing activities increased by $1.2 million for the three months ended September 30, 2022 as compared to the three months ended September 30, 2021 due to an investment made in a privately held company in the three months ended September 30, 2021.

Net cash used in investing activities decreased by $3.7 million for the six months ended December 31, 2022 as compared to the six months ended December 31, 2021 primarily due to decrease in purchases of property, plant and equipment in the six months ended December 31, 2022.

Financing Activities

Net cash used by financing activities for the three months ended September 30, 2022 was $331.2 million while net cash provided by financing activities for the three months ended September 30, 2021 was $184.3 million.

The change in cash flows from financing activities was primarily due to a decrease of $190.7 million in proceeds from borrowings and a decrease of $325.3 million in repayment of debt.

SMCI | Q1 2023 Form 10-Q | 38

Net cash used by financing activities for the six months ended December 31, 2022 was $415.8 million while net cash provided by financing activities for the six months ended December 31, 2021 was $227.2 million.

The change in cash flows from financing activities of $643.0 million was primarily due to a decrease of $443.7 million in proceeds from borrowings and an increase of $197.4 million in repayment of debt.

Other Factors Affecting Liquidity and Capital Resources

2 unchanged sentences

We anticipate our capital expenditures for the remainder of fiscal year 2023 will be approximately $33 million, relating primarily to costs associated with our manufacturing capabilities, including tooling for new products, new information technology investments, and facilities upgrades.

We will continue to evaluate new business opportunities and new markets.

We are evaluating an expansion of our manufacturing into Malaysia, and during the second quarter of fiscal year 2023 entered into a letter of understanding to acquire land in Malaysia.

A definitive agreement to acquire such land, subject to various conditions, was subsequently executed in January 2023.

In the event we acquire such land, we anticipate additional future capital expenditures for the remainder of fiscal year 2023 of approximately $14 million for such initiative.

In addition, we will continue to evaluate new business opportunities and new markets.

As a result, our future growth within the existing business or new opportunities and markets may dictate the need for additional facilities and capital expenditures to support that growth.

1 unchanged sentence

We intend to continue to focus our capital expenditures in fiscal year 2023 to support the growth of our operations.

Our future capital requirements will depend on many factors including our growth rate, the timing and extent of spending to support development efforts, the expansion of sales and marketing activities, the introduction of new and enhanced software and services offerings, the investments in our office facilities and our systems infrastructure, the continuing market acceptance of our offerings and our planned investments, particularly in our product development efforts, applications or technologies.

SMCI | Q2 2023 Form 10-Q | 42

Recent Accounting Pronouncements

2 unchanged sentences

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