What changed in this filing

/stocks — the workspaceLOADING

Item 2. Management’s Discussion and Analysis

2020-12-03 compared with 2020-09-04 · 178 added, 136 removed, 283 unchanged (53% of the section changed)

9 unchanged sentences

Demand for agricultural equipment and, to a lesser extent, parts and service support, are impacted by agricultural commodity prices and net farm income.

Based on February 2020 U.S.

Based on September 2020 U.S.

Department of Agriculture publications, the estimate of net farm income for calendar year 2020 indicated an approximate 22.7% increase as compared to calendar year 2019, and an approximate 3.0% increase in net farm income for calendar year 2019, as compared to calendar year 2018.

For the second quarter of fiscal 2021, our net income was $6.4 million, or $0.28 per diluted share, compared to a fiscal 2020 second quarter net income of $5.5 million, or $0.25 per diluted share.

Our adjusted diluted earnings per share was $0.29 for the second quarter of fiscal 2021, compared to $0.31 for the second quarter of fiscal 2020.

For the third quarter of fiscal 2021, our net income was $9.9 million, or $0.44 per diluted share, compared to a fiscal 2020 third quarter net income of $8.2 million, or $0.37 per diluted share.

Our adjusted diluted earnings per share was $0.58 for the third quarter of fiscal 2021, compared to $0.48 for the third quarter of fiscal 2020.

See the Non-GAAP Financial Measures section below for a reconciliation of adjusted diluted earnings per share to diluted earnings per share, the most comparable GAAP financial measure.

Significant factors impacting the quarterly comparisons were:

• Revenue in the second quarter of fiscal 2021 was 3.7% lower than the second quarter of fiscal 2020.

Increased revenue from parts and service was more than offset by lower equipment and rental and other revenue.

Total same store sales were down 5.8% compared to the prior year second quarter as the Northwood (ND) location was acquired in the third quarter of fiscal 2020 and the Scottsbluff (NE), Sidney (NE) and Torrington (WY) locations were acquired in the second quarter of fiscal 2021.

• Operating expenses decreased 3.2% compared to the second quarter of fiscal 2020 despite adding the four acquired locations.

This was achieved through managed expense reductions, primarily in the Construction and International segments, and lower expenses in all segments due to the COVID-19 pandemic such as travel and fuel expenses.

• Floorplan and other interest expense decreased a combined 20.5% in the second quarter of fiscal 2021, as compared to the second quarter last year, due to an overall lower interest rate environment as well as a lower interest rate spread under our new five-year Bank Syndicate Agreement that was finalized in April 2020.

• Revenue in the third quarter of fiscal 2021 was flat compared to the third quarter of fiscal 2020.

Increased revenue from parts and service was offset by lower equipment and rental and other revenue.

Total same store sales were down 2.1% compared to the prior year third quarter as the Northwood (ND) location was acquired late in the third quarter of fiscal 2020 and the Scottsbluff (NE), Sidney (NE) and Torrington (WY) locations were acquired in the second quarter of fiscal 2021.

Parts and service revenue within our Agriculture segment in the third quarter of fiscal 2020 was positively impacted by good harvest conditions throughout most of our footprint.

• Impairments in the third quarter of fiscal 2021 were $2.6 million compared to $0.1 million in the third quarter of fiscal 2020.

The increase was attributable to the impairment of goodwill and other intangible assets in one of our International reporting units.

• Operating expenses decreased 7.0% compared to the third quarter of fiscal 2020 despite adding the four acquired locations.

• Floorplan and other interest expense decreased a combined 29.4% in the third quarter of fiscal 2021, as compared to the third quarter last year, due to an overall lower interest rate environment, a lower interest rate spread under our new five-year Bank Syndicate Agreement that was finalized in April 2020, and a lower borrowings on our line of credit.

Impact of the COVID-19 Pandemic on the Company

6 unchanged sentences

Even though we are considered an essential business, in response to the COVID-19 pandemic, the Company closed its U.S.

stores to the public on March 23, 2020 but continued operations through social distancing means in all areas:

stores to the public in March 2020 but continued operations through social distancing means in all areas:

equipment, parts, service and rental.

Beginning May 4, 2020, we began fully reopening our stores to the public, following pandemic safety

protocols applicable to the locations.

Additionally, our International stores have also been following pandemic safety protocols applicable to each location.

By June 2020, all of our stores were open to the public but still maintain pandemic safety protocols.

We believe that each of our business segments will be impacted by the pandemic to varying degrees, although the actual impact will be subject to many variables and uncertainties which are currently unknown and outside of our control.

Overall, COVID-19 has created industry challenges such as lower agriculture commodity prices as demand deterioration and supply chain disruptions are affecting areas such as ethanol, livestock and international trade.

We believe that the existing and anticipated lower commodity prices will reduce our equipment sales, but it is difficult to estimate the extent and timing of this impact given all the variables and uncertainties.

We believe our parts and service business will be less impacted, as our customers will be experiencing similar levels of wear and tear on their equipment.

Beginning in May 2020, we began fully reopening our stores to the public, following pandemic safety protocols, and by June 2020 all of our locations were once again open to the public.

Additionally, our International stores have also been following pandemic safety protocols set forth by each country and local government authority, which at times have included border shutdowns and curfew regulations.

With the number of cases within our footprint on the rise throughout the third quarter of fiscal 2021, we continue to follow the requirements of the local authorities for each of our locations to determine mandates and social distancing policies.

As a result of some of the improvements we have made since the beginning of the pandemic, such as physical barriers, cleaning policies, social distancing, and mask mandates, the Company has no plans to close all of its U.S.

stores to the public as we did in the spring of fiscal 2021.

Any such decision to close a U.S.

store to the public, if it is made, will be determined on a location by location basis so as to protect our employees and customers while continuing to provide customers with the service expected from the Company.

We believe that each of our business segments, has been and will continue to be, impacted by the COVID-19 pandemic to varying degrees, although the actual ultimate impact has been and will continue to be subject to many variables and uncertainties many of which are currently unknown or outside of our control.

Overall, we believe COVID-19 has created challenging industry conditions resulting in supply chain disruptions affecting areas such as ethanol, livestock and international trade.

These conditions impacted agricultural commodities early in the year, but were later offset by other more positive macro conditions, such as U.S.

crop production and increased commodity exports.

The variability in commodity prices makes it difficult to estimate the extent and timing of this impact on our equipment sales.

However, we believe our parts and service business has been less negatively impacted by COVID-19, as our customers are continuing to experience wear and tear on their equipment.

Also, offsetting some of the challenges in the agriculture industry will be government support programs for our farm customers, such as the $16 billion Coronavirus Food Assistance Program (CFAP).

We believe all revenue categories of equipment, parts, service and rental will be impacted in this segment, with such effects continuing so long as pandemic related macroeconomic stress and uncertainties persist.

Examples of such macroeconomic stress include:

We believe all revenue categories of equipment, parts, service and rental have been negatively impacted in this segment as a result of COVID-19, with such effects expected to continue as long as pandemic related macroeconomic stress and uncertainties persist.

Examples of such macroeconomic stressors include:

lower oil prices, higher unemployment, lower GDP, and reduced government spending on infrastructure projects.

All of these factors we believe will lead to lower overall U.S.

We believe all of these factors have lead to lower overall U.S.

construction spending.

International

In addition to the industry challenges indicated for our Agriculture Segment, International is also being impacted by border shutdowns, timing of equipment shipments and from time to time more stringent in-country pandemic regulations.

We believe all revenue categories in this segment will experience greater negative impacts than our Agriculture Segment because of these additional challenges along with the general lack of government support programs to our International farm customers.

In addition to the industry challenges indicated for our Agriculture segment, our International segment is also being negatively impacted by border shutdowns, timing of equipment shipments and, from time to time, more stringent in-country pandemic regulations.

We believe all revenue categories in this segment have been more negatively impacted than our Agriculture segment because of these additional challenges and the general lack of government support programs for our International farm customers.

On May 4, 2020, the Company acquired certain assets of HorizonWest Inc.

This acquired Case IH agriculture dealership complex consisted of three agriculture equipment stores in Scottsbluff and Sidney, Nebraska and Torrington, Wyoming, which expands the Company's agriculture presence in Nebraska and into Wyoming.

This acquired Case IH agriculture dealership complex consisted of three agriculture equipment stores in Scottsbluff and Sidney, Nebraska and Torrington, Wyoming, which expanded the Company's agriculture presence in Nebraska and into Wyoming.

The total consideration transferred for the acquired business was $ 6.8 million paid in cash, which the Company financed through available cash resources and capacity under our existing floorplan payable and other credit facilities.

The three HorizonWest dealerships are included within our Agriculture segment.

On October 1, 2019, we acquired certain assets of Uglem-Ness Co., a single Case IH agriculture equipment store in Northwood, North Dakota.

On October 1, 2019, we acquired certain assets of Uglem-Ness Co., a single store Case IH agriculture equipment dealership in Northwood, North Dakota.

The acquisition continues our strategy of acquiring dealerships in agriculture markets contiguous to our current North American agriculture stores.

5 unchanged sentences

The new ERP application is expected to provide data-driven and mobile-enabled sales and support tools to improve employee efficiency and deliver an enhanced customer experience.

The Company integrated one pilot store on the new ERP system in the second quarter of the current fiscal year and expects all domestic stores to be on the new ERP application in the first half of the fiscal year ending January 31, 2022.

The Company integrated one pilot store on the new ERP system in the second quarter of fiscal 2021 and expects all domestic stores to be migrated to the new ERP during the second or third quarter of fiscal 2022.

We have prospectively adjusted the useful life of our current ERP application such that it will be fully amortized upon its estimated replacement date.

1 unchanged sentence

Our critical accounting policies and estimates are included in the Management's Discussion and Analysis of Financial Condition and Results of Operations section of our Annual Report on Form 10-K for the fiscal year ended January 31, 2020.

Other than the adoption of the accounting standards for current expected credit loss and the standard for cloud computing

described in Note 1 to our consolidated financial statements in this Quarterly Report on Form 10-Q, there have been no changes in our critical accounting policies since January 31, 2020.

Other than the adoption of the accounting standards for current expected credit loss and the standard for cloud computing described in Note 1 to our consolidated financial statements in this Quarterly Report on Form 10-Q, there have been no changes in our critical accounting policies since January 31, 2020.

Results of Operations

7 unchanged sentences

Comparative financial data for each of our four sources of revenue are expressed below.

Three Months Ended July 31, Six Months Ended July 31,

Three Months Ended October 31, Nine Months Ended October 31,

2020 2019 2020 2019

18 unchanged sentences

The following table sets forth our statements of operations data expressed as a percentage of total revenue for the periods indicated:

Three Months Ended July 31, Six Months Ended July 31,

Three Months Ended October 31, Nine Months Ended October 31,

2020 2019 2020 2019

7 unchanged sentences

Operating Expenses 15.0 % 16.1 % 16.4 % 17.4 %

Impairment of Goodwill 0.4 % — % 0.1 % — %

Impairment of Intangible and Long-Lived Assets 0.3 % — % 0.1 % — %

Income from Operations 4.4 % 3.8 % 3.1 % 2.5 %

3 unchanged sentences

Net Income 2.7 % 2.3 % 1.9 % 1.4 %

Three Months Ended July 31, 2020 Compared to Three Months Ended July 31, 2019

Three Months Ended October 31, 2020 Compared to Three Months Ended October 31, 2019

Consolidated Results

Three Months Ended July 31, Increase/ Percent

Three Months Ended October 31, Increase/ Percent

2020 2019 (Decrease) Change

5 unchanged sentences

Total Revenue $ 360,872 $ 360,936 $ (64) — %

Total revenue for the second quarter of fiscal 2021 was down 3.7% or $11.5 million as compared to the second quarter of fiscal 2020 driven by revenue decreases in equipment and rental and other.

These decreases primarily occurred in our Construction and International segments.

Company-wide same-store sales in the second quarter of fiscal 2021 decreased 5.8% versus the comparable period in the fiscal 2020.

Same-store sales decreased in all three segments but most notably in International where same-store sales were down 13.1%.

Three Months Ended July 31, Increase/ Percent

Total revenue for the third quarter of fiscal 2021 was virtually flat compared to the third quarter of fiscal 2020.

Increased revenue from parts and service was offset by lower equipment and rental and other revenue.

Company-wide same-store sales in the third quarter of fiscal 2021 decreased 2.1% versus the comparable period in fiscal 2020.

The most significant decrease in same store sales occurred in the International segment with same-store sales decreasing 11.1% from the prior year quarter.

Three Months Ended October 31, Increase/ Percent

2020 2019 (Decrease) Change

17 unchanged sentences

Total Gross Profit Mix 100.0 % 100.0 %

Gross profit for the second quarter of fiscal 2021 decreased 2.1% or $1.3 million, as compared to the same period last year.

The decrease in gross profit was due to the revenue decreases in equipment and rental and other.

Total gross profit margin increased to 20.7% in the current quarter from 20.3% in the prior year quarter primarily due to an increased mix of higher margin parts and service business slightly offset by lower service and rental and other margins.

Our company-wide absorption rate — which is calculated by dividing our gross profit from sales of parts, service and rental fleet by our operating expenses, less commission expense on equipment sales, plus interest expense on floorplan payables and rental fleet debt — increased to 80.9% for the second quarter of fiscal 2021 compared to 77.1% during the same period last year as the increase in gross profit from parts, service, and rental and other in the second quarter of fiscal 2021 combined with lower operating and floorplan interest expenses generated the improved absorption compared to the prior year.

Gross profit for the third quarter of fiscal 2021 increased 1.1% or $0.8 million, as compared to the same period last year.

Gross profit margin also improved to 20.1% in the current quarter from 19.9% in the prior year quarter.

The increase in gross profit and gross profit margin was primarily the result of a change in gross profit mix resulting from a greater percentage of revenue generated by our higher margin parts and service businesses.

Our company-wide absorption rate — which is calculated by dividing our gross profit from sales of parts, service and rental fleet by our operating expenses, less commission expense on equipment sales, plus interest expense on floorplan payables and rental fleet debt — increased to 94.2% for the third quarter of fiscal 2021 compared to 82.6% during the same period last year as the increase in gross profit from parts and service in the third quarter of fiscal 2021 combined with lower operating and floorplan interest expenses generated the improved absorption rate compared to that of the prior year quarter.

Operating Expenses

Three Months Ended July 31, Increase/ Percent

Three Months Ended October 31, Increase/ Percent

2020 2019 (Decrease) Change

2 unchanged sentences

Operating Expenses as a Percentage of Revenue 15.0 % 16.1 % (1.1) % (6.8) %

Our operating expenses in the second quarter of fiscal 2021 decreased 3.2%, as compared to the second quarter of fiscal 2020.

The increased operating expenses of four acquired locations, which were not in the prior year quarter, was more than offset by managed expense reductions in our Construction and International segments and various lower operating expenses caused by COVID-19 such as travel and fuel costs.

Operating expenses as a percentage of revenue remained relatively flat at 17.5% in the second quarter of fiscal 2021 from 17.4% in the second quarter of fiscal 2020.

Our operating expenses in the third quarter of fiscal 2021 decreased 7.0%, as compared to the third quarter of fiscal 2020.

The increased operating expenses of four acquired locations, which were not in the prior year quarter, were more than offset by managed expense reductions in our Construction and International segments and various lower operating expenses caused by COVID-19 such as reduced travel and fuel costs.

Operating expenses as a percentage of revenue decreased to 15.0% in the third quarter of fiscal 2021 from 16.1% in the third quarter of fiscal 2020.

Impairment Charges

Three Months Ended October 31, Increase/ Percent

2020 2019 Decrease Change

(dollars in thousands)

Impairment of Goodwill $ 1,453 $ — $ 1,453 100.0%

Impairment of Intangible and Long-Lived Assets 1,103 51 1,052 n/m

We recognized $1.5 million in impairment expense related to certain goodwill assets in our International segment in the third quarter of fiscal 2021.

We also recognized impairment expense related to other intangible assets and long-lived assets of $1.1 million primarily in our International segment during the same period.

The total impairment expense of $2.6 million is an increase compared to the impairment expense in third quarter of fiscal 2020 of $0.1 million.

Other Income (Expense)

Three Months Ended July 31, Increase/ Percent

Three Months Ended October 31, Increase/ Percent

2020 2019 (Decrease) Change

(dollars in thousands)

Interest income and other income (expense) $ 562 $ 620 $ (58) (9.4) %

Interest and other income (expense) $ (360) $ 1,273 $ (1,633) n/m

Floorplan interest expense (757) (1,448) (691) (47.7) %

Other interest expense (940) (955) (15) (1.6) %

Floorplan interest expense decreased 35.6% in the second quarter of fiscal 2021, as compared to the second quarter of fiscal 2020, due to an overall lower interest rate environment as well as a lower interest rate spread under our new five-year Bank Syndicate Agreement that was finalized in April 2020.

Floorplan interest expense decreased 47.7% in the third quarter of fiscal 2021, as compared to the third quarter of fiscal 2020, due to an overall lower interest rate environment, a lower interest rate spread under our new five-year Bank Syndicate Agreement that was finalized in April 2020, and lower borrowings on our line of credit.

The decrease in Interest and other income (expense) was primarily due to foreign currency remeasurement losses in Ukraine, resulting from a devaluation of the Ukrainian hyrvnia in the third quarter of fiscal 2021.

Provision for Income Taxes

Three Months Ended July 31, Increase/ Percent

Three Months Ended October 31, Increase/ Percent

2020 2019 (Decrease) Change

1 unchanged sentence

Provision for Income Taxes $ 3,912 $ 4,195 $ (283) (6.7) %

Our effective tax rate was 22.8 % for the second quarter of fiscal 2021 and 25.8 % for the second quarter of fiscal 2020.

In the current quarter our effective tax rate differed from the 21.0% domestic federal statutory tax rate primarily due to the impact of state taxes and discreet items, such as the tax impact of share-based payments, offset by the tax impact of foreign currency fluctuations on our Ukrainian business.

Our effective tax rate was 28.3 % for the third quarter of fiscal 2021 and 33.8 % for the third quarter of fiscal 2020.

In the current quarter our effective tax rate differed from the 21.0% domestic federal statutory tax rate primarily due to the impact of state taxes, share-based payments, foreign currency fluctuations on our Ukrainian business and a partial valuation allowance recorded on the deferred tax assets of our Germany entity.

Segment Results

2 unchanged sentences

Revenue between segments is immaterial.

Three Months Ended July 31, Increase/ Percent

Three Months Ended October 31, Increase/ Percent

2020 2019 (Decrease) Change

6 unchanged sentences

Agriculture $ 13,575 $ 10,259 $ 3,316 32.3 %

Construction 1,375 1,334 41 3.1 %

Construction 1,448 347 1,101 n/m

International (2,424) 2,061 (4,485) n/m

Segment income (loss) before income taxes 7,695 8,016 (321) (4.0) %

Segment income before income taxes 12,599 12,667 (68) (0.5) %

Shared Resources 1,225 (258) 1,483 n/m

Total $ 13,824 $ 12,409 $ 1,415 11.4 %

Agriculture segment revenue for the second quarter of fiscal 2021 increased 2.0% compared to the second quarter of fiscal 2020.

Agriculture segment revenue for the third quarter of fiscal 2021 increased 3.1% compared to the third quarter of fiscal 2020.

The higher revenue was driven by increases in our parts and service businesses.

Parts and service revenue continued to benefit from an aging customer fleet and all sources of revenue in this segment benefited from the addition of four locations that were not in the prior year quarter.

Same-store sales of our Agriculture segment decreased 3.5% for the second quarter of fiscal 2021, as compared to the second quarter of fiscal 2020.

Agriculture segment income before income taxes was $6.8 million for the second quarter of fiscal 2021 compared to $6.2 million for the second quarter of fiscal 2020.

The improvement in segment results was primarily due to the higher parts and service revenue.

Construction segment revenue for the second quarter of fiscal 2021 decreased 7.5% compared to the second quarter of fiscal 2020, due to a same-store sales decrease of 4.5% and our divestiture of the Albuquerque, New Mexico store in the fourth quarter of fiscal 2020.

All sources of revenue — equipment, parts, service and rental and other — declined for the segment’s second quarter of 2021, as compared to the prior year’s second quarter.

A larger contributor to the decrease was our rental and other revenue, which was down due to a smaller fleet and lower utilization compared to the prior year driven by more difficult industry conditions such as lower oil prices and a general slowdown in the economy due to COVID-19.

Our Construction segment income before taxes was $1.4 million for the second quarter of fiscal 2021 compared to $1.3 million in the second quarter of fiscal 2020.

Lower revenues in this segment were fully offset by decreases in operating and interest expenses compared to that of the prior year.

The dollar utilization — which is calculated by dividing the rental revenue earned on our rental fleet by the average gross carrying value of our rental fleet (comprised of original equipment costs plus additional capitalized costs) for that period — of our rental fleet decreased from 25.5% in the second quarter of fiscal 2020 to 22.2% in the second quarter of fiscal 2021.

Parts and service also benefited in the quarter from good harvest conditions throughout much of our footprint in the quarter.

Same-store sales of our Agriculture segment decreased 1.3% for the third quarter of fiscal 2021 as compared to the third quarter of fiscal 2020.

Agriculture segment income before income taxes was $13.6 million for the third quarter of fiscal 2021 compared to $10.3 million for the third quarter of fiscal 2020.

The improvement in segment results was primarily due to the higher parts and service revenue as well as the addition of the four acquired locations.

Increased operating expenses for the quarter were partially offset by a decrease in traveling expenses due to COVID-19.

Lower floorplan and other interest expense for the third quarter of fiscal 2021, as compared to the third quarter of fiscal 2020, also contributed to the improvement in segment results.

Construction segment revenue for the third quarter of fiscal 2021 increased 1.3% compared to the third quarter of fiscal 2020.

The higher revenue was driven by increases in our equipment sales, as compared to the prior year’s third quarter.

This increase was partially offset by lower rental and other revenue, which was down due to a smaller fleet and lower utilization compared to the prior year driven by more difficult industry conditions such as lower oil prices and a general slowdown in the economy due to COVID-19.

Higher revenues were offset by the divestiture of the Albuquerque, New Mexico store in the fourth quarter of fiscal 2020.

Same-store sales of our Construction segment increased 3.6% for the third quarter of fiscal 2021, as compared to the third quarter of fiscal 2020.

Our Construction segment income before taxes was $1.4 million for the third quarter of fiscal 2021 compared to $0.3 million in the third quarter of fiscal 2020.

Lower gross profits in this segment were more than offset by managed operating expense reductions and interest expense savings compared to that of the prior year.

The dollar utilization — which is calculated by dividing the rental revenue earned on our rental fleet by the average gross carrying value of our rental fleet (comprised of original equipment costs plus additional capitalized costs) for that period — of our rental fleet decreased from 30.4% in the third quarter of fiscal 2020 to 25.7% in the third quarter of fiscal 2021.

International

International segment revenue and same-store sales, for the second quarter of fiscal 2021 decreased 13.1% compared to the second quarter of fiscal 2020.

All primary sources of revenue — equipment, parts and service — declined for the segment's second quarter of fiscal 2021, as compared to the prior year's second quarter.

Lower segment revenue was driven by decreased customer demand due to below average small grain yields in certain areas of our International footprint as well as overall challenging economic and business conditions due to COVID-19.

Our International segment loss before income taxes was $0.4 million for the second quarter of fiscal 2021 compared to segment income of $0.5 million for the same period last year.

Decreased revenues drove the lower results in this segment but were slightly offset by decreases in operating expenses.

International segment revenue and same-store sales, for the third quarter of fiscal 2021 decreased 11.1% compared to the third quarter of fiscal 2020.

All primary sources of revenue — equipment, parts and service — declined for the segment's third quarter of fiscal 2021, as compared to the prior year's third quarter.

Lower segment revenue was driven by decreased customer demand due to below average yields in certain areas of our International footprint as well as overall challenging economic and business conditions due to COVID-19.

Our International segment loss before income taxes was $2.4 million for the third quarter of fiscal 2021 compared to segment income of $2.1 million for the same period last year.

The decrease in segment income was the result of lower revenues and impairment of goodwill and other intangible assets in our Germany reporting unit.

In the third quarter of fiscal 2020, the International segment was positively impacted by foreign currency gains resulting from a strengthening U.S.

dollar relative to the Euro and a strengthening Ukrainian hryvnia relative to the U.S.

Shared Resources/Eliminations

1 unchanged sentence

Since these allocations are set early in the year, and a portion is planned to be unallocated, unallocated balances may occur.

Shared Resources income before income taxes was $0.6 million for the second quarter of fiscal 2021 compared to a loss before income taxes of $0.6 million for the same period last year.

Six Months Ended July 31, 2020 Compared to Six Months Ended July 31, 2019

Shared Resources income before income taxes was $1.2 million for the third quarter of fiscal 2021 compared to a loss before income taxes of $0.3 million for the same period last year.

The increase in Shared Resources income was the result of operating expense reductions due to COVID-19 as well as interest expense reductions due to a lower interest rate environment and lower borrowings, compared to the same period last year.

Nine Months Ended October 31, 2020 Compared to Nine Months Ended October 31, 2019

Consolidated Results

Six Months Ended July 31, Increase/ Percent

Nine Months Ended October 31, Increase/ Percent

2020 2019 (Decrease) Change

5 unchanged sentences

Total Revenue $ 974,545 $ 954,207 $ 20,338 2.1 %

Total revenue for the six months of fiscal 2021 was up 3.4% or $20.4 million compared to the first six months of fiscal 2020 and was driven by increases in revenue from our equipment, parts and service businesses.

Total revenue for the first nine months of fiscal 2021 was up 2.1% or $20.3 million compared to the first nine months of fiscal 2020, and was driven by increases in revenue from our equipment, parts and service businesses.

These increases occurred in our Agriculture segment but were partially offset by lower revenue in our Construction and International segments.

1 unchanged sentence

Same-store sale increases in our Agriculture segment more than offset the decreases in same-store sales in our other two segments.

Six Months Ended July 31, Increase/ Percent

Our total revenue increase was also positively impacted by the addition of the four acquired locations.

Nine Months Ended October 31, Increase/ Percent

2020 2019 (Decrease) Change

17 unchanged sentences

Total Gross Profit Mix 100.0 % 100.0 %

The $3.2 million increase in gross profit for the first six months of fiscal 2021, as compared to the same period last year, was primarily due to higher parts and service revenue for the first six months of fiscal 2021 partially offset by lower equipment margins and lower revenues in our rental and other business.

Our company-wide absorption rate for the first six months of fiscal 2021 increased to 77.0% as compared to 72.6% during the same period last year as the increase in gross profit from parts, service and combined with flat operating expenses and lower floorplan interest expense levels compared to that of the prior year six month period.

The $4.0 million increase in gross profit for the first nine months of fiscal 2021, as compared to the same period last year, was primarily due to higher parts and service revenue for the first nine months of fiscal 2021 partially offset by lower equipment margins and lower revenues in our rental and other business.

Our company-wide absorption rate for the first nine months of fiscal 2021 increased to 82.7% as compared to 76.1% during the same period last year as the increase in gross profit from parts and service combined with lower operating expenses and lower floorplan interest expense generated the improved absorption rate compared to that of the prior year nine month period.

Operating Expenses

Six Months Ended July 31, Increase/ Percent

Nine Months Ended October 31, Increase/ Percent

2020 2019 (Decrease) Change

2 unchanged sentences

Operating Expenses as a Percentage of Revenue 16.4 % 17.4 % (1.0) % (5.7) %

Our operating expenses for the first six months of fiscal 2021 decreased $1.3 million as compared to the first six months of fiscal 2020.

The increased operating expenses of four acquired locations, which were not in the prior year six-month period, was more than offset by managed expense reductions in our Construction and International segments and various lower operating expenses caused by COVID-19 such as travel and fuel costs.

Operating expenses as a percentage of revenue decreased to 17.3% in the first six months of fiscal 2021 from 18.1% in the first six months of fiscal 2020.

The decrease in operating expenses as a percentage of total revenue was due to the slightly lower expenses combined with the increase in total revenue in the first six months of fiscal 2021, as compared to the the first six months of fiscal 2020, which positively affected our ability to leverage our fixed operating costs.

Our operating expenses for the first nine months of fiscal 2021 decreased $5.3 million as compared to the first nine months of fiscal 2020.

The increased operating expenses of four acquired locations, which were not in the prior year nine-month period, were more than offset by managed expense reductions in our Construction and International segments and various lower operating expenses caused by COVID-19 such as reduced travel and fuel costs.

Operating expenses as a percentage of revenue decreased to 16.4% in the first nine months of fiscal 2021 from 17.4% in the first nine months of fiscal 2020.

The decrease in operating expenses as a percentage of total revenue was due to lower expenses combined with the increase in total revenue in the first nine months of fiscal 2021, as compared to the the first nine months of fiscal 2020, which positively affected our ability to leverage our fixed operating costs.

Restructuring Costs

Six Months Ended July 31, Increase/ Percent

Nine Months Ended October 31, Increase/ Percent

2020 2019 Decrease Change

(dollars in thousands)

Impairment of Long-Lived Assets $ 216 $ 135 $ 81 60.0%

We recognized $0.2 million and $0.1 million of impairment charges on certain long-lived assets during first six months of fiscal 2021 and 2020.

Impairment of Goodwill $ 1,453 $ — $ 1,453 100.0 %

Impairment of Intangible and Long-Lived Assets 1,319 186 1,133 n/m

We recognized $1.5 million in impairment expense related to certain goodwill assets in the International segment in the first nine months of fiscal 2021.

We also recognized $1.3 million, primarily in our International segment, and $0.2 million of impairment charges on certain intangible assets and long-lived assets during first nine months of fiscal 2021 and 2020, respectively.

Other Income (Expense)

Six Months Ended July 31, Increase/ Percent

Nine Months Ended October 31, Increase/ Percent

2020 2019 (Decrease) Change

(dollars in thousands)

Interest income and other income (expense) $ 692 $ 1,414 $ (722) (51.1) %

Interest and other income (expense) $ 333 $ 2,687 $ (2,354) (87.6) %

Floorplan interest expense (2,811) (3,724) (913) (24.5) %

Other interest expense (2,884) (3,562) (678) (19.0) %

Floorplan interest expense decreased 9.8% for the first six months of fiscal 2021, as compared to the same period last year, due to an overall lower interest rate environment as well as lower interest rate spread under our new five-year Bank Syndicate Agreement that was finalized in April 2020.

The decrease in other interest expense in the first six months of fiscal 2021, as compared to the first six months of fiscal 2020, is the result of our repayment in full of the outstanding balance of our senior convertible notes in May 2019.

The decrease in interest income and other income (expense) was primarily due to foreign currency remeasurement losses in Ukraine, resulting from a devaluation of the Ukrainian hyrvnia in the first quarter of fiscal 2021.

See the Non-GAAP Financial Measures section below for the impact of these costs on non-GAAP Diluted EPS.

Six Months Ended July 31, Increase/ Percent

Floorplan interest expense decreased 24.5% for the first nine months of fiscal 2021, as compared to the same period last year, due to an overall lower interest rate environment as well as a lower interest rate spread under our new five-year Bank Syndicate Agreement that was finalized in April 2020.

The decrease in other interest expense in the first nine months of fiscal 2021, as compared to the first nine months of fiscal 2020, is the result of our repayment in full of the outstanding balance of our senior convertible notes in May 2019.

The decrease in Interest and other income (expense) in the first nine months of fiscal 2021 as compared to the the same period of fiscal 2020 is primarily the result of differences in foreign currency gains and losses recognized during the periods.

dollar strengthened relative to the Euro and the Ukrainian hyrvia strengthened relative to the U.S.

dollar in fiscal 2020 creating foreign currency gains in fiscal 2020.

Provision for Income Taxes

Nine Months Ended October 31, Increase/ Percent

2020 2019 Decrease Change

1 unchanged sentence

Provision for Income Taxes $ 6,691 $ 6,041 $ 650 10.8 %

Our effective tax rate was 24.3% for the first six months of fiscal 2021 and 26.7% for the same period last year.

In the six-month period our effective tax rate differed from the 21.0% domestic federal statutory tax rate primarily due to the impact of state taxes and discreet items, such as the tax impact of share-based payments, offset by the tax impact of foreign currency fluctuations on our Ukrainian business.

Our effective tax rate was 26.5% for the first nine months of fiscal 2021 and 31.3% for the same period last year.

In the nine-month period of fiscal our effective tax rate differed from the 21.0% domestic federal statutory tax rate primarily due to the impact of state taxes, share-based payments, foreign currency fluctuations on our Ukrainian business and a partial valuation allowance recorded on the deferred tax assets of our Germany entity.

The effective tax rate for the first nine months fiscal 2020 was impacted by foreign currency gains recognized as a result of a strengthening Ukrainian hryvnia, which had increased our effective tax rate by approximately seven percentage points for the first nine months of fiscal 2020.

Segment Results

2 unchanged sentences

Revenue between segments is immaterial.

Six Months Ended July 31, Increase/ Percent

Nine Months Ended October 31, Increase/ Percent

2020 2019 (Decrease) Change

11 unchanged sentences

Total $ 25,265 $ 19,321 $ 5,944 30.8 %

Agriculture segment revenue for the first six months of fiscal 2021 increased 13.5% compared to the same period last year.

Agriculture segment revenue for the first nine months of fiscal 2021 increased 9.3% compared to the same period last year.

We experienced increases across our equipment, parts and service businesses.

Equipment sales were supported by replacement demand and the delay of customer purchases from the fourth quarter of fiscal 2020 to the first quarter of the current year due to the late and difficult harvest conditions in areas of our footprint.

Same-store sales increased 9.4% for the first six months of fiscal 2021, as compared to the same period last year.

Agriculture segment income before income taxes was $12.9 million for the first six months of fiscal 2021 compared to $8.1 million over the first six months of fiscal 2020.

The improvement in segment results was largely the result of increased revenue, but was partially offset by increased operating expenses.

Construction segment revenue for the first six months of fiscal 2021 decreased 11.0% compared to the same period last year, due to a same-store sales decrease of 8.0% and our divestiture of the Albuquerque, New Mexico store in the fourth quarter of fiscal year 2020.

All sources of revenue – equipment, parts, service and rental and other – declined in the current year six-month period, as compared to the prior year’s six-month period.

Same-store sales increased 5.1% for the first nine months of fiscal 2021, as compared to the same period last year.

Agriculture segment income before income taxes was $26.5 million for the first nine months of fiscal 2021 compared to $18.3 million over the first nine months of fiscal 2020.

The improvement in segment results was the result of increased revenue and a higher mix of higher margin parts and service business, but was partially offset by increased operating expenses due to the addition of four locations.

Construction segment revenue for the first nine months of fiscal 2021 decreased 6.9% compared to the same period last year, due to a same-store sales decrease of 4.1% and our divestiture of the Albuquerque, New Mexico store in the fourth quarter of fiscal year 2020.

All sources of revenue – equipment, parts, service and rental and other – declined in the current year nine-month period, as compared to the prior year’s nine-month period.

The overall lower same-store sales are a result of decreased customer sentiment, lower oil prices, and a general slowdown in the economy due to COVID-19.

Our Construction segment loss before income taxes was $1.5 million for the first six months of fiscal 2021 compared to $0.9 million for the first six months of fiscal 2020.

The decrease in segment results was primarily due to decreased lower revenues but partially offset by decreased operating and interest expenses compared to the prior year.

The dollar utilization of our rental fleet decreased from 23.0% in the first six months of fiscal 2020 to 20.5% in the first six months of fiscal 2021.

Our Construction segment loss before income taxes was $0.1 million for the first nine months of fiscal 2021 compared to $0.5 million for the first nine months of fiscal 2020.

The increase in segment results was primarily due to decreased operating and interest expenses partially offset by lower revenues compared to the prior year preiod.

The dollar utilization of our rental fleet decreased from 25.5% in the first nine months of fiscal 2020 to 22.2% in the first nine months of fiscal 2021.

International

International segment revenue for the first six months of fiscal 2021 decreased 4.9% compared to the same period last year as a result of lower equipment sales.

Our International segment loss before income taxes was $0.7 million for the first six months of fiscal 2021 compared to income before income taxes of $0.7 million for the same period last year.

The lower segment results was primarily due to decreased equipment revenue.

International segment revenue for the first nine months of fiscal 2021 decreased 7.2% compared to the same period last year as a result of lower equipment sales.

Our International segment loss before income taxes was $3.1 million for the first nine months of fiscal 2021 compared to income before income taxes of $2.8 million for the same period last year.

The lower segment results were the result of decreased equipment revenue and the resulting negative impact on our ability to leverage our fixed operating costs within this segment and impairment charges.

Impairment charges of $2.3 million were recognized in the first nine months of fiscal 2021, related to the impairment of the goodwill balance and a portion of the distribution rights of our Germany reporting unit.

Shared Resources/Eliminations

1 unchanged sentence

Since these allocations are set early in the year, and a portion is planned to be unallocated, unallocated balances may occur.

Shared Resources income before income taxes was $0.7 million for the first six months of fiscal 2021 compared to loss before income taxes of $1.0 million for the same period last year.

Shared Resources income before income taxes was $2.0 million for the first nine months of fiscal 2021 compared to loss before income taxes of $1.2 million for the same period last year.

Non-GAAP Financial Measures

To supplement net income and diluted earnings per share ("Diluted EPS"), both GAAP measures, we present adjusted net income and adjusted Diluted EPS, both non-GAAP measures, which include adjustments for ERP transition costs, impairment charges of long-lived assets and foreign currency remeasurement in Ukraine resulting from valuation changes of the UAH.

To supplement net income and diluted earnings per share ("Diluted EPS"), both GAAP measures, we present adjusted net income and adjusted Diluted EPS, both non-GAAP measures, which include adjustments for valuation allowances for income tax, ERP transition costs, impairment charges and foreign currency remeasurement in Ukraine resulting from valuation changes of the Ukrainian hryvnia.

We believe that the presentation of adjusted net income and adjusted Diluted EPS is relevant and useful to our management and investors because it provides a measurement of earnings on activities that we consider to occur in the ordinary course of our business.

2 unchanged sentences

The following tables reconcile (i) net income, a GAAP measure, to adjusted net income and (ii) Diluted EPS, a GAAP measure, to adjusted Diluted EPS:

Three Months Ended July 31, Six Months Ended July 31,

Three Months Ended October 31, Nine Months Ended October 31,

2020 2019 2020 2019

1 unchanged sentence

Adjusted Net Income

Net Income (Loss) $ 6,400 $ 5,511 $ 8,662 $ 5,066

Net Income $ 9,912 $ 8,214 $ 18,574 $ 13,280

ERP transition costs 765 2,062 2,250 4,778

3 unchanged sentences

Tax Effect of Adjustments (1) 1,566 (846) 2,613 (417)

Income Tax Valuation Allowance 1,018 — 1,018 —

Total Adjustments 3,111 2,524 4,400 4,793

8 unchanged sentences

Tax Effect of Adjustments (1) 0.07 (0.04) 0.12 (0.02)

Income Tax Valuation Allowance 0.05 — 0.05 —

Total Adjustments 0.14 0.11 0.19 0.21

2 unchanged sentences

related adjustments was calculated using a 26% tax rate, determined based on a 21% federal statutory rate and a 5% blended state income tax rate.

Included in the tax effect of the adjustments is the tax impact of foreign currency changes in Ukraine of $0.3 million for the three months ended July 31, 2020 and $0.6 million for the six months ended July 31, 2020.

The tax effect of the Germany related adjustments was calculated using a 29% tax rate.

Included in the tax effect of the adjustments is the tax impact of foreign currency changes in Ukraine of $0.7 million for the three months ended October 31, 2020 and $1.3 million for the nine months ended October 31, 2020.

(2) Adjustments are net of amounts allocated to participating securities where applicable.

2 unchanged sentences

Our primary sources of liquidity are cash reserves, cash generated from operations, and borrowings under our floorplan and other credit facilities.

We expect these sources of liquidity to be sufficient to fund our working capital requirements, acquisitions, capital expenditures and other investments in our business, service our debt, pay our tax and lease obligations and other commitments and contingencies, and meet any seasonal operating requirements for the foreseeable future, provided, however, that our borrowing capacity under our credit agreements is dependent on compliance with various covenants as further described in the "Risk Factors" section of our Annual Report in Form 10-K.

obligations and other commitments and contingencies, and meet any seasonal operating requirements for the foreseeable future, provided that our borrowing capacity under our credit agreements is dependent on compliance with various covenants as further described in the "Risk Factors" section of our Annual Report on Form 10-K.

Equipment Inventory and Floorplan Payable Credit Facilities

As of July 31, 2020, the Company had floorplan payable lines of credit for equipment purchases totaling $763.0 million, which is primarily comprised of a $450.0 million credit facility with CNH Industrial, a $185.0 million floorplan payable line under the Bank Syndicate Agreement, and a $60.0 million credit facility with DLL Finance.

Our equipment inventory turnover decreased from 1.7 times for the four-quarter period ended July 31, 2019 to 1.6 times for the four-quarter period ended July 31, 2020.

The decrease in equipment turnover was attributable to a slight decrease in equipment sales volume and a 9.3% increase in our rolling 12 month average equipment inventory over the four-quarter period ended July 31, 2020 as compared to the four-quarter period ended July 31, 2019.

Our equity in equipment inventory, which reflects the portion of our equipment inventory balance that is not financed by floorplan payables, decreased to 27.0% as of July 31, 2020 from 27.9% as of January 31, 2020.

As of October 31, 2020, the Company had floorplan payable lines of credit for equipment purchases totaling $765.0 million, which is primarily comprised of a $450.0 million credit facility with CNH Industrial, a $185.0 million floorplan payable line under the Bank Syndicate Agreement, and a $60.0 million credit facility with DLL Finance.

Our equipment inventory turnover decreased from 1.7 times for the four-quarter period ended October 31, 2019 to 1.6 times for the four-quarter period ended October 31, 2020.

The decrease in equipment turnover was attributable to a slight decrease in equipment sales and a slight increase in our rolling 12 month average equipment inventory over the four-quarter period ended October 31, 2020 as compared to the four-quarter period ended October 31, 2019.

Our equity in equipment inventory, which reflects the portion of our equipment inventory balance that is not financed by floorplan payables, increased to 36.0% as of October 31, 2020 from 27.9% as of January 31, 2020.

The increase was due to cash generated from operating activities used to pay down floorplan payables.

Long-Term Debt

5 unchanged sentences

Based on our current operational performance, we believe our cash flow from operations, available cash and available borrowing capacity under our existing credit facilities will adequately provide for our liquidity needs for, at a minimum, the next 12 months.

As of July 31, 2020, we were in compliance with the financial covenants under our CNH Industrial and DLL Finance credit agreements and we were not subject to the fixed charge coverage ratio covenant under the Bank Syndicate Agreement as our adjusted excess availability plus eligible cash collateral (as defined therein) was not less than 15% of the lesser of (i) aggregate borrowing base and (ii) maximum credit amount as of July 31, 2020.

As of October 31, 2020, we were in compliance with the financial covenants under our CNH Industrial and DLL Finance credit agreements and we were not subject to the fixed charge coverage ratio covenant under the Bank Syndicate Agreement as our adjusted excess availability plus eligible cash collateral (as defined therein) was not less than 15% of the lesser of (i) aggregate borrowing base and (ii) maximum credit amount as of October 31, 2020.

While not expected to occur, if anticipated operating results were to create the likelihood of a future covenant violation, we would expect to work with our lenders on an appropriate modification or amendment to our financing arrangements.

Cash Flow Provided by (Used for) Operating Activities

Net cash provided by operating activities was $13.0 million for the first six months of fiscal 2021, compared to net cash used for operating activities of $6.3 million for the first six months of fiscal 2020.

The change in net cash provided by (used for) operating activities is primarily the result of a reduction in inventory for the first six months of fiscal 2021.

Net cash provided by operating activities was $60.8 million for the first nine months of fiscal 2021, compared to net cash used for operating activities of $8.3 million for the first nine months of fiscal 2020.

The change in net cash provided by (used for) operating activities is primarily the result of a reduction in inventory for the first nine months of fiscal 2021.

We evaluate our cash flow from operating activities net of all floorplan activity and maintaining a constant level of equity in our equipment inventory.

Taking these adjustments into account, our adjusted cash flow provided by operating activities was $16.1 million for the first six months of fiscal 2021 compared to an adjusted cash flow used for operating activities of $49.3 million for the first six months of fiscal 2020.

The change in adjusted cash flow provided by (used for) operating activities is primarly the result of increased equipment inventory stocking during the previous fiscal year compared to reducing inventories during the first six months of fiscal 2021.

Taking these adjustments into account, our adjusted cash flow provided by operating activities was $56.5 million for the first nine months of fiscal 2021 compared to an adjusted cash flow used for operating activities of $35.0 million for the first nine months of fiscal 2020.

The change in adjusted cash flow provided by (used for) operating activities is primarily the result of increased equipment inventory stocking during the previous fiscal year compared to reducing inventories during the first nine months of fiscal 2021.

See the Adjusted Cash Flow Reconciliation below for a reconciliation of adjusted cash flow used for operating activities to the GAAP measure of cash flow used for operating activities.

Cash Flow Used for Investing Activities

Net cash used for investing activities was $16.8 million for the first six months of fiscal 2021, compared to $14.6 million for the first six months of fiscal 2020.

The increase in cash used for investing activities was primarily the result of an increase in cash outflows for acquisitions as compared to the first six months of fiscal 2020.

Cash Flow Provided by Financing Activities

Net cash provided by financing activities was $4.5 million for the first six months of fiscal 2021 compared to $13.6 million for the first six months of fiscal 2020.

The decrease in cash provided by financing activities was primarily the result of

higher non-manufacturer floorplan and long-term debt borrowings in the prior year, which was partially offset by the payoff of the senior convertible notes in May 2019.

Net cash used for investing activities was $22.2 million for the first nine months of fiscal 2021, compared to $30.8 million for the first nine months of fiscal 2020.

The decrease in cash used for investing activities was primarily the result of a

decreased level of rental fleet purchases and a decrease in cash paid for acquisitions in the purchase of equipment dealerships for the first nine months of fiscal 2021 compared to the same period last year.

Cash Flow Provided by (Used for) Financing Activities

Net cash used for financing activities was $40.8 million for the first nine months of fiscal 2021 compared to cash provided by financing activities of $34.9 million for the first nine months of fiscal 2020 .

The decrease in cash provided by financing activities was primarily the result of a decrease in proceeds from non-manufacturer floorplan as well as a decrease in proceeds from long term debt borrowings in the first nine months of fiscal 2021 compared to the same period last year.

The cash provided by financing activities in fiscal 2020 was partially offset by the repayment of the senior convertible notes.

Adjusted Cash Flow Reconciliation

6 unchanged sentences

We refer to this measure of cash flow as Adjusted Cash Flow.

Our equity in equipment inventory decreased to 27.0% as of July 31, 2020 from 27.9% as of January 31, 2020, and decreased to 17.4% as of July 31, 2019 from 34.4% as of January 31, 2019.

Our equity in equipment inventory increased to 36.0% as of October 31, 2020 from 27.9% as of January 31, 2020, and decreased to 18.0% as of October 31, 2019 from 34.4% as of January 31, 2019.

Adjusted Cash Flow is a non-GAAP financial measure.

2 unchanged sentences

Net Cash Provided by (Used for) Operating Activities Net Cash Provided by (Used for) Financing Activities

Six Months Ended July 31, 2020 Six Months Ended July 31, 2019 Six Months Ended July 31, 2020 Six Months Ended July 31, 2019

Nine Months Ended October 31, 2020 Nine Months Ended October 31, 2019 Nine Months Ended October 31, 2020 Nine Months Ended October 31, 2019

(in thousands) (in thousands)

4 unchanged sentences

Certain Information Concerning Off-Balance Sheet Arrangements

As of July 31, 2020, we did not have any relationships with unconsolidated entities or financial partnerships, such as entities often referred to as structured finance or special purpose entities, which would have been established for the purpose of facilitating off-balance sheet arrangements or other contractually narrow or limited purposes.

As of October 31, 2020, we did not have any relationships with unconsolidated entities or financial partnerships, such as entities often referred to as structured finance or special purpose entities, which would have been established for the purpose of facilitating off-balance sheet arrangements or other contractually narrow or limited purposes.

We are, therefore, not exposed to any financing, liquidity, market or credit risk that could arise if we had engaged in these relationships.

2 unchanged sentences

Forward-looking statements are contained in this Quarterly Report on Form 10-Q, including in “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” as well as in our Annual Report on Form 10-K for the year ended January 31, 2020, and in other materials filed or to be filed by the Company with the Securities and Exchange Commission (and included in oral statements or other written statements made or to be made by the Company).

Forward-looking statements are statements based on future expectations and specifically may include, among other things, statements relating to our expectations regarding exchange rate and interest rate impact on our business, the impact of farm income levels on customer demand for agricultural equipment and services, the impact of oil prices on market demand for equipment and services, the impact of the COVID-19 pandemic on our business, the general market conditions of the agricultural and construction industries, equipment inventory levels, discussion of the anticipated implementation date of our new ERP system, and our primary liquidity sources, and the adequacy of our capital resources.

farm income levels on customer demand for agricultural equipment and services, the impact of oil prices on market demand for equipment and services, the impact of the COVID-19 pandemic on our business, the general market conditions of the agricultural and construction industries, equipment inventory levels, discussion of the anticipated implementation date of our new ERP system, and our primary liquidity sources, and the adequacy of our capital resources.

Any statements that are not based upon historical facts, including the outcome of events that have not yet occurred and our expectations for future performance, are forward-looking statements.

The words “potential,” “believe,” “estimate,” “expect,” “intend,” “may,” “could,” “will,” “plan,” “anticipate,” and similar words and expressions are intended to identify forward-looking statements.

statements are based upon the current beliefs and expectations of our management.

Such statements are based upon the current beliefs and expectations of our management.

Such forward-looking information involves important risks and uncertainties that could significantly affect anticipated results in the future and, accordingly, such results may differ from those expressed in any forward-looking statements made by or on behalf of the Company.

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