What changed in this filing

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Item 2. Management’s Discussion and Analysis

2024-08-01 compared with 2024-05-02 · 88 added, 83 removed, 134 unchanged (56% of the section changed)

1 unchanged sentence

Except as otherwise indicated or required by the context, all references in this Quarterly Report to the “Company,” “Cactus,” “we,” “us” and “our” refer to Cactus, Inc.

(“Cactus Inc.”) and its consolidated subsidiaries, unless we state otherwise or the context otherwise requires.

(“Cactus Inc.”) and its consolidated subsidiaries.

The following discussion and analysis of our financial condition and results of operations should be read in conjunction with the accompanying unaudited condensed consolidated financial statements and related notes.

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onshore market.

We believe this acquisition enhances our position as a premier manufacturer and provider of highly engineered equipment to the exploration and production ("E&P") industry and should provide meaningful growth potential.

We further believe FlexSteel’s products are highly complementary to Cactus’ equipment as it expands our exposure to our customers’ operations from production trees to transportation of oil, gas and other liquids as well as to additional customers operating in the midstream area.

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Product revenues are derived from the sale of wellhead systems, production trees and spoolable pipe and fittings.

Rental revenues are primarily derived from the rental of equipment used during the completion process, the repair of such equipment and the rental of equipment or tools used to install wellhead equipment or spoolable pipe.

Field service and other revenues are primarily earned when we provide installation and other field services for both product sales and equipment rental.

During the three months ended March 31, 2024, we derived 76% of total revenues from the sale of our products, 8% of total revenues from rental and 16% of total revenues from field service and other.

During the three months ended March 31, 2023, we derived 70% of total revenues from the sale of our products, 12% of total revenues from rental and 18% of total revenues from field service and other.

Rental revenues are derived from the rental of equipment used during the completion process, the repair of such equipment and the rental of equipment or tools used to install wellhead equipment or spoolable pipe.

Field service and other revenues are earned when we provide installation and other field services for both product sales and equipment rental.

During the six months ended June 30, 2024, we derived 76% of total revenues from the sale of our products, 9% of total revenues from rental and 15% of total revenues from field service and other.

During the six months ended June 30, 2023, we derived 73% of total revenues from the sale of our products, 11% of total revenues from rental and 16% of total revenues from field service and other.

We have predominantly domestic operations with more limited operations in Australia, Canada, and the Middle East, as well as sales in other international markets.

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Pressure Control manufacturing and production facilities are located in Bossier City, Louisiana and Suzhou, China.

Demand for our product sales in the Pressure Control segment are driven primarily by the number of new wells drilled, as each new well requires a wellhead and, after the completion phase, a production tree.

Demand for our product sales in the Pressure Control segment is driven primarily by the number of new wells drilled, as each new well requires a wellhead and, after the completion phase, a production tree.

Demand for our rental items is driven primarily by the number of well completions as we rent frac trees to oil and gas operators to assist in hydraulic fracturing.

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Our manufacturing facility is located in Baytown, Texas.

Demand for our product sales in the Spoolable Technologies segment are driven primarily by the number of wells being placed into production after the completions phase as customers use our spoolable pipe and associated fittings to bring wells more rapidly onto production.

Demand for our product sales in the Spoolable Technologies segment is driven primarily by the number of wells being placed into production after the completions phase as customers use our spoolable pipe and associated fittings to bring wells more rapidly onto production.

Rental and field service and other revenues are closely correlated with revenues from product sales, as items sold usually have an associated rental and service component.

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The following table summarizes average oil and natural gas prices in North America over the indicated periods, as well as industry activity levels as reflected by the average number of active onshore drilling rigs during the same periods.

Three Months Ended

March 31, 2024 December 31, 2023 March 31, 2023

Three Months Ended Six Months Ended

June 30, 2024 March 31, 2024 June 30, 2024 June 30, 2023

WTI Oil Price ($/bbl) (1)

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Land Drilling Rigs (3)

583 602 593 720

(1) EIA Cushing, OK WTI (“West Texas Intermediate”) spot price.

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(3) Baker Hughes.

In the first quarter of 2024, U.S.

land drilling and completion activity levels were flat compared to the fourth quarter of 2023 and down approximately 10% from the 2023 full year average.

Average oil prices also remained flat in the first quarter of 2024 compared to the fourth quarter of 2023 as prices remain elevated due to geopolitical risk concerns and continued strong global demand.

Natural gas prices declined 22% in the first quarter of 2024 from the fourth quarter of 2023, as continued strong production and warmer weather have led to U.S.

storage levels well above five-year average levels, despite announced activity reductions and curtailments from several U.S.

gas producers.

The ongoing conflicts in Ukraine and the Middle East have led to heightened commodity volatility and increased risk to our global supply chain.

In recent weeks, risk of a broader Middle East conflict has increased, which could have broad impacts on the global economy and our business.

In the second quarter of 2024, U.S.

land drilling and completion activity levels were down approximately 3% from the first quarter of 2024 and down approximately 13% from the 2023 full year average.

Average oil prices increased modestly in the second quarter of 2024 compared to the first quarter of 2024 as oil demand continued to grow and outpaced supply growth, keeping prices elevated.

Prices were also influenced higher due to continued geopolitical risk concerns.

Natural gas prices declined 4% in the second quarter of 2024 from the first quarter of 2024, as production curtailments and activity reductions have failed to sufficiently offset weaker demand from warmer weather and delayed export plans.

gas storage levels remain well above five-year average levels.

The ongoing conflicts in Ukraine and the Middle East have led to heightened commodity volatility and increased risk to the global supply chain.

Pillar Two Framework

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Where appropriate, we have identified specific events and changes that affect comparability or trends and, where reasonably practicable, have quantified the impact of such items.

We have two operating segments consisting of the Pressure Control segment (legacy Cactus) and the Spoolable Technologies segment (FlexSteel).

We have two operating segments consisting of the Pressure Control segment and the Spoolable Technologies segment.

Our results of operations are evaluated by the Chief Executive Officer on a consolidated basis as well as at the segment level.

The performance of our operating segments is primarily evaluated based on segment operating income (in addition to other measures), which is defined as income before taxes and before interest income (expense), net, other income (expense), net and corporate and other expenses not allocated to the operating segments.

Corporate and other expenses were previously included in our Pressure Control segment.

The Company has recast the information for the three months ended March 31, 2023 to align with the presentation for the three months ended March 31, 2024.

Three Months Ended March 31, 2024 Compared to Three Months Ended December 31, 2023

The following table presents summary consolidated operating results for the periods indicated:

Prior to January 1, 2024, Corporate and other expenses were included in our Pressure Control segment.

The Company has recast the information for the six months ended June 30, 2023 to align with the presentation for the six months ended June 30, 2024.

Three Months Ended June 30, 2024 Compared to Three Months Ended March 31, 2024

The following table presents a summary of the segment consolidated operating results for the periods indicated:

Three Months Ended

March 31, 2024 December 31, 2023 $ Change % Change

June 30, 2024 March 31, 2024 $ Change % Change

(in thousands)

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Spoolable Technologies 103,716 99,095 4,621 4.7

Corporate and other (519) — (519) nm

Total revenues 290,389 274,123 16,266 5.9

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Total segment operating income 85,710 68,068 17,642 25.9

Corporate and other expenses (5,518) (5,668) 150 (2.6)

Corporate and other (5,891) (5,518) (373) 6.8

Total operating income 79,819 62,550 17,269 27.6

Interest income (expense), net 689 (182) 871 nm

Other income, net — 686 (686) nm

Interest income, net 1,405 689 716 nm

Income before income taxes 81,224 63,239 17,985 28.4

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Pressure Control.

Pressure Control revenue for the first quarter of 2024 was $175.0 million, a decrease of $5.4 million, or 3.0%, from $180.5 million for the fourth quarter of 2023 primarily due to decreased customer activity resulting in reduced sales of wellhead and production related equipment in addition to decreased rental activity.

Pressure Control operating income of $51.7 million for the first quarter of 2024 decreased $4.4 million, or 7.8% from $56.1 million for the fourth quarter of 2023 primarily due to decreased equipment sales and rental activity, slightly offset by higher field service activity.

Pressure Control selling, general and administrative expenses (“SG&A”) decreased $0.1 million from the fourth quarter primarily due to lower bad debt expense and professional fees, partially offset by higher stock-based compensation expense.

Pressure Control revenue for the second quarter of 2024 was $187.2 million, an increase of $12.2 million, or 6.9%, from the first quarter of 2024 primarily due to increased customer activity resulting in increased sales of wellhead and production related equipment, increased rental activity and higher field service activity.

Pressure Control operating income of $55.7 million for the second quarter of 2024 increased $4.0 million, or 7.7% from the first quarter of 2024 primarily due to the overall increase in customer activity.

Pressure Control selling, general and administrative expenses (“SG&A”) increased $2.0 million from the first quarter primarily due to an increase in personnel costs and other reserves.

Spoolable Technologies.

Spoolable Technologies revenue for the first quarter of 2024 was $99.1 million, an increase of $4.7 million, or 5.0% from $94.4 million for the fourth quarter of 2023.

Total operating income for Spoolable Technologies for the first quarter of 2024 was $16.4 million, a decrease of $11.8 million, compared to operating income of $28.2 million for the fourth quarter of 2023.

The decrease in operating income was primarily due to a $13.3 million loss related to the change in fair value of the earn-out payment for the FlexSteel acquisition in the first quarter of 2024 compared to a $1.9 million loss in the fourth quarter of 2023.

Corporate and other expenses.

Corporate and other expenses for the first quarter of 2024 was $5.5 million, a decrease of $0.2 million, or 2.6% from $5.7 million for the fourth quarter of 2023.

The decrease was primarily due to lower stock-based compensation expense.

Interest income (expense), net.

Interest income, net was $0.7 million for the first quarter of 2024 compared to interest expense, net of $0.2 million for the fourth quarter of 2023.

Spoolable Technologies revenue for the second quarter of 2024 was $103.7 million, an increase of $4.6 million, or 4.7% from the first quarter of 2024.

Total operating income for Spoolable Technologies for the second quarter of 2024 was $30.0 million, compared to operating income of $16.4 million for the first quarter of 2024.

The increase in operating income was primarily due to a $2.9 million expense related to the change in fair value of the earn-out payment for the FlexSteel acquisition in the second quarter of 2024 compared to a larger expense of $13.3 million related to the change in fair value of the earn-out payment for the FlexSteel acquisition recognized in the first quarter of 2024.

Corporate and other.

Corporate and other revenue represents the elimination of inter-segment sales from our Pressure Control segment to our Spoolable technologies segment.

Corporate and other expenses for the second quarter of 2024 were $5.9 million, an increase of $0.4 million, or 6.8% from $5.5 million for the first quarter of 2024.

The increase was primarily due to higher stock-based compensation and bonus expense.

Interest income, net.

Interest income, net was $1.4 million for the second quarter of 2024, an increase of $0.7 million from the first quarter of 2024.

The increase in interest income, net was primarily due to higher interest income earned on a higher invested cash balance.

Other income, net.

Other income, net of $0.7 million for the fourth quarter of 2023 represented non-cash adjustments for the revaluation of the liability related to the tax receivable agreement.

Income tax expense.

Income tax expense for the first quarter of 2024 was $13.4 million compared to $17.0 million for the fourth quarter of 2023.

The decrease in income tax expense from the fourth quarter was primarily due to a decrease in operating income quarter over quarter.

Income tax expense for the second quarter of 2024 was $18.2 million compared to $13.4 million for the first quarter of 2024.

The increase in income tax expense from the first quarter was primarily due to an increase in operating income quarter over quarter.

is only subject to federal and state income tax on its share of income from Cactus Companies.

Income allocated to the non-controlling interest is only taxable to the non-controlling interest.

Three Months Ended March 31, 2024 Compared to Three Months Ended March 31, 2023

The following table presents summary consolidated operating results for the periods indicated:

Three Months Ended

Six Months Ended June 30, 2024 Compared to Six Months Ended June 30, 2023

The following table presents a summary of the segment consolidated operating results for the periods indicated:

Six Months Ended

2024 2023 $ Change % Change

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Pressure Control $ 362,220 $ 393,789 $ (31,569) (8.0) %

Spoolable Technologies 99,095 33,750 65,345 nm

Spoolable Technologies 202,811 140,435 62,376 44.4

Corporate and other (519) — (519) nm

Total revenues 564,512 534,224 30,288 5.7

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Total segment operating income 153,778 120,290 33,488 27.8

Corporate and other expenses (5,518) (13,732) 8,214 (59.8)

Corporate and other (11,409) (22,080) 10,671 (48.3)

Total operating income 142,369 98,210 44,159 45.0

Interest income, net 689 1,002 (313) (31.2)

Interest income (expense), net 2,094 (4,926) 7,020 nm

Other income, net — 3,538 (3,538) nm

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Pressure Control.

Pressure Control revenue was $175.0 million for the first quarter of 2024, a decrease of $19.6 million, or 10.1%, from $194.7 million for the first quarter of 2023.

This was primarily due to decreased sales of wellhead and production related equipment resulting from lower drilling and completion activity by our customers.

In addition, rental of drilling and completion equipment and field service associated with product and rental revenues decreased as a result of the abovementioned decline in activity.

Operating income of $51.7 million in the first quarter of 2024 decreased $11.5 million, or 18.2%, from $63.2 million in the first quarter of 2023.

The decrease was primarily attributable to lower gross margins during the period due to the decreased activity levels and higher SG&A expenses.

Pressure Control revenue was $362.2 million for the first six months of 2024, a decrease of $31.6 million, or 8.0%, from the first six months of 2023.

The lower revenue was primarily due to decreased sales of wellhead and production related equipment resulting from lower drilling and completion activity by our customers.

In addition, rental of drilling and completion equipment and field service associated with product and rental revenues decreased as a result of the decline in activity.

Operating income of $107.3 million in the first six months of 2024 decreased $18.7 million, or 14.8%, from the first six months of 2023.

The decrease was primarily attributable to lower gross margins during the period due to the decreased customer activity levels and higher SG&A expenses.

The increase in SG&A expenses primarily related to higher personnel costs, bad debt expense and stock-based compensation expense.

Spoolable Technologies.

Spoolable Technologies revenue for the first quarter of 2024 was $99.1 million, an increase of $65.3 million from $33.8 million for the first quarter of 2023, as results for the first quarter of 2023 only included one month of revenues (from the FlexSteel acquisition date of February 28, 2023).

Total operating income was $16.4 million in the first quarter 2024, an increase of $16.1 million, compared to $0.2 million in the first quarter of 2023, which included only one month of income.

Operating income in the first quarter of 2024 included a loss of $13.3 million related to the change in fair value of the earn-out payment.

Operating income for the first quarter of 2023 included $4.2 million of inventory step-up expense and $3.7 million of intangible amortization expense as well as increased depreciation for the step-up of its fixed assets in connection with accounting for the purchased assets at fair value in conjunction with purchase accounting.

Corporate and other expenses.

Corporate and other expenses for the first quarter of 2024 was $5.5 million, a decrease of $8.2 million, or 59.8% from $13.7 million for the first quarter of 2023.

Spoolable Technologies revenue for the first six months of 2024 was $202.8 million, an increase of $62.4 million, or 44.4%, from the first six months of 2023, as results for the first six months of 2023 only included four months of revenues from the FlexSteel acquisition, which closed on February 28, 2023.

Total operating income was $46.4 million in the first six months of 2024, an increase of $52.2 million, compared to an operating loss of $5.8 million in the first six months of 2023, which included only four months of income.

Operating income for the first six months of 2024 included $16.2 million of expense related to the change in fair value of the earn-out liability for the FlexSteel acquisition and $8.0 million of intangible amortization.

Operating loss for the first six months of 2023 included approximately $18.0 million of expense related to the change in fair value of the estimated earn-out liability, $23.5 million of inventory step-up expense and $12.3 million of intangible amortization expense as well as depreciation expense of $5.5 million primarily associated with the step-up of fixed assets in connection with accounting for the purchased assets at fair value in conjunction with purchase accounting.

Corporate and other.

Corporate and other revenue represents the elimination of inter-segment sales from our Pressure Control segment to our Spoolable technologies segment.Corporate and other expenses for the first six months of 2024 was $11.4

million, a decrease of $10.7 million, or 48.3% from the first six months of 2023.

The decrease was largely attributable to lower professional fees related to transaction costs associated with the closing of and accounting for the FlexSteel acquisition.

Interest income, net.

Interest income, net for the first quarter of 2024 of $0.7 million decreased $0.3 million from the first quarter of 2023 primarily due to lower interest income earned on lower cash invested during the period.

Interest income (expense), net.

Interest income, net for the first six months of 2024 was $2.1 million, compared to interest expense, net of $4.9 million for the first six months of 2023.

The increase was primarily due to an increase in interest income earned on cash invested during the period.

Interest expense for the first six months of 2023 related to outstanding borrowings under the Amended ABL Credit Facility in conjunction with the FlexSteel acquisition.

Other income, net.

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Income tax expense.

Income tax expense for the first quarter of 2024 was $13.4 million compared to $1.9 million for the first quarter of 2023.

The increase in income tax expense from the first quarter of 2023 was primarily due to an increase in operating income during the first quarter of 2024 and fewer reductions in income tax expense for items specific to the first quarter of 2023.

Income tax expense for the first quarter of 2023 included $11.0 million of expense associated with current income offset by a $12.1 million benefit associated with the release of our valuation allowance previously provided for our investment in Cactus Companies based on the determination that the deferred tax asset was realizable due to our ability to generate sufficient taxable income of the appropriate type.

Income tax expense for the first six months of 2024 was $31.6 million compared to $12.1 million for the first six months of 2023.

The increase in income tax expense from the first six months of 2023 was primarily due to an increase in operating income during the first six months of 2024, and fewer reductions in income tax expense for items specific to the first half of 2023.

Income tax expense for the first half of 2023 included $21.1 million of expense associated with current income, offset by a $12.1 million benefit associated with the release of our valuation allowance previously provided for our investment in Cactus Companies based on the determination that the deferred tax asset was realizable due to our ability to generate sufficient taxable income of the appropriate type.

Additionally, we recognized $4.3 million of expense associated with the revaluation of our deferred tax asset as a result of a change in our forecasted state tax rate, and a $1.2 million benefit associated with permanent differences related to equity compensation.

Liquidity and Capital Resources

At March 31, 2024, we had $194.3 million of cash and cash equivalents.

At June 30, 2024, we had $246.5 million of cash and cash equivalents.

Our primary sources of liquidity and capital resources are cash on hand, cash flows generated by operating activities, and borrowings under our Amended ABL Credit Facility (as defined in Note 7 in the notes to the unaudited condensed consolidated financial statements).

Depending upon market conditions and other factors, we may also have the ability to issue additional equity and debt if needed.

As of March 31, 2024, we had $216.7 million of available borrowing capacity under our Amended ABL Credit Facility with no outstanding borrowings and $1.1 million in letters of credit outstanding.

We were in compliance with the covenants of the Amended ABL Credit Facility as of March 31, 2024.

As of June 30, 2024, we had $220.1 million of available borrowing capacity under our Amended ABL Credit Facility with no outstanding borrowings, and $1.1 million in letters of credit outstanding.

We were in compliance with the covenants of the Amended ABL Credit Facility as of June 30, 2024.

The contingent consideration earn-out period related to the FlexSteel acquisition ended on June 30, 2024 and resulted in a final earn-out liability of $37.0 million, which we expect to pay in August 2024.

In June 2023, our board of directors authorized the Company to repurchase shares of its Class A common stock for an aggregate purchase price of up to $150 million.

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The repurchase program does not obligate the Company to purchase any particular amount of shares, and the repurchase program may be suspended or discontinued at any time at the Company’s discretion.

We believe that our existing cash on hand, cash generated from operations and available borrowings under our Amended ABL Credit Facility will be sufficient for at least the next 12 months to meet working capital requirements, debt service obligations, anticipated capital expenditures, repurchases of shares of our Class A common stock, expected TRA liability payments, anticipated tax liabilities and dividends to holders of our Class A common stock as well as pro rata cash distributions to holders of CC Units other than Cactus Inc.

As of June 30, 2024, $146.3 million remained authorized for future repurchases of Class A common stock under the program.

We believe that our existing cash on hand, cash generated from operations and available borrowings under our Amended ABL Credit Facility will be sufficient for at least the next 12 months to meet working capital requirements, debt service obligations, anticipated capital expenditures, the earn-out payment related to the FlexSteel acquisition, repurchases of shares of our Class A common stock, expected TRA liability payments, anticipated tax liabilities and dividends to holders of our Class A common stock as well as pro rata cash distributions to holders of CC Units other than Cactus Inc.

We currently estimate our net capital expenditures for the year ending December 31, 2024 will range from $35 million to $45 million.

In the Pressure Control segment, capital expenditures are primarily related to rental fleet investments, international expansion, diversification of our low cost supply chain and development of a research and development facility in Houston, Texas.

In the Pressure Control segment, capital expenditures are primarily related to rental fleet investments, international expansion and diversification of our low cost supply chain.

In the Spoolable Technologies segment, capital expenditures are primarily related to manufacturing plant enhancements and additional deployment equipment used for product installation.

Our ability to satisfy our long-term liquidity requirements, including cash requirements to fund income tax liabilities and the TRA liability at Cactus Inc.

along with associated distributions to holders of CC Units relating to their ownership of Cactus Companies, depends on our future operating performance, which is affected by, and subject to, prevailing economic conditions, market conditions in the E&P industry, availability and cost of raw materials, and financial, business and other factors, many of which are beyond our control.

We will not be able to predict or control many of these factors, such as economic conditions in the markets where we operate and competitive pressures.

If necessary, we could choose to further reduce our spending on capital expenditures and operating expenses to ensure we operate within the cash flow generated from our operations.

Three Months Ended March 31, 2024 Compared to Three Months Ended March 31, 2023

Our ability to satisfy our long-term liquidity requirements, including cash requirements to fund income tax liabilities and the TRA liability at Cactus Inc., along with associated distributions to holders of CC Units relating to their ownership of Cactus Companies, depends on our future operating performance, which is affected by, and subject to, prevailing economic conditions, market conditions in the E&P industry, availability and cost of raw materials, and financial, business and other factors, many of which are beyond our control.

We will not be able to predict or control many of these factors, such as economic conditions in the

markets where we operate, and competitive pressures.

If necessary, we would likely choose to further reduce our spending on capital expenditures and operating expenses to ensure we operate within the cash flow generated from our operations.

Six Months Ended June 30, 2024 Compared to Six Months Ended June 30, 2023

The following table summarizes our cash flows for the periods indicated:

Three Months Ended

Six Months Ended

(in thousands)

1 unchanged sentence

Net cash used in investing activities (14,054) (639,519)

Net cash provided by (used in) financing activities (20,127) 303,163

Net cash provided by operating activities was $86.3 million and $60.5 million for the three months ended March 31, 2024 and 2023, respectively.

Operating cash flows for 2024 increased primarily due to a decrease in cash outflows associated with working capital.

Net cash used in investing activities was $6.8 million and $633.2 million for the three months ended March 31, 2024 and 2023, respectively.

Net cash (used in) provided by financing activities (37,195) 190,687

Net cash provided by operating activities was $164.2 million and $168.5 million for the six months ended June 30, 2024 and 2023, respectively.

Operating cash flows for 2024 decreased primarily due to an increase in cash outflows associated with working capital, partially offset by an increase in operating income.

Net cash used in investing activities was $14.1 million and $639.5 million for the six months ended June 30, 2024 and 2023, respectively.

The decrease was primarily due to cash paid to acquire FlexSteel for $621.5 million less $5.3 million in cash acquired during the first quarter of 2023.

Additionally, our capital expenditures decreased approximately $8.0 million primarily due to the $7.0 million purchase of a previously leased facility during the first quarter of 2023.

Net cash used in financing activities was $20.1 million for the three months ended March 31, 2024 as compared to net cash provided by financing activities of $303.2 million for the three months ended March 31, 2023.

Additionally, our capital expenditures decreased approximately $6.3 million primarily due to the $7.0 million purchase of a previously leased facility during the first half of 2023.

Net cash used in financing activities was $37.2 million for the six months ended June 30, 2024 as compared to net cash provided by financing activities of $190.7 million for the six months ended June 30, 2023.

The decrease in net cash provided by financing activities was primarily related to certain financing activities in 2023 associated with the FlexSteel acquisition.

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Additionally, we received $155.0 million from total borrowings under our Amended ABL Credit Facility of which all $155.0 million has been repaid.

The first quarter of 2023 included payments of approximately $6.7 million of debt issuance costs.

The first quarter of 2024 includes a $3.9 million increase in share repurchases primarily associated with the Company's share repurchase program.

The first half of 2023 included payments of approximately $6.8 million of debt issuance costs.

The first half of 2024 includes a $3.9 million increase in share repurchases primarily associated with the Company's share repurchase program, increased distributions to members of $3.9 million, higher dividend payments of approximately $1.7 million and $0.4 million of additional payments on finance leases.

Quantitative and Qualitative Disclosures About Market Risk.

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Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 2. Management’s Discussion and Analysis