Wingstop Inc. 10-Q

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations The following discussion and analysis of the financial condition and results of operations of Wingstop Inc. (collectively with its direct and indirect subsidiaries on a consolidated basis, “Wingstop,” the “Company,” “we,” “our,” or “us”) should be read in conjunction with the accompanying unaudited consolidated financial statements and related notes in Part I, Item 1 of this Quarterly Report on Form 10-Q (this “Quarterly Report”) and with the audited consolidated financial statements and the related notes included in our Annual Report on Form 10-K for the fiscal year ended December 26, 2020 (our “Annual Report”). The statements in this discussion regarding industry outlook, our expectations regarding our future performance, liquidity and capital resources, and other non-historical statements are forward-looking statements. These forward-looking statements are subject to risks and uncertainties, including, but not limited to, the risks and uncertainties described in “Special Note Regarding Forward-Looking Statements,” below and “Risk Factors” on page 11 of our Annual Report and in Part II, Item 1A. of this Quarterly Report. Our actual results may differ materially from those contained in or implied by any forward-looking statements. We operate on a 52 or 53-week fiscal year ending on the last Saturday of each calendar year. Our fiscal quarters are comprised of 13 weeks, with the exception of the fourth quarter of a 53-week year, which contains 14 weeks. Fiscal years 2021 and 2020 each contain 52 weeks. Overview Wingstop is the largest fast casual chicken wings-focused restaurant chain in the world, with over 1,500 locations worldwide. We are dedicated to serving the world flavor through an unparalleled guest experience and offering of classic wings, boneless wings and tenders, always cooked to order and hand-sauced-and-tossed in 11 bold, distinctive flavors. The Company is primarily a franchisor, with approximately 98% of Wingstop’s restaurants currently owned and operated by independent franchisees. We believe our asset-light, highly-franchised business model generates strong operating margins and requires low capital expenditures, creating stockholder value through strong and consistent free cash flow and capital-efficient growth. Change in presentation Beginning in the first quarter of 2021, headcount related expenses that support our national advertising fund are presented within “Advertising expenses” on the Consolidated Statements of Operations. Prior to the first quarter of 2021, these expenses were presented within “Selling, general and administrative expenses.” Prior period amounts have been reclassified to conform to the current presentation. This reclassification had no impact on operating income, balance sheets or statements of cash flows. 12 Key Performance Indicators Key measures that we use in evaluating our restaurants and assessing our business include the following: Number of restaurants. Management reviews the number of new restaurants, the number of closed restaurants, and the number of acquisitions and divestitures of restaurants to assess net new restaurant growth. Thirteen Weeks Ended March 27, 2021 March 28, 2020 Domestic Franchised Activity: Beginning of period 1,327 1,200 Openings 44 22 Closures — (1) Restaurants end of period 1,371 1,221 Domestic Company-Owned Activity: Beginning of period 32 31 Openings 1 1 Closures — — Restaurants end of period 33 32 Total Domestic Restaurants 1,404 1,253 International Franchised Activity: Beginning of period 179 154 Openings 2 6 Closures (6) — Restaurants end of period 175 160 Total System-wide Restaurants 1,579 1,413 System-wide sales. System-wide sales represents net sales for all of our company-owned and franchised restaurants. This measure allows management to better assess changes in our royalty revenue, our overall store performance, the health of our brand, and the strength of our market position relative to competitors. Our system-wide sales growth is driven by new restaurant openings as well as increases in same store sales. Domestic average unit volume (“AUV”). Domestic AUV consists of the average annual sales of all restaurants that have been open for a trailing 52-week period or longer. This measure is calculated by dividing sales during the applicable period for all restaurants being measured by the number of restaurants being measured. Domestic AUV includes revenue from both company-owned and franchised restaurants. Domestic AUV allows management to assess our company-owned and franchised restaurant economics. Our domestic AUV growth is primarily driven by increases in same store sales and is also influenced by opening new restaurants. Domestic same store sales. Domestic same store sales reflects the change in year-over-year sales for the same store base. We define the same store base to include those restaurants open for at least 52 full weeks. This measure highlights the performance of existing restaurants, while excluding the impact of new restaurant openings and closures. We review same store sales for domestic company-owned restaurants as well as system-wide domestic restaurants. Domestic same store sales growth is driven by increases in transactions and average transaction size. Transaction size increases are driven by price increases or favorable mix shift from either an increase in items purchased or shifts into higher priced items. EBITDA and Adjusted EBITDA. We define EBITDA as net income before interest expense, net, income tax expense, and depreciation and amortization. We define Adjusted EBITDA as net income before interest expense, net, income tax expense, and depreciation and amortization, with further adjustments for losses on debt extinguishment and refinancing transactions, transaction costs, costs and fees associated with investments in our strategic initiatives, gains and losses on the disposal of assets, and stock-based compensation expense. Adjusted EBITDA may not be comparable to other similarly titled captions of 13 other companies due to differences in methods of calculation. For a reconciliation of net income to EBITDA and Adjusted EBITDA and for further discussion of EBITDA and Adjusted EBITDA as non-GAAP measures and how we utilize them, see footnote 2 below. The following table sets forth our key performance indicators for the thirteen weeks ended March 27, 2021 and March 28, 2020 (in thousands, except unit data): Thirteen Weeks Ended March 27, 2021 March 28, 2020 Number of system-wide restaurants open at end of period 1,579 1,413 System-wide sales (1) $ 558,869 $ 429,898 Domestic restaurant AUV $ 1,547 $ 1,272 Domestic same store sales growth 20.7 % 9.9 % Company-owned domestic same store sales growth 13.4 % 6.2 % Total revenue $ 70,690 $ 55,436 Net income $ 13,160 $ 8,096 Adjusted EBITDA (2) $ 23,914 $ 16,357 (1) The percentage of system-wide sales attributable to company-owned restaurants was 3.1% and 3.4% for the thirteen weeks ended March 27, 2021 and March 28, 2020, respectively. The remainder was generated by franchised restaurants, as reported by our franchisees. (2) EBITDA and Adjusted EBITDA are supplemental measures of our performance that are not required by, or presented in accordance with, accounting principles generally accepted in the United States (“GAAP”). EBITDA and Adjusted EBITDA should not be considered as an alternative to net income or any other performance measure derived in accordance with GAAP, or as an alternative to cash flows from operating activities as a measure of our liquidity. We caution investors that amounts presented in accordance with our definitions of EBITDA and Adjusted EBITDA may not be comparable to similar measures disclosed by our competitors, because not all companies and analysts calculate EBITDA and Adjusted EBITDA in the same manner. We present EBITDA and Adjusted EBITDA because we consider them to be important supplemental measures of our performance and believe they are frequently used by securities analysts, investors, and other interested parties in the evaluation of companies in our industry. Management believes that investors’ understanding of our performance is enhanced by including these non-GAAP financial measures as a reasonable basis for comparing our ongoing results of operations. Many investors are interested in understanding the performance of our business by comparing our results from ongoing operations on a period-over-period basis and would ordinarily add back non-cash expenses such as depreciation and amortization, as well as items that are not part of normal day-to-day operations of our business. Management uses EBITDA and Adjusted EBITDA: • as a measurement of operating performance because they assist us in comparing the operating performance of our restaurants on a consistent basis, as they remove the impact of items not directly resulting from our core operations; • for planning purposes, including the preparation of our internal annual operating budget and financial projections; • to evaluate the performance and effectiveness of our operational strategies; • to evaluate our capacity to fund capital expenditures and expand our business; and • to calculate incentive compensation payments for our employees, including assessing performance under our annual incentive compensation plan and determining the vesting of performance-based equity awards. By providing these non-GAAP financial measures, together with a reconciliation to the most comparable GAAP measure, we believe we are enhancing investors’ understanding of our business and our results of operations, as well as assisting investors in evaluating how well we are executing our strategic initiatives. In addition, the instruments governing our indebtedness use EBITDA (with additional adjustments) to measure our compliance with covenants, such as our fixed charge coverage, lease adjusted leverage, and debt incurrence. EBITDA and Adjusted EBITDA have limitations as analytical tools and should not be considered in isolation, or as an alternative to, or a substitute for net income or other 14 financial statement data presented in our consolidated financial statements as indicators of financial performance. Some of the limitations are: • such measures do not reflect our cash expenditures or future requirements for capital expenditures or contractual commitments; • such measures do not reflect changes in, or cash requirements for, our working capital needs; • such measures do not reflect the interest expense or the cash requirements necessary to service interest or principal payments on our debt; • such measures do not reflect our tax expense or the cash requirements to pay our taxes; • although depreciation and amortization are non-cash charges, the assets being depreciated and amortized will often have to be replaced in the future and such measures do not reflect any cash requirements for such replacements; and • other companies in our industry may calculate such measures differently than we do, limiting their usefulness as comparative measures. Due to these limitations, EBITDA and Adjusted EBITDA should not be considered as measures of discretionary cash available to us to invest in the growth of our business. We compensate for these limitations by relying primarily on our GAAP results and using these non-GAAP measures only supplementally. As noted in the table below, Adjusted EBITDA includes adjustments for transaction costs, costs and fees associated with investments in our strategic initiatives, gains and losses on the disposal of assets, and stock-based compensation expense. It is reasonable to expect that this item will occur in future periods. However, we believe these adjustments are appropriate because the amounts recognized can vary significantly from period to period, do not directly relate to the ongoing operations of our restaurants, and complicate comparisons of our internal operating results and operating results of other restaurant companies over time. Each of the normal recurring adjustments and other adjustments described in this paragraph and in the reconciliation table below help management measure our core operating performance over time by removing items that are not related to day-to-day operations. The following table reconciles net income to EBITDA and Adjusted EBITDA for the thirteen weeks ended March 27, 2021 and March 28, 2020 (in thousands): Thirteen Weeks Ended March 27, 2021 March 28, 2020 Net income $ 13,160 $ 8,096 Interest expense, net 3,782 4,145 Income tax expense 2,861 1,230 Depreciation and amortization 1,795 1,555 EBITDA $ 21,598 $ 15,026 Additional adjustments: Stock-based compensation expense (a) 2,316 1,331 Adjusted EBITDA $ 23,914 $ 16,357 (a) Includes non-cash, stock-based compensation. 15 Results of Operations Thirteen Weeks Ended March 27, 2021 compared to Thirteen Weeks Ended March 28, 2020 The following table sets forth our results of operations for the thirteen weeks ended March 27, 2021 and March 28, 2020 (dollars in thousands): Thirteen Weeks Ended Increase / (Decrease) March 27, 2021 March 28, 2020 $ % Revenue: Royalty revenue, franchise fees and other $ 31,606 $ 24,199 $ 7,407 30.6 % Advertising fees 21,520 16,014 5,506 34.4 % Company-owned restaurant sales 17,564 15,223 2,341 15.4 % Total revenue 70,690 55,436 15,254 27.5 % Costs and expenses: Cost of sales (1) 13,279 11,176 2,103 18.8 % Advertising expenses 22,027 16,995 5,032 29.6 % Selling, general and administrative 13,786 12,239 1,547 12.6 % Depreciation and amortization 1,795 1,555 240 15.4 % Total costs and expenses 50,887 41,965 8,922 21.3 % Operating income 19,803 13,471 6,332 47.0 % Interest expense, net 3,782 4,145 (363) (8.8) % Income before income tax expense 16,021 9,326 6,695 71.8 % Income tax expense (benefit) 2,861 1,230 1,631 132.6 % Net income $ 13,160 $ 8,096 $ 5,064 62.5 % (1) Cost of sales includes all operating expenses of company-owned restaurants, including advertising expenses, and excludes depreciation and amortization, which are presented separately. Total revenue. During the thirteen weeks ended March 27, 2021, total revenue was $70.7 million, an increase of $15.3 million, or 27.5%, compared to $55.4 million in the comparable period in 2020. Royalty revenue, franchise fees and other increased $7.4 million primarily due to domestic same store sales growth of 20.7% as well as 165 net franchise restaurant openings since March 28, 2020. Advertising fees and related income increased $5.5 million due to the 30.0% increase in system-wide sales in the thirteen weeks ended March 27, 2021 compared to the thirteen weeks ended March 28, 2020. Company-owned restaurant sales increased $2.3 million primarily due to company-owned same store sales growth of 13.4%, which was driven by both an increase in transaction size and an increase in transactions. Cost of sales. During the thirteen weeks ended March 27, 2021, cost of sales was $13.3 million, an increase of $2.1 million, or 18.8%, compared to $11.2 million in the comparable period in 2020. Cost of sales as a percentage of company-owned restaurant sales was 75.6% in the thirteen weeks ended March 27, 2021, compared to 73.4% in the comparable period in 2020. 16 The table below presents the major components of cost of sales (dollars in thousands): Thirteen Weeks Ended March 27, 2021 March 28, 2020 In dollars As a % of company-owned restaurant sales In dollars As a % of company-owned restaurant sales Cost of sales: Food, beverage and packaging costs $ 7,304 41.6 % $ 5,477 36.0 % Labor costs 3,728 21.2 % 3,524 23.1 % Other restaurant operating expenses 2,627 15.0 % 2,567 16.9 % Vendor rebates (380) (2.2) % (392) (2.6) % Total cost of sales $ 13,279 75.6 % $ 11,176 73.4 % Food, beverage and packaging costs as a percentage of company-owned restaurant sales were 41.6% in the thirteen weeks ended March 27, 2021, compared to 36.0% in the comparable period in 2020. The increase was primarily due to a 25.8% increase in the cost of bone-in chicken wings as compared to the prior year period. Labor costs as a percentage of company-owned restaurant sales were 21.2% for the thirteen weeks ended March 27, 2021, compared to 23.1% in the comparable period in 2020. The decrease as a percentage of company-owned restaurant sales was primarily due to our ability to leverage costs due to the increase in company-owned same store sales of 13.4%. Other restaurant operating expenses as a percentage of company-owned restaurant sales were 15.0% for the thirteen weeks ended March 27, 2021, compared to 16.9% in the comparable period in 2020. The decrease as a percentage of company-owned restaurant sales was a result of our ability to leverage costs due to the increase in company-owned same store sales of 13.4%. Advertising expenses. During the thirteen weeks ended March 27, 2021, advertising expenses were $22.0 million, an increase of $5.0 million compared to $17.0 million in the comparable period in 2020. Advertising expenses are recognized at the same time the related revenue is recognized, which does not necessarily correlate to the actual timing of the related advertising spend. Selling, general and administrative ("SG&A"). During the thirteen weeks ended March 27, 2021, SG&A expense was $13.8 million, an increase of $1.5 million compared to $12.2 million in the comparable period in 2020. The increase in SG&A expense was primarily due to an increase of $0.9 million in headcount related expenses as we make investments to support our strategic initiatives, as well as an increase of $1.0 million in stock-based compensation expense. These increases were partially offset by a decrease of $0.6 million related to certain organizational changes made in the prior year period. Depreciation and amortization. During the thirteen weeks ended March 27, 2021, depreciation expense was $1.8 million, an increase of $0.2 million compared to $1.6 million in the comparable period in 2020. Interest expense, net. During the thirteen weeks ended March 27, 2021, interest expense, net was $3.8 million, a decrease of $0.4 million compared to $4.1 million of interest expense, net in the comparable period in 2020. The decrease was due to the refinancing of our securitized financing facility on October 30, 2020, which increased our outstanding debt by $162.4 million and reduced our interest rate from 4.97% to 2.84%. Income tax expense. During the thirteen weeks ended March 27, 2021, we recognized an income tax expense of $2.9 million yielding an effective tax rate of 17.9%, compared to an effective tax rate of 13.2% in the prior year period. The increase in the effective tax rate was due to the impact of excess tax benefits associated with stock options exercised in the prior year period. 17 Liquidity and Capital Resources General. Our primary sources of liquidity and capital resources are cash provided from operating activities, cash and cash equivalents on hand, and proceeds from the incurrence of debt. Our primary requirements for liquidity and capital are working capital and general corporate needs. Historically, we have operated with minimal positive working capital or with negative working capital. We have in the past, and may in the future, refinance our existing indebtedness with new debt arrangements and/or equity issuances and utilize a portion of funds to return capital to our stockholders. We believe our sources of liquidity and capital will be sufficient to finance our continued operations and growth strategy for at least the next twelve months. The following table shows summary cash flows information for the thirteen weeks ended March 27, 2021 and March 28, 2020 (in thousands): Thirteen Weeks Ended March 27, 2021 March 28, 2020 Net cash provided by (used in): Operating activities $ 13,788 $ 12,471 Investing activities (2,841) (1,579) Financing activities (6,368) 12,253 Net change in cash and cash equivalents $ 4,579 $ 23,145 Operating activities . Our cash flows from operating activities are principally driven by sales at both franchise restaurants and company-owned restaurants, as well as franchise and development fees. We collect franchise royalties from our franchise owners on a weekly basis. Restaurant-level operating costs at our company-owned restaurants, unearned franchise and development fees, and corporate overhead costs also impact our cash flows from operating activities. Net cash provided by operating activities was $13.8 million in the thirteen weeks ended March 27, 2021, an increase of $1.3 million from cash provided by operating activities of $12.5 million in the thirteen weeks ended March 28, 2020. The increase is the result of increased operating income associated with the increased sales over the prior period, partially offset by the timing of changes in working capital. Investing activities . Our net cash used in investing activities was $2.8 million in the thirteen weeks ended March 27, 2021, an increase of $1.3 million from cash used in investing activities of $1.6 million in the thirteen weeks ended March 28, 2020. The increase in cash used in investing activities was primarily due to an increase in capital expenditures to support our strategic initiatives. Financing activities . Our net cash used in financing activities was $6.4 million in the thirteen weeks ended March 27, 2021, a change of $18.6 million from cash provided by financing activities of $12.3 million in the thirteen weeks ended March 28, 2020. The change was primarily due to additional borrowings under our 2018 Variable Funding Notes (as defined below) of $16.0 million in the thirteen weeks ended March 28, 2020, as well as an increase in the amount of our regular dividend in June 2020. Securitized financing facility . On October 30, 2020, the Company completed a transaction to refinance its existing securitized financing facility with a new securitized financing facility, pursuant to which Wingstop Funding LLC (the “Issuer”), a limited-purpose, bankruptcy-remote, wholly-owned indirect subsidiary of the Company, issued $480.0 million of its Series 2020-1 2.84% Fixed Rate Senior Notes, Class A-2 (the “2020 Class A-2 Notes”). The Issuer also entered into a revolving financing facility of Series 2020-1 Variable Funding Senior Notes, Class A-1 (the “2020 Variable Funding Notes,” and together with the 2020 Class A-2 Notes, the “2020 Notes”) which permits borrowings of up to a maximum principal amount of $50.0 million, which may be used to issue letters of credit. A portion of the proceeds of the 2020 Class A-2 Notes was used to repay the $332.8 million of principal outstanding on the existing Series 2018-1 4.97% Fixed Rate Senior Secured Notes, Class A-2 and Series 2018-1 Variable Funding Senior Secured Notes, Class A-1 (the “2020 Variable Funding Notes”) and to pay a special cash dividend of approximately $148.4 million to our stockholders in December 2020. The 2020 Class A-2 Notes are generally subject to 1% annual amortization, bear interest at a fixed rate of 2.84% per annum, and have an anticipated repayment date of December 2027. 18 Dividends. We paid a quarterly cash dividend of $0.14 per share of common stock, aggregating $4.2 million, during the first quarter of 2021. On April 27, 2021, the Company’s Board of Directors approved a dividend of $0.14 per share, to be paid on June 4, 2021 to stockholders of record as of May 14, 2021, totaling approximately $4.2 million. We do not currently expect the restrictions in our debt instruments to impact our ability to make regular quarterly dividends pursuant to our quarterly dividend program. However, any future declarations of dividends, as well as the amount and timing of such dividends, are subject to capital availability and the discretion of our Board of Directors, which must evaluate, among other things, whether cash dividends are in the best interest of our stockholders. Contractual Obligations During the thirteen weeks ended March 27, 2021, there were no material changes to our contractual obligations disclosed in the contractual obligations section of Management’s Discussion and Analysis of Financial Condition and Results of Operations in our Annual Report. For additional information regarding our long-term debt and our commitments and contingencies, see Note 10, Debt Obligations and Note 12, Commitments and Contingencies in our Annual Report and the corresponding Notes 6 and 7 in the notes to our unaudited consolidated financial statements included elsewhere in this Quarterly Report. Off-Balance Sheet Arrangements The Company is required to provide standby letters of credit related to our securitized financing facility. Although the letters of credit are off-balance sheet, the obligations to which they relate are reflected as liabilities in the Consolidated Balance Sheet. Outstanding letters of credit totaled $3.5 million at March 27, 2021. We do not believe these arrangements have or are likely to have a material effect on our results of operations, financial condition, revenues or expenses, capital expenditures or liquidity. Critical Accounting Policies and Estimates Our consolidated financial statements and accompanying notes are prepared in accordance with GAAP. Preparing consolidated financial statements requires us to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenue and expenses. These estimates and assumptions are affected by the application of our accounting policies. Critical accounting estimates are those that require application of management’s most difficult, subjective, or complex judgments, often as a result of matters that are inherently uncertain and may change in subsequent periods. While we apply our judgment based on assumptions believed to be reasonable under the circumstances, actual results could vary from these assumptions. It is possible that materially different amounts would be reported using different assumptions. Our critical accounting policies and estimates are identified and described in our annual consolidated financial statements and the related notes included in our Annual Report, and there have been no material changes since the filing of our Annual Report. Recent Accounting Pronouncements The Company has reviewed all recently issued, but not yet effective, accounting pronouncements and does not believe the future adoption of any such pronouncements may be expected to cause a material impact on its financial condition or the results of its operations. Special Note Regarding Forward-Looking Statements This report includes statements of our expectations, intentions, plans and beliefs that constitute “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”) and are intended to come within the safe harbor protection provided by those sections. These statements, which involve risks and uncertainties, relate to the discussion of our business strategies and our expectations concerning future operations, margins, profitability, trends, liquidity and capital resources and to analyses and other information that are based on forecasts of future results and estimates of amounts not yet determinable. These forward-looking statements can generally by identified by the use of forward-looking terminology, including the terms “may,” “will,” “should,” “expect,” “intend,” “plan,” “anticipate,” “believe,” “think,” “estimate,” “seek,” “predict,” “could,” “project,” “potential” or, in each case, their negative or other variations or comparable terminology, although not all forward-looking statements are accompanied by such terms. These forward-looking statements are made based on expectations and beliefs concerning future events affecting us and are subject to uncertainties, risks, and factors relating to our operations and business environments, all of which are difficult to predict and many of which are beyond our control, that could cause our actual results to differ materially from those matters expressed or implied by these forward-looking statements. 19 Such risks and other factors include those listed below and elsewhere in this report, that could cause actual results or outcomes to differ from the results expressed or implied by forward-looking statements: • the impacts of the novel coronavirus (COVID-19) pandemic on our business; • the response of governments and of our Company to the pandemic; • our ability to effectively implement our growth strategy; • risks associated with changes in food and supply costs; • our relationships with, and the performance of, our franchisees, as well as actions by franchisees that could harm our business; • our ability to identify, recruit and contract with a sufficient number of qualified franchisees; • risks associated with food safety, food-borne illness and other health concerns; • our ability to successfully expand into new markets; • our ability to effectively compete within our industry; • risks associated with interruptions in our supply chain, including availability of food products; • risks associated with our future performance and operating results falling below the expectations of securities analysts and investors; • risks associated with data privacy, cyber security and the use and implementation of information technology; • risks associated with our increasing dependence on digital commerce platforms and third-party delivery service providers; • uncertainty in the law with respect to the assignment of liabilities in the franchise business model; • risks associated with litigation against us or our franchisees; • our ability to successfully advertise and market our business; • risks associated with changes in customer preferences and perceptions; • our ability to comply with government regulations relating to food products and franchising, including increased costs associated with new or changing regulations; • risks associated with the geographic concentration of our business; • our ability to maintain adequate insurance coverage for our business; • risks associated with damage to our reputation or lack of acceptance of our brand in existing or new markets; • risks associated with our expansion into international markets and foreign government restrictions on operations; • our ability to comply with the terms of our securitized debt financing and generate sufficient cash flows to satisfy our significant debt service obligations thereunder; • our ability to attract and retain our executive officers and other key employees; and • our ability to protect our intellectual property, including trademarks and trade secrets. 20 The above list of factors is not exhaustive. Some of these and other factors are discussed in more detail under “Risk Factors” in our Annual Report. When considering forward-looking statements in this report or that we make in other reports or statements, you should keep in mind the cautionary statements in this report and future reports we file with the SEC. New risks and uncertainties arise from time to time, and we cannot predict when they may arise or how they may affect us. Except as required by law, we assume no obligation to update or revise any forward-looking statements for any reason, or to update the reasons actual results could differ materially from those anticipated in any forward-looking statements, even if new information becomes available in the future. 21