What changed in this filing

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Item 2. Management’s Discussion and Analysis

2020-08-06 compared with 2020-05-07 · 95 added, 66 removed, 161 unchanged (50% of the section changed)

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consumer debt levels;

the impact of COVID-19

the continued impact of the COVID-19

new housing starts and completions;

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however, you should not place undue reliance on any forward-looking statements, which are based on current expectations.

For additional information regarding important factors that may affect our operations and could cause actual results to vary materially from those anticipated in the forward-looking statements, please see the discussion below under Impact of COVID-19

Pandemic, Item 1A “Risk Factors” contained in Part II of this Quarterly Report on this Form 10-Q

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The following information should be read in conjunction with the condensed consolidated unaudited financial statements, including the notes thereto, included under Part I, Item 1 of this Quarterly Report on Form 10-Q.

In addition, reference should be made to our audited consolidated financial statements and notes thereto, and related Management’s Discussion and Analysis of Financial Condition and Results of Operations included in our Annual Report on Form 10-K

In addition, reference should be made to our audited consolidated financial statements and notes thereto and the related Management’s Discussion and Analysis of Financial Condition and Results of Operations included in our Annual Report on Form 10-K

for the year ended December 31, 2019.

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was incorporated in Florida in 1956, and, together with its subsidiaries (collectively, “Watsco,” or “we,” “us,” or “our”) is the largest distributor of air conditioning, heating, and refrigeration equipment, and related parts and supplies (“HVAC/R”) in the HVAC/R distribution industry in North America.

At March 31, 2020, we operated from 603 locations in 38 U.S.

At June 30, 2020, we operated from 603 locations in 38 U.S.

States, Canada, Mexico, and Puerto Rico with additional market coverage on an export basis to portions of Latin America and the Caribbean.

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Demand related to the new construction sectors throughout most of the markets we serve tends to be fairly evenly distributed throughout the year and depends largely on housing completions and related weather and economic conditions.

Impact of COVID-19

Impact of the COVID-19

A novel strain of coronavirus, COVID-19,

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In March 2020, the World Health Organization declared COVID-19

pandemic has resulted, and is likely to continue to result, in significant economic disruption and has and will likely continue to adversely affect our business and results of operations.

As of the date of this filing, significant uncertainty exists concerning the magnitude of the impact and duration of the COVID-19

pandemic significantly impacted business during the second quarter of 2020.

states were under executive orders requiring that all workers remain at home unless their work was critical, essential, or life-sustaining.

We believe that, based on the various standards published to date, the work our employees are performing is essential, and as such we continued to operate with certain modifications.

A few of our locations experienced short-term closures for COVID-19

employee health concerns or are operating at a diminished capacity, which impacted sales during the quarter and through the date of this filing and may negatively impact sales until the COVID-19

employee health concerns or operated at a diminished capacity, which negatively impacted sales during the quarter and may continue to negatively impact sales until the COVID-19

pandemic moderates.

As of the date of this filing, while all of our locations currently continue to operate, we have restricted public access to our branches and have instituted contactless sales and servicing capabilities to safeguard our employees and customers.

related factors that have impacted, or may negatively impact, sales, gross margin and other results of operations in the future include, but are not limited to:

limitations on the ability of our suppliers to manufacture, or procure from manufacturers, the products we sell, or to meet delivery requirements and commitments;

limitations on the ability of our employees to perform their work due to illness or other disruptions caused by the pandemic, including local, state, or federal orders requiring employees to remain at home;

limitations on the ability of carriers to deliver our products to customers;

limitations on the ability of our customers to conduct their businesses and purchase our products;

and limitations on the ability of our customers to pay us on a timely basis.

Moreover, the COVID-19

pandemic could alter the mix of our business due to a shift in consumer demand towards repair of equipment rather than replacement, as well as changes in our sales mix toward value-oriented equipment and lower demand and/or disruption to new construction and commercial markets, which would result in a reduction in our sales and consequential gross margin.

In response to the pandemic, we are implementing modifications to preserve adequate liquidity and ensure that our business can continue to operate during this uncertain time.

Certain states have issued executive orders requiring that all workers remain at home unless their work is critical, essential, or life-sustaining.

We believe that, based on the various standards published to date, the work our employees are performing is essential.

With respect to liquidity, our balance sheet remains strong with cash of $51.2 million, debt of $156.1 million and shareholders’ equity of $1.7 billion at March 31, 2020.

In April 2020, we increased our borrowing capacity under our existing revolving credit facility from $500.0 million to $560.0 million with no change to pricing or terms.

Our quarterly dividend plans remain currently unchanged, most recently $1.775 per share.

Future dividends and/or changes in dividend rates are at the sole discretion of the Board of Directors and depend upon factors including, but not limited to, cash flow generated by operations, profitability, financial condition, cash requirements, and future prospects.

During these uncertain times, we believe that our scale, our current low debt-level, conservative leverage ratio, and our historical ability to generate cash flow positions us well as we work through the impacts of the COVID-19

At the end of the second quarter of 2020, many of the markets in which we operate had begun to ease COVID-19

restrictions that had been in place earlier in the period.

However, as of the date of this filing, viral infections have begun to increase, resulting in the resumption of restrictions in certain markets in which we operate.

As a result, significant uncertainty exists concerning the magnitude of the impact and duration of the COVID-19

In response to the pandemic, we have implemented plans intended to preserve adequate liquidity and ensure that our business can continue to operate during this uncertain time.

In addition, we have taken actions to reduce costs, including reductions in fixed-cost compensation, rent abatement, changes to vendor terms and various austerity measures to curtail discretionary spending in light of the circumstances.

Other variable costs, including hourly wages, overtime, sales commissions, temporary labor, performance-based compensation, advertising, and delivery expenses are expected to moderate consistent with our overall business activity.

If and to the extent restrictions ease and normal economic conditions and operations resume, the various austerity measures to curtail discretionary spending may cease.

With respect to liquidity, we believe that our balance sheet remains strong with $79.6 million in cash, $33.4 million in borrowings drawn from our $560.0 million credit facility and $1.7 billion of shareholders’ equity as of June 30, 2020.

Our quarterly dividend plans remain currently unchanged, most recently at $1.775 per share.

The full impact of the COVID-19

pandemic on our financial condition and results of operations will depend on future developments, such as the ultimate duration and scope of the pandemic, its impact on our customers and suppliers, how quickly normal economic conditions and operations resume and whether the pandemic exacerbates other risks disclosed in Item 1A “Risk Factors” of our Annual Report on Form 10-K

pandemic on our financial condition and results of operations will depend on future developments, such as the ultimate duration and scope of the pandemic, its impact on our employees, customers, and suppliers, how quickly normal economic conditions and operations resume and whether the pandemic exacerbates other risks disclosed in Item 1A “Risk Factors” of our Annual Report on Form 10-K

for the year ended December 31, 2019.

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as filed with the SEC on February 28, 2020.

We believe that there have been no significant changes during the quarter ended March 31, 2020 to the critical accounting policies disclosed in our Annual Report on Form 10-K

We believe that there have been no significant changes during the quarter ended June 30, 2020 to the critical accounting policies disclosed in our Annual Report on Form 10-K

for the year ended December 31, 2019.

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Results of Operations

The following table summarizes information derived from our condensed consolidated unaudited statements of income, expressed as a percentage of revenues, for the quarters ended March 31, 2020 and 2019:

The following table summarizes information derived from our condensed consolidated unaudited statements of income, expressed as a percentage of revenues, for the quarters and six months ended June 30, 2020 and 2019:

Ended June 30,

Cost of sales

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(“RSI”) in April 2019, and the purchase of an additional 20% ownership interest in Homans effective May 31, 2019.

We did not acquire any businesses during the quarters ended March 31, 2020 or 2019.

We did not acquire any businesses during the quarter or six months ended June 30, 2020.

In the following narratives, computations and other information referring to “same-store basis” exclude the effects of locations closed, acquired, or locations opened, in each case during the immediately preceding 12 months, unless such locations are within close geographical proximity to existing locations.

At March 31, 2020 and 2019, seven and nine locations, respectively, that we opened were near existing locations and were therefore included in “same-store basis” information.

The table below summarizes the changes in our locations for the 12 months ended March 31, 2020:

March 31, 2019

At June 30, 2020 and 2019, three and eight locations, respectively, that we opened were near existing locations and were therefore included in “same-store basis” information.

The table below summarizes the changes in our locations for the 12 months ended June 30, 2020:

June 30, 2019

December 31, 2019

March 31, 2020

Revenues for the first quarter of 2020 increased $76.9 million, or 8%, as compared to the first quarter of 2019, including $61.0 million attributable to the new locations acquired and $1.5 million from other locations opened during the preceding 12 months, offset by $2.9 million from locations closed.

Sales of HVAC equipment (66% of sales) increased 7%, sales of other HVAC products (30% of sales) increased 9% and sales of commercial refrigeration products (4% of sales) were flat.

On a same-store basis, revenues increased $17.3 million, or 2%, as compared to the same period in 2019, reflecting a 2% increase in sales of HVAC equipment (67% of sales), which included a 4% increase in residential HVAC equipment (5% increase in U.S.

markets and an 11% decrease in international markets), a 2% increase in sales of other HVAC products (29% of sales) and flat sales of commercial refrigeration products (4% of sales).

For HVAC equipment, the increase in revenues was primarily due to demand for the replacement of residential HVAC equipment and a higher mix of high-efficiency air conditioning and heating systems, which sell at higher unit prices, resulting in a 4% increase in volume and a 1% increase in the average selling price.

Gross profit for the first quarter of 2020 increased $13.9 million, or 6%, as compared to the first quarter of 2019, primarily as a result of increased revenues.

Gross profit margin for the quarter ended March 31, 2020 declined 50 basis-points to 24.6% versus 25.1%, primarily due to lower benefit of pricing actions taken by our HVAC equipment suppliers and overall competitive conditions.

June 30, 2020

Second Quarter of 2020 Compared to Second Quarter of 2019

Revenues for the second quarter of 2020 decreased $16.5 million, or 1%, including $66.5 million attributable to the new locations acquired and $0.8 million from other locations opened during the preceding 12 months, offset by $4.8 million from locations closed.

Sales of HVAC equipment (71% of sales) increased 1%, sales of other HVAC products (26% of sales) decreased 6% and sales of commercial refrigeration products (3% of sales) decreased 15%.

On a same-store basis, revenues decreased $79.0 million, or 6%, as compared to the same period in 2019, reflecting a 4% decrease in sales of HVAC equipment (70% of sales), which included flat sales of residential HVAC equipment and a 20% decrease in sales of commercial HVAC equipment, a 9% decrease in sales of other HVAC products (27% of sales) and a 15% decrease in sales of commercial refrigeration products (3% of sales).

The decrease in HVAC equipment revenues was primarily attributable to lower sales of commercial HVAC equipment due to the pandemic-related market disruption, while both the average selling price and volume of residential HVAC equipment remained flat.

Gross profit for the second quarter of 2020 decreased $8.8 million, or 3%, primarily as a result of decreased revenues.

Gross profit margin for the quarter ended June 30, 2020 declined 30 basis-points to 23.6% versus 23.9% for the same period in 2019, primarily due to a shift in sales mix toward HVAC equipment, which generates a lower gross profit margin than non-equipment

Selling, General and Administrative Expenses

Selling, general and administrative expenses for the first quarter of 2020 increased $23.3 million, or 13%, as compared to the first quarter of 2019, primarily due to newly acquired locations.

Selling, general and administrative expenses as a percent of revenues for the quarter ended March 31, 2020 increased to 20.2% versus 19.3% for the same period in 2019.

On a same-store basis, selling, general and administrative expenses increased 4% as compared to the same period in 2019, primarily due to additional employee headcount and related employee benefit costs and increased costs related to ongoing technology initiatives.

Other income of $1.0 million and $1.4 million for the first quarters of 2020 and 2019, respectively, represents our share of the net income of RSI.

Selling, general and administrative expenses for the second quarter of 2020 decreased $2.5 million, or 1%, primarily due to decreased revenues.

Selling, general and administrative expenses as a percent of revenues for the second quarter of 2020 remained flat at 14.3% versus the same period in 2019.

On a same-store basis, selling, general and administrative expenses decreased 7% as compared to the same period in 2019, primarily due to actions taken to reduce costs and curtail discretionary spending in response to the pandemic as well as decreased variable costs commensurate with decreased revenues.

Selling, general and administrative expenses included $0.5 million of additional costs for 2020 in excess of 2019 for ongoing technology initiatives, including initiatives designed to ameliorate the impact of, or otherwise address, the pandemic.

Other income of $4.1 million and $3.0 million for the second quarters of 2020 and 2019, respectively, represented our share of the net income of RSI.

Interest Expense, Net

Interest expense, net, for the first quarter of 2020 increased 2%, primarily as a result of an increase in average outstanding borrowings, partially offset by a lower effective interest rate for the 2020 period, in each case under our revolving credit facility, as compared to the same period in 2019.

Income taxes decreased to $8.2 million for the first quarter of 2020, as compared to $10.6 million for the first quarter of 2019, and represent a composite of the income taxes attributable to our wholly owned operations and income taxes attributable to the Carrier joint ventures, which are primarily taxed as partnerships for income tax purposes;

Interest expense, net for the second quarter of 2020 decreased $0.9 million, or 77%, primarily as a result of a decrease in average outstanding borrowings and a lower effective interest rate for the 2020 period, in each case under our revolving credit facility, as compared to the same period in 2019.

Income taxes decreased to $24.7 million for the second quarter of 2020, as compared to $25.3 million for the second quarter of 2019 and represent a composite of the income taxes attributable to our wholly owned operations and income taxes attributable to the Carrier joint ventures, which are primarily taxed as partnerships for income tax purposes;

therefore, Carrier is responsible for its proportionate share of income taxes attributable to its share of earnings from these joint ventures.

The effective income tax rates attributable to us were 21.0% and 22.7% for the quarters ended March 31, 2020 and 2019, respectively.

The effective income tax rates attributable to us were 22.1% and 21.7% for the quarters ended June 30, 2020 and 2019, respectively.

The increase was primarily due to lower estimated foreign withholding taxes in the second quarter of 2019 as compared to the same period in 2020.

Net Income Attributable to Watsco, Inc.

Net income attributable to Watsco for the quarter ended June 30, 2020 decreased $3.6 million, or 4%, compared to the same period in 2019.

The decrease was primarily driven by lower revenues and gross profit, partially offset by lower selling, general and administrative expenses, higher other income, and a reduction in interest expense, net.

First Half of 2020 Compared to First Half of 2019

Revenues for the first half of 2020 increased $60.4 million, or 3%, including $127.5 million attributable to the new locations acquired and $2.3 million from other locations opened during the preceding 12 months, offset by $7.7 million from locations closed.

Sales of HVAC equipment (69% of sales) increased 3%, sales of other HVAC products (28% of sales) were flat and sales of commercial refrigeration products (3% of sales) decreased 8%.

On a same-store basis, revenues decreased $61.7 million, or 3%, as compared to the same period in 2019, reflecting a 2% decrease in sales of HVAC equipment (69% of sales), which included a 1% increase in sales of residential HVAC equipment (2% increase in U.S.

markets and an 11% decrease in international markets) and a 14% decrease in sales of commercial HVAC equipment, a 4% decrease in sales of other HVAC products (28% of sales) and an 8% decrease in commercial refrigeration products (3% of sales).

The decrease in HVAC equipment revenues was primarily attributable to lower sales of commercial HVAC equipment due to pandemic-related market disruption, partially offset by a 2% increase in volume of residential HVAC equipment.

Gross profit for the first half of 2020 increased $5.1 million, or 1%, primarily as a result of increased revenues.

Gross profit margin for the six months ended June 30, 2020 declined 40 basis-points to 24.0% versus 24.4% for the same period in 2019, primarily due to a shift in sales mix toward HVAC equipment, which generates a lower gross profit margin than non-equipment

products and a lower benefit of pricing actions taken by our HVAC equipment suppliers.

Selling, General and Administrative Expenses

Selling, general and administrative expenses for the first half of 2020 increased $20.8 million, or 6%, primarily due to newly acquired locations.

Selling, general and administrative expenses as a percentage of revenues for the six months ended June 30, 2020 increased to 16.8% versus 16.4% for the same period in 2019.

On a same-store basis, selling, general and administrative expenses decreased 2% as compared to the same period in 2019 primarily due to actions taken to reduce costs and curtail discretionary spending in response to the pandemic as well as decreased variable costs commensurate with decreased revenues.

Selling, general and administrative expenses included $1.6 million of additional costs for 2020 in excess of 2019 for ongoing technology initiatives.

Other income of $5.1 million and $4.4 million for the first half of 2020 and 2019, respectively, represented our share of the net income of RSI.

Interest Expense, Net

Interest expense, net for the first half of 2020 decreased $0.9 million, or 46%, primarily as a result of a decrease in average outstanding borrowings and a lower effective interest rate for the 2020 period, in each case under our revolving credit facility, as compared to the same period in 2019.

Income taxes decreased to $32.9 million for the first half of 2020, as compared to $35.8 million for the first half of 2019 and represent a composite of the income taxes attributable to our wholly owned operations and income taxes attributable to the Carrier joint ventures, which are primarily taxed as partnerships for income tax purposes;

therefore, Carrier is responsible for its proportionate share of income taxes attributable to its share of earnings from these joint ventures.

The effective income tax rates attributable to us were 21.8% and 22.0% for the first half of 2020 and 2019, respectively.

The decrease was primarily due to higher share-based payment tax benefits in 2020 as compared to the same period in 2019.

Net Income Attributable to Watsco, Inc.

Net income attributable to Watsco for the quarter ended March 31, 2020 decreased $4.5 million, or 13%, compared to the same period in 2019.

The decrease was primarily driven by higher selling, general and administrative expenses, partially offset by higher revenues, a reduction in income taxes and a decrease in net income attributable to the non-controlling

interest, as discussed above.

Net income attributable to Watsco for the first half of 2020 decreased $8.1 million, or 6%, compared to the same period in 2019.

The decrease was primarily driven by higher selling, general and administrative expenses, partially offset by lower interest expense, net, a reduction in income taxes, and a decrease in the net income attributable to the non-controlling

Liquidity and Capital Resources

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Additionally, we may also generate cash through the issuance and sale of our Common stock.

As of March 31, 2020, we had $51.2 million of cash and cash equivalents, of which $39.0 million was held by foreign subsidiaries.

As of June 30, 2020, we had $79.6 million of cash and cash equivalents, of which $60.0 million was held by foreign subsidiaries.

The repatriation of cash balances from our foreign subsidiaries could have adverse tax impacts or be subject to capital controls;

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The consequences of these developments with respect to LIBOR cannot be entirely predicted but could result in an increase in the cost of our debt, as it is currently anticipated that lenders will replace LIBOR with the Secured Overnight Financing Rate (“SOFR”), which may exceed what would have been the comparable LIBOR rate.

We believe that the transition from LIBOR will not materially impact our financial position or results of operations.

Additionally, disruptions in the credit and capital markets could also result in increased borrowing costs and/or reduced borrowing capacity under our revolving credit agreement.

Working Capital

Working capital decreased to $1,069.9 million at March 31, 2020 from $1,085.0 million at December 31, 2019.

The following table summarizes our cash flow activity for the quarters ended March 31, 2020 and 2019 (in millions):

Working capital decreased to $992.6 million at June 30, 2020 from $1,085.0 million at December 31, 2019, reflecting lower levels of inventory due to pandemic-related market disruption resulting in lower purchases in 2020 versus 2019, higher levels of accounts payable and accrued expenses offset by higher levels of accounts receivable due to the seasonality of our business.

The following table summarizes our cash flow activity for the six months ended June 30, 2020 and 2019 (in millions):

Cash flows provided by operating activities

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Operating Activities

The decrease in net cash provided by operating activities was primarily due to higher accounts receivable driven by increased sales volume, timing of collections and lower net income, partially offset by a reduction in the level seasonal increases in inventory in 2020 as compared to 2019.

The increase in net cash provided by operating activities was primarily due to a reduction in the level of inventories.

Investing Activities

Net cash used in investing activities was lower due to a decrease in capital expenditures in 2020.

Net cash used in investing activities was lower due to cash consideration paid for acquisitions and the purchase of an additional ownership interest in RSI in 2019.

Financing Activities

The increase in net cash used in financing activities was primarily attributable to lower borrowing requirements and an increase in dividends paid in 2020.

The increase in net cash used in financing activities was primarily attributable to net repayments under our revolving credit agreement and an increase in dividends paid in 2020.

Revolving Credit Agreement

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On April 10, 2020, we increased the aggregate borrowing capacity of our revolving credit agreement from $500.0 million to $560.0 million.

The credit facility has a seasonal component from October 1 to March 31, during which the borrowing capacity may be reduced to $460.0 million at our discretion (which would effectively reduce fees payable in respect of the unused portion of the commitment).

Included in the credit facility are a $100.0 million swingline subfacility, a $10.0 million letter of credit subfacility, a $75.0 million alternative currency borrowing sublimit and an $8.0 million Mexican borrowing sublimit.

The credit agreement matures on December 5, 2023.

At March 31, 2020 and December 31, 2019, $156.1 million and $155.7 million, respectively, were outstanding under the revolving credit agreement.

At June 30, 2020 and December 31, 2019, $33.4 million and $155.7 million, respectively, were outstanding under the revolving credit agreement.

The revolving credit agreement contains customary affirmative and negative covenants, including financial covenants with respect to consolidated leverage and interest coverage ratios, and other customary restrictions.

We believe we were in compliance with all covenants at March 31, 2020.

We believe we were in compliance with all covenants at June 30, 2020.

Purchase of Additional Ownership Interest from Joint Venture

Effective May 31, 2019, we purchased an additional 20% ownership interest in Homans from Carrier Enterprise II for cash consideration of $32.4 million, which increased our ownership in Homans to 100%.

Homans previously operated as a division of Carrier Enterprise II and subsequent to the purchase operates as a stand-alone subsidiary of the Company with 16 locations in the Northeastern U.S.

Investment in Unconsolidated Entity

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for cash consideration of $63.6 million, of which we contributed $50.9 million, and Carrier contributed $12.7 million.

Effective June 29, 2018, Carrier Enterprise I acquired an additional 1.4% ownership interest in RSI, which increased Carrier Enterprise I’s ownership interest in RSI to 36.3%.

Total cash consideration of $3.8 million was paid on July 5, 2018, of which we contributed $3.0 million and Carrier contributed $0.8 million.

Effective June 29, 2018, Carrier Enterprise I acquired an additional 1.4% ownership interest in RSI, which increased Carrier Enterprise I’s ownership interest in RSI to 36.3% for cash consideration of $3.8 million, of which we contributed $3.0 million and Carrier contributed $0.8 million.

Effective April 22, 2019, Carrier Enterprise I acquired an additional 1.8% ownership interest in RSI, which increased Carrier Enterprise I’s ownership interest in RSI to 38.1% for cash consideration of $4.9 million, of which we contributed $3.9 million and Carrier contributed $1.0 million.

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RSI’s shareholders may transfer their respective shares of RSI common stock only to members of the Sigler family or to Carrier Enterprise I, and, at any time from and after the date on which Carrier Enterprise I owns 85% or more of RSI’s outstanding common stock, it has the right, but not the obligation, to purchase from RSI’s shareholders the remaining outstanding shares of RSI common stock.

At March 31, 2020, the estimated purchase amount we would be contingently liable for was approximately $142.0 million.

At June 30, 2020, the estimated purchase amount we would be contingently liable for was approximately $170.0 million.

We believe that our operating cash flows, cash on hand, and funds available for borrowing under our revolving credit agreement will be sufficient to purchase any additional ownership interests in RSI.

On November 26, 2019, one of our wholly owned subsidiaries acquired certain assets and assumed certain liabilities of N&S, a distributor of air conditioning, heating and plumbing products operating from seven locations in New York and Connecticut.

The purchase price was composed of cash consideration of $12.0 million, the issuance of 22,435 shares of Common stock having a fair value of $4.0 million and the payment of certain indebtedness.

On August 1, 2019, Carrier Enterprise I acquired substantially all the HVAC assets and assumed certain of the liabilities of PPI, an HVAC distributor operating from 19 locations in Pennsylvania, New Jersey, and Delaware, for $85.0 million less certain average revolving indebtedness.

Consideration for the net purchase price consisted of $10.0 million in cash, 372,543 shares of Common stock having a fair value of $58.3 million, net of a discount for lack of marketability, and the payment of certain average revolving indebtedness.

Carrier contributed cash of $17.0 million to Carrier Enterprise I in connection with the acquisition of PPI.

On April 2, 2019, one of our wholly owned subsidiaries acquired certain assets and assumed certain liabilities of DASCO, a distributor of air conditioning and heating products operating from seven locations in New Jersey, New York and Connecticut.

The purchase price was composed of cash consideration of $16.8 million and the issuance of 50,952 shares of Common stock having a fair value of $6.9 million, net of a discount for lack of marketability.

We continually evaluate potential acquisitions and/or joint ventures and investments in unconsolidated entities.

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Common Stock Dividends

We paid cash dividends of $1.60 per share of Common stock and Class B common stock during both the quarters ended March 31, 2020 and 2019.

On April 1, 2020, our Board of Directors declared a regular quarterly cash dividend of $1.775 per share of both Common and Class B common stock that was paid on April 30, 2020 to shareholders of record as of April 15, 2020.

We paid cash dividends of $3.375 and $3.20 per share of Common stock and Class B common stock during the six months ended June 30, 2020 and 2019, respectively.

On July 1, 2020, our Board of Directors declared a regular quarterly cash dividend of $1.775 per share of both Common and Class B common stock that was paid on July 31, 2020 to shareholders of record as of July 16, 2020.

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In aggregate, 6,370,913 shares of Common and Class B common stock have been repurchased at a cost of $114.4 million since the inception of the program.

At March 31, 2020, there were 1,129,087 shares remaining authorized for repurchase under the program.

At June 30, 2020, there were 1,129,087 shares remaining authorized for repurchase under the program.

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