What changed in this filing

/stocks — the workspaceLOADING

Item 2. Management’s Discussion and Analysis

2021-11-04 compared with 2021-08-05 · 84 added, 64 removed, 182 unchanged (45% of the section changed)

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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 June 30, 2021, we operated from 655 locations in 42 U.S.

At September 30, 2021, we operated from 673 locations in 42 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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We believe that, based on the various standards published to date, the work our employees perform is essential, and as such we continued to operate with certain modifications during these periods.

Additionally, most of the restrictive orders have been lifted, allowing people to generally return to work.

Although we have learned to navigate COVID-19

while maintaining our operations in all material respects, the pandemic continued to impact our business and operating results throughout 2020.

while maintaining our operations in all material respects, the pandemic continued to impact our business and operating results throughout 2020 and into 2021.

Some of our locations experienced short-term closures for COVID-19

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In addition, we took actions to reduce costs, including reductions in compensation, rent abatement, changes to vendor terms and other austerity measures to curtail discretionary spending in light of the circumstances in 2020.

However, as economic activity has been recovering, the impact of the pandemic on our business has been more reflective of greater economic and marketplace dynamics, which include supply chain disruptions and labor shortages, rather than pandemic-related issues such as location closures, mandated restrictions and employee illness.

As restrictions have eased and normal economic conditions have largely resumed, our various austerity measures to curtail discretionary spending have eased.

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

Notwithstanding the recent resurgence of economic activity, in light of variant strains of the virus and the continued high rate of viral infections that exists as of the date of this filing, there remains significant uncertainty concerning the magnitude of the impact and duration of the COVID-19

We believe that our scale, our currently low debt level, conservative leverage ratio, and our historical ability to generate cash flow positions us well as we work through the ongoing impacts of the COVID-19

As economic activity has been recovering and the effects of the pandemic have lessened in 2021, the impact of the pandemic on our business has been more reflective of greater economic and marketplace dynamics rather than pandemic-related issues such as location closures, mandated restrictions and employee illness.

OEMs and manufacturers have experienced some level of supply chain disruptions caused by component availability, labor shortages, transportation delays, and other supply chain challenges, all of which have impacted typical lead times and overall availability of HVAC products.

While supply chain disruptions impacted third quarter 2021 residential sales, we nonetheless experienced growth in residential units during the quarter.

As of the date of this filing, product availability has improved, and we are encouraged by current volume trends and the ability of OEMs to meet strong end-market

Notwithstanding the recent resurgence of economic activity, in light of variant strains of the virus and the continued rate of viral infections that exists as of the date of this filing, there remains significant uncertainty concerning the magnitude of the impact and duration of the COVID-19

The full impact of the COVID-19

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We intend to continue to actively monitor the situation and may take further actions that alter our business operations as may be required by federal, state or local authorities or that we determine are in the best interests of our employees, customers, suppliers and shareholders.

Climate Change

We believe we can meaningfully contribute to sustainability and greenhouse gas emissions reduction through the sale of high-efficiency residential HVAC equipment that replaces older systems operating at lower required minimum efficiencies.

Based on estimates validated by independent sources, since January 1, 2020 through September 30, 2021, we facilitated the reduction of an estimated 19.4 billion pounds of CO2e emissions from the sale of replacement residential air conditioners, heat pumps, and furnaces.

Joint Ventures with Carrier Global Corporation

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as filed with the SEC on February 26, 2021.

We believe that there have been no significant changes during the quarter ended June 30, 2021 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 September 30, 2021 to the critical accounting policies disclosed in our Annual Report on Form 10-K

for the year ended December 31, 2020.

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 and six months ended June 30, 2021 and 2020:

Ended June 30,

Six Months Ended

Quarter Ended

September 30,

Nine Months Ended

September 30,

Cost of sales

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Due to rounding, percentages may not add up to 100.

The following narratives reflect our acquisitions of Acme Refrigeration of Baton Rouge LLC (“ACME”) in May 2021, and TEC in April 2021.

The following narratives reflect our acquisitions of Makdad Industrial Supply Co., Inc.

(“MIS”) in August 2021, Acme Refrigeration of Baton Rouge LLC (“ACME”) in May 2021, and TEC in April 2021.

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 June 30, 2021 and 2020, one and three 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, 2021:

June 30, 2020

At September 30, 2021 and 2020, zero and two 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 September 30, 2021:

September 30, 2020

December 31, 2020

June 30, 2021

Second Quarter of 2021 Compared to Second Quarter of 2020

Revenues for the second quarter of 2021 increased $494.3 million, or 36%, including $104.8 million attributable to the new locations acquired and $1.9 million from other locations opened during the preceding 12 months, offset by $1.3 million from locations closed.

September 30, 2021

Third Quarter of 2021 Compared to Third Quarter of 2020

Revenues for the third quarter of 2021 increased $245.9 million, or 16%, including $112.4 million attributable to new locations acquired and $7.1 million from other locations opened during the preceding 12 months, offset by $1.7 million from locations closed.

Sales of HVAC equipment (69% of sales) increased 13%, sales of other HVAC products (27% of sales) increased 19% and sales of commercial refrigeration products (4% of sales) increased 27%.

On a same-store basis, revenues increased $388.9 million, or 29%, as compared to the same period in 2020, reflecting a 29% increase in sales of HVAC equipment (71% of sales), which included a 28% increase in sales of residential HVAC equipment (27% increase in U.S.

markets) and a 32% increase in sales of commercial HVAC equipment, a 25% increase in sales of other HVAC products (26% of sales) and a 45% increase in sales of commercial refrigeration products (3% of sales).

For HVAC equipment, the increase in revenues was primarily due to strong demand for residential HVAC equipment, the realization of price increases, and a higher mix of high-efficiency air conditioning and heating systems, which sell at higher unit prices, resulting in a 15% increase in volume and a 12% increase in the average selling price, as well as higher sales of commercial HVAC equipment.

Gross profit for the second quarter of 2021 increased $158.7 million, or 50%, primarily as a result of increased revenues.

Gross profit margin for the quarter ended June 30, 2021 improved 220 basis-points to 25.8% versus 23.6% for the same period in 2020, primarily due to the impact of pricing and mix for HVAC equipment.

On a same-store basis, revenues increased $128.1 million, or 8%, as

compared to the same period in 2020, reflecting a 7% increase in sales of HVAC equipment (69% of sales), which included a 5% increase of residential HVAC equipment (5% increase in U.S.

markets and a 9% increase in international markets) and a 15% increase in sales of commercial HVAC equipment, a 12% increase in sales of other HVAC products (27% of sales) and a 27% increase in sales of commercial refrigeration products (4% of sales).

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

Gross profit for the third quarter of 2021 increased $108.9 million, or 29%, primarily as a result of increased revenues.

Gross profit margin for the quarter ended September 30, 2021 improved 280 basis-points to 27.1% versus 24.3% for the same period in 2020, primarily due to the impact of pricing and mix for residential HVAC equipment.

Selling, General and Administrative Expenses

Selling, general and administrative expenses for the second quarter of 2021 increased $72.6 million, or 37%, primarily due to increased revenues and newly acquired locations.

Selling, general and administrative expenses as a percent of revenues for the second quarter of 2021 increased to 14.4% versus 14.3% for the same period in 2020.

On a same-store basis, selling, general and administrative expenses increased 28% as compared to the same period in 2020, primarily due to increased performance-based compensation costs commensurate with the increase in revenue and profitability in 2021 and easing of short-term austerity measures taken during the second quarter of 2020 to reduce costs and curtail discretionary spending in response to the pandemic.

Other income of $5.5 million and $4.1 million for the second quarters of 2021 and 2020, respectively, represents our share of the net income of Russell Sigler, Inc.

Selling, general and administrative expenses for the third quarter of 2021 increased $60.9 million, or 28%, primarily due to increased revenues and newly acquired locations.

Selling, general and administrative expenses as a percent of revenues for the third quarter of 2021 increased to 15.8% versus 14.4% for the same period in 2020.

On a same-store basis, selling, general and administrative expenses increased 17% as compared to the same period in 2020, primarily due to variable selling costs driven by the increase in revenues, increased employee headcount, increased performance-based compensation costs commensurate with 2021’s operating performance and easing of short-term austerity measures taken during the third quarter of 2020 to reduce costs and curtail discretionary spending in response to the pandemic.

Other income of $6.1 million and $4.1 million for the third quarters of 2021 and 2020, respectively, represented our share of the net income of Russell Sigler, Inc.

(“RSI”), in which we have a 38.1% equity interest.

Interest Expense, Net

Interest expense, net for the second quarter of 2021 increased $0.2 million, or 58%, primarily as a result of an increase in average outstanding borrowings and a higher effective interest rate, in each case under our revolving credit facility, as compared to the same period in 2020.

Income taxes increased to $44.2 million for the second quarter of 2021, as compared to $24.7 million for the second quarter of 2020 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 third quarter of 2021 increased $0.1 million, or 105%, primarily as a result of an increase in average outstanding borrowings, partially offset by a lower effective interest rate, in each case under our revolving credit facility, as compared to the same period in 2020.

Income taxes increased to $41.7 million for the third quarter of 2021, as compared to $30.5 million for the third quarter of 2020 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 23.4% and 22.1% for the quarters ended June 30, 2021 and 2020, respectively.

The increase was primarily due to higher state income taxes and proportionately higher income in the second quarter of 2021 as compared to tax credits and share-based compensation deductions in the second quarter of 2020.

Net Income Attributable to Watsco, Inc.

Net income attributable to Watsco, Inc.

for the quarter ended June 30, 2021 increased $57.5 million, or 66%, compared to the same period in 2020.

The effective income tax rates attributable to us were 22.8% and 22.2% for the quarters ended September 30, 2021 and 2020.

The increase was primarily due to higher state income taxes and proportionately higher income in the third quarter of 2021 as compared to tax credits and share-based compensation deductions in the third quarter of 2020.

Income Attributable to Watsco, Inc.

Net income attributable to Watsco for the quarter ended September 30, 2021 increased $34.4 million, or 32%, compared to the same period in 2020.

The increase was primarily driven by higher revenues and expanded profit margins, partially offset by higher income taxes and an increase in the net income attributable to the non-controlling

First Half of 2021 Compared to First Half of 2020

Revenues for the first half of 2021 increased $622.2 million, or 26%, including $104.8 million attributable to the new locations acquired and $3.2 million from other locations opened during the preceding 12 months, offset by $3.0 million from locations closed.

Nine Months Ended September 30, 2021 Compared to Nine Months Ended September 30, 2020

Revenues for the nine months ended September 30, 2021 increased $868.1 million, or 22%, including $217.1 million attributable to new locations acquired and $10.4 million from other locations opened during the preceding 12 months, offset by $4.7 million from locations closed.

Sales of HVAC equipment (69% of sales) increased 21%, sales of other HVAC products (27% of sales) increased 22% and sales of commercial refrigeration products (4% of sales) increased 28%.

On a same-store basis, revenues increased $517.2 million, or 22%, as compared to the same period in 2020, reflecting a 23% increase in sales of HVAC equipment (69% of sales), which included a 24% increase in sales of residential HVAC equipment (23% increase in U.S.

markets) and a 16% increase in sales of commercial HVAC equipment, a 19% increase in sales of other HVAC products (27% of sales) and a 28% increase in commercial refrigeration products (4% of sales).

For HVAC equipment, the increase in revenues was primarily due to strong demand for residential HVAC equipment, the realization of price increases, and a higher mix of high-efficiency air conditioning and heating systems, which sell at higher unit prices, resulting in a 15% increase in volume and an 8% increase in the average selling price, as well as higher sales of commercial HVAC equipment.

Gross profit for the first half of 2021 increased $205.9 million, or 36%, primarily as a result of increased revenues.

Gross profit margin for the six months ended June 30, 2021 improved 190 basis-points to 25.9% versus 24.0% for the same period in 2020, due to the impact of pricing and mix for HVAC equipment.

On a same-store basis, revenues increased $645.3 million, or 17%, as compared to the same period in 2020, reflecting a 16% increase in sales of HVAC equipment (69% of sales), which included a 17% increase in residential HVAC equipment (16% increase in U.S.

markets and a 27% increase in international markets) and a 15% increase in sales of commercial HVAC equipment, a 16% increase in sales of other HVAC products (27% of sales) and a 28% increase in commercial refrigeration products (4% of sales).

For HVAC equipment, the increase in revenues was

primarily due to strong demand for the replacement of residential HVAC equipment, the realization of price increases, and a higher mix of high-efficiency air conditioning and heating systems, which sell at higher unit prices, resulting in a 9% increase in volume and an 6% increase in the average selling price, as well as higher sales of commercial HVAC equipment.

Gross profit for the nine months ended September 30, 2021 increased $314.8 million, or 33%, primarily as a result of increased revenues.

Gross profit margin for the nine months ended September 30, 2021 improved 220 basis-points to 26.3% versus 24.1% for the same period in 2020, primarily due to the impact of pricing and mix for residential HVAC equipment.

Selling, General and Administrative Expenses

Selling, general and administrative expenses for the first half of 2021 increased $86.9 million, or 22%, primarily due to increased revenues.

Selling, general and administrative expenses as a percentage of revenues for the six months ended June 30, 2021 decreased to 16.2% versus 16.8% for the same period in 2020 primarily due to increased leverage on fixed costs driven by increased revenues and actions taken to improve operating efficiencies.

On a same-store basis, selling, general and administrative expenses increased 17% as compared to the same period in 2020 primarily due to increased performance-based compensation costs commensurate with increased revenues and profitability.

Other income of $10.2 million and $5.1 million for the first half of 2021 and 2020, respectively, represents our share of the net income of RSI.

Selling, general and administrative expenses for the nine months ended September 30, 2021 increased $147.8 million, or 24%, primarily due to increased revenues and newly acquired locations.

Selling, general and administrative expenses as a percentage of revenues increased to 16.1% versus 15.9% for the nine months ended September 30, 2021 as compared to the same period in 2020.

On a same-store basis, selling, general and administrative expenses increased 17% as compared to the same period in 2020.

The increase was primarily related to increased higher variable selling costs driven by the increase in revenues, investments in employee headcount and performance-based compensation costs, increased logistics costs in response to strong demand and continuing supply chain disruptions, and increased rent expense associated with new locations opened.

Other income of $16.3 million and $9.2 million for the nine months ended September 30, 2021 and 2020, respectively, represented our share of the net income of RSI, in which we have a 38.1% equity interest.

Interest Expense, Net

Interest expense, net for the first half of 2021 decreased $0.5 million, or 50%, primarily as a result of a decrease in average outstanding borrowings and a lower effective interest rate, in each case under our revolving credit facility, as compared to the same period in 2020.

Income taxes increased to $59.9 million for the first half of 2021, as compared to $32.9 million for the first half of 2020 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 nine months ended September 30, 2021 decreased $0.4 million, or 36%, primarily as a result of a decrease in average outstanding borrowings for the 2021 period, in each case under our revolving credit facility, as compared to the same period in 2020.

Income taxes increased to $101.6 million for the nine months ended September 30, 2021, as compared to $63.4 million for the nine months ended September 30, 2020 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 23.0% and 21.8% for the first half of 2021 and 2020, respectively.

The effective income tax rates attributable to us were 22.9% and 22.0% for the nine months ended September 30, 2021 and 2020, respectively.

The increase was primarily due to higher state income taxes and proportionately higher income in 2021 as compared to tax credits and share-based compensation deductions in 2020.

Net Income Attributable to Watsco, Inc.

Net income attributable to Watsco, Inc.

for the first half of 2021 increased $82.1 million, or 70%, compared to the same period in 2020.

Net income attributable to Watsco for the nine months ended September 30, 2021 increased $116.5 million, or 52%, compared to the same period in 2020.

The increase was primarily driven by higher revenues and expanded profit margins, partially offset by higher income taxes and an increase in the net income attributable to the non-controlling

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

As of June 30, 2021, we had $96.8 million of cash and cash equivalents, of which $80.6 million was held by foreign subsidiaries.

As of September 30, 2021, we had $137.2 million of cash and cash equivalents, of which $99.1 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;

however, these balances are generally available to fund the ordinary business operations of our foreign subsidiaries without legal restrictions.

We believe that our operating cash flows, cash on hand, and funds available for borrowing under our revolving credit agreement are sufficient to meet our liquidity needs for the foreseeable future.

We believe that our operating cash flows, cash on hand, funds available for borrowing under our revolving credit agreement, and funds available from sales of our Common stock under our at-the-market

offering program, each of which is described below, will be sufficient to meet our liquidity needs for the foreseeable future.

However, there can be no assurance that our current sources of available funds will be sufficient to meet our cash requirements.

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Working Capital

Working capital increased to $1,206.8 million at June 30, 2021, reflecting 50 new locations added by acquisitions in 2021, which in aggregate added $105.2 million of working capital.

Excluding these new locations, working capital increased 10% to $1,101.6 million at June 30, 2021 from $997.3 million at December 31, 2020, primarily due to higher accounts receivable consistent with overall increased sales, the seasonality of our business, and higher levels of inventory in support of stronger business conditions.

The following table summarizes our cash flow activity for the six months ended June 30, 2021 and 2020 (in millions):

Working capital increased to $1,184.2 million at September 30, 2021, reflecting 56 new locations added by acquisitions in 2021, which in aggregate added $94.5 million of working capital.

Excluding these new locations, working capital increased 9% to $1,089.7 million at September 30, 2021 from $997.3 million at December 31, 2020, primarily due to higher accounts receivable consistent with overall increased sales, the seasonality of our business, and higher levels of inventory in support of stronger business conditions.

The following table summarizes our cash flow activity for the nine months ended September 30, 2021 and 2020 (in millions):

Cash flows provided by operating activities

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Investing Activities

Net cash used in investing activities was higher primarily due to cash consideration paid for the acquisitions of TEC and ACME.

Net cash used in investing activities was higher primarily due to cash consideration paid for acquisitions.

Financing Activities

The decrease in net cash used in financing activities was primarily attributable to increased uses of cash and borrowings to fund working capital and acquisitions in 2021 versus 2020 (funded by our revolving credit agreement) and offset by $21.0 million in proceeds from the non-controlling

interest for its contribution to the acquisition of TEC in 2021 and an increase in dividends paid in 2021.

The decrease in net cash used in financing activities was primarily attributable to net repayments under our revolving credit agreement in 2020 and $21.0 million in proceeds from the non-controlling

interest for its contribution to the acquisition of TEC in 2021, partially offset by an increase in dividends paid in 2021.

Revolving Credit Agreement

We maintain an unsecured, syndicated multicurrency revolving credit agreement, which we use to fund seasonal working capital needs and for other general corporate purposes, including acquisitions, dividends (if and as declared by our Board of Directors), capital expenditures, stock repurchases and issuances of letters of credit.

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

We maintain an unsecured, $560.0 million syndicated multicurrency revolving credit agreement, which we use to fund seasonal working capital needs and for other general corporate purposes, including acquisitions, dividends (if and as declared by our Board of Directors), capital expenditures, stock repurchases and issuances of letters of credit.

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 effectively reduces fees payable in respect of the unused portion of the commitment), and we effected this reduction in 2021.

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The credit agreement matures on December 5, 2023.

At June 30, 2021 $114.2 million was outstanding under the revolving credit agreement.

At September 30, 2021 $1.7 million was outstanding under the revolving credit agreement related to a foreign subsidiary.

At December 31, 2020 there was no outstanding balance 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 June 30, 2021.

We believe we were in compliance with all covenants at September 30, 2021.

Investment in Unconsolidated Entity

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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 June 30, 2021, the estimated purchase amount we would be contingently liable for was approximately $299.0 million.

At September 30, 2021, the estimated purchase amount we would be contingently liable for was approximately $318.0 million.

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

On August 20, 2021, one of our wholly owned subsidiaries acquired MIS, a distributor of air conditioning and heating products operating from six locations in Pennsylvania.

Consideration for the purchase price consisted of $3.1 million in cash and the issuance of 3,627 shares of Common stock having a fair value of $1.0 million, net of cash acquired of $0.2 million.

On May 7, 2021, we acquired certain assets and assumed certain liabilities of ACME, a distributor of air conditioning, heating, and refrigeration products, operating from 18 locations in Louisiana and Mississippi, for $22.9 million less certain average revolving indebtedness.

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Common Stock Dividends

We paid cash dividends of $3.725 and $3.375 per share of Common stock and Class B common stock during the six months ended June 30, 2021 and 2020, respectively.

On July 1, 2021, our Board of Directors declared a regular quarterly cash dividend of $1.95 per share of both Common and Class B common stock that was paid on July 30, 2021 to shareholders of record as of July 15, 2021.

We paid cash dividends of $5.675 and $5.15 per share of Common stock and Class B common stock during the nine months ended September 30, 2021 and 2020, respectively.

On October 1, 2021, our Board of Directors declared a regular quarterly cash dividend of $1.95 per share of both Common and Class B common stock that was paid on October 29, 2021 to shareholders of record as of October 15, 2021.

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.

At-the-Market

Offering Program

On August 6, 2021, we entered into a sales agreement with Robert W.

Inc., which enables the Company to issue and sell shares of Common stock in one or more negotiated transactions or transactions that are deemed to be “at the market” offerings as defined in Rule 415 under the Securities Act of 1933, as amended (the “Securities Act”), for a maximum aggregate offering amount of up to $300.0 (the “ATM Program”).

The offer and sale of our Common stock pursuant to the ATM Program has been registered under the Securities Act pursuant to our automatically effective shelf registration statement on Form S-3

As of September 30, 2021, no shares of Common stock had been sold under the ATM Program.

Company Share Repurchase Program

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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 June 30, 2021, there were 1,129,087 shares remaining authorized for repurchase under the program.

At September 30, 2021, 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