Avis Budget Group, Inc.: Form 10-Q for the period ended Jun 30, 2025

The following discussion should be read in conjunction with our Condensed Consolidated Financial Statements and accompanying Notes included in this Quarterly Report on Form 10-Q and with our 2024 Form 10-K. Our actual results of operations may differ materially from those discussed in forward-looking statements as a result of various factors, including those discussed in “Forward-Looking Statements.” See “Forward-Looking Statements” and “Risk Factors” for additional information. Unless otherwise noted, all dollar amounts in tables are in millions.

OVERVIEW

Our Company

We operate three of the most globally recognized brands in mobility solutions, Avis, Budget and Zipcar, together with several other brands well recognized in their respective markets. We are a leading vehicle rental operator in North America, Europe, Australasia and certain other regions we serve, with an average rental fleet of approximately 699,000 vehicles in second quarter 2025. We also license the use of our trademarks to licensees in the areas in which we do not operate directly. We and our licensees operate our brands in approximately 180 countries throughout the world.

Our Segments

We categorize our operations into two reportable business segments: Americas, consisting primarily of (i) vehicle rental operations in North America, South America, Central America and the Caribbean, (ii) car sharing operations in certain of these markets, and (iii) licensees in the areas in which we do not operate directly; and International, consisting primarily of (i) vehicle rental operations in Europe, the Middle East, Africa, Asia and Australasia, (ii) car sharing operations in certain of these markets, and (iii) licensees in the areas in which we do not operate directly.

Business and Trends

Our strategy continues to focus on transforming key parts of our business through technology, system enhancements and data, particularly with respect to customer experience, revenue generation and costs. Additionally, during the fourth quarter of our fiscal year ended December 31, 2024, we changed our fleet strategy with respect to United States and Canadian rental car vehicles, to accelerate certain fleet rotations in order to decrease the age of our fleet for competitive reasons. We believe our strategies will continue to strengthen our Company, maximize profitability, and deliver stakeholder value. During the three months ended June 30, 2025, we generated revenues of $3.0 billion, net income of $5 million and Adjusted EBITDA of $277 million. These results were primarily driven by sustained volume and decreased fleet costs, offset by decreased revenue per day.

We continue to be susceptible to a number of industry-specific and global macroeconomic factors that may cause our actual results of operations to differ from our historical results of operations or current expectations. The factors and trends that we currently believe are or will be most impactful to our results of operations and financial condition include the following: interest rates, inflationary impact on items such as commodity prices and wages, cost of new vehicles, used car values, increases in the number of personal injury claims and cost per incident, and an economic downturn that may impact travel demand, all of which may be exacerbated by ongoing military conflicts, including in the Middle East and Eastern Europe. Additionally, uncertainty remains with respect to tariffs and tax regulations, and this uncertainty has had and may continue to have impacts on our operations. We continue to monitor the potential favorable or unfavorable impacts of these and other factors on our business, operations, financial condition, and future results of operations.

RESULTS OF OPERATIONS

We measure performance principally using the following key metrics: (i) rental days, which represent the total number of days (or portion thereof) a vehicle was rented, (ii) revenue per day, which represents revenues divided by rental days, (iii) vehicle utilization, which represents rental days divided by available rental days, with available rental days being defined as average rental fleet times the number of days in the period, and (iv) per-unit fleet costs, which represent vehicle depreciation, lease charges and gain or loss on vehicle sales, divided by average rental fleet. Our rental days, revenue per day and vehicle utilization metrics are all calculated based on the actual rental of the vehicle during a 24-hour period. We believe that this methodology provides management with the most relevant metrics in order to effectively manage the performance of the business. Our calculation may not be comparable to the calculation of similarly-titled metrics by other companies. We present currency exchange rate effects to provide a method of assessing how our business performed excluding the effects of foreign currency rate fluctuations. Currency exchange rate effects are calculated by translating the current period results at the prior period average exchange rate plus any related gains and losses on currency hedges.

We assess performance and allocate resources based upon the separate financial information of our operating segments. We aggregate certain of our operating segments into our reportable segments. In identifying our reportable segments, we also consider the management structure of the organization, the nature of services provided by our operating segments, the geographical areas and economic characteristics in which the segments operate, and other relevant factors. Management evaluates the operating results of each of our reportable segments based upon revenues and Adjusted EBITDA, which we define as income (loss) from continuing operations before non-vehicle related depreciation and amortization; long-lived asset impairment and other related charges; other fleet charges; restructuring and other related charges; early extinguishment of debt costs; non-vehicle related interest; transaction-related costs, net; legal matters, net, which primarily includes amounts recorded in excess of $5 million, related to unprecedented self-insurance reserves for allocated loss adjustment expense, class action lawsuits and personal injury matters; non-operational charges related to shareholder activist activity, which includes third-party advisory, legal and other professional fees; COVID-19 charges, net; cloud computing costs; other (income) expense, net; severe weather-related damages in excess of $5 million, net of insurance proceeds; and income taxes. In the first quarter of 2025, we revised our definition of Adjusted EBITDA to exclude other fleet charges. We did not revise prior years' Adjusted EBITDA amounts because there were no other charges similar in nature to these.

We believe Adjusted EBITDA is useful as a supplemental measure in evaluating the performance of our operating businesses and in comparing our results from period to period. We also believe that Adjusted EBITDA is useful to investors because it allows them to assess our results of operations and financial condition on the same basis that management uses internally. Adjusted EBITDA is a non-GAAP measure and should not be considered in isolation or as a substitute for net income or other income statement data prepared in accordance with U.S. GAAP. Our presentation of Adjusted EBITDA may not be comparable to similarly-titled measures used by other companies.

During the six months ended June 30, 2025:

• Our revenues totaled $5.5 billion, a decrease of $130 million year-over-year, primarily due to decreased revenue per day and volume.
• Our net loss attributable to Avis Budget Group, Inc. was $501 million, representing an additional loss of $401 million year-over-year, primarily due to other fleet charges related to the accelerated disposal of certain fleet in our Americas reportable segment.
• Our Adjusted EBITDA was $184 million, representing a decrease of $42 million year-over-year.

Three Months Ended June 30, 2025 vs. Three Months Ended June 30, 2024

Our condensed consolidated results of operations comprised of the following:

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Revenues decreased $9 million during the three months ended June 30, 2025 compared to the similar period in 2024, primarily due to a 1% decrease in revenue per day, excluding exchange rate effects, partially offset by a $24 million positive impact from currency exchange rate movements. Total expenses during the three months ended June 30, 2025 were consistent with the similar period in 2024. Our effective tax rates were a provision of 66.7% and 44.4% for the three months ended June 30, 2025 and 2024, respectively. As a result of these items, our net income attributable to Avis Budget Group, Inc. decreased by $10 million compared to the similar period in 2024. For the three months ended June 30, 2025 and 2024, we reported diluted earnings per share of $0.10 and $0.41, respectively.

Operating expenses were 50.2% of revenue during the three months ended June 30, 2025 compared to 50.3% during the similar period in 2024. Vehicle depreciation and lease charges decreased to 20.9% of revenue during the three months ended June 30, 2025 compared to 24.0% during the similar period in 2024, primarily due to decreased per-unit fleet costs, excluding exchange rate effects, driven by an increase in the gain on sale of vehicles. Selling, general and administrative costs increased to 13.0% of revenue during the three months ended June 30, 2025 compared to 11.4% during the similar period in 2024, primarily due to increased commissions and marketing costs. Vehicle interest costs decreased to 7.6% of revenue during the three months ended June 30, 2025, compared to 8.0% during the similar period in 2024, primarily due to decreased fleet levels and interest rates.

Following is a more detailed discussion of the results of each of our reportable segments and corporate and other, together with a reconciliation of net income to Adjusted EBITDA:

(a) Includes unallocated corporate expenses which are not attributable to a particular segment.

(b) Primarily consists of gains or losses related to our equity method investment in a former subsidiary, offset by fleet related and certain administrative services provided to the same former subsidiary.

(c) Consists of $1 million reported within selling, general, and administrative expenses for the three months ended June 30, 2025 and $11 million and $12 million reported within operating expenses for the three months ended June 30, 2025 and 2024, respectively.

(d) Reported within operating expenses.

Americas

Revenues decreased during the three months ended June 30, 2025 compared to the similar period in 2024, primarily due to a 2% decrease in revenue per day, excluding exchange rate effects, and a $1 million negative impact from currency exchange rate movements, offset by a 1% increase in volume.

Operating expenses were 50.6% of revenue during the three months ended June 30, 2025 compared to 50.4% during the similar period in 2024. Vehicle depreciation and lease charges decreased to 20.8% of revenue during the three months ended June 30, 2025 compared to 23.7% during the similar period in 2024, primarily due to decreased per-unit fleet costs, excluding exchange rate effects, driven by an increase in the gain on sale of vehicles. Selling, general and administrative costs increased to 11.3% of revenue during the three months ended June 30, 2025 compared to 9.4% during the similar period in 2024, primarily due to increased commissions and marketing costs. Vehicle interest costs decreased to 8.4% of revenue during the three months ended June 30, 2025 compared to 8.8% during the similar period in 2024, primarily due to decreased interest rates.

Adjusted EBITDA increased during the three months ended June 30, 2025 compared to the similar period in 2024, primarily due to lower per-unit fleet costs and a $1 million positive impact from currency exchange rate movements.

International

Revenues increased during the three months ended June 30, 2025, compared to the similar period in 2024, primarily due to a 3% increase in revenue per day, excluding exchange rate effects, and a $25 million positive impact from currency exchange rate movements, partially offset by a 4% decrease in volume.

Operating expenses decreased to 46.7% of revenue during the three months ended June 30, 2025 compared to 48.0% during the similar period in 2024, primarily due to an increase in revenue per day, excluding exchange rate effects, offset by sustained costs. Vehicle depreciation and lease charges decreased to 21.4% of revenue during the three months ended June 30, 2025 compared to 25.2% during the similar period in 2024, primarily due to decreased per-unit fleet costs, excluding exchange rate effects, driven by decreased fleet levels, partially offset by a decrease in the gain on sale of vehicles. Selling, general and administrative costs decreased to 15.5% of revenue during the three months ended June 30, 2025 compared to 15.8% during the similar period in 2024 primarily due to decreased commissions, partially offset by an increase in marketing costs and other selling, general and administrative costs. Vehicle interest costs decreased to 4.9% of revenue during the three months ended June 30, 2025 compared to 5.5% during the similar period in 2024, primarily due to decreased fleet levels and interest rates.

Adjusted EBITDA increased during the three months ended June 30, 2025 compared to the similar period in 2024, primarily due to lower per-unit fleet costs and a $4 million positive impact from currency exchange rate movements.

Six Months Ended June 30, 2025 vs. Six Months Ended June 30, 2024

Our condensed consolidated results of operations comprised of the following:

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Revenues decreased $130 million or 2% during the six months ended June 30, 2025 compared to the similar period in 2024, primarily due to a 2% decrease in revenue per day, excluding exchange rate effects and a 1% decrease in volume, partially offset by a $1 million positive impact from currency exchange rate movements. Total expenses increased 7% during the six months ended June 30, 2025, compared to the similar period in 2024, primarily due to fleet costs. Our effective tax rates were a benefit of 24.6% and 14.8% for the six months ended June 30, 2025 and 2024, respectively. As a result of these items, our net loss attributable to Avis Budget Group, Inc. resulted in an additional loss of $401 million compared to the similar period in 2024. For the six months ended June 30, 2025 and 2024, we reported diluted loss per share of $14.24 and $2.80, respectively.

Operating expenses increased to 52.6% of revenue during the six months ended June 30, 2025 compared to 51.4% during the similar period in 2024, primarily due to a decrease in revenue per day, excluding exchange rate effects, and sustained costs. Vehicle depreciation and lease charges increased to 30.9% of revenue during the six months ended June 30, 2025 compared to 24.4% during the similar period in 2024, primarily due to other fleet charges related to the accelerated disposal of certain fleet in our Americas reportable segment. Selling, general and administrative costs increased to 12.9% of revenue during the six months ended June 30, 2025, compared to 12.0% during the similar period in 2024, primarily due to increased commissions and marketing costs. Vehicle interest costs decreased to 8.0% of revenue during the six months ended June 30, 2025 compared to 8.6% during the similar period in 2024, primarily due to decreased fleet levels and interest rates.

Following is a more detailed discussion of the results of each of our reportable segments and corporate and other, together with a reconciliation of net loss to Adjusted EBITDA:

(a) Includes unallocated corporate expenses which are not attributable to a particular segment.

(b) Costs reported within vehicle depreciation and lease charges, net related to the accelerated disposal of certain fleet in our Americas reportable segment. These costs relate to vehicles that were not included in the long-lived asset impairment and other related charges recorded in 2024.

(c) Primarily consists of gains or losses related to our equity method investment in a former subsidiary, offset by fleet related and certain administrative services provided to the same former subsidiary.

(d) Consists of $2 million reported within selling, general and administrative expenses for the six months ended June 30, 2025 and $11 million and $7 million reported within operating expenses for the six months ended June 30, 2025 and 2024, respectively.

(e) Reported within operating expenses.

Americas

Revenues decreased during the six months ended June 30, 2025 compared to the similar period in 2024, primarily due to a 3% decrease in revenue per day and a $5 million negative impact from currency exchange rate movements, partially offset by sustained volume.

Operating expenses increased to 52.9% of revenue during the six months ended June 30, 2025 compared to 51.4% during the similar period in 2024, primarily due to a decrease in revenue per day, excluding exchange rate effects, and sustained costs. Vehicle depreciation and lease charges increased to 33.2% of revenue during the six months ended June 30, 2025 compared to 24.0% during the similar period in 2024, primarily due to other fleet charges related to the accelerated disposal of certain fleet. Selling, general and administrative costs were approximately 10.9% of revenue during the six months ended June 30, 2025 compared to 9.8% during the similar period in 2024, primarily due to increased commissions and marketing costs. Vehicle interest costs decreased to 8.8% of revenue during the six months ended June 30, 2025 compared to 9.4% during the similar period in 2024, primarily due to decreased fleet levels and interest rates.

Adjusted EBITDA decreased during the six months ended June 30, 2025 compared to the similar period in 2024, primarily due to decreased revenue per day and other fleet charges related to the accelerated disposal of certain fleet, partially offset by approximately $1 million positive impact from currency exchange rate movements.

International

Revenues decreased during the six months ended June 30, 2025 compared to the similar period in 2024, primarily due to a 4% decrease in volume, partially offset by a $6 million positive impact from currency exchange rate movements and a 2% increase in revenue per day, excluding exchange rate effects.

Operating expenses decreased to 49.2% of revenue during the six months ended June 30, 2025 compared to 49.8% during the similar period in 2024, primarily due to a decrease in volume, partially offset by an increase in revenue per day, excluding exchange rate effects. Vehicle depreciation and lease charges decreased to 23.0% of revenue during the six months ended June 30, 2025 compared to 25.9% during the similar period in 2024, primarily due to decreased per-unit fleet costs, excluding exchange rate effects, driven by decreased fleet levels. Selling, general and administrative costs decreased to 16.0% of revenue during the six months ended June 30, 2025 compared to 16.7% during the similar period in 2024, primarily due to a decrease in marketing costs and commissions. Vehicle interest costs decreased to 5.5% of revenue during the six months ended June 30, 2025 compared to 5.9% during the similar period in 2024, primarily due to decreased fleet levels and interest rates.

Adjusted EBITDA increased during the six months ended June 30, 2025 compared to the similar period in 2024, primarily due to lower per-unit fleet costs and approximately $4 million positive impact from currency exchange rate movements.

FINANCIAL CONDITION, LIQUIDITY AND CAPITAL RESOURCES

We present separately the financial data of our vehicle programs. These programs are distinct from our other activities as the assets under vehicle programs are generally funded through the issuance of debt that is collateralized by such assets. The income generated by these assets is used, in part, to repay the principal and interest associated with the debt. Cash inflows and outflows relating to the generation or acquisition of such assets and the principal debt repayment or financing of such assets are classified as activities of our vehicle programs. We believe it is appropriate to segregate the financial data of our vehicle programs because, ultimately, the source of repayment of such debt is the realization of such assets.

FINANCIAL CONDITION

The increase in total liabilities exclusive of liabilities under vehicle programs is primarily due to the increase in corporate indebtedness from the issuance of Senior Notes due June 2032. See “Liquidity and Capital Resources,” and Note 10 – Long-term Corporate Debt and Borrowing Arrangements to our Condensed Consolidated Financial Statements. The increases in both assets under vehicle programs and liabilities under vehicle programs is primarily due to the increase in the cost of our rental fleet. The decrease in total stockholders’ equity is primarily due to our net loss.

LIQUIDITY AND CAPITAL RESOURCES

Overview

Our principal sources of liquidity are cash on hand and our ability to generate cash through operations and financing activities, as well as available funding arrangements and committed credit facilities, each of which is discussed below.

In February 2025, we borrowed $500 million under a floating rate term loan due December 2025, which is part of our senior revolving credit facilities. The proceeds were primarily used to pay down fleet indebtedness. In June 2025, we fully repaid our outstanding borrowings under the floating rate term loan due 2025.

In April 2025, our Avis Budget Rental Car Funding (AESOP) LLC subsidiary amended and extended its asset-backed variable-funding financing facilities to increase its capacity. The proceeds from these borrowings were used to repay maturing vehicle-backed debt and the acquisition of rental cars in the United States.

In May 2025, we issued $600 million of 8.375% Senior Notes due June 2032. Net proceeds were used to repay our floating rate term loan due 2025 and a portion of our 5.750% Senior Notes due July 2027, with the remaining proceeds being used to repay outstanding fleet debt and for general corporate purposes.

In June 2025, we redeemed $100 million of our outstanding 5.750% Senior Notes due July 2027.

In July 2025, we amended our floating rate term loan, extending its maturity date from August 2027 to July 2032 and increasing the interest rate to SOFR plus 2.50%.

During 2025, our Avis Budget Rental Car Funding (AESOP) LLC subsidiary issued approximately $1,008 million of asset-backed notes with expected final payment dates ranging from August 2027 to August 2030 and a weighted average interest rate of 5.95%. The proceeds from these borrowings were used to fund the repayment of maturing vehicle-backed debt and the acquisition of rental cars in the United States.

Our Board of Directors has authorized the repurchase of up to approximately $8.1 billion of our common stock under a plan originally approved in 2013 and subsequently expanded most recently in February 2023 (the “Stock Repurchase Program”). Our stock repurchases may occur through open market purchases, privately negotiated transactions or trading plans pursuant to Rule 10b5-1 of the Securities Exchange Act of 1934, as amended. The amount and timing of specific repurchases are subject to market conditions, applicable legal requirements, restricted payment capacity under our debt instruments and other factors. The Stock Repurchase Program may be suspended, modified or discontinued at any time without prior notice. The Stock Repurchase Program has no set expiration or termination date. During the six months ended June 30, 2025, we did not repurchase shares of common stock under the Stock Repurchase Program. As of June 30, 2025, approximately $757 million of authorization remained available to repurchase common stock under the Stock Repurchase Program.

CASH FLOWS

The following table summarizes our cash flows:

Cash provided by operating activities during the six months ended June 30, 2025 is consistent with the similar period in 2024.

Cash used in investing activities during the six months ended June 30, 2025 increased when compared with the similar period in 2024, primarily due to the increase in our investment in vehicles.

Cash provided by financing activities during the six months ended June 30, 2025 increased when compared with the similar period in 2024, primarily due to the increase in our borrowings under vehicle programs.

DEBT AND FINANCING ARRANGEMENTS

As of June 30, 2025, we had approximately $26.0 billion of indebtedness, including corporate indebtedness of approximately $6.1 billion and debt under vehicle programs of approximately $19.9 billion. For information regarding our debt and borrowing arrangements, see Note 1 – Basis of Presentation, Note 10 – Long-term Corporate Debt and Borrowing Arrangements and Note 11 – Debt Under Vehicle Programs and Borrowing Arrangements to our Condensed Consolidated Financial Statements.

LIQUIDITY RISK

Our primary liquidity needs include the procurement of rental vehicles to be used in our operations, servicing of corporate and vehicle-related debt and the payment of operating expenses. The present intention of management is to reinvest the undistributed earnings of our foreign subsidiaries indefinitely into our foreign operations. Our primary sources of funding are operating revenue, cash received upon the sale of vehicles, borrowings under our vehicle-backed borrowing arrangements and our senior revolving credit facility, and other financing activities.

Our liquidity has in the past been, and could in the future be, negatively affected by any financial market disruptions, a worsening of the United States and worldwide economies or by increases in interest rates, which may result in unfavorable conditions in the mobility industry, in the asset-backed financing market and in the credit markets generally. We believe these factors have affected and could further affect the debt ratings assigned to us by credit rating agencies and the cost of our borrowings. Additionally, a worsening or prolonged downturn in the worldwide economy or a disruption in the credit markets could further impact our liquidity due to (i) decreased demand and pricing for vehicles in the used vehicle market, (ii) increased costs associated with, and/or reduced capacity or increased collateral needs, including due to a decrease in the fair value of our fleet, under, our financings, (iii) the adverse impact of vehicle manufacturers being unable or unwilling to honor their obligations to repurchase or guarantee the depreciation on the related program vehicles and (iv) disruption in our ability to obtain financing due to negative credit events specific to us or affecting the overall debt market.

As of June 30, 2025, we had $541 million of available cash and cash equivalents and access to $403 million of available borrowing capacity under our revolving credit facility, providing us with access to approximately $944 million of total liquidity.

Our liquidity position could also be negatively impacted if we are unable to remain in compliance with the consolidated first lien leverage ratio requirement and other covenants associated with our senior credit facilities and other borrowings. As of June 30, 2025, we were in compliance with the financial covenants governing our indebtedness. For additional information regarding our liquidity risks, see Part I, Item 1A, “Risk Factors” of our 2024 Form 10-K.

CONTRACTUAL OBLIGATIONS

Our future contractual obligations have not changed significantly from the amounts reported within our 2024 Form 10-K with the exception of our commitment to purchase vehicles, which decreased by approximately $4.0 billion from December 31, 2024, to approximately $2.3 billion as of June 30, 2025 due to existing fleet levels. Changes to our obligations related to corporate indebtedness and debt under vehicle programs are presented above within the section titled “Liquidity and Capital Resources—Debt and Financing Arrangements” and also within Note 10 – Long-term Corporate Debt and Borrowing Arrangements and Note 11 – Debt Under Vehicle Programs and Borrowing Arrangements to our Condensed Consolidated Financial Statements.

CRITICAL ACCOUNTING ESTIMATES

Accounting Policies

The results of the majority of our recurring operations are recorded in our financial statements using accounting policies that are not particularly subjective, nor complex. However, in presenting our financial statements in conformity with generally accepted accounting principles (GAAP), we are required to make estimates and assumptions that affect the amounts reported therein. Several of the estimates and assumptions we are required to make relate to matters that are inherently uncertain as they relate to future events and/or events that are outside of our control. If there is a significant unfavorable change to current conditions, it could result in a material adverse impact to our consolidated results of operations, financial position and liquidity. We believe that the estimates and assumptions we used when preparing our financial statements were the most appropriate at that time. Presented within the section titled “Critical Accounting Estimates” of our 2024 Form 10-K are the accounting policies (related to goodwill and other indefinite-lived intangible assets, vehicles, income taxes and public liability, property damage and other insurance liabilities) that we believe require subjective and complex judgments that could potentially affect reported results. There have been no significant changes to those accounting policies or our assessment of which accounting policies we would consider to be critical accounting policies.

New Accounting Standards

For detailed information regarding new accounting standards and their impact on our business, see Note 1 – Basis of Presentation to our Condensed Consolidated Financial Statements.

We are exposed to a variety of market risks, including changes in currency exchange rates, interest rates and fuel prices. We assess our market risks based on changes in interest and currency exchange rates utilizing a sensitivity analysis that measures the potential impact on earnings, fair values and cash flows based on a hypothetical 10% change (increase and decrease) in interest and foreign currency exchange rates. We used June 30, 2025 market rates to perform a sensitivity analysis separately for each of these market risk exposures. We have determined, through such analyses, that the impact of a 10% change in interest or currency exchange rates on our results of operations, balance sheet and cash flows would not be material. Additionally, we have commodity price exposure related to fluctuations in the price of unleaded fuel. We anticipate that such commodity risk will remain a market risk exposure for the foreseeable future. We determined that a 10% change in the price of unleaded fuel would not have a material impact on our earnings for the period ended June 30, 2025. For additional information regarding our long-term borrowings and financial instruments, see Note 10 – Long-term Corporate Debt and Borrowing Arrangements, Note 11 – Debt Under Vehicle Programs and Borrowing Arrangements and Note 16 – Financial Instruments to our Condensed Consolidated Financial Statements.

(a) Disclosure Controls and Procedures. Under the supervision and with the participation of our Chief Executive Officer and Chief Financial Officer, our management conducted an evaluation of the effectiveness of our disclosure controls and procedures (as such term is defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”)). Based on such evaluation, our Chief Executive Officer and Chief Financial Officer have concluded that our disclosure controls and procedures were effective as of June 30, 2025.

(b) Changes in Internal Control Over Financial Reporting. During the second quarter of 2025, there was no change in our internal control over financial reporting (as such term is defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

During the quarter ended June 30, 2025, we had no material developments to report with respect to our risk factors. For additional information regarding our risk factors, please refer to our 2024 Form 10-K.