# Designer Brands Inc.: Form 10-Q for the period ended May 4, 2024

- Company: [Designer Brands Inc.](/companies/dbi.md) (CIK 1319947)
- Form: 10-Q
- Filed: 2024-06-04
- Accepted by EDGAR: Jun 4, 2024, 16:08 ET
- Period: 2024-05-04
- Accession: 0001319947-24-000035
- Inline XBRL: yes
- Main document: https://www.sec.gov/Archives/edgar/data/1319947/000131994724000035/dsw-20240504.htm
- All documents and exhibits: https://www.sec.gov/Archives/edgar/data/1319947/000131994724000035/

## Figures reported in this filing

Standardized XBRL line items for the period ended 2024-05-04.

| Line item | Period | Value | XBRL concept |
| --- | --- | ---: | --- |
| Revenue | 3 months, 2024-02-04 to 2024-05-04 | $746.6m | us-gaap:Revenues |
| Gross profit | 3 months, 2024-02-04 to 2024-05-04 | $245.1m | us-gaap:GrossProfit |
| Selling, general and administrative | 3 months, 2024-02-04 to 2024-05-04 | $238.6m | us-gaap:SellingGeneralAndAdministrativeExpense |
| Operating income | 3 months, 2024-02-04 to 2024-05-04 | $9.4m | us-gaap:OperatingIncomeLoss |
| Income tax | 3 months, 2024-02-04 to 2024-05-04 | −$3.2m | us-gaap:IncomeTaxExpenseBenefit |
| Net income | 3 months, 2024-02-04 to 2024-05-04 | $783.0k | us-gaap:NetIncomeLoss |
| Diluted EPS | 3 months, 2024-02-04 to 2024-05-04 | $0.01 | us-gaap:EarningsPerShareDiluted |
| Basic EPS | 3 months, 2024-02-04 to 2024-05-04 | $0.01 | us-gaap:EarningsPerShareBasic |
| Diluted shares (weighted) | 3 months, 2024-02-04 to 2024-05-04 | 59,470,000 shares | us-gaap:WeightedAverageNumberOfDilutedSharesOutstanding |
| Operating cash flow | 3 months, 2024-02-04 to 2024-05-04 | −$19.7m | us-gaap:NetCashProvidedByUsedInOperatingActivities |
| Capital expenditure | 3 months, 2024-02-04 to 2024-05-04 | $15.9m | us-gaap:PaymentsToAcquirePropertyPlantAndEquipment |
| Dividends paid | 3 months, 2024-02-04 to 2024-05-04 | $2.9m | us-gaap:PaymentsOfDividends |
| Cash and equivalents | at 2024-05-04 | $43.4m | us-gaap:CashAndCashEquivalentsAtCarryingValue |
| Current assets | at 2024-05-04 | $838.9m | us-gaap:AssetsCurrent |
| Total assets | at 2024-05-04 | $2.16bn | us-gaap:Assets |
| Current liabilities | at 2024-05-04 | $649.5m | us-gaap:LiabilitiesCurrent |
| Total liabilities | at 2024-05-04 | $1.80bn | us-gaap:Liabilities |
| Long-term debt | at 2024-05-04 | $469.3m | us-gaap:LongTermDebt |
| Current portion of debt | at 2024-05-04 | $6.8m | us-gaap:LongTermDebtCurrent |
| Shareholders' equity | at 2024-05-04 | $358.5m | us-gaap:StockholdersEquityIncludingPortionAttributableToNoncontrollingInterest |

## Management's discussion and analysis

As filed, 24,738 characters.

### EXECUTIVE OVERVIEW AND TRENDS IN OUR BUSINESS

For the first quarter of 2024, net sales increased 0.6% and total comparable sales decreased 2.5% compared to the same period last year. During the first quarter of 2024, net sales from Owned Brands represented 24.5% of consolidated net sales, down from 27.8% for the same period last year. Gross profit as a percentage of net sales for the first quarter of 2024 was 80 basis points higher when compared to the same period last year, primarily due to improvements from the Brand Portfolio segment as we achieved significant improvements in product costing and did not have the same level of closeout sales as we did in the first quarter of 2023 as we were managing through excess inventory from last year's acquired brands.

Beginning in 2024, we changed how the Brand Portfolio segment sources certain Owned Brands for the U.S. Retail segment by transacting using a wholesale model, where intersegment sales and cost of sales are recorded, whereas in 2023 and prior we transacted on a commission model, where intersegment sales were based on a percentage of product cost. This change results in an increase in Brand Portfolio intersegment net sales, cost of sales, gross profit, and gross profit as a percentage of net sales and a corresponding increase in the amount of eliminated intersegment net sales, cost of sales, and gross profit with no impact to consolidated net sales and cost of sales.

### EFFECTS OF GLOBAL ECONOMIC CONDITIONS

During the first quarter of 2024, our comparable sales declined as we experienced lower traffic and a decrease in the number of units per transaction. We believe this is a result of ongoing concern among consumers of negative and/or uncertain economic conditions, most notably the growing concerns of a potential recession, fluctuations in interest rates, inflationary pressures, changes in employment levels, and significant foreign currency volatility. Consumer spending on discretionary items, including our products, generally declines during periods of economic uncertainty, when disposable income is reduced, or when there is a reduction in consumer confidence. We are unable to predict the severity of macroeconomic uncertainty, whether or when such circumstances may improve or worsen, or the full impact such circumstances could have on our business. These factors ultimately could require us to enact mitigating operating efficiency measures that could have a material adverse effect on our business, operations, and results of operations.

### FINANCIAL SUMMARY AND OTHER KEY METRICS

For the three months ended May 4, 2024:

- Net sales increased to $746.6 million from $742.1 million for the same period last year.
- Gross profit as a percentage of net sales was 32.8% compared to 32.0% for the same period last year.
- Net income attributable to Designer Brands Inc. was $0.8 million, or $0.01 per diluted share, which included net after-tax charges of $4.0 million, or $0.07 per diluted share, primarily related to restructuring and integration costs. For the three months ended April 29, 2023, net income attributable to Designer Brands Inc. was $11.4 million, or $0.17 per diluted share, which included net after-tax charges of $2.8 million, or $0.04, primarily related to the CEO transition, restructuring, integration, and acquisition costs, partially offset by the valuation change on deferred tax assets.

***Comparable Sales Performance Metric-*** The following table presents the percent change in comparable sales for each segment and in total:

| Change in comparable sales: | Three months ended May 4, 2024 | April 29, 2023 |
| --- | ---: | ---: |
| U.S. Retail segment | **(2.3)%** | (11.6)% |
| Canada Retail segment | **(4.9)%** | 2.9% |
| Brand Portfolio segment - direct-to-consumer channel | **(1.7)%** | 8.3% |
| Total | **(2.5)%** | (10.4)% |

18

We consider the percent change in comparable sales from the same previous year period, a primary metric commonly used throughout the retail industry, to be an important measurement for management and investors of the performance of our direct-to-consumer businesses. We include in our comparable sales metric sales from stores in operation for at least 14 months at the beginning of the applicable year. Stores are added to the comparable base at the beginning of the year and are dropped for comparative purposes in the quarter in which they are closed. Comparable sales include the e-commerce sales of the U.S. Retail and Canada Retail segments. For calculating comparable sales in 2024, periods in 2023 are shifted by one week to compare similar calendar weeks. Comparable sales for the Canada Retail segment exclude the impact of foreign currency translation and are calculated by translating current period results at the foreign currency exchange rate used in the comparable period of the prior year. Comparable sales include the e-commerce net sales of the Brand Portfolio segment from the direct-to-consumer e-commerce sites for Vince Camuto and Topo. Net sales from the direct-to-consumer e-commerce sites for Keds and Hush Puppies will be added to the comparable base for the Brand Portfolio segment beginning with the second quarter of 2024 and the third quarter of 2024, respectively. Stores added as a result of the Rubino acquisition that will have been in operation for at least 14 months at the beginning of 2025, along with its e-commerce sales, will be added to the comparable base beginning with the second quarter of 2025. The calculation of comparable sales varies across the retail industry and, as a result, the calculations of other retail companies may not be consistent with our calculation.

***Number of Stores-*** As of May 4, 2024 and April 29, 2023, we had the following number of stores:

|  | May 4, 2024 | April 29, 2023 |
| --- | ---: | ---: |
| U.S. Retail segment - DSW stores | **500** | 499 |
| Canada Retail segment: |  |  |
| The Shoe Company stores | **122** | 114 |
| DSW stores | **25** | 25 |
| Rubino stores | **28** | — |
|  | **175** | 139 |
| Total number of stores | **675** | 638 |

19

### RESULTS OF OPERATIONS

### FIRST QUARTER OF 2024 COMPARED WITH FIRST QUARTER OF 2023

*(amounts in thousands, except per share amounts)*

| May 4, 2024 | Three months ended Amount | % of Net Sales | April 29, 2023 Amount | % of Net Sales | Change Amount% |  |
| --- | ---: | ---: | ---: | ---: | ---: | ---: |
| Net sales | **$746,596** | **100.0%** | $742,082 | 100.0% | $4,514 | 0.6% |
| Cost of sales | **(501,527)** | **(67.2)** | (504,343) | (68.0) | 2,816 | (0.6)% |
| Gross profit | **245,069** | **32.8** | 237,739 | 32.0 | 7,330 | 3.1% |
| Operating expenses | **(238,551)** | **(32.0)** | (220,119) | (29.6) | (18,432) | 8.4% |
| Income from equity investments | **2,864** | **0.5** | 2,331 | 0.2 | 533 | 22.9% |
| Impairment charges | **—** | **—** | (341) | — | 341 | NM |
| Operating profit | **9,382** | **1.3** | 19,610 | 2.6 | (10,228) | (52.2)% |
| Interest expense, net | **(11,561)** | **(1.6)** | (6,597) | (0.9) | (4,964) | 75.2% |
| Non-operating expenses, net | **(143)** | **—** | (334) | — | 191 | (57.2)% |
| Income (loss) before income taxes | **(2,322)** | **(0.3)** | 12,679 | 1.7 | (15,001) | NM |
| Income tax benefit (provision) | **3,207** | **0.4** | (1,306) | (0.2) | 4,513 | NM |
| Net income | **885** | **0.1** | 11,373 | 1.5 | (10,488) | (92.2)% |
| Net loss (income) attributable to redeemable noncontrolling interest | **(102)** | **—** | 42 | — | (144) | NM |
| Net income attributable to Designer Brands Inc. | **$783** | **0.1%** | $11,415 | 1.5% | $(10,632) | (93.1)% |
| Earnings per share attributable to Designer Brands Inc.: |  |  |  |  |  |  |
| Basic earnings per share | **$0.01** |  | $0.18 |  | $(0.17) | (94.4)% |
| Diluted earnings per share | **$0.01** |  | $0.17 |  | $(0.16) | (94.1)% |
| Weighted average shares used in per share calculations: |  |  |  |  |  |  |
| Basic shares | **57,464** |  | 64,371 |  | (6,907) | (10.7)% |
| Diluted shares | **59,470** |  | 67,042 |  | (7,572) | (11.3)% |

NM - Not meaningful

### NET SALES

The following table summarizes net sales by segment:

*(dollars in thousands)*

| Segment net sales: | Three months ended May 4, 2024 Amount | % of Segment Net Sales | April 29, 2023 Amount | % of Segment Net Sales | Change Amount% |  | Comparable Sales |
| --- | ---: | ---: | ---: | ---: | ---: | ---: | ---: |
| U.S. Retail | **$621,367** | **79.6%** | $612,886 | 80.7% | $8,481 | 1.4% | (2.3)% |
| Canada Retail | **55,512** | **7.1** | 53,955 | 7.1 | 1,557 | 2.9% | (4.9)% |
| Brand Portfolio | **104,130** | **13.3** | 92,983 | 12.2 | 11,147 | 12.0% | (1.7)% |
| Total segment net sales | **781,009** | **100.0%** | 759,824 | 100.0% | 21,185 | 2.8% | (2.5)% |
| Elimination of intersegment net sales | **(34,413)** |  | (17,742) |  | (16,671) | 94.0% |  |
| Consolidated net sales | **$746,596** |  | $742,082 |  | $4,514 | 0.6% |  |

For the three months ended May 4, 2024, net sales increased in the U.S. Retail segment primarily due to added net sales of $23.3 million due to the calendar shift as a result of 2023 containing an additional week, offset by the decrease in comparable sales. The decrease in comparable sales for the U.S. Retail segment was largely driven by a decrease in comparable average sales amounts per transaction of 3% due to lower units per transaction, partially offset by an increase in comparable transactions of approximately 1% as conversion rates more than offset lower traffic. Net sales increased in the Canada Retail segment also due to the calendar shift as well as the impact of new stores opened since the end of the first quarter of 2023, partially offset by a decrease in comparable sales. The increase in net sales for the Brand Portfolio segment was primarily due to a change in how we source certain Owned Brands for the U.S. Retail segment from a commission model, where sales are based on a percentage of product cost, to a wholesale model, where sales and cost of sales are recorded. This change also resulted in the increase in intersegment net sales that are eliminated.

### GROSS PROFIT

The following table summarizes gross profit by segment:

*(dollars in thousands)*

| Segment gross profit: | Three months ended May 4, 2024 Amount | % of Segment Net Sales | April 29, 2023 Amount | % of Segment Net Sales | Change Amount% |  | Basis Points |
| --- | ---: | ---: | ---: | ---: | ---: | ---: | ---: |
| U.S. Retail | **$198,455** | **31.9%** | $196,814 | 32.1% | $1,641 | 0.8% | (20) |
| Canada Retail | **17,385** | **31.3%** | 17,174 | 31.8% | 211 | 1.2% | (50) |
| Brand Portfolio | **33,477** | **32.1%** | 22,085 | 23.8% | 11,392 | 51.6% | 830 |
| Total segment gross profit | **249,317** | **31.9%** | 236,073 | 31.1% | 13,244 | 5.6% | 80 |
| Net recognition (elimination) of intersegment gross profit | **(4,248)** |  | 1,666 |  | (5,914) |  |  |
| Consolidated gross profit | **$245,069** | **32.8%** | $237,739 | 32.0% | $7,330 | 3.1% | 80 |

The increase in gross profit for the U.S. Retail and Canada Retail segments was primarily driven by the increase in net sales during the three months ended May 4, 2024 over the same period last year. Gross profit as a percentage of net sales decreased for the U.S. Retail segment when compared to the same period last year primarily due to a change in mix of products sold, whereas the decrease for the Canada Retail segment was primarily due to the increase in store occupancy costs with new stores and renewed leases resulting in slight increases in rent. The increase in gross profit for the Brand Portfolio segment was primarily driven by higher margin rates on wholesale sales as well as the transition of certain Owned Brands sourced for the U.S. Retail segment under a wholesale model as discussed above, which also resulted in the net elimination of intersegment gross profit during the first quarter of 2024 as compared to the net recognition of intersegment gross profit for the same period last year (refer to the table below). Gross profit as a percentage of net sales increased for the Brand Portfolio segment with the transition of certain Owned Brands sourced for the U.S. Retail segment under a wholesale model, as well as significant improvements we achieved in product costing and a lower level of closeout sales than the first quarter of 2023 as we managed through excess inventory from last year's acquired brands.

The net recognition (elimination) of intersegment gross profit consisted of the following:

*(in thousands)*

| Intersegment recognition and elimination activity: | Three months ended May 4, 2024 | April 29, 2023 |
| --- | ---: | ---: |
| Elimination of net sales recognized by Brand Portfolio segment | **$(34,413)** | $(17,742) |
| Cost of sales: |  |  |
| Elimination of cost of sales recognized by Brand Portfolio segment | **24,093** | 13,211 |
| Recognition of intersegment gross profit for inventory previously purchased that was subsequently sold to external customers during the current period | **6,072** | 6,197 |
|  | **$(4,248)** | $1,666 |

### OPERATING EXPENSES

For the three months ended May 4, 2024, operating expenses increased by $18.4 million over the same period last year, primarily driven by an increase in incentive compensation as we did not recognize incentive compensation last year based on the performance of the business, an increase in marketing expense as we invested more in brand awareness for the newly acquired brands in the Brand Portfolio segment, and higher store selling expenses in line with the increase in retail sales. Operating expenses, as a percentage of net sales, increased 240 basis points over the same period last year due to the increase in operating expenses being greater than the increase in net sales.

### INTEREST EXPENSE, NET

For the three months ended May 4, 2024, interest expense, net, increased by $5.0 million over the same period last year, primarily driven by overall higher interest rates on our debt, with higher rates on the ABL Revolver over the same period last year, and the addition of the Term Loan.

### INCOME TAXES

For the three months ended May 4, 2024 and April 29, 2023, our effective tax rate was 138.1% and 10.3%, respectively. The high effective tax rate for the three months ended May 4, 2024 was due to discrete tax benefits, primarily state tax planning initiatives and release of federal tax reserves no longer deemed necessary, that approximated the amount of loss before income taxes and the impact of permanent non-deductible compensation. The low effective tax rate for the three months ended April 29, 2023 was primarily due to net discrete tax benefits, including federal and state valuation allowance adjustments, partially offset by permanent non-deductible compensation.

### LIQUIDITY AND CAPITAL RESOURCES

### OVERVIEW

Our primary ongoing operating cash flow requirements are for inventory purchases, payments on lease obligations and licensing royalty commitments, other working capital needs, capital expenditures, and debt service. Our working capital and inventory levels fluctuate seasonally. On April 8, 2024, we acquired Rubino for $16.7 million in cash, funded with available cash and borrowings on the ABL Revolver. On June 3, 2024, we received $46.9 million from the Internal Revenue Service representing the final amount due, plus interest, as a result of the Coronavirus Aid, Relief, and Economic Security Act. We intend to use these proceeds to pay down debt.

We are committed to a cash management strategy that maintains liquidity to adequately support the operation of the business, pursue our growth strategy, and withstand unanticipated business volatility, including the impacts of the global economic conditions on our results of operations. We believe that cash generated from our operations, together with our current levels of cash, as well as the availability under our ABL Revolver, are sufficient to maintain our ongoing operations, support seasonal working capital requirements, fund acquisitions and capital expenditures, repurchase common shares under our share repurchase program, and meet our debt service obligations over the next 12 months and beyond.

The following table presents the key categories of our condensed consolidated statements of cash flows:

*(in thousands)*

|  | Three months ended May 4, 2024 | April 29, 2023 | Change |
| --- | ---: | ---: | ---: |
| Net cash provided by (used in) operating activities | **$(19,680)** | $22,546 | $(42,226) |
| Net cash used in investing activities | **(28,203)** | (123,935) | 95,732 |
| Net cash provided by financing activities | **42,323** | 93,507 | (51,184) |
| Effect of exchange rate changes on cash balances | **(179)** | (315) | 136 |
| Net decrease in cash and cash equivalents | **$(5,739)** | $(8,197) | $2,458 |

### OPERATING CASH FLOWS

For the three months ended May 4, 2024, we had net cash used in operations as compared to net cash provided by operations for the same period last year. This change was largely driven by higher spend on working capital as we increased our investment in inventories, partially offset by no incentive compensation for 2023 being paid in the first quarter of 2024 whereas we did pay incentive compensation for 2022 in the first quarter of 2023, and the decrease in net income recognized in the three months ended May 4, 2024 over the same period last year after adjusting for non-cash activity, including depreciation and amortization and stock-based compensation activity. As of May 4, 2024, our inventories remain below the amount as of April 29, 2023. Also, during the first quarter of 2023, much of the inventory buildup came from the acquisition of Keds, which is included in investing cash flows. Other changes in working capital were the result of timing of payments with the calendar shift.

### INVESTING CASH FLOWS

For the three months ended May 4, 2024, net cash used in investing activities was primarily due to the acquisition of the Rubino business for $16.7 million and capital expenditures of $15.9 million relating to infrastructure and IT projects and new stores, including relocations. For the three months ended April 29, 2023, net cash used in investing activities was primarily due to the acquisition of the Keds business of $109.4 million and capital expenditures of $14.4 million relating to infrastructure and IT projects and store relocation and improvements.

### FINANCING CASH FLOWS

For the three months ended May 4, 2024, net cash provided by financing activities was primarily due to the net receipts of $50.2 million from our ABL Revolver, which was primarily used to fund our working capital investments and the acquisition of Rubino, partially offset by payments of $3.3 million for taxes for stock-based compensation shares withheld and $2.9 million for dividends. For the three months ended April 29, 2023, net cash provided by financing activities was primarily due to net receipts of $109.4 million from our ABL Revolver, which was used primarily to fund the Keds business acquisition, partially offset by payments of $11.8 million for taxes for stock-based compensation shares withheld.

### DEBT

***ABL Revolver-*** The ABL Revolver provides a revolving line of credit of up to $600.0 million, including a Canadian sub-limit of up to $60.0 million, a $75.0 million sub-limit for the issuance of letters of credit, a $60.0 million sub-limit for swing-loan advances for U.S. borrowings, and a $6.0 million sub-limit for swing-loan advances for Canadian borrowings. In addition, the ABL Revolver includes a FILO Term Loan of up to $30.0 million. The FILO Term Loan may be repaid in full, but not in part, so long as certain payment conditions are satisfied. Once repaid, no portion of the FILO Term Loan may be reborrowed. The ABL Revolver, which matures in 2027, may be used to provide funds for working capital, capital expenditures, share repurchases, other expenditures, and permitted acquisitions as defined by the credit facility agreement. The amount of credit available is limited to a borrowing base formulated on, among other things, a percentage of the book value of eligible inventory and credit card receivables, as reduced by certain reserves. As of May 4, 2024, the revolving line of credit (excluding the FILO Term Loan) had a borrowing base of $514.0 million, with $321.3 million in outstanding borrowings and $4.9 million in letters of credit issued, resulting in $187.8 million available for borrowings.

***Term Loan-*** On June 23, 2023, we entered into a Term Loan and have since borrowed the maximum aggregate of $135.0 million. The Term Loan matures at the earliest of the date the ABL Revolver matures (currently March 2027) or five years from closing of the Term Loan (June 2028).

***Debt Covenants-*** The ABL Revolver required us to maintain a fixed charge coverage ratio covenant of not less than 1:1 when availability is less than the greater of $47.3 million or 10.0% of the maximum borrowing amount. At any time that liquidity is less than $100.0 million, the Term Loan requires a maximum consolidated net leverage ratio as of the last day of each fiscal month, calculated on a trailing twelve-month basis, of (1) 2.25 to 1.00 for any trailing twelve-month period through February 3, 2024, and (2) 2.50 to 1.00 thereafter. Testing of the consolidated net leverage ratio ends after liquidity has been greater than or equal to $100.0 million for a period of 45 consecutive days. The ABL Revolver and the Term Loan also contain customary covenants restricting certain activities, including limitations on our ability to sell assets, engage in acquisitions, enter into transactions involving related parties, incur additional debt, grant liens on assets, pay dividends or repurchase stock, and make certain other changes. There are specific exceptions to these covenants including, in some cases, upon satisfying specified payment conditions based on availability. As of May 4, 2024, we were in compliance with all financial covenants contained in the ABL Revolver and the Term Loan.

Refer to Note 10, *Debt*, of the condensed consolidated financial statements of this Form 10-Q for further information about our debt arrangements.

### PLANS FOR CAPITALIZED COSTS

During 2024, we expect to spend approximately $65.0 million to $75.0 million that will be capitalized for property and equipment and implementation costs for cloud computing arrangements accounted for as service contracts, $17.4 million of which was spent during the three months ended May 4, 2024. Our future investments will depend primarily on the number of stores we open and remodel, infrastructure and IT projects that we undertake, and the timing of these expenditures.

### RECENT ACCOUNTING PRONOUNCEMENTS

The information related to recent accounting pronouncements as set forth in Note 1, *Description of Business and Significant Accounting Policies - Recently Issued Accounting Pronouncements*, of the condensed consolidated financial statements included in this Form 10-Q is incorporated herein by reference.

### CRITICAL ACCOUNTING POLICIES AND ESTIMATES

The preparation of our condensed consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, and disclosure of commitments and contingencies at the date of the condensed consolidated financial statements and reported amounts of revenue and expenses during the reporting period. We base these estimates and judgments on factors we believe to be relevant, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. The process of determining significant estimates is fact-specific and takes into account factors such as historical experience, current and expected economic conditions, product mix, and in some cases, actuarial and valuation techniques. We constantly re-evaluate these significant factors and make adjustments where facts and circumstances dictate. While we believe that the factors considered provide a meaningful basis for the accounting policies applied in the preparation of the condensed consolidated financial statements, we cannot guarantee that our estimates and assumptions will be accurate. As the determination of these estimates requires the exercise of judgment, actual results may differ from those estimates, and such differences may be material to our condensed consolidated financial statements. There have been no material changes to the application of critical accounting policies and estimates disclosed in our 2023 Form 10-K.

## Market risk

As filed, 231 characters.

We have market risk exposure related to interest rates and foreign currency exchange rates. There have been no material changes in our primary risk exposures or management of market risks from those disclosed in our 2023 Form 10-K.

## Controls and procedures

As filed, 962 characters.

### EVALUATION OF DISCLOSURE CONTROLS AND PROCEDURES

We, under the supervision and with the participation of our management, including our Chief Executive Officer and Chief Financial Officer, performed an evaluation of the effectiveness of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the "Exchange Act")). Based on that evaluation, our Chief Executive Officer and Chief Financial Officer concluded, as of the end of the period covered by this Form 10-Q, that such disclosure controls and procedures were effective.

### CHANGES IN INTERNAL CONTROL OVER FINANCIAL REPORTING

No change was made in our internal control over financial reporting, as such term is defined in Exchange Act Rules 13a-15(f)

and 15d -15(e), during our last fiscal quarter that has materially affected, or is reasonably likely to materially affect, our internal

control over financial reporting.

## Risk factors

As filed, 159 characters.

As of the date of this filing, there have been no material changes to the risk factors as set forth in Part I, Item 1A., *Risk Factors*, in our 2023 Form 10-K.

Filed Jun 4, 2024.
Source: SEC EDGAR, the filing index for accession 0001319947-24-000035. Last ingested by Listed: Nov 3, 2026, 19:27 ET. No prices; not investment advice.