# Tootsie Roll Industries Inc: Form 10-Q for the period ended Mar 31, 2024 - Company: [Tootsie Roll Industries Inc](/companies/tr.md) (CIK 98677) - Form: 10-Q - Filed: 2024-05-09 - Accepted by EDGAR: May 9, 2024, 19:00 ET - Period: 2024-03-31 - Accession: 0001558370-24-007567 - Inline XBRL: yes - Main document: https://www.sec.gov/Archives/edgar/data/98677/000155837024007567/tr-20240331x10q.htm - All documents and exhibits: https://www.sec.gov/Archives/edgar/data/98677/000155837024007567/ ## Figures reported in this filing Standardized XBRL line items for the period ended 2024-03-31. | Line item | Period | Value | XBRL concept | | --- | --- | ---: | --- | | Revenue | 3 months, 2024-01-01 to 2024-03-31 | $153.2m | us-gaap:RevenueFromContractWithCustomerExcludingAssessedTax | | Cost of revenue | 3 months, 2024-01-01 to 2024-03-31 | $103.1m | us-gaap:CostOfGoodsAndServicesSold | | Gross profit | 3 months, 2024-01-01 to 2024-03-31 | $50.0m | us-gaap:GrossProfit | | Selling, general and administrative | 3 months, 2024-01-01 to 2024-03-31 | $38.9m | us-gaap:SellingGeneralAndAdministrativeExpense | | Operating income | 3 months, 2024-01-01 to 2024-03-31 | $11.1m | us-gaap:OperatingIncomeLoss | | Income tax | 3 months, 2024-01-01 to 2024-03-31 | $4.3m | us-gaap:IncomeTaxExpenseBenefit | | Net income | 3 months, 2024-01-01 to 2024-03-31 | $15.8m | us-gaap:NetIncomeLoss | | Basic EPS | 3 months, 2024-01-01 to 2024-03-31 | $0.22 | us-gaap:EarningsPerShareBasic | | Operating cash flow | 3 months, 2024-01-01 to 2024-03-31 | $21.4m | us-gaap:NetCashProvidedByUsedInOperatingActivities | | Capital expenditure | 3 months, 2024-01-01 to 2024-03-31 | $4.5m | us-gaap:PaymentsToAcquirePropertyPlantAndEquipment | | Dividends paid | 3 months, 2024-01-01 to 2024-03-31 | $12.5m | us-gaap:PaymentsOfDividendsCommonStock | | Cash and equivalents | at 2024-03-31 | $64.9m | us-gaap:CashAndCashEquivalentsAtCarryingValue | | Current assets | at 2024-03-31 | $328.5m | us-gaap:AssetsCurrent | | Total assets | at 2024-03-31 | $1.09bn | us-gaap:Assets | | Current liabilities | at 2024-03-31 | $87.3m | us-gaap:LiabilitiesCurrent | | Shareholders' equity | at 2024-03-31 | $834.4m | us-gaap:StockholdersEquity | ## Management's discussion and analysis As filed, 26,065 characters. This financial review discusses the Company’s financial condition, results of operations, liquidity and capital resources and other matters. Dollars are presented in thousands, except per share amounts. This review should be read in conjunction with the accompanying Condensed Consolidated Financial Statements and related notes included in this Form 10-Q and with the Company’s Consolidated Financial Statements and related notes and Management’s Discussion and Analysis of Financial Condition and Results of Operations included in the Company’s Form 10-K for the year ended December 31, 2023 (the “2023 Form 10-K”). Net product sales were $151,464 in first quarter 2024 compared to $160,711 in first quarter 2023, a decrease of $9,247 or 5.8%. Domestic (U.S.) net product sales in first quarter 2024 decreased 7.2% compared to the corresponding period in the prior year, however, foreign net product sales, including exports to foreign markets, increased 9.8% compared to the corresponding period in the prior year. For first quarter 2024, domestic sales represented 90.1% of total consolidated net product sales. The Company faced a more challenging market in first quarter 2024 as customers and consumers became more resistant to higher price realization which was necessary to restore our margins. First quarter 2024 sales were also adversely affected by the timing of seasonal sales, primarily for Easter, between first quarter 2024 and fourth quarter 2023 when compared to the prior year comparative quarterly periods. In addition, first quarter 2024 sales were impacted by customer inventory adjustments, which adversely affected customer orders and sales in first quarter 2024. Product cost of goods sold was $102,732 in first quarter 2024 compared to $111,406 in first quarter 2023. Product cost of goods sold includes $365 and $230 of certain deferred compensation expenses in first quarter 2024 and 2023, respectively. These deferred compensation expenses principally resulted from the changes in the market value of investments and investment income from trading securities relating to compensation deferred in previous years and are not reflective of current operating results. Adjusting for the aforementioned, product cost of goods sold decreased from $111,176 in first quarter 2023 to $102,367 in first quarter 2024, a decrease of $8,809 or 7.9%. As a percentage of net product sales, adjusted product cost of goods sold was 67.6% and 69.2% in first quarter 2024 and 2023, respectively, a favorable decrease of 1.6 percentage points. First quarter 2024 gross profit margins benefited from higher price realization and improvements in plant manufacturing operating efficiencies. Although we did achieve improvement in gross profit margin, higher overall ingredient costs and increases in labor, employee benefits, and certain manufacturing costs offset some of the benefits of higher sales price realization in first quarter 2024. However, certain cost and expense reductions initiated by Company programs mitigated some of the cost increase in adjusted product cost of goods sold in first quarter 2024 compared to the corresponding period in the prior year. Our unit costs for ingredients, labor and benefits, and certain plant manufacturing costs continued to increase in first quarter 2024. Cocoa and chocolate costs have been moving significantly higher in the market, and we expect that these increases will have some adverse effects on our input costs and margins in 2024 and 2025. The Company uses the Last-In-First-Out (LIFO) method of accounting for inventory and costs of goods sold which results in lower current income taxes during such periods of increasing costs and higher inflation, but this method does charge the most current costs to cost of goods sold and thereby accelerates the realization of these higher costs. In response to increases in input costs in recent years, many companies in the consumer products industry have increased selling prices. We have implemented price increases as well during this period with the objective of improving sales price realization in order to recover our margin declines. We made progress in restoring our margins in 2023 and continue to do so in 2024. Although the Company continues to monitor its input costs, we are mindful of the effects and limits when passing on the above-discussed higher input costs to our customers as well as the final consumers of our products. Selling, marketing and administrative expenses were $38,918 in first quarter 2024 compared to $37,499 in first quarter 2023. Selling, marketing and administrative expenses include $6,925 and $4,117 of certain deferred compensation expenses in first quarter 2024 and 2023, respectively. As discussed above, these expenses principally result from changes in the market value of investments and investment income from trading securities relating to compensation deferred in previous years and are not reflective of current operating results. Adjusting for the aforementioned deferred compensation expenses, selling, marketing and administrative expenses decreased from $33,382 in first quarter 2023 to $31,993 in first quarter 2024, a decrease of $1,389 or 4.2%. As a percentage of net product sales, adjusted selling, marketing and administrative expenses increased from 20.8% in first quarter 2023 to 21.1% in first quarter 2024, an unfavorable increase of 0.3 percentage points as a percent of net product sales. These higher expenses as a percentage of sales reflect the adverse effects of lower sales as certain expenses are generally fixed and do not change significantly with changes in sales. Selling, marketing and administrative expenses include $13,616 and $16,233 for customer freight, delivery and warehousing expenses in first quarter 2024 and 2023, respectively, a decrease of $2,617 or 16.1%. These expenses were 9.0% and 10.1% of net product sales in first quarter 2024 and 2023, respectively. Customer freight and delivery unit costs, including the cost per pound shipped, was more favorable in first quarter 2024 compared to the corresponding period in 2023. Increased over-the-road truck availability in 2024 relative to tight freight markets over the past few years has resulted in a more competitive market and resulting lower costs. Earnings from operations were $11,110 in first quarter 2024 compared to $12,796 in first quarter 2023. Earnings from operations include $7,290 and $4,347 of certain deferred compensation expenses in first quarter 2024 and 2023, respectively, which is discussed above. Adjusting for these deferred compensation costs and expenses, adjusted earnings from operations were $18,400 and $17,143 in first quarter 2024 and 2023, respectively, an increase of $1,257 or 7.3%. As a percentage of net product sales, these adjusted operating earnings were 12.1% and 10.7% in first quarter 2024 and 2023, respectively, a favorable increase of 1.4 percentage points. Higher price realization as well as reductions of certain costs and expense as discussed above, was the principal driver of the aforementioned margin improvement in first quarter 2024 adjusted operating earnings. Other income, net was $9,032 in first quarter 2024 compared to $4,780 in first quarter 2023. Other income, net for first quarter 2024 and 2023 includes net gains and investment income of $7,290 and $4,347, respectively, on trading securities which provide an economic hedge of the Company’s deferred compensation liabilities on trading securities. The investment gains on trading securities in first quarter 2024 and 2023 reflect the overall changes in the equity markets during these periods. These changes in market values were substantially offset by a like amount of deferred compensation expense included in product cost of goods sold and selling, marketing, and administrative expenses in the respective periods as discussed above. Management believes the comparisons presented in the preceding paragraphs, after adjusting for changes in deferred compensation, are useful to our investors and other users of our financial information in assessing the operations of the Company. Other income, net for first quarter 2024 and 2023 includes investment income on available for sale securities of $1,862 and $1,163 in 2024 and 2023, respectively. The aforementioned increases in 2024 investment income on available for sale securities reflects the higher interest rate environment in 2024 as well as a higher average balance in the investment portfolio of available for sale securities in first quarter 2024 compared to first quarter 2023. Other income, net also includes pre-tax loss on foreign exchange of $20 and $744 in first quarter 2024 and 2023, respectively, which contributed to improved net earnings in first quarter 2024 when compared to first quarter 2023. The consolidated effective tax rates were 21.4% and 23.8 in first quarter 2024 and 2023, respectively. The lower effective income tax rate in first quarter 2024 reflects a reduction in state income taxes. Net earnings attributable to Tootsie Roll Industries, Inc. were $15,834 (after $1 net income attributed to non-controlling interests) in first quarter 2024 compared to $13,401 (after $7 net loss attributed to non-controlling interests) in first quarter 2023, and earnings per share were $0.22 and $0.19 in first quarter 2024 and 2023, respectively, an increase of $0.03 per share, or 15.8%. Earnings per share attributable to Tootsie Roll Industries, Inc. for first quarter 2024 benefited from the reduction in average shares outstanding resulting from purchases in the open market by the Company of its common stock during the preceding twelve months. Average shares outstanding decreased from 72,317 at first quarter 2023 to 71,417 at first quarter 2024. Goodwill and intangibles, principally trademarks, are assessed annually as of December 31 or whenever events or circumstances indicate that the carrying values may not be recoverable from future cash flows. The Company has not identified any triggering events, as defined, or other adverse information that would indicate a material impairment of its goodwill or intangibles in first quarter 2024. Although Company management has not identified any trigging events at this time relating to its intangibles, factors outlined in the Company’s risk factors discussed on Form 10-K for the year ended December 31, 2023, could change this assessment in the future. Beginning in 2012, the Company received periodic notices from the Bakery and Confectionery Union and Industry International Pension Fund (Plan), a multi-employer defined benefit pension plan for certain Company union employees, that the Plan’s actuary certified the Plan to be in “critical status”, as defined by the Pension Protection Act (PPA) and the Pension Benefit Guaranty Corporation (PBGC); and that a plan of rehabilitation was adopted by the trustees of the Plan in 2012. The Plan’s status was changed to “critical and declining status”, as defined by the PPA and PBGC, for the plan year beginning January 1, 2015, and this status continues to date. A designation of “critical and declining status” implies that the Plan is expected to become insolvent in the next 20 years. In 2016, the Company received new notices that the Plan’s trustees adopted an updated Rehabilitation Plan effective January 1, 2016, and all annual notices through 2023 have continued to classify the Plan in the “critical and declining status” category. Based on these updated notices, the Plan’s funded percentage (plan investment assets as a percentage of plan liabilities), as defined, were 49.4%, 48.5%, and 48.3% as of January 1, 2022, 2021, and 2020, respectively (these valuation dates are as of the beginning of each Plan year). These funded percentages are based on actuarial values, as defined, and do not reflect the actual market value of Plan investments as of these dates. If the market value of investments had been used as of January 1, 2022, the funded percentage would be 56.7% (not 49.4%). As of the January 1, 2022 valuation date (most recent valuation available), only 14% of Plan participants were current active employees, 55% were retired or separated from service and receiving benefits, and 31% were retired or separated from service and entitled to future benefits. The number of current active employee Plan participants as of January 1, 2022 fell 5% from the previous year and 10% over the past two years. When compared to the Plan valuation date of January 1, 2011 (just prior to the Plan being certified to be in “critical status”), current active employee participants have declined 54%, whereas participants who were retired or separated from service and receiving benefits increased 3% and participants who were retired or separated from service and entitled to future benefits increased 8%. The Company has been advised by the Plan that its withdrawal liability would have been $96,000, $104,300 and $99,300 if it had withdrawn from the Plan during 2022, 2021 and 2020, respectively (most recent information provided by the Plan). The aforementioned most recent decrease in the withdrawal liability as advised by the Plan was primarily driven by an increase in the PBGC interest rates used to value a portion of the liability as well as the positive market value investment performance in 2021. Not all mortality and certain other assumption changes made in 2022 have been fully updated in the calculation of the Company’s withdrawal liability had the Company withdrawn from the Plan during 2022. Updating these assumptions may result in a change in the Company’s withdrawal liability. The Company’s relative share of the Plan’s contribution base, driven by employer withdrawals, has increased in the last several years, and management believes that this trend could continue indefinitely and add upward pressure on the Company’s withdrawal liability. Based on the above, management believes that the Company’s withdrawal liability will likely increase further in future years. Based on the Company’s most recent actuarial estimates using the information provided by the Plan with respect to its 2022 withdrawal liability and certain provisions in ERISA and laws relating to withdrawal liability payments, management believes that the Company’s liability had the Company withdrawn in 2022 would likely be limited to twenty annual payments of $2,714 which have a present value in the range of $31,851 to $43,741 depending on the interest rate used to discount these payments. While the Company’s actuarial consultant did not believe that the Plan will suffer a future mass withdrawal (as defined) of participating employers, in the event of a mass withdrawal, the Company’s annual withdrawal payments would theoretically be payable in perpetuity. Based on the same actuarial estimates, had a mass withdrawal occurred in 2022, the present value of such perpetuities is in the range of $44,472 to $115,808 and would apply in the unlikely event that substantially all employers withdraw from the Plan. The aforementioned is based on a range of valuations and interest rates which the Company’s actuary has advised is provided under the statute. Should the Company actually withdraw from the Plan at a future date, a withdrawal liability, which could be higher than the above discussed amounts, could be payable to the Plan. In fourth quarter 2020, the Plan Trustees advised the Company that the surcharges would no longer increase annually and therefore be “frozen” at the rates and amounts in effect as of December 31, 2020 provided that the local bargaining union and the Company executed a formal consent agreement by March 31, 2021. The Trustees advised that they have concluded that continuing increases in surcharges would likely have a long-term adverse effect on the solvency of the Plan. The Trustees concluded that further increases would result in increasing financial hardships and withdrawals of participating employers, and that this change will not have a material effect on the Plan’s insolvency date. In first quarter 2021, the local bargaining union and the Company executed this agreement which resulted in the “freezing” of such surcharges as of December 31, 2020. The Company’s pension expense for this Plan for first quarter 2024 and 2023 was $704 and $865, respectively. The aforementioned expense includes surcharges of $248 and $305 for first quarter 2024 and 2023, respectively, as required under the amended plan of rehabilitation. The Company’s twelve months pension expense for this Plan for 2023 and 2022 was $3,516 and $3,510, respectively, which includes surcharges of $1,239 and $1,237, respectively. The Plan advised that they have submitted an application to the PBGC for Special Financial Assistance under the American Rescue Plan Act of 2021. Company management understands that this legislation would provide financial assistance from the PBGC to shore up financially distressed multi-employer plans to ensure that they can remain solvent and continue to pay benefits to retirees through 2051 without any reduction in retiree benefits. Nonetheless, the Company’s actuary believes that given the Plan’s projected insolvency within the next 20 years as well as other factors, that it still remains unclear if the Plan can remain solvent through the targeted date of 2051. The Company’s actuary also advised that the regulations under the aforementioned PBGC financial assistance could result in a higher Company withdrawal liability even with PBGC financial assistance. During second quarter 2023, the Company and the union concluded negotiations and entered into a new labor contract which expires in September 2027. Under terms of the union contract the Company is obligated to continue its participation in the Plan during the contract period. The Company is unable to determine the ultimate outcome of the above discussed multi-employer union pension matter and therefore is unable to determine the effects on its consolidated financial statements, but the ultimate outcome could have a material adverse effect on the Company’s consolidated results of operations or cash flows in one or more future periods. See also Note 7 of the Company’s Notes to Consolidated Financial Statements on Form 10-K for the year ended December 31, 2023 The Company is focused on the longer term and therefore is continuing to make investments in plant manufacturing operations to meet new consumer and customer product demands, achieve product quality improvements, expand capacity in certain product lines, and increase operational efficiencies in order to provide genuine value to consumers. LIQUIDITY AND CAPITAL RESOURCES Net cash flows provided by (used in) operating activities were $21,401 and $(7,482) in first quarter 2024 and 2023, respectively, a favorable increase of $28,883. The $28,883 increase in cash flows from operating activities from 2024 to 2023 principally reflects higher net earnings as discussed above and benefits from changes in working capital, primarily more favorable changes in accounts receivable and inventories during first quarter 2024 compared to first quarter 2023. The more favorable changes in accounts receivable also reflect changes in the Company’s payment terms for seasonal sales. Net cash (used in) provided by investing activities was $(20,002) in first quarter 2024 compared to $5,495 in first quarter 2023. Cash flows used in investing activities reflect $27,297 and $14,848 of purchases of available for sale securities during first quarter 2024 and 2023, respectively, and $12,655 and $25,874 of sales and maturities of available for sale securities during first quarter 2024 and 2023, respectively. First quarter 2024 and 2023 investing activities include capital expenditures of $4,494 and $5,049, respectively. The Company is evaluating a plant expansion, including both the addition and replacement of certain processing and packaging lines, to better meet its higher level of projected demand for certain products on a timelier and more cost effective basis. The Company believes that any plant expansion would take place over the next five years, but most of the actual expenditures would likely occur during the next three years. Company management believes that the total cost of this expansion, including new machinery, equipment and food processing infrastructure, will approximate $70,000 to $80,000. All capital expenditures have been and are expected to be funded from the Company’s cash flow from operations and internal sources including available for sale securities. The Company’s consolidated financial statements include bank borrowings of $1,050 and $1,060 at March 31, 2024 and 2023, respectively, all of which relate to its Spanish subsidiary. The Company had no other outstanding bank borrowings at March 31, 2024. Financing activities include Company common stock purchases and retirements of $0 and $1,604 in first quarter 2024 and 2023, respectively. Cash dividends of $12,491 and $12,291 were paid in first quarter 2024 and 2023, respectively. The Company’s current ratio (current assets divided by current liabilities) was 3.8 to 1 at March 31, 2024 compared to 3.6 to 1 at December 31, 2023 and 3.9 to 1 at March 31, 2023. Net working capital was $241,272 at March 31, 2024 compared to $245,763 and $227,168 at December 31, 2023 and March 31, 2023, respectively. Included in net working capital is cash and cash equivalents and short-term investments totaling $159,361 at March 31, 2024 compared to $171,422 and $123,872 at December 31, 2023 and March 31, 2023, respectively. In addition, long term investments, principally debt securities comprising corporate bonds, were $278,953 at March 31, 2024, as compared to $255,606 and $252,888 at December 31, 2023 and March 31, 2023, respectively. Aggregate cash and cash equivalents and short and long-term investments were $438,314, $427,028, and $376,760, at March 31, 2024, December 31, 2023 and March 31, 2023, respectively, including $95,957, $87,800, and $76,039 at March 31, 2024, December 31, 2023 and March 31, 2023, respectively, relating to trading securities which are used as an economic hedge for the Company’s deferred compensation liabilities. Investments in available for sale securities, primarily high quality corporate bonds, that matured during first quarter 2024 and 2023 were generally used in working capital or were replaced with debt securities of similar maturities. The net unrealized loss on available for sale investments was approximately $2,200 and $6,900 at March 31, 2024 and 2023, respectively, which principally reflects the increase in market interest rates since such securities were purchased. The Company expects to hold most of these securities to maturity and therefore does not expect to ultimately realize a substantial portion of the aforementioned unrealized losses (see also Item 3 below, QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK). The Company periodically contributes to a VEBA trust, managed and controlled by the Company, to fund the estimated future costs of certain employee health, welfare and other benefits. The Company added $20,000 in additional funding to the VEBA trust in 2023. No contribution was made during first quarter 2024. The Company is using these VEBA funds to pay the actual cost of such benefits through part or all of 2027. The VEBA trust held $19,258, $19,126 and $3,917 of aggregate cash and cash equivalents at March 31, 2024, December 31, 2023 and March 31, 2023, respectively. This asset value is included in prepaid expenses and long-term other assets in the Company’s Consolidated Statement of Financial Position. These assets are categorized as Level 2 within the fair value hierarchy. ACCOUNTING PRONOUNCEMENTS See Note 1 of the Company’s Condensed Consolidated Financial Statements. CRITICAL ACCOUNTING POLICIES AND ESTIMATES See Note 1 of the Company’s Condensed Consolidated Financial Statements for more information related to our use of estimates in the preparation of financial statements as well as information related to material changes in our significant accounting policies that were included in our 2023 Form 10-K. FORWARD-LOOKING STATEMENTS This discussion and certain other sections contain forward-looking statements that are based largely on the Company’s current expectations and are made pursuant to the safe harbor provision of the Private Securities Litigation Reform Act of 1995. Forward-looking statements can be identified by the use of words such as “anticipated,” “believe,” “expect,” “intend,” “estimate,” “project,” “plan” and other words of similar meaning in connection with a discussion of future operating or financial performance and are subject to certain factors, risks, trends and uncertainties that could cause actual results and achievements to differ materially from those expressed in the forward-looking statements. Such factors, risks, trends and uncertainties, which in some instances are beyond the Company’s control, include the ability to recover increases in input costs through price increases and restoring margins, the overall competitive environment in the Company’s industry, successful distribution and sell-through during Halloween and other seasons, the availability of cocoa and chocolate at reasonable prices given that these markets are significantly elevated and volatile, and changes in assumptions, judgments and risk factors discussed in our Annual Report on Form 10-K for the year ended December 31, 2023. The risk factors referred to above are believed to be significant factors, but not necessarily all of the significant factors that could cause actual results to differ from those expressed in any forward-looking statement. Readers are cautioned not to place undue reliance on such forward-looking statements, which are made only as of the date of this report. The Company undertakes no obligation to update such forward-looking statements. ## Market risk As filed, 2,221 characters. The Company is exposed to various market risks, including fluctuations in and sufficient availability of sugar, corn syrup, edible oils, including palm oils, cocoa, chocolate, dextrose, milk and whey, gum-base input ingredients, packaging, and fuel costs principally relating to freight and delivery fuel surcharges. The Company generally enters into annual supply contracts and hedges certain commodities (primarily sugar) to control and plan for such cost changes. The Company has experienced significant increases in its ingredient and packaging costs in 2022 and 2023, and more recently, the cocoa and chocolate markets have moved to unprecedented highs. The Company has entered into longer-range supply contracts for its cocoa and chocolate needs in 2024 and much of 2025 in order to insure supply and reduce the risk of further increases in these ingredients. Nonetheless, the cocoa market is experiencing unprecedented volatility and highs, and remains a risk for the intermediate term. The Company is exposed to exchange rate fluctuations in the Canadian dollar which is the currency used for a portion of the raw material and packaging material costs and all labor, benefits and local plant operating costs at its Canadian plants. The Company is exposed to exchange rate fluctuations in Mexico, Canada, and Spain where its subsidiaries sell products in their local currencies. The Company invests principally in corporate bonds (available for sale securities) with an average maturity of three to five years, to manage its interest rate risk. While the Company generally holds these investments to maturity, the Company would sell prior to maturity if it was considered beneficial to do so for tax-planning strategies or if the Company required the funds to finance a significant reinvestment in the Company, including an acquisition. The Company believes that the above discussed policies and programs limit the Company’s exposure to significant interest rate fluctuations. Other than the cocoa and chocolate market as discussed above, there have been no material changes in the Company’s market risks that would significantly affect the disclosures made in the Form 10-K for the year ended December 31, 2023. ## Controls and procedures As filed, 1,317 characters. Under the supervision and with the participation of Management, the Chief Executive Officer and Chief Financial Officer of the Company have evaluated the effectiveness of the design and operation of the Company’s disclosure controls and procedures as of March 31, 2024 and, based on their evaluation, the Chief Executive Officer and Chief Financial Officer have concluded that these controls and procedures are effective. Disclosure controls and procedures are designed to ensure that information required to be disclosed by the Company in the reports that it files or submits under the Securities Exchange Act of 1934 is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission’s rules and forms. Disclosure controls and procedures are also designed to ensure that information is accumulated and communicated to Management, including the Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure. There has been no change in the Company’s internal control over financial reporting that occurred during the Company’s fiscal quarter ended March 31, 2024 that has materially affected, or is reasonably likely to materially affect, the Company’s internal control over financial reporting. Filed May 9, 2024. Source: SEC EDGAR, the filing index for accession 0001558370-24-007567. Last ingested by Listed: Oct 24, 2026, 14:54 ET. No prices; not investment advice.