Krispy Kreme Inc

The following comparisons are historical results and are not indicative of future results, which could differ materially from the historical financial information presented.

Quarter ended September 29, 2024 compared to the Quarter ended October 1, 2023

The following table presents our unaudited condensed consolidated results of operations for the quarter ended September 29, 2024 and the quarter ended October 1, 2023:

The following table presents a further breakdown of total net revenue and organic revenue growth by segment for the quarter ended September 29, 2024 compared to the quarter ended October 1, 2023:

Total net revenue declined $27.5 million, or approximately 6.8%, primarily due to the $43.5 million reduction associated with the divestiture of Insomnia Cookies in July 2024, partially offset by $5.2 million from shops acquired in the third quarter of fiscal 2024. Organic revenue growth of $12.6 million, or approximately 3.5%, was driven by the continued and successful execution of our omni-channel growth strategy globally, high impact brand activations, and product premiumization efforts. We have continued to increase availability through 2,417, or 18.0%, additional Global Points of Access, primarily including new capital-light DFD Doors, and via digital channels. Additionally, we have continued to take pricing actions to offset cost inflation, with average pricing increasing approximately 4%, partially offset by transaction volume declines from the third quarter of fiscal 2023 to the third quarter of fiscal 2024.

Our U.S. segment net revenue declined $31.8 million, or approximately 12.2%, primarily due to the $43.5 million reduction associated with the divestiture of Insomnia Cookies in July 2024, partially offset by $6.2 million from shops acquired in the third quarter of fiscal 2024. Organic revenue increased $5.5 million, or approximately 2.5%, from the third quarter of fiscal 2023 to the third quarter of fiscal 2024, driven by Points of Access growth of 969, or 13.7%, compared to the third quarter of fiscal 2023 and growth in Krispy Kreme branded digital channel revenues of 21%. Our organic growth has been supplemented by effective pricing increases with average pricing increasing approximately 4% from the third quarter of fiscal 2023 to the third quarter of fiscal 2024, leading to an increase in the average transaction size, but partially offset by transaction volume declines.

Our International segment net revenue grew $4.6 million, or approximately 3.7%, from the third quarter of fiscal 2023 to the third quarter of fiscal 2024, in spite of foreign currency translation impacts of $1.8 million primarily from a weaker Mexican peso. International organic revenue grew $5.3 million, or approximately 4.2%, from the third quarter of fiscal 2023 to the third quarter of fiscal 2024, driven primarily by increased pricing of approximately 4% and Points of Access growth of 1,312, or 31.8%, compared to the third quarter of fiscal 2023. International organic revenue growth was partially offset by lower transaction volume compared to last year, particularly in the U.K.

Our Market Development segment net revenue declined $0.3 million, or approximately 1.5%, due to the $2.1 million impact of franchise acquisitions in the third quarter of fiscal 2024. Market Development organic revenue grew $1.8 million, or approximately 8.6%, from the third quarter of fiscal 2023 to the third quarter of fiscal 2024 due to the continued expansion of our international franchise business.

Product and distribution costs (exclusive of depreciation and amortization): Product and distribution costs decreased $5.5 million, or 5.4%, from the third quarter of fiscal 2023 to the third quarter of fiscal 2024, largely in line with and attributable to the same factors as our revenue decline. As a percentage of revenue, product and distribution costs increased by approximately 30 basis points from 24.9% in the third quarter of fiscal 2023 to 25.2% in the third quarter of fiscal 2024, primarily due to sales mix shift, increased DFD returns, and impacts from increased discounting.

Operating expenses: Operating expenses decreased $3.4 million, or 1.7%, from the third quarter of fiscal 2023 to the third quarter of fiscal 2024, driven mainly by a $21.2 million impact from the divestiture of Insomnia Cookies partially offset by increases of $17.8 million in operating expenses for the global Krispy Kreme brand. Operating expenses as a percentage of revenue increased by approximately 260 basis points, from 48.0% in the third quarter of fiscal 2023 to 50.6% in the third quarter of fiscal 2024, primarily due to the impact of discounting and lower transaction volumes on operating leverage.

Selling, general and administrative expense: Selling, general and administrative (“SG&A”) expense increased $2.8 million, or 4.1%, from the third quarter of fiscal 2023 to the third quarter of fiscal 2024. As a percentage of revenue, SG&A expense increased approximately 190 basis points, from 16.8% in the third quarter of fiscal 2023 to 18.7% in the third quarter of fiscal 2024, primarily driven by $11.3 million related to preparing for and executing the divestiture of Insomnia Cookies (including share-based compensation expenses), partially offset by cost control initiatives and lower employee cash incentive compensation by $3.6 million in the third quarter of fiscal 2024.

Other income, net: Other income, net of $5.8 million in the third quarter of fiscal 2024 was driven by a gain of $5.6 million related to the remeasurement of equity method investments to fair value immediately prior to the acquisition of Krispy Kreme shops referenced in Note 2, Acquisitions and Divestitures to the Condensed Consolidated Financial Statements included in Item 1 of Part I of this Quarterly Report on Form 10-Q. Other income, net of $1.1 million in the third quarter of fiscal 2023 was primarily driven by business interruption insurance recoveries for the Krispy Kreme U.S. business.

Depreciation and amortization expense: Depreciation and amortization expense decreased $0.6 million, or 2.0%, from the third quarter of fiscal 2023 to the third quarter of fiscal 2024. As a percentage of revenue, depreciation and amortization expense increased approximately 40 basis points, from 7.9% in the third quarter of fiscal 2023 to 8.3% in the third quarter of fiscal 2024, primarily driven by higher capital spend and assets placed into service to support the Hub and Spoke model evolution, including preparing for the acceleration of our U.S. national DFD rollout discussed in “Significant Events and Transactions” above.

Interest expense, net: Interest expense, net increased $3.5 million, or 27.1%, from the third quarter of fiscal 2023 to the third quarter of fiscal 2024. The increase primarily relates to a $3.0 million impact from the maturity of our prior interest rate swap agreements in the second quarter of fiscal 2024. We have entered into a cumulative $500.0 million notional new interest rate swap agreements as of the end of the third quarter of fiscal 2024, which will mature in March 2028. Refer to Note 7, Derivative Instruments to the Condensed Consolidated Financial Statements included in Item 1 of Part I of this Quarterly Report on Form 10-Q for further information.

Gain on divestiture of Insomnia Cookies: In the third quarter of fiscal 2024, we entered into an agreement to sell our controlling interest in Insomnia Cookies in exchange for cash proceeds. Following the transaction, we owned approximately 34.7% of Insomnia Cookies and lost the ability to exercise control. Accordingly, we deconsolidated Insomnia Cookies and recorded a gain on divestiture of $87.1 million. Refer to Note 2, Acquisitions and Divestitures to the Condensed Consolidated Financial Statements included in Item 1 of Part I of this Quarterly Report on Form 10-Q for further information.

Income tax expense: Income tax expense was$17.7 million in the third quarter of fiscal 2024 compared to$24.4 million in the third quarter of fiscal 2023. The decrease of $6.7 million was primarily driven by lower pre-tax results compared to the third quarter of fiscal 2023, offset by the tax impact of the gain on the divestiture of Insomnia Cookies.

Net (loss)/income attributable to noncontrolling interest: Net loss attributable to noncontrolling interest was$2.0 million in the third quarter of fiscal 2024, while net income attributable to noncontrolling interest was $0.2 million in the third quarter of fiscal 2023. The fluctuation of$2.2 millionwas driven by losses allocated to certain consolidated subsidiaries, particularly WKS Krispy Kreme.

Results of Operations by Segment – Quarter ended September 29, 2024 compared to the Quarter ended October 1, 2023

The following table presents Adjusted EBITDA by segment for the periods indicated:

(1) Refer to “Key Performance Indicators and Non-GAAP Measures” above for a reconciliation of Adjusted EBITDA to net income.

U.S. segment Adjusted EBITDA decreased $8.3 million, or 37.5%, with margin decline of 250 basis points to 6.1% in the third quarter of fiscal 2024 compared to the third quarter of fiscal 2023, primarily driven by a decline in operating leverage, incremental vehicle accident claims costs of $2.8 million, and certain McDonald’s start-up costs, partially offset by pricing and productivity benefits from Hub and Spoke expansion.

International segment Adjusted EBITDA decreased $2.2 million, or 8.7%, with margin decline of 240 basis points to 17.4% in the third quarter of fiscal 2024 compared to the third quarter of fiscal 2023, as lower transaction volumes continued to impact operating leverage for the International equity markets. International Adjusted EBITDA margin improved 10 basis points compared to the second quarter of fiscal 2024 as actions taken to reduce costs delivered improved sequential results.

Market Development segment Adjusted EBITDA increased $1.5 million, or 14.8%, with margin expansion of 770 basis points to 54.2% in the third quarter of fiscal 2024 compared to the third quarter of fiscal 2023, driven mainly by savings in SG&A and marketing costs, and the continued expansion of our international franchise business.

Three Quarters ended September 29, 2024 compared to the Three Quarters ended October 1, 2023

The following table presents our unaudited condensed consolidated results of operations for the three quarters ended September 29, 2024 and the three quarters ended October 1, 2023:

The following table presents a further breakdown of total net revenue and organic revenue growth by segment for the three quarters ended September 29, 2024 compared to the three quarters ended October 1, 2023:

Total net revenue growth of $26.2 million, or approximately 2.1%, and organic revenue growth of $72.2 million, or approximately 6.1%, was driven by the continued and successful execution of our growth strategy deploying our omni-channel approach globally. We have continued to increase availability through 2,417 additional Global Points of Access, including 2,483 new capital-light DFD Doors, and via digital channels. Additionally, we have continued to take pricing actions to offset cost inflation, with average pricing increasing approximately 6%, partially offset by transaction volume declines from the first three quarters of fiscal 2023 to the first three quarters of fiscal 2024.

Our U.S. segment net revenue grew $4.7 million, or approximately 0.6%, and organic revenue increased $48.3 million, or approximately 6.4%, fromthe first three quarters of fiscal 2023 tothe first three quarters of fiscal 2024. Growth was driven primarily by 969 additional Points of Access compared to the first three quarters of fiscal 2023 and growth in Krispy Kreme branded digital channel revenues of 26%. Our organic growth has been supplemented by effective pricing increases with average pricing increasing approximately 7% from the first three quarters of fiscal 2023 to the first three quarters of fiscal 2024, leading to an increase in the average transaction size, but partially offset by transaction volume declines.

Our International segment net revenue grew $22.1 million, or approximately 6.2%, fromthe first three quarters of fiscal 2023 tothe first three quarters of fiscal 2024, in spite of foreign currency translation impacts of $1.3 million. International organic revenue grew$22.3 million, or approximately 6.2%, fromthe first three quarters of fiscal 2023 to the first three quarters of fiscal 2024, driven primarily by increased pricing of approximately 5% and Points of Access growth of 1,312 compared to the first three quarters of fiscal 2023. International organic revenue growth was partially offset by the lower transaction volume compared to last year.

Our Market Development segment net revenue declined$0.6 million, or approximately 0.8%, due to the$2.1 million impact of acquisitions in the third quarter of fiscal 2024. Market Development organic revenue grew$1.6 million, or approximately 2.3%, from the first three quarters of fiscal 2023 to the first three quarters of fiscal 2024 due to the continued expansion of our international franchise business.

Product and distribution costs (exclusive of depreciation and amortization): Product and distribution costs decreased $19.6 million, or 5.9%, fromthe first three quarters of fiscal 2023 tothe first three quarters of fiscal 2024. As a percentage of revenue, product and distribution costs decreased by approximately 210 basis points from 26.7% in the first three quarters of fiscal 2023 to 24.6% in the first three quarters of fiscal 2024, primarily due to benefits from pricing actions taken to offset materials cost inflation of approximately 4%. Additionally, we benefited from the exit of the lower-margin Branded Sweet Treats business, and lapping the related $10.4 million inventory write-offs and employee severance expenses incurred during the first three quarters of fiscal 2023.

Operating expenses: Operating expenses increased $33.8 million, or 5.9%, from the first three quarters of fiscal 2023 to the first three quarters of fiscal 2024, driven mainly by labor cost inflation of approximately 5% and investments to support growth, with shop and delivery labor expenses increasing $20.8 million. Operating expenses as a percentage of revenue increased approximately 170 basis points, from 46.6% in the first three quarters of fiscal 2023 to 48.3% in the first three quarters of fiscal 2024, primarily due to the impact of lower transaction volumes on operating leverage. This has been partially offset by efficiency benefits from Hub and Spoke expansion.

Selling, general and administrative expense: SG&A expense increased $14.8 million, or 7.7%, from the first three quarters of fiscal 2023 to the first three quarters of fiscal 2024. As a percentage of revenue, SG&A expense increased approximately 80 basis points, from 15.6% in the first three quarters of fiscal 2023 to 16.4% in the first three quarters of fiscal 2024, primarily driven by $14.2 million related to preparing for and executing the divestiture of Insomnia Cookies (including share-based compensation expenses), partially offset by lower employee cash incentive compensation by $7.6 million and cost control initiatives in the first three quarters of fiscal 2024.

Other income, net: Other income, net of $6.4 million in the first three quarters of fiscal 2024 was driven by a gain of $5.6 million related to the remeasurement of equity method investments to fair value immediately prior to the acquisition of Krispy Kreme shops referenced in Note 2, Acquisitions and Divestitures to the Condensed Consolidated Financial Statements included in Item 1 of Part I of this Quarterly Report on Form 10-Q. Other income, net of $6.1 million in the first three quarters of fiscal 2023 was primarily driven by a gain on a sale-leaseback transaction of $9.6 million, partially offset by property, plant and equipment impairments associated with the exit of the Branded Sweet Treats business.

Depreciation and amortization expense: Depreciation and amortization expense increased $10.4 million, or 11.7%, from the first three quarters of fiscal 2023 to the first three quarters of fiscal 2024. As a percentage of revenue, depreciation and amortization expense increased approximately 70 basis points, from 7.2% in the first three quarters of fiscal 2023 to 7.9% in the first three quarters of fiscal 2024, primarily driven by higher capital spend and assets placed into service to support the Hub and Spoke model evolution, including preparing for the acceleration of our U.S. national DFD rollout discussed in “Significant Events and Transactions” above.

Interest expense, net: Interest expense, net increased $7.6 million, or 20.6%, from the first three quarters of fiscal 2023 to the first three quarters of fiscal 2024. The increase was primarily driven by a higher average debt balance in the first three quarters of fiscal 2024 and also includes a $3.0 million impact from the maturity of our prior interest rate swap agreements in the second quarter of fiscal 2024. We have entered into a cumulative $500.0 million notional new interest rate swap agreements as of the end of the third quarter of fiscal 2024, which will mature in March 2028.

Gain on divestiture of Insomnia Cookies: In the third quarter of fiscal 2024, we entered into an agreement to sell our controlling interest in Insomnia Cookies in exchange for cash proceeds. Following the transaction, we owned approximately 34.7% of Insomnia Cookies and lost the ability to exercise control. Accordingly, we deconsolidated Insomnia Cookies and recorded a gain on divestiture of $87.1 million. Refer to Note 2, Acquisitions and Divestitures to the Condensed Consolidated Financial Statements included in Item 1 of Part I of this Quarterly Report on Form 10-Q for further information.

Income tax expense: Income tax expense was $18.3 million in the first three quarters of fiscal 2024, while income tax expense was $17.1 million in the first three quarters of fiscal 2023. The fluctuation of $1.2 million from the first three quarters of fiscal 2023 to the first three quarters of fiscal 2024 was primarily driven by lower pre-tax results compared to the first three quarters of fiscal 2023, offset by the tax impact of the gain on the divestiture of Insomnia Cookies.

Results of Operations by Segment – Three Quarters ended September 29, 2024 compared to the Three Quarters ended October 1, 2023

The following table presents Adjusted EBITDA by segment for the periods indicated:

(1) Refer to “Key Performance Indicators and Non-GAAP Measures” above for a reconciliation of Adjusted EBITDA to net income.

U.S. segment Adjusted EBITDA increased $0.3 million, or 0.4%, with margin flat at 11.0% in the first three quarters of fiscal 2024 compared to the first three quarters of fiscal 2023, as benefits from lapping the exited Branded Sweet Treats business, productivity benefits from Hub and Spoke expansion, and lower employee cash incentive compensation were offset by impacts from lower transaction volume on operating leverage and incremental vehicle accident claims costs.

International segment Adjusted EBITDA decreased $3.7 million, or 5.4%, with margin decline of 200 basis points to 17.1% in the first three quarters of fiscal 2024 compared to the first three quarters of fiscal 2023, as lower transaction volume continued to impact operating leverage for the International equity markets.

Market Development segment Adjusted EBITDA increased $4.2 million, or 13.1%, with margin expansion of 670 basis points to 53.8% in the first three quarters of fiscal 2024 compared to the first three quarters of fiscal 2023, driven mainly by savings in SG&A and the continued expansion of our international franchise business.

Capital Resources and Liquidity

Our principal sources of liquidity to date have included cash from operating activities, cash on hand, amounts available under our credit facility, vendor financing including our SCF programs and structured payables programs, and proceeds from the divestiture of Insomnia Cookies. Our primary use of liquidity is to fund the cash requirements of our business operations, including working capital needs, capital expenditures, acquisitions, and other commitments.

Our future obligations primarily consist of our debt and lease obligations, as well as commitments under ingredient and other forward purchase contracts. As of December 31, 2023, we had the following future obligations:

•An aggregate principal amount of $837.5 million outstanding under the 2023 Facility;

•An aggregate principal amount of $11.0 million outstanding under short-term, uncommitted lines of credit;

•Non-cancellable future minimum operating lease payments totaling $759.2 million;

•Non-cancellable future minimum finance lease payments totaling $63.3 million; and

•Purchase commitments under ingredient and other forward purchase contracts of $130.5 million.

As of September 29, 2024, the principal amount outstanding under our 2023 Facility was $798.8 million. The decrease from the 2023 Facility balance as of December 31, 2023 was driven by our use of a portion of the proceeds from the divestiture of Insomnia Cookies to pay down outstanding balances associated with the 2023 Facility. Refer to Note 9, Long-Term Debt to the Condensed Consolidated Financial Statements included in Item 1 of Part I of this Quarterly Report on Form 10-Q for further information.

We had cash and cash equivalents of $25.4 million and $38.2 million as of September 29, 2024 and December 31, 2023, respectively. We believe that our existing cash and cash equivalents and available borrowing capacity under our credit facilities will be sufficient to fund our operating and capital needs for at least the next twelve months. Our assessment of the period of time through which our financial resources will be adequate to support our operations could vary because of, and our future capital requirements will depend on, many factors, including our growth rate, the timing and extent of spending on business acquisitions, the growth of our presence in new markets, and the expansion of our omni-channel model in existing markets. We may enter into arrangements in the future to acquire or invest in complementary businesses, services, and technologies. We have based this estimate on assumptions that may prove to be wrong, and we could use our available capital resources sooner than we currently expect. We may be required to seek additional equity or debt financing. In the event that additional financing is required from outside sources, we may not be able to raise it on terms acceptable to us or at all. If we are unable to raise additional capital when desired, or if we cannot expand our operations or otherwise capitalize on our business opportunities because we lack sufficient capital, our business, results of operations, and financial condition would be adversely affected.

Cash Flows

We typically generate cash from operations and have substantial credit availability and capacity to fund operating and discretionary spending such as capital expenditures and debt repayments. Our requirement for working capital is not significant because our consumers pay us in cash or on debit or credit cards at the time of the sale and we are able to sell many of our inventory items before payment is due to the vendor of such items. The following table and discussion present, for the periods indicated, a summary of our key cash flows from operating, investing, and financing activities:

Operating Activities

Cash provided by operations totaled $18.8 million for the first three quarters of fiscal 2024, a decrease of $25.2 million compared with the first three quarters of fiscal 2023. This decrease was primarily due to less operating income generated in the first three quarters of fiscal 2024 compared to the first three quarters of fiscal 2023, as well as our receipt of $7.7 million cash proceeds from the settlement of interest rate swap derivative contracts in the first three quarters of fiscal 2023 discussed in Note 7, Derivative Instruments to the Condensed Consolidated Financial Statements included in Item 1 of Part I of this Quarterly Report on Form 10-Q.

Investing Activities

Cash provided by investing activities totaled $44.7 million for the first three quarters of fiscal 2024, a fluctuation of $123.1 million compared with the first three quarters of fiscal 2023. The cash provided by investing activities was primarily due to the receipt of net proceeds of $117.6 million from the divestiture of Insomnia Cookies and an additional $45.0 million from the repayment of an intercompany loan due from Insomnia Cookies in the first three quarters of fiscal 2024. These proceeds were partially offset by our use of $26.6 million cash for the acquisition of franchised shops in the first three quarters of fiscal 2024, discussed in Note 2, Acquisitions and Divestitures to the Condensed Consolidated Financial Statements included in Item 1 of Part 1 of this Quarterly Report on Form 10-Q.

We expect to incur additional capital expenditures related to our accelerated U.S. expansion, including via QSR channels such as the McDonald’s U.S. national rollout discussed in “Significant Events and Transactions” above. We plan to support much of this expansion using existing capacity, and do not expect a significant increase in capital expenditures as a percentage of revenues in fiscal 2024. While we do expect U.S. capital expenditures as a percentage of revenues to increase in fiscal 2025 and 2026 associated with acceleration of the overall U.S. business expansion, these capital expenditures support the overall DFD and retail channels and are not directly attributable to, or required by, the agreement with McDonald’s. We are not subject to capital expenditure commitments or obligations specific to the relationship with McDonald’s.

Financing Activities

Cash used for financing activities totaled $77.3 million for the first three quarters of fiscal 2024, a fluctuation of $104.9 million compared with the first three quarters of fiscal 2023. The cash used for financing activities was primarily driven by the pay down of long term debt balances with a portion of the net proceeds received from the divestiture of Insomnia Cookies.

Proceeds from our structured payables resulted in a net $48.7 million change in cash flows (net proceeds from structured payables of $34.2 million in the first three quarters of fiscal 2024 compared to net payments on structured payables of $14.5 million in the first three quarters of fiscal 2023). The proceeds from structured payables in the first three quarters of fiscal 2024 primarily related to our purchase of all shares held by the noncontrolling interest holders in consolidated subsidiary Awesome Doughnut. Refer to Note 8, Vendor Finance Programs to the Condensed Consolidated Financial Statements included in Item 1 of Part I of this Quarterly Report on Form 10-Q for further information.

Debt

Our long-term debt obligations consist of the following:

2023 Secured Credit Facility

The 2023 Facility consists of a $300.0 million senior secured revolving credit facility and a term loan with an original principal amount of $700.0 million. Refer to Note 9, Long-Term Debt to the Condensed Consolidated Financial Statements included in Item 1 of Part I of this Quarterly Report on Form 10-Q for further information.

Under the terms of the 2023 Facility, we are subject to a requirement to maintain a leverage ratio of less than 5.00 to 1.00 as of the end of each quarterly Test Period (as defined in the 2023 Facility) through maturity in March 2028. The leverage ratio under the 2023 Facility is defined as the ratio of (a) Total Indebtedness (as defined in the 2023 Facility, which includes all debt and finance lease obligations) minus unrestricted cash and cash equivalents to (b) a defined calculation of Adjusted EBITDA (2023 Facility Adjusted EBITDA) for the most recently ended Test Period. Our leverage ratio was 3.51 to 1.00 as of the end of the third quarter of fiscal 2024 compared to 3.48 to 1.00 as of the end of fiscal 2023.

We were in compliance with the financial covenants related to the 2023 Facility as of September 29, 2024 and expect to remain in compliance over the next 12 months. If we are unable to meet the 2023 Facility financial or other covenants in future periods, it may negatively impact our liquidity by limiting our ability to draw on the revolving credit facility, could result in the lenders accelerating the maturity of such indebtedness and foreclosing upon the collateral pledged thereunder, and could require the replacement of the 2023 Facility with new sources of financing, which there is no guaranty we could secure.

Short-Term Lines of Credit

We are party to two agreements with existing lenders providing for short-term, uncommitted lines of credit up to $25.0 million. Borrowings under these short-term lines of credit are payable to the lenders on a revolving basis for tenors up to a maximum of three months and are subject to an interest rate of adjusted term SOFR plus a credit spread adjustment of 0.10% plus a margin of 1.75%.

Critical Accounting Policies and Estimates

Our Condensed Consolidated Financial Statements and the related notes thereto included elsewhere in this Quarterly Report on Form 10-Q have been prepared in conformity with GAAP. The preparation of the Condensed Consolidated Financial Statements requires the use of judgments, estimates, and assumptions that affect the reported amounts of assets, liabilities, revenues, and expenses as well as related disclosures. We consider an accounting judgment, estimate, or assumption to be critical when (1) the estimate or assumption is complex in nature or requires a high degree of judgment and (2) the use of different judgments, estimates, and assumptions could have a material impact on our Condensed Consolidated Financial Statements. Actual results could differ from the estimates made by management.

There have been no material changes to our critical accounting policies and estimates as compared to those described in “Management’s Discussion and Analysis of Financial Condition and Results of Operations” set forth in our Annual Report on Form 10-K for the year ended December 31, 2023.

New Accounting Pronouncements

Refer to Note 1, Description of Business and Summary of Significant Accounting Policies to the Condensed Consolidated Financial Statements included in Item 1 of Part I of this Quarterly Report on Form 10-Q, for a detailed description of recent accounting pronouncements.