Howmet Aerospace 10-Q 2024-03-31

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

For the Quarterly Period Ended March 31, 2024

OR

Commission File Number 1-3610

HOWMET AEROSPACE INC.

(Exact name of registrant as specified in its charter)

201 Isabella Street, Suite 200, Pittsburgh, Pennsylvania 15212-5872

(Address of principal executive offices) (Zip code)

Investor Relations 412-553-1950

Office of the Secretary 412-553-1940

(Registrant’s telephone numbers, including area code)

Securities registered pursuant to Section 12(b) of the Act:

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ✓ No

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ✓ No

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No x

As of April 29, 2024, there were 408,183,459 shares of common stock, par value $1.00 per share, of the registrant outstanding.

TABLE OF CONTENTS

PART I – FINANCIAL INFORMATION

Howmet Aerospace Inc. and subsidiaries

Statement of Consolidated Operations (unaudited)

(in millions, except per-share amounts)

The accompanying notes are an integral part of the consolidated financial statements.

Howmet Aerospace Inc. and subsidiaries

Statement of Consolidated Comprehensive Income (unaudited)

(in millions)

The accompanying notes are an integral part of the consolidated financial statements.

Howmet Aerospace Inc. and subsidiaries

Consolidated Balance Sheet (unaudited)

(in millions)

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(U.S. dollars in millions, except per share amounts)

The following Management’s Discussion and Analysis of Financial Condition and Results of Operations (“MD&A”) is intended to help the reader understand our results of operations and financial condition. The MD&A is provided as a supplement to, and should be read in conjunction with, our consolidated financial statements and notes thereto included in Part I, Item 1 (Financial Statements and Supplementary Data) of this Form 10-Q.

Overview

Howmet is a global leader in lightweight metals engineering and manufacturing. Howmet’s innovative, multi-material products, which include nickel, titanium, aluminum, and cobalt, are used worldwide in the aerospace (commercial and defense), commercial transportation, and industrial and other markets.

In the first quarter of 2024, the Company derived approximately 51% of its revenue from products sold to the commercial aerospace market which is less than the pre-pandemic 2019 annual rate of approximately 60%. Aircraft production in the commercial aerospace industry continues to recover based on increases in demand for narrow body and wide body aircraft. We expect commercial aerospace wide body demand to grow faster than narrow body demand on a production percentage basis. Quality control issues at The Boeing Company (“Boeing”) are expected to negatively impact narrow body and wide body production rates in the near term. For instance, the Federal Aviation Administration stated that it will not approve production rate increases or additional production lines for the Boeing 737 MAX until it is satisfied that Boeing is in full compliance with required quality control procedures. Boeing production levels have a material impact on the financial performance of Howmet. The timing and level of future aircraft builds by original equipment manufacturers (“OEM”) are subject to changes and uncertainties, which may cause our future results to differ from prior periods due to changes in product mix in certain segments.

For additional information regarding the ongoing risks related to our business, see section Part I, Item 1A, “Risk Factors” in the Company’s Annual Report on Form 10-K for the year ended December 31, 2023.

Results of Operations

Earnings Summary:

Sales. Sales were $1,824 in the first quarter of 2024 compared to $1,603 in the first quarter of 2023. The increase of $221, or 14%, in the first quarter of 2024 was primarily due to higher volumes from the commercial aerospace, defense aerospace, and industrial and other markets, and favorable product pricing.

Cost of goods sold (“COGS”). COGS as a percentage of Sales was 70.7% in the first quarter of 2024 compared to 72.6% in the first quarter of 2023. The decrease in the first quarter of 2024 was primarily due to higher volumes and favorable product pricing, partially offset by increased net headcount in the Engine Products, Fastening Systems and Engineered Structures segments, in support of expected revenue increases. There were no COGS charges in the first quarter of 2024 related to fires that occurred at a Fastening Systems plant in France in 2019 (the “France Plant Fire”) and a mechanical failure resulting in substantial heat and fire-related damage to equipment at the Forged Wheel’s cast house in Barberton, Ohio in the third quarter of 2022 (the “Barberton Cast House Incident”), compared to total COGS charges of $4 in the first quarter of 2023, related to the France Plant Fire and Barberton Cast House Incident. The Company is negotiating resolution of the insurance claims related to the France Plant Fire and Barberton Cast House Incident.

Selling, general administrative, and other expenses (“SG&A”). SG&A expenses were $88 in the first quarter of 2024 compared to $75 in the first quarter of 2023. The increase of $13, or 17%, in the first quarter of 2024 was primarily due to higher employment and legal costs.

Restructuring and other charges. Restructuring and other charges were less than $1 in the first quarter of 2024 compared to $1 in the first quarter of 2023. Restructuring and other charges for the first quarter of 2024 were primarily due to a gain on the sale of assets at a small U.K. manufacturing facility in Engines Products of $1, partially offset by exit related costs, including accelerated depreciation, of $1. Restructuring and other charges for the first quarter of 2023 were primarily due to exit related costs, including accelerated depreciation, of $2, partially offset by a reversal of $1 for a layoff reserve related to a prior period.

See Note D to the Consolidated Financial Statements in Part I, Item I of this Form 10-Q for additional detail.

Interest expense, net. Interest expense, net was $49 in the first quarter of 2024 compared to $57 in the first quarter of 2023. The decrease of $8, or 14%, in the first quarter of 2024 was primarily due to a reduced average level of long-term debt.

See Note N to the Consolidated Financial Statements in Part I, Item I of this Form 10-Q for additional detail related to the Company’s debt.

Loss on debt redemption. Debt redemption or tender premiums include the cost to redeem or repurchase certain of the Company’s notes at a price which may be equal to the greater of the principal amount or the sum of the present values of the

remaining scheduled payments, discounted using a defined treasury rate plus a spread, or a price based on the market price of its notes. There was no loss on debt redemption in the first quarter of 2024 compared to $1 in the first quarter of 2023, which was due to the debt premiums paid on the early partial redemption of the 5.125% Notes due October 2024 in the first quarter of 2023.

See Note N to the Consolidated Financial Statements in Part I, Item I of this Form 10-Q for additional detail related to the Company’s debt.

Other expense, net. Other expense, net was $17 in the first quarter of 2024 compared to $7 in the first quarter of 2023. The increase of $10 in the first quarter of 2024 was primarily due to a year over year increase in foreign currency losses of $5 and an increase from net realized and unrealized losses of $3. Non-service related net periodic benefit costs related to defined benefit plans is expected to increase by approximately $5 for the full year 2024 versus 2023.

Provision for income taxes. The estimated annual effective tax rate, before discrete items, applied to ordinary income was 21.7% in the first quarter of 2024 compared to 23.4% in the first quarter of 2023. The tax rate including discrete items was 19.8% in the first quarter of 2024 compared to 32.7% in the first quarter of 2023. A discrete net tax benefit of $7 was recorded in the first quarter of 2024 compared to a discrete tax charge of $21, which included the income tax reserve recorded as a result of the French tax litigation (See Note P to the Consolidated Financial Statements in Part I, Item I of this Form 10-Q for reference), in the first quarter of 2023. The 2024 estimated annual effective tax rate is lower than the 2023 rate primarily due to a U.S. tax benefit recognized for foreign tax credits in 2024 and lower net U.S. tax on Global Intangible Low-Taxed Income and other foreign earnings.

See Note G to the Consolidated Financial Statements in Part I, Item I of this Form 10-Q for additional detail.

Net income. Net income was $243, or $0.59 per diluted share, in the first quarter of 2024 compared to $148, or $0.35 per diluted share, in the first quarter of 2023. The increase of $95 in the first quarter of 2024 was primarily due to higher volumes in the commercial aerospace and defense aerospace markets, favorable product pricing, and a reduction in interest expense due to lower long-term debt levels.

Segment Information

The Company’s operations consist of four worldwide reportable segments: Engine Products, Fastening Systems, Engineered Structures, and Forged Wheels. Segment performance under Howmet’s management reporting system is evaluated based on a number of factors; however, the primary measure of performance is Segment Adjusted EBITDA. Howmet’s definition of Segment Adjusted EBITDA (Earnings before interest, taxes, depreciation, and amortization) is net margin plus an add-back for depreciation and amortization. Net margin is equivalent to Sales minus the following items: Cost of goods sold; Selling, general administrative, and other expenses; Research and development expenses; and Provision for depreciation and amortization. Special items, including Restructuring and other charges, are excluded from Net margin and Segment Adjusted EBITDA. Segment Adjusted EBITDA may not be comparable to similarly titled measures of other companies. Differences between the total segment and consolidated totals are in Corporate (See Note C to the Consolidated Financial Statements in Part I, Item 1 of this Form 10-Q for a description of each segment).

On March 3, 2024, Howmet and the United Autoworkers at our Cleveland, Ohio location approved a new five-year collective bargaining agreement, covering approximately 750 employees within our Engineered Structures and Forged Wheels segments. The agreement positions our Cleveland location to continue to offer market competitive wages and benefits. The new agreement expires on February 28, 2029.

The Company has aligned its operations consistent with how the Chief Executive Officer assesses operating performance and allocates capital.

Engine Products

Third-party sales for the Engine Products segment increased $90, or 11%, in the first quarter of 2024 compared to the first quarter of 2023, primarily due to higher volumes in the commercial aerospace, defense aerospace, and oil and gas markets.

Segment Adjusted EBITDA for the Engine Products segment increased $37, or 17%, in the first quarter of 2024 compared to the first quarter of 2023, primarily due to higher volumes in the commercial aerospace, defense aerospace, and oil and gas markets. The segment absorbed approximately 435 net headcount in the first quarter of 2024, in support of expected revenue increases, resulting in unfavorable near-term recruiting, training and operational costs.

Segment Adjusted EBITDA Margin for the Engine Products segment increased approximately 140 basis points in the first quarter of 2024 compared to the first quarter of 2023, primarily due to higher volumes in the commercial aerospace, defense aerospace, and oil and gas markets, partially offset by an increase in headcount and inflationary costs.

In 2024, as compared to 2023, demand in the commercial aerospace, defense aerospace, oil and gas, and industrial gas turbine markets is expected to increase. However, quality control issues at Boeing are expected to negatively impact narrow body and wide body production rates in the near term.

Fastening Systems

Third-party sales for the Fastening Systems segment increased $77, or 25%, in the first quarter of 2024 compared to the first quarter of 2023, primarily due to higher volumes in the commercial aerospace market, including wide body recovery.

Segment Adjusted EBITDA for the Fastening Systems segment increased $34, or 59%, in the first quarter of 2024 compared to the first quarter of 2023, primarily due to higher volumes in the commercial aerospace market as well as productivity gains.

Segment Adjusted EBITDA Margin for the Fastening Systems segment increased approximately 510 basis points in the first quarter of 2024 compared to the first quarter of 2023, primarily due to higher volumes in the commercial aerospace market as well as productivity gains.

In 2024, as compared to 2023, demand in the commercial aerospace and industrial markets is expected to increase. However, quality control issues at Boeing are expected to negatively impact narrow body and wide body production rates in the near term.

Engineered Structures

Third-party sales for the Engineered Structures segment increased $55, or 27%, in the first quarter of 2024 compared to the first quarter of 2023, primarily due to higher volumes in the commercial aerospace market, including wide body recovery, and defense aerospace market.

Segment Adjusted EBITDA for the Engineered Structures segment increased $7, or 23%, in the first quarter of 2024 compared to the first quarter of 2023, primarily due to higher volumes in the commercial aerospace and defense aerospace markets.

Segment Adjusted EBITDA Margin for the Engineered Structures segment decreased approximately 40 basis points in the first quarter of 2024 compared to the first quarter of 2023, primarily due to an increase in headcount and inflationary costs, partially offset by higher volumes in the commercial aerospace and defense aerospace markets.

In 2024, as compared to 2023, demand in the commercial aerospace and defense aerospace markets is expected to increase. However, quality control issues at Boeing are expected to negatively impact narrow body and wide body production rates in the near term.

Forged Wheels

Third-party sales for the Forged Wheels segment decreased $1 in the first quarter of 2024 compared to the first quarter of 2023, primarily due to a decrease in aluminum price and other inflationary cost pass through, mostly offset by higher volumes in the commercial transportation market.

Segment Adjusted EBITDA for the Forged Wheels segment increased $3, or 4%, in the first quarter of 2024 compared to the first quarter of 2023, primarily due to higher volumes in the commercial transportation market.

Segment Adjusted EBITDA Margin for the Forged Wheels segment increased approximately 120 basis points in the first quarter of 2024 compared to the first quarter of 2023, primarily due to lower aluminum prices and other inflationary cost pass through.

In 2024, as compared to 2023, demand in the commercial transportation markets served by Forged Wheels is expected to decrease in most regions due to lower OEM builds.

Howmet Wheel Systems Mexico S. DE R.L. D.E. C.V. (“Howmet Mexico”) is working closely with Daimler Trucks North America (“DTNA”) to investigate two reports (involving four wheels) of potential rapid air loss associated with the steer axle applications for Part ULA18X Alcoa® Wheels that were manufactured by Howmet Mexico’s facility in Monterrey, Mexico between November 2022 and August 2023 (the “Affected Period”). None of the reported incidents resulted in fatalities or injuries. DTNA has filed a Defect Information Report with the National Highway Safety Transportation Administration (“NHTSA”) and a similar report with Transport Canada, which has initiated a recall of their units that utilize Part ULA18X Alcoa® Wheels manufactured during the Affected Period by Howmet Mexico that were sold in the United States and Canada. DTNA’s own filing states: “While the root cause investigation of these reports remains ongoing, out of an abundance of caution, on March 28, 2024, DTNA decided to initiate a recall to address this issue.” Howmet Mexico’s ongoing investigation to date has found that the rapid air loss reports submitted by DTNA are unsubstantiated. Howmet Mexico will continue to closely work with the NHTSA, Transport Canada, and DTNA regarding this matter. No other Alcoa Wheels are implicated. At this time, we do not expect the impacts to be material to the results of our operations.

Reconciliation of Total Segment Adjusted EBITDA to Income before income taxes

Total Segment Adjusted EBITDA is a non-GAAP financial measure. Management believes that this measure is meaningful to investors because it provides additional information with respect to the Company’s operating performance and the Company’s ability to meet its financial obligations. Differences between the total segment and consolidated totals are in Corporate.

See Restructuring and other charges, Interest expense, net, Loss on debt redemption, and Other expense, net discussions above, under “Results of Operations” for reference.

Corporate expense decreased $3, or 10%, in the first quarter of 2024 compared to the first quarter of 2023, primarily due to lower net costs related to the France Plant Fire and the Barberton Cast House Incident of $4, partially offset by higher employment and legal costs in 2024.

Environmental Matters

See the Environmental Matters section of Note P to the Consolidated Financial Statements in Part I, Item 1 of this Form 10-Q.

Subsequent Events

See Note Q to the Consolidated Financial Statements in Part I, Item 1 of this Form 10-Q for subsequent events.

Liquidity and Capital Resources

Operating Activities

Cash provided from operations was $177 in the three months ended March 31, 2024 compared to $23 in the three months ended March 31, 2023. The increase of $154 was primarily due to higher operating results of $93, lower working capital of $55, and lower pension contributions of $7. The components of the change in working capital primarily included favorable changes in accounts payable of $89, inventories of $14, prepaid expenses and other current assets of $11, and receivables of $10, partially offset by compensation related payments and other accrued expenses of $68.

Management expects Howmet’s estimated pension contributions and other postretirement benefit payments in 2024 to be approximately $65.

Financing Activities

Cash used for financing activities was $178 in the three months ended March 31, 2024 compared to $214 in the three months ended March 31, 2023. The decrease of $36, or 17%, was primarily due to payments made in 2023 in connection with the reduction of long-term debt of $176 (See Note N to the Consolidated Financial Statements in Part I, Item 1 of this Form 10-Q for reference), partially offset by an increase in common stock repurchases of $125, taxes paid for the net share settlement of equity awards of $11, and increased dividends paid to common stock shareholders of $4 due to a $0.01 increase in dividends per common share. Future changes in common stock dividends are subject to the approval of the Board of Directors of Howmet.

The Company maintains a credit facility (the “Credit Facility) pursuant to its Five-Year Revolving Credit Agreement (the “Credit Agreement”) with a syndicate of lenders and issuers named therein (See Note N to the Consolidated Financial Statements in Part I, Item 1 of this Form 10-Q for reference). There were no amounts outstanding under the Credit Agreement as of March 31, 2024 or December 31, 2023, and no amounts were borrowed during 2024 or 2023 under the Credit Agreement.

On April 4, 2024, the Company established a commercial paper program under which the Company may issue unsecured commercial paper from time to time up to a maximum aggregate face amount of $1,000. The Company’s commercial paper will be sold on customary terms in the U.S. commercial paper market on a private placement basis. The proceeds of the commercial paper will be used for general corporate purposes. In conjunction with the commercial paper program, the Company was assigned short-term credit ratings by Moody’s Investors Service, Inc., S&P Global Ratings, and Fitch Ratings, Inc.

The Company has an effective shelf registration statement on Form S-3, filed with the SEC, which allows for offerings of debt securities from time to time. The Company may opportunistically issue new debt securities in accordance with securities laws or utilize commercial paper in order to, but not limited to, refinance existing indebtedness. The Company continues to evaluate whether, when, and to what extent it may access capital markets, including any plans to refinance the 5.125% Notes due October 2024 and the 6.875% Notes due May 2025. Our ability to refinance our indebtedness or enter into alternative financings in adequate amounts on commercially reasonable terms, or terms acceptable to us, may be affected by circumstances and economic events outside of our control. In the event that a refinancing does not occur before the maturity dates of the Company’s 5.125% Notes and the 6.875% Notes, respectively, the Company believes that its projected cash on hand, availability under the Credit Facility, and its commercial paper program will enable the Company to repay, as applicable, the 5.125% Notes and/or the 6.875% Notes.

In the future, the Company may, from time to time, redeem portions of its debt securities or repurchase portions of its debt or equity securities in either the open market or through privately negotiated transactions, in accordance with applicable SEC and other legal requirements. The timing, prices, and sizes of purchases depend upon prevailing trading prices, general economic and market conditions, and other factors, including applicable securities laws. Such purchases may be completed by means of trading plans established from time to time in accordance with Rule 10b5-1 under the Securities Exchange Act of 1934, as amended, block trades, private transactions, open market repurchases, tender offers, and/or accelerated share repurchase agreements or other derivative transactions.

The Company’s costs of borrowing and ability to access the capital markets are affected not only by market conditions but also by the short-term and long-term debt ratings assigned to the Company by the major credit rating agencies. The Company believes that its cash on hand, cash provided from operations and availability of its Credit Facility, its commercial paper program, and its accounts receivables securitization program will continue to be sufficient to fund our operating and capital allocation activities, including repayments of indebtedness.

The three major credit rating agencies have rated Howmet’s debt with investment grade ratings. The Company’s most recent short-term and long-term credit ratings from the three major credit rating agencies are as follows:

On February 29, 2024, Moody’s upgraded Howmet’s long-term debt rating from Ba1 to Baa3, citing demand in the markets served by Howmet along with the Company’s improved financial leverage, and affirmed the current outlook at positive.

On December 15, 2023, S&P upgraded Howmet’s long-term debt rating at BBB- and updated the current outlook from positive to stable, citing strong demand in the commercial aerospace market and the Company’s improved financial leverage.

On August 23, 2023, Fitch upgraded Howmet’s long-term debt rating from BBB- to BBB, citing the Company’s improved financial leverage, and affirmed the current outlook at stable.

Investing Activities

Cash used for investing activities was $75 in the three months ended March 31, 2024 compared to $64 in the three months ended March 31, 2023. The increase of $11, or 17%, was primarily due to an increase in capital expenditures of $18 primarily related to capacity expansion projects in Engine Products and Forged Wheels and various automation projects, partially offset by proceeds from the sale of assets at a small U.K. manufacturing facility in Engines Products of $7.

Recently Adopted and Recently Issued Accounting Guidance

See Note B to the Consolidated Financial Statements in Part I, Item 1 of this Form 10-Q.

Forward-Looking Statements

This report contains (and oral communications made by Howmet may contain) statements that relate to future events and expectations and as such constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements include those containing such words as “anticipates”, “believes”, “could”, “estimates”, “expects”, “forecasts”, “goal”, “guidance”, “intends”, “may”, “outlook”, “plans”, “projects”, “seeks”, “sees”, “should”, “targets”, “will”, “would”, or other words of similar meaning. All statements that reflect Howmet’s expectations, assumptions or projections about the future, other than statements of historical fact, are forward-looking statements, including, without limitation, statements, forecasts and outlook relating to the condition of end markets; future financial results or operating performance; future strategic actions; Howmet’s strategies, outlook, and business and financial prospects; and any future debt redemptions or repurchases of its debt or equity securities. These statements reflect beliefs and assumptions that are based on Howmet’s perception of historical trends, current conditions and expected future developments, as well as other factors Howmet believes are appropriate in the circumstances. Forward-looking statements are not guarantees of future performance and are subject to risks, uncertainties, and changes in circumstances that are difficult to predict, which could cause actual results to differ materially from those indicated by these statements. Such risks and uncertainties include, but are not limited to: (a) deterioration in global economic and financial market conditions generally; (b) unfavorable changes in the markets served by Howmet; (c) the impact of potential cyber attacks and information technology or data security breaches; (d) the loss of significant customers or adverse changes in customers’ business or financial conditions; (e) manufacturing difficulties or other issues that impact product performance, quality or safety; (f) inability of suppliers to meet obligations due to supply chain disruptions or otherwise; (g) failure to attract and retain a qualified workforce and key personnel, labor disputes or other employee relations issues; (h) the inability to achieve revenue growth, cash generation, restructuring plans, cost reductions, improvement in profitability, or strengthening of competitiveness and operations anticipated or targeted; (i) inability to meet increased demand, production targets or commitments; (j) competition from new product offerings, disruptive technologies or other developments; (k) geopolitical, economic, and regulatory risks relating to Howmet’s global operations, including geopolitical and diplomatic tensions, instabilities, conflicts and wars, as well as compliance with U.S. and foreign trade and tax laws, sanctions, embargoes and other regulations; (l) the outcome of contingencies, including legal proceedings, government or regulatory investigations, and environmental remediation, which can expose Howmet to substantial costs and liabilities; (m) failure to comply with government contracting regulations; (n) adverse changes in discount rates or investment returns on pension assets; and (o) the other risk factors summarized in Howmet’s Form 10-K for the year ended December 31,

2023 and other reports filed with the U.S. Securities and Exchange Commission. Market projections are subject to the risks discussed above and other risks in the market. Credit ratings are not a recommendation to buy or hold any Howmet securities, and they may be revised or revoked at any time at the sole discretion of the credit rating organizations. The statements in this report are made as of the date of the filing of this report. Howmet disclaims any intention or obligation to update publicly any forward-looking statements, whether in response to new information, future events, or otherwise, except as required by applicable law.

Not material.

(a) Evaluation of Disclosure Controls and Procedures

The Company's Chief Executive Officer and Chief Financial Officer have evaluated the Company’s disclosure controls and procedures, as defined in Rules 13a-15(e) and 15d-15(e) of the Securities Exchange Act of 1934, as amended, as of the end of the period covered by this report, and they have concluded that these controls and procedures are effective.

(b) Changes in Internal Control over Financial Reporting

There have been no changes in internal control over financial reporting during the first quarter of 2024 that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.

PART II – OTHER INFORMATION

Item 1. Legal Proceedings.

See Note P to the Consolidated Financial Statements in Part I, Item 1 of this Form 10-Q.

There have been no material changes from the risk factors previously disclosed in Part I, Item 1A, “Risk Factors” in the Company’s Annual Report on Form 10-K for the year ended December 31, 2023.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.

The following table presents information with respect to the Company’s repurchases of its common stock during the quarter ended March 31, 2024:

(1)Excludes commissions cost.

(2)On August 18, 2021, the Company announced that its Board of Directors authorized a share repurchase program of up to $1,500 million of the Company's outstanding common stock. After giving effect to the share repurchases made through March 31, 2024, approximately $547 million Board authorization remains available. Under the Company’s share repurchase program (the “Share Repurchase Program”), the Company may repurchase shares by means of trading plans established from time to time in accordance with Rule 10b5-1 under the Securities Exchange Act of 1934, as amended, block trades, private transactions, open market repurchases and/or accelerated share repurchase agreements or other derivative transactions. There is no stated expiration for the Share Repurchase Program. Under its Share Repurchase Program, the Company may repurchase shares from time to time, in amounts, at prices, and at such times as the Company deems appropriate, subject to market conditions, legal requirements and other considerations. The Company is not obligated to repurchase any specific number of shares or to do so at any particular time, and the Share Repurchase Program may be suspended, modified or terminated at any time without prior notice.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.