AvalonBay Communities(AVB) - 2023 Q2 - Quarterly Report

Report Information This report details the quarterly financial filing for AvalonBay Communities, Inc as of June 30, 2023 - AvalonBay Communities, Inc filed its Form 10-Q for the quarterly period ended June 30, 2023[1] - The company is classified as a large accelerated filer[1] Common Stock Outstanding | Metric | Value | | :----- | :---- | | Common Stock Outstanding | 142,015,558 shares | | As of | July 31, 2023 | PART I - FINANCIAL INFORMATION This part presents the company's unaudited condensed consolidated financial statements and management's discussion and analysis ITEM 1. Condensed Consolidated Financial Statements This section presents unaudited financial statements for the periods ended June 30, 2023, including balance sheets, income, and cash flows Condensed Consolidated Balance Sheets This section summarizes the company's assets, liabilities, and equity as of June 30, 2023, compared to December 31, 2022 Key Balance Sheet Data (June 30, 2023 vs. December 31, 2022) | Metric | June 30, 2023 (Unaudited) ($000) | December 31, 2022 ($000) | Change ($000) | | :---------------------------------- | :------------------------ | :---------------- | :----- | | Total assets | 20,806,197 | 20,457,764 | +348,433 | | Total liabilities | 8,989,119 | 9,201,526 | -212,407 | | Total equity | 11,815,565 | 11,253,553 | +562,012 | | Cash and cash equivalents | 769,622 | 613,189 | +156,433 | | Construction in progress, including land | 1,202,977 | 1,072,543 | +130,434 | | Unsecured notes, net | 7,355,693 | 7,602,305 | -246,612 | | Additional paid-in capital | 11,269,159 | 10,765,431 | +503,728 | Condensed Consolidated Statements of Comprehensive Income This section details revenues, expenses, and net income for the three and six months ended June 30, 2023 and 2022 Key Comprehensive Income Data (Three Months Ended June 30) | Metric | Q2 2023 ($000) | Q2 2022 ($000) | Change ($000) | Change (%) | | :----------------------------------- | :-------- | :-------- | :--------- | :--------- | | Total revenue | 690,860 | 644,559 | +46,301 | +7.2% | | Total expenses | 515,903 | 509,008 | +6,895 | +1.4% | | Gain on sale of communities | 187,322 | 404 | +186,918 | N/A | | Net income | 367,807 | 138,566 | +229,241 | +165.4% | | Net income attributable to common stockholders | 367,923 | 138,691 | +229,232 | +165.3% | | EPS - basic | $2.59 | $0.99 | +$1.60 | +161.6% | | EPS - diluted | $2.59 | $0.99 | +$1.60 | +161.6% | Key Comprehensive Income Data (Six Months Ended June 30) | Metric | H1 2023 ($000) | H1 2022 ($000) | Change ($000) | Change (%) | | :----------------------------------- | :-------- | :-------- | :--------- | :--------- | | Total revenue | 1,365,569 | 1,258,486 | +107,083 | +8.5% | | Total expenses | 1,045,238 | 1,007,778 | +37,460 | +3.7% | | Gain on sale of communities | 187,309 | 149,204 | +38,105 | +25.5% | | Net income | 514,582 | 400,642 | +113,940 | +28.4% | | Net income attributable to common stockholders | 514,825 | 400,735 | +114,090 | +28.5% | | EPS - basic | $3.65 | $2.87 | +$0.78 | +27.2% | | EPS - diluted | $3.65 | $2.86 | +$0.79 | +27.6% | Condensed Consolidated Statements of Cash Flows This section outlines cash movements from operating, investing, and financing activities for the six months ended June 30, 2023 Key Cash Flow Data (Six Months Ended June 30) | Metric | H1 2023 ($000) | H1 2022 ($000) | Change ($000) | | :----------------------------------- | :-------- | :-------- | :--------- | | Net cash provided by operating activities | 742,579 | 640,048 | +102,531 | | Net cash used in investing activities | (297,877) | (356,508) | +58,631 | | Net cash used in financing activities | (231,949) | (567,137) | +335,188 | | Net increase (decrease) in cash, cash equivalents and cash in escrow | 212,753 | (283,597) | +496,350 | | Cash, cash equivalents and cash in escrow, end of period | 946,998 | 260,191 | +686,807 | - Investing activities included $453.1 million in development/redevelopment and $81.9 million in capital expenditures, partially offset by $252.9 million from real estate dispositions[18][161] - Financing activities included $454.3 million in dividends paid and $250 million in unsecured note repayments, partially offset by $491.9 million from common stock issuance[18][162] Notes to Condensed Consolidated Financial Statements This section provides detailed explanations of accounting policies and specific financial statement line items 1. Organization, Basis of Presentation and Significant Accounting Policies This section describes the company's business as a REIT, its portfolio, and key accounting policies including segment reporting - AvalonBay Communities, Inc is a Maryland corporation operating as a REIT, specializing in the development, acquisition, ownership, and operation of multifamily communities in key US metropolitan areas and expansion regions[25] - As of June 30, 2023, the company owned or held interests in 294 operating apartment communities (88,659 homes) and land for 43 additional communities (estimated 14,993 homes)[26] Total Revenue by Segment (Three Months Ended June 30) | Segment | Q2 2023 Revenue ($000) | Q2 2022 Revenue ($000) | Change ($000) | Change (%) | | :-------------------------- | :--------------------- | :--------------------- | :------------ | :--------- | | Same Store | 636,890 | 599,828 | +37,062 | +6.2% | | Other Stabilized | 32,240 | 19,078 | +13,162 | +69.0% | | Development/Redevelopment | 13,029 | 6,546 | +6,483 | +99.0% | | Nonallocated | 2,712 | 904 | +1,808 | +200.0% | | Total Revenue | 684,871 | 626,356 | +58,515 | +9.3% | Total Revenue by Segment (Six Months Ended June 30) | Segment | H1 2023 Revenue ($000) | H1 2022 Revenue ($000) | Change ($000) | Change (%) | | :-------------------------- | :--------------------- | :--------------------- | :------------ | :--------- | | Same Store | 1,261,641 | 1,170,919 | +90,722 | +7.7% | | Other Stabilized | 63,972 | 34,291 | +29,681 | +86.6% | | Development/Redevelopment | 23,529 | 12,597 | +10,932 | +86.8% | | Nonallocated | 3,778 | 1,656 | +2,122 | +128.1% | | Total Revenue | 1,352,920 | 1,219,463 | +133,457 | +10.9% | - Uncollectible lease revenue, net of government rent relief, increased to $13.3 million (Q2 2023) from $7.1 million (Q2 2022) and to $30.3 million (H1 2023) from $20.7 million (H1 2022)[49] 2. Interest Capitalized This section details the amount of interest capitalized for development and redevelopment activities Capitalized Interest | Period | 2023 ($000) | 2022 ($000) | Change ($000) | Change (%) | | :-------------------- | :---------- | :---------- | :------------ | :--------- | | Three months ended June 30 | 11,606 | 8,193 | +3,413 | +41.7% | | Six months ended June 30 | 22,624 | 15,293 | +7,331 | +47.9% | 3. Debt This section summarizes the company's debt structure, including unsecured notes, credit facilities, and covenant compliance Debt Summary (June 30, 2023 vs. December 31, 2022) | Metric | June 30, 2023 ($000) | December 31, 2022 ($000) | Change ($000) | | :----------------------------------- | :------------------- | :--------------------- | :------------ | | Total principal outstanding | 8,120,427 | 8,377,827 | -257,400 | | Weighted average interest rate | 3.5% | 3.4% | +0.1% | | Fixed rate unsecured notes | 7,250,000 | 7,500,000 | -250,000 | | Variable rate mortgage notes payable | 449,750 | 457,150 | -7,400 | - The company repaid $250 million of its 2.85% unsecured notes at maturity during the six months ended June 30, 2023[55] Credit Facility Availability (June 30, 2023 vs. December 31, 2022) | Metric | June 30, 2023 ($000) | December 31, 2022 ($000) | | :-------------------------- | :------------------- | :--------------------- | | Credit Facility commitment | 2,250,000 | 2,250,000 | | Total Credit Facility available | 2,248,086 | 2,248,086 | - The company was in compliance with all customary covenants under its Credit Facility, Commercial Paper Program, Term Loan, and unsecured notes as of June 30, 2023[58] 4. Equity This section outlines changes in stockholders' equity, common stock issuance, and share repurchase activities Equity Changes (Six Months Ended June 30, 2023) | Metric | December 31, 2022 ($000) | June 30, 2023 ($000) | Change ($000) | | :----------------------------------- | :----------------------- | :------------------- | :------------ | | Total stockholders' equity | 11,253,476 | 11,815,488 | +562,012 | | Net income attributable to common stockholders | N/A | 514,825 | N/A | | Dividends declared to common stockholders | N/A | (465,732) | N/A | | Issuance of common stock, net of withholdings | N/A | 494,705 | N/A | - During the six months ended June 30, 2023, the company issued 2,000,000 shares of common stock in settlement of forward contracts for $491.9 million[63][65] - The company repurchased 11,800 shares of common stock for an average price of $161.96 per share under its Stock Repurchase Program, with $314.2 million remaining authorized[65] 5. Investments This section details investments in unconsolidated entities, property technology, and the Structured Investment Program - As of June 30, 2023, the company had investments in five unconsolidated entities (20.0% to 50.0% ownership) and other unconsolidated investments in property technology and environmentally focused companies[66] - The company guaranteed a construction loan of $111.7 million for one unconsolidated development investment (25.0% ownership)[66] - Under its Structured Investment Program (SIP), the company had commitments to fund three mezzanine loans up to $92.4 million, with $55.9 million funded as of June 30, 2023, at a weighted average rate of return of 9.8%[68] 6. Real Estate Disposition Activities This section reports on the sale of communities and residential condominiums during the first half of 2023 Real Estate Sales (Six Months Ended June 30, 2023) | Community Name | Location | Apartment Homes | Gross Sales Price ($000) | Gain on Disposition ($000) | | :----------------------- | :--------------- | :-------------- | :----------------------- | :------------------------- | | eaves Daly City | Daly City, CA | 195 | 67,000 | 54,618 | | Avalon at Newton Highlands | Newton, MA | 294 | 170,000 | 132,723 | | Total | | 489 | 237,000 | 187,341 | - For The Park Loggia, four residential condominiums were sold for $19.3 million (H1 2023), resulting in a gain of $410,000. Five residential condominiums remained unsold as of June 30, 2023[78] 7. Commitments and Contingencies This section discloses obligations related to ground leases, operating leases, and finance leases - The company owns seven apartment communities and two commercial properties on ground leases expiring between July 2046 and April 2106[79] Lease Obligations (June 30, 2023 vs. December 31, 2022) | Lease Type | June 30, 2023 ($000) | December 31, 2022 ($000) | | :-------------------- | :------------------- | :--------------------- | | Operating lease assets | 107,765 | 114,977 | | Operating lease obligations | 134,916 | 142,602 | | Finance lease assets | 28,415 | 28,354 | | Finance lease obligations | 20,041 | 20,069 | 8. Segment Reporting This section provides financial performance data for the company's primary operating segments - The company's reportable operating segments are Same Store, Other Stabilized, and Development/Redevelopment, with Net Operating Income (NOI) as the primary financial measure for Same Store and Other Stabilized communities[83][84] Net Operating Income (NOI) Reconciliation (Six Months Ended June 30) | Metric | H1 2023 ($000) | H1 2022 ($000) | Change ($000) | Change (%) | | :----------------------------------- | :------------- | :------------- | :------------ | :--------- | | Net income | 514,582 | 400,642 | +113,940 | +28.4% | | Net operating income (NOI) | 932,381 | 842,406 | +89,975 | +10.7% | | Commercial NOI | (17,094) | (15,693) | -1,401 | +8.9% | | Residential NOI | 915,287 | 826,713 | +88,574 | +10.7% | Same Store Residential NOI by Region (Six Months Ended June 30, 2023) | Region | Total Revenue ($000) | NOI ($000) | | :------------------ | :------------------- | :--------- | | New England | 180,732 | 120,976 | | Metro NY/NJ | 266,285 | 183,903 | | Mid-Atlantic | 182,367 | 127,015 | | Southeast Florida | 38,119 | 25,274 | | Denver, CO | 13,882 | 9,765 | | Pacific Northwest | 85,789 | 61,030 | | Northern California | 212,104 | 151,466 | | Southern California | 270,540 | 185,947 | | Other Expansion Regions | 11,823 | 8,103 | | Total Same Store | 1,261,641 | 873,479 | 9. Stock-Based Compensation Plans This section details activity in stock option and performance award plans for employees Stock Options Outstanding (June 30, 2023) | Metric | Options | Weighted Average Exercise Price | | :-------------------------- | :-------- | :------------------------------ | | Outstanding at Dec 31, 2022 | 293,813 | $181.85 | | Granted | 15,744 | $177.83 | | Exercised | (5,773) | $163.56 | | Outstanding at June 30, 2023 | 303,784 | $181.99 | Performance Awards Outstanding (June 30, 2023) | Metric | Performance Awards | Weighted Average Grant Date Fair Value | | :-------------------------- | :----------------- | :------------------------------------- | | Outstanding at Dec 31, 2022 | 279,067 | $225.46 | | Granted | 89,977 | $193.88 | | Converted to common stock | (60,016) | $238.71 | | Outstanding at June 30, 2023 | 274,964 | $210.54 | - Total employee stock-based compensation cost recognized in income was $15.2 million for H1 2023, down from $17.8 million for H1 2022[95] 10. Related Party Arrangements This section reports on fees from unconsolidated entities and compensation for non-employee directors Fees from Unconsolidated Entities | Period | 2023 ($000) | 2022 ($000) | Change ($000) | Change (%) | | :-------------------- | :---------- | :---------- | :------------ | :--------- | | Three months ended June 30 | 2,712 | 904 | +1,808 | +200.0% | | Six months ended June 30 | 3,778 | 1,656 | +2,122 | +128.1% | Non-Employee Director Compensation Expense | Period | 2023 ($000) | 2022 ($000) | Change ($000) | Change (%) | | :-------------------- | :---------- | :---------- | :------------ | :--------- | | Three months ended June 30 | 631 | 575 | +56 | +9.7% | | Six months ended June 30 | 1,246 | 1,090 | +156 | +14.3% | 11. Fair Value This section discloses the fair value measurements of financial instruments, including derivatives and debt - The company uses interest rate swap and cap agreements as Hedging Derivatives to manage interest rate risk, classified as Level 2 in the fair value hierarchy[98] - During H1 2023, the company entered into $250 million of new forward interest rate swap agreements to hedge anticipated future debt issuance[101] Financial Instruments Measured/Disclosed at Fair Value (June 30, 2023) | Description | Total Fair Value ($000) | Level 1 ($000) | Level 2 ($000) | Level 3 ($000) | | :----------------------------------- | :---------------------- | :------------- | :------------- | :------------- | | Assets: | | | | | | Equity Securities | 28,926 | — | 28,926 | — | | Notes Receivable, net | 59,071 | — | 59,071 | — | | Non Designated Hedges (Interest Rate Caps & Swaps) | 8,750 | — | 8,750 | — | | Total Assets | 96,747 | — | 96,747 | — | | Liabilities: | | | | | | Fixed rate unsecured notes | 6,474,043 | 6,474,043 | — | — | | Mortgage notes payable, Commercial Paper Program and variable rate unsecured notes | 763,708 | — | 763,708 | — | | Total Liabilities | 7,237,751 | 6,474,043 | 763,708 | — | 12. Subsequent Events This section reports on significant events occurring after the balance sheet date, such as property sales - In July 2023, the company sold Avalon Columbia Pike (269 apartment homes, 27,000 sq ft commercial space) for $105 million[112] ITEM 2. Management's Discussion and Analysis of Financial Condition and Results of Operations This section provides management's perspective on the company's financial condition, results of operations, and strategic initiatives Executive Overview This section highlights the company's strategic vision, Q2 2023 operating results, and development activities - The company's strategic vision is to be the leading apartment company in select US markets, providing distinctive living experiences, leveraging market research, consumer insight, disciplined capital allocation, and balance sheet management[116] Q2 2023 Operating Highlights | Metric | Q2 2023 ($000) | Q2 2022 ($000) | Change ($000) | Change (%) | | :----------------------------------- | :------------- | :------------- | :------------ | :--------- | | Net income attributable to common stockholders | 367,923 | 138,691 | +229,232 | +165.3% | | Same Store Residential NOI | 435,057 | 412,850 | +22,207 | +5.4% | | Residential rental revenue | N/A | N/A | +37,080 | +6.3% | | Residential property operating expenses | N/A | N/A | +14,769 | +8.2% | - As of June 30, 2023, the company had 17 wholly-owned communities under construction (5,761 homes, $2.29 billion projected cost) and land for 43 additional communities (14,993 homes, $6.8 billion projected cost)[118][120] - During Q2 2023, two wholly-owned communities (489 homes) were sold for $237 million, generating a GAAP gain of $187.3 million. Avalon Columbia Pike was sold in July 2023 for $105 million[120] Communities Overview This section classifies the company's portfolio into Same Store, Stabilized, Development, and other categories - Same Store communities are consolidated, had stabilized occupancy as of January 1, 2022, and are not undergoing substantial redevelopment or held for sale. Stabilized occupancy is 90% physical occupancy or one year post-completion[121] Community Classification (June 30, 2023) | Category | Number of Communities | Number of Apartment Homes | | :-------------------------- | :-------------------- | :------------------------ | | Same Store | 253 | 74,955 | | Other Stabilized | 11 | 4,012 | | Redevelopment | 1 | 714 | | Unconsolidated | 8 | 2,247 | | Total Current Communities | 273 | 81,928 | | Development | 20 | 6,256 | | Unconsolidated Development | 1 | 475 | | Total Communities | 294 | 88,659 | | Development Rights | 43 | 14,993 | Results of Operations This section presents a detailed analysis of operating results for the three and six months ended June 30, 2023 Key Operating Results (Three Months Ended June 30) | Metric | Q2 2023 ($000) | Q2 2022 ($000) | Change ($000) | Change (%) | | :----------------------------------- | :------------- | :------------- | :------------ | :--------- | | Rental and other income | 688,148 | 643,655 | +44,493 | +6.9% | | Management, development and other fees | 2,712 | 904 | +1,808 | +200.0% | | Total revenue | 690,860 | 644,559 | +46,301 | +7.2% | | Total community operating expenses | 213,150 | 195,713 | +17,437 | +8.9% | | Interest expense, net | (51,585) | (58,797) | +7,212 | -12.3% | | Gain on sale of communities | 187,322 | 404 | +186,918 | N/A | | Net income attributable to common stockholders | 367,923 | 138,691 | +229,232 | +165.3% | Key Operating Results (Six Months Ended June 30) | Metric | H1 2023 ($000) | H1 2022 ($000) | Change ($000) | Change (%) | | :----------------------------------- | :------------- | :------------- | :------------ | :--------- | | Rental and other income | 1,361,791 | 1,256,830 | +104,961 | +8.4% | | Management, development and other fees | 3,778 | 1,656 | +2,122 | +128.1% | | Total revenue | 1,365,569 | 1,258,486 | +107,083 | +8.5% | | Total community operating expenses | 420,627 | 388,912 | +31,715 | +8.2% | | Interest expense, net | (108,406) | (115,323) | +6,917 | -6.0% | | Gain on sale of communities | 187,309 | 149,204 | +38,105 | +25.5% | | Net income attributable to common stockholders | 514,825 | 400,735 | +114,090 | +28.5% | - Same Store Residential rental revenue increased by 7.8% for the six months ended June 30, 2023, primarily due to an 8.1% increase in average rental revenue per occupied home, partially offset by a 0.3% decrease in Economic Occupancy[138] - Uncollectible lease revenue (excluding rent relief) as a percentage of Same Store Residential rental revenue decreased to 2.6% in H1 2023 from 4.1% in H1 2022[140] - Casualty loss of $5.05 million for H1 2023 was due to severe weather damages in Northeast and California regions[148] FFO and Core FFO (Six Months Ended June 30) | Metric | H1 2023 ($000) | H1 2022 ($000) | Change ($000) | Change (%) | | :----------------------------------- | :------------- | :------------- | :------------ | :--------- | | FFO attributable to common stockholders | 735,069 | 650,700 | +84,369 | +13.0% | | Core FFO attributable to common stockholders | 738,152 | 656,948 | +81,204 | +12.4% | | FFO per common share - diluted | $5.21 | $4.65 | +$0.56 | +12.0% | | Core FFO per common share - diluted | $5.23 | $4.69 | +$0.54 | +11.5% | Liquidity and Capital Resources This section discusses the company's sources and uses of cash, debt facilities, and equity activities - The company's principal focus for liquidity is to fund development/redevelopment, minimum REIT dividend payments, debt service, operating expenses, and strategic investments[158] Cash, Cash Equivalents and Cash in Escrow | Metric | June 30, 2023 ($000) | December 31, 2022 ($000) | Change ($000) | | :----------------------------------- | :------------------- | :--------------------- | :------------ | | Cash, cash equivalents and cash in escrow | 946,998 | 734,245 | +212,753 | - The $2.25 billion Credit Facility matures in September 2026, with $2.248 billion available as of July 31, 2023. The interest rate margin and commitment fee were reduced in July 2023 due to achieving sustainability targets[163][165] - The company repaid $250 million of 2.85% unsecured notes at maturity during H1 2023[173] - The company settled an Equity Forward contract, issuing 2 million shares of common stock for $491.9 million[170] - The company repurchased 11,800 shares of common stock under its Stock Repurchase Program during H1 2023, with $314.2 million remaining authorized[171] Unconsolidated Real Estate Investments and Off-Balance Sheet Arrangements This section details joint ventures, development projects, and commitments under the Structured Investment Program Unconsolidated Real Estate Investments - Operating Communities (June 30, 2023) | Joint Venture | Company Ownership | of Apartment Homes | Total Capitalized Cost ($000) | Principal Amount Debt ($000) | Weighted Avg. Interest Rate | | :----------------------------------- | :---------------- | :------------------- | :---------------------------- | :--------------------------- | :-------------------------- | | NYTA MF Investors, LLC (5 communities) | 20.0% | 1,301 | 769,222 | 394,969 | 3.88% | | Other Operating Joint Ventures (3 communities) | 25.0% - 50.0% | 946 | 257,922 | 122,399 | 3.27% | | Total | | 2,247 | 1,027,144 | 517,368 | 3.73% | - The AVA Arts District, an unconsolidated development community (25.0% ownership), is projected to contain 475 apartment homes and 56,000 sq ft of commercial space, with an estimated completion in Q4 2023 and a total capitalized cost of $288 million. The company has an equity investment of $31.8 million and guarantees a construction loan of $111.7 million[191] - The company has 17 wholly-owned Development Communities under construction, expected to add 5,761 apartment homes and 29,000 sq ft of commercial space, with a total capitalized cost of approximately $2.29 billion[193][194] - The company holds 43 Development Rights for future apartment communities, estimated to add 14,993 apartment homes, with $195.1 million in land acquisition costs and $71.4 million in capitalized deferred development costs[196] - In July 2023, the company committed to an additional mezzanine loan of up to $20.9 million under the SIP, bringing total commitments to $113.3 million for four loans, with $63.6 million funded as of July 31, 2023[198] Supplemental U.S. Federal Income Tax Considerations This section outlines tax withholding requirements for distributions to non-U.S. stockholders - The company is required to withhold and remit to the IRS 21% (or the then applicable highest corporate rate of US federal income tax) of any distributions to non-US stockholders attributable to gain from the sale or exchange of US real property interests[200] Forward-Looking Statements This section provides a cautionary statement regarding forward-looking information and associated risks - The report contains forward-looking statements identified by words like "believe," "expect," "anticipate," "intend," "estimate," "assume," "project," "plan," "may," "shall," "will," "pursue"[201] - Key factors that could cause actual results to differ include failure to secure development opportunities, construction cost overruns, delays in completion, adverse market conditions, financing availability, new landlord-tenant laws, and risks associated with joint ventures and the SIP[204][205] Critical Accounting Policies and Estimates This section identifies the company's most critical accounting policies and confirms no material changes - The company's critical accounting policies and estimates are cost capitalization and abandoned pursuit costs and asset impairment[206] - These policies have not materially changed from the discussion in the Annual Report on Form 10-K for the year ended December 31, 2022[206] ITEM 3. Quantitative and Qualitative Disclosures About Market Risk This section confirms no material changes to the company's exposures to market risk since the disclosures in its Annual Report on Form 10-K for the year ended December 31, 2022 - No material changes to market risk exposures since the December 31, 2022 Annual Report on Form 10-K[208] ITEM 4. Controls and Procedures This section confirms the effectiveness of its disclosure controls and procedures as of June 30, 2023, and notes no changes in internal controls - The CEO and CFO concluded that the company's disclosure controls and procedures were effective as of June 30, 2023[209] - No changes in internal controls over financial reporting occurred during the quarter ended June 30, 2023[210] PART II - OTHER INFORMATION This part contains disclosures on legal proceedings, risk factors, equity sales, and other required information ITEM 1. Legal Proceedings This section states that current litigation is not expected to have a material adverse effect on the company - The company is involved in various legal proceedings arising in the ordinary course of business[211] - Management does not believe any outstanding litigation will have a material adverse effect on financial condition or results of operations[211] ITEM 1A. Risk Factors This section confirms there have been no material changes to the company's risk factors since December 31, 2022 - No material changes to risk factors since December 31, 2022[212] ITEM 2. Unregistered Sales of Equity Securities and Use of Proceeds This section details the company's issuer purchases of equity securities during the second quarter of 2023 Issuer Purchases of Equity Securities (Q2 2023) | Period | Total Number of Shares Purchased (1) | Average Price Paid Per Share | Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs | Maximum Number (or Approximate Dollar Value) of Shares that May Yet be Purchased Under the Plans or Programs (in thousands) (2) | | :---------------------- | :--------------------------- | :--------------------------- | :----------------------------------------------------------------------- | :--------------------------------------------------------------------------------------------------------------------------------- | | April 1- April 30, 2023 | 5,363 | $163.47 | 4,800 | 314,237 | | May 1- May 31, 2023 | 959 | $179.63 | — | 314,237 | | June 1- June 30, 2023 | — | $— | — | 314,237 | | Total | 6,322 | $165.92 | 4,800 | | - The Stock Repurchase Program, approved in July 2020, authorizes up to $500 million in common stock repurchases and does not have an expiration date[217] ITEM 3. Defaults Upon Senior Securities This section reports there were no defaults upon senior securities for the period - No defaults upon senior securities were reported[218] ITEM 4. Mine Safety Disclosures This section states that this item is not applicable to the company - This item is not applicable[218] ITEM 5. Other Information This section confirms no directors or officers adopted, terminated, or modified a trading arrangement during the quarter - No directors or officers adopted, terminated, or modified Rule 10b5-1 or non-Rule 10b5-1 trading arrangements during Q2 2023[218] ITEM 6. Exhibits This section lists all exhibits filed with the Form 10-Q, including certifications and financial materials in Inline XBRL format - Exhibits include Articles of Amendment and Restatement of Articles of Incorporation, Amended and Restated Bylaws, and certifications under Sections 302 and 906 of the Sarbanes-Oxley Act[220] - Financial materials for the period ended June 30, 2023, are provided in Inline XBRL format[220] SIGNATURES This section provides the official signatures of the company's certifying officers - The report was signed by Benjamin W. Schall (CEO and President) and Kevin P. O'Shea (CFO) on August 4, 2023[222]