Chemed(US:CHE)2024-07-26 13:01PART I. FINANCIAL INFORMATION Item 1. Financial Statements This section contains the company's unaudited consolidated financial statements and accompanying notes for the period Unaudited Consolidated Balance Sheets | Metric (in thousands) | June 30, 2024 | December 31, 2023 | Change | | :-------------------- | :------------ | :---------------- | :----- | | Total Assets | $1,734,984 | $1,668,095 | +$66,889 | | Total Liabilities | $527,687 | $560,219 | -$32,532 | | Total Stockholders' Equity | $1,207,297 | $1,107,876 | +$99,421 | - Goodwill increased significantly from $585,017 thousand at December 31, 2023, to $662,124 thousand at June 30, 2024, primarily due to the Covenant acquisition at VITAS21103 Unaudited Consolidated Statements of Income | Metric (in thousands, except per share) | 3 Months Ended June 30, 2024 | 3 Months Ended June 30, 2023 | 6 Months Ended June 30, 2024 | 6 Months Ended June 30, 2023 | | :-------------------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | | Service revenues and sales | $595,880 | $553,816 | $1,185,113 | $1,113,973 | | Net income | $70,887 | $53,377 | $135,904 | $107,498 | | Diluted EPS | $4.65 | $3.51 | $8.89 | $7.09 | Unaudited Consolidated Statements of Cash Flows | Cash Flow Activity (in thousands) | 6 Months Ended June 30, 2024 | 6 Months Ended June 30, 2023 | Change | | :-------------------------------- | :--------------------------- | :--------------------------- | :----- | | Net cash provided by operating activities | $162,066 | $192,809 | -$30,743 | | Net cash used by investing activities | ($112,874) | ($33,534) | -$79,340 | | Net cash used by financing activities | ($90,247) | ($73,477) | -$16,770 | | Cash and cash equivalents at end of period | $222,903 | $159,924 | +$62,979 | - Business combinations, net of cash acquired, significantly increased cash used in investing activities to $92,300 thousand in the first six months of 2024, compared to $305 thousand in the same period of 202327 Unaudited Consolidated Statements of Changes in Stockholders' Equity | Metric (in thousands) | Balance at Dec 31, 2023 | 6 Months Ended June 30, 2024 | Balance at June 30, 2024 | | :-------------------- | :---------------------- | :--------------------------- | :----------------------- | | Total Stockholders' Equity | $1,107,876 | +$99,421 | $1,207,297 | | Net income | | +$135,904 | | | Dividends paid | | ($12,107) | | | Stock awards and exercise of stock options | | +$64,510 | | | Purchases of treasury stock | | ($88,113) | | Notes to Unaudited Consolidated Financial Statements Note 1. Basis of Presentation The unaudited consolidated financial statements are prepared in accordance with SEC Regulation S-X - Financial statements are prepared in accordance with Rule 10-01 of SEC Regulation S-X, with certain GAAP disclosures omitted38 - VITAS utilizes a cloud computing arrangement for human resources, with approximately $5.6 million capitalized and amortized over 5.7 years40 - The effective income tax rate was 24.5% in Q2 2024 (vs 24.1% in Q2 2023) and 23.8% in H1 2024 (vs 24.0% in H1 2023)4142 Note 2. Revenue Recognition This note details revenue recognition policies under ASC 606 for the VITAS and Roto-Rooter segments - Revenue recognition for both segments follows ASC 606, with performance obligations generally satisfied over time for VITAS and at a point in time for Roto-Rooter's core services5373 VITAS Revenue Recognition VITAS recognizes service revenue on a daily or hourly basis, primarily from Medicare, Medicaid, and commercial insurers | VITAS Net Revenue (in thousands) | 3 Months Ended June 30, 2024 | 3 Months Ended June 30, 2023 | 6 Months Ended June 30, 2024 | 6 Months Ended June 30, 2023 | | :------------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | | Medicare | $352,998 | $304,072 | $688,295 | $599,017 | | Medicaid | $15,822 | $14,100 | $30,953 | $27,750 | | Commercial | $9,356 | $8,426 | $18,260 | $15,915 | | Total Subtotal | $378,176 | $326,598 | $737,508 | $642,682 | | Medicare cap adjustment | ($1,375) | ($2,750) | ($3,750) | ($5,500) | | Implicit price concessions | ($3,820) | ($3,237) | ($7,910) | ($6,346) | | Room and board, net | ($3,156) | ($2,904) | ($6,101) | ($5,672) | | Net revenue | $374,558 | $320,861 | $728,564 | $631,339 | - The cost of providing charity care was $2.2 million for the quarter ended June 30, 2024, and $4.4 million for the six months ended June 30, 202455 - None of VITAS' hospice programs exceeded the payment limits on inpatient services during the three months ended June 30, 2024 and 202360 Roto-Rooter Revenue Recognition Roto-Rooter recognizes revenue for core services upon job completion and over time for franchisee fees | Roto-Rooter Net Revenue (in thousands) | 3 Months Ended June 30, 2024 | 3 Months Ended June 30, 2023 | 6 Months Ended June 30, 2024 | 6 Months Ended June 30, 2023 | | :------------------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | | Drain cleaning | $57,865 | $60,362 | $119,486 | $126,851 | | Plumbing | $46,046 | $48,719 | $94,144 | $99,172 | | Excavation | $55,713 | $57,552 | $114,331 | $117,128 | | Water restoration | $42,777 | $44,978 | $89,454 | $95,741 | | Independent contractors | $18,255 | $21,875 | $37,871 | $45,175 | | Franchisee fees | $1,398 | $1,388 | $2,890 | $2,739 | | Net revenue | $221,322 | $232,955 | $456,549 | $482,634 | - Roto-Rooter's short-term core services (plumbing, drain and sewer cleaning, and excavation) and water restoration services recognize revenue upon completion of each job697173 - Revenue from independent contractors and franchisees is recognized over time (weekly or monthly) as the services are provided and payments are received7577 Note 3. Segments This note provides a breakdown of after-tax income by business segment, showing growth in VITAS and a decline in Roto-Rooter | After-tax Income (in thousands) | 3 Months Ended June 30, 2024 | 3 Months Ended June 30, 2023 | 6 Months Ended June 30, 2024 | 6 Months Ended June 30, 2023 | | :------------------------------ | :--------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | | VITAS | $49,252 | $26,128 | $93,221 | $50,892 | | Roto-Rooter | $40,517 | $44,374 | $81,371 | $92,027 | | Corporate | ($18,882) | ($17,125) | ($38,688) | ($35,421) | | Total Net Income | $70,887 | $53,377 | $135,904 | $107,498 | Note 4. Earnings per Share This note details the computation of basic and diluted earnings per share, showing an increase in diluted EPS | EPS (in thousands, except per share) | 3 Months Ended June 30, 2024 | 3 Months Ended June 30, 2023 | 6 Months Ended June 30, 2024 | 6 Months Ended June 30, 2023 | | :----------------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | | Net Income | $70,887 | $53,377 | $135,904 | $107,498 | | Diluted Earnings per Share | $4.65 | $3.51 | $8.89 | $7.09 | | Average number of shares outstanding (Diluted) | 15,251 | 15,219 | 15,295 | 15,167 | - 310,000 stock options were excluded from the computation of dilutive earnings per share for the three and six months ended June 30, 2024, as they would have been anti-dilutive8586 Note 5. Long-Term Debt and Lines of Credit The company maintains a $550 million credit facility and is compliant with all debt covenants - The 2022 Credit Facilities consist of a five-year $450.0 million revolver and a five-year $100.0 million term loan, with a floating interest rate87133 - The company has approximately $404.8 million of unused lines of credit available under its revolving credit facility as of June 30, 2024, and is in compliance with all debt covenants89135148 - Prepayments totaling $96.3 million were made on the term loan in Q1 and April 2023, reducing the total borrowing capacity from $550.0 million to $450.0 million84134 Note 6. Other Income – Net Other income increased significantly, driven by market value adjustments on deferred compensation assets and higher interest income | Other Income - Net (in thousands) | 3 Months Ended June 30, 2024 | 3 Months Ended June 30, 2023 | 6 Months Ended June 30, 2024 | 6 Months Ended June 30, 2023 | | :-------------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | | Market value adjustment on assets held in deferred compensation trust | $2,637 | $1,504 | $10,971 | $1,184 | | Interest income | $3,495 | $113 | $7,737 | $263 | | Total other income - net | $6,132 | $1,609 | $18,709 | $1,506 | Note 7. Leases The company's lease portfolio primarily consists of real estate operating leases with a weighted average remaining term of 4.75 years | Lease Information (in thousands) | June 30, 2024 | December 31, 2023 | | :------------------------------- | :------------ | :---------------- | | Operating lease assets | $132,262 | $126,387 | | Total operating lease liabilities | $146,402 | $139,411 | - The weighted average remaining lease term for operating leases is 4.75 years, and the weighted average discount rate is 3.51% as of June 30, 202496 - Roto-Rooter leases equipment to certain independent contractors, which are classified as operating leases91 Note 8. Stock-Based Compensation Plans The company granted Performance Stock Units (PSUs) contingent on TSR and EPS targets, including a one-time grant to the former CFO - 7,133 Performance Stock Units (PSUs) tied to Total Shareholder Return (TSR) and 7,133 PSUs tied to Earnings Per Share (EPS) targets were granted in February 20249899 - A one-time grant of 6,424 PSUs to the former Chief Financial Officer resulted in a $5.3 million compensation expense recognized in SG&A for the period ended March 31, 2024100 Note 9. Retirement Plans Net gains from the company's defined contribution retirement plans increased for the three and six-month periods | Net Gains from Retirement Plans (in thousands) | 3 Months Ended June 30, 2024 | 3 Months Ended June 30, 2023 | 6 Months Ended June 30, 2024 | 6 Months Ended June 30, 2023 | | :--------------------------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | | Net gains | $6,817 | $5,550 | $20,238 | $11,424 | Note 10. Legal and Regulatory Matters VITAS is subject to ongoing regulatory inquiries and is appealing a $50.3 million overpayment demand from its MAC - VITAS is appealing a $50.3 million overpayment demand from its Medicare Administrative Contractor (MAC) related to an OIG audit of elevated level-of-care hospice services112113 - VITAS deposited $50.3 million under the 'Immediate Recoupment' process to preserve its appeal rights and has been refunded $3.34 million to date113 Note 11. Concentration of Risk VITAS faces significant concentration risk from Medicare and Medicaid receivables and reliance on single-source vendors - Approximately 85% of VITAS' consolidated net accounts receivable as of June 30, 2024, were from Medicare (73%) and various state Medicaid programs (22%)116 - VITAS obtains the majority of its pharmacy services and medical supplies from single vendors, which could adversely impact operations if disrupted117 Note 12. Cash Overdrafts and Cash Equivalents Cash overdrafts were eliminated as of June 30, 2024, and excess cash is invested in money market funds - No cash overdrafts were included in accounts payable at June 30, 2024, compared to $15.7 million at December 31, 2023118 - The company invests excess cash in money market funds holding US Treasuries119 Note 13. Other Assets Other assets primarily include a deposit with OAS related to the Medicare audit and cash surrender value life insurance | Other Assets (in thousands) | June 30, 2024 | December 31, 2023 | | :-------------------------- | :------------ | :---------------- | | Deposit with OAS | $46,968 | $46,968 | | Cash surrender value life insurance | $3,754 | $3,651 | | Total other assets | $55,918 | $55,618 | Note 14. Other Current Liabilities Total other current liabilities decreased, driven by reductions in Medicare cap liability and accrued bonuses | Other Current Liabilities (in thousands) | June 30, 2024 | December 31, 2023 | | :--------------------------------------- | :------------ | :---------------- | | Medicare cap | $8,916 | $13,245 | | Accrued advertising | $3,102 | $4,641 | | Healthcare worker retention bonus | $2,975 | $8,901 | | Accrued legal | $640 | $6,386 | | Total other current liabilities | $39,310 | $55,574 | Note 15. Financial Instruments The company's financial instruments are measured at fair value using Level 1 inputs, and long-term debt fair value approximates carrying value - Investments of deferred compensation plans and cash equivalents are measured at fair value using Level 1 inputs (quoted prices in active markets)126 - The fair value of long-term debt approximates its carrying value due to its floating interest rate, which is reset at short-term intervals1 Note 16. Capital Stock Repurchase Plan Transactions The company repurchased 150,000 shares in H1 2024, with $225.9 million remaining under the current authorization | Share Repurchase Activity (in thousands, except per share) | 3 Months Ended June 30, 2024 | 3 Months Ended June 30, 2023 | 6 Months Ended June 30, 2024 | 6 Months Ended June 30, 2023 | | :------------------------------------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | | Total cost of repurchased shares | $55,769 | $13,425 | $88,113 | $13,425 | | Shares repurchased | 100,000 | 25,000 | 150,000 | 25,000 | | Weighted average price per share | $557.68 | $536.98 | $587.41 | $536.98 | - As of June 30, 2024, $225.9 million of authorization remains under the existing share repurchase plan12204 Note 17. Acquisitions VITAS and Roto-Rooter completed acquisitions totaling $92.3 million in cash, contributing to a $77.1 million increase in goodwill - VITAS completed the purchase of hospice operations and an assisted living facility from Covenant Health for $85.0 million in cash on April 17, 202438 - Roto-Rooter completed the acquisition of two franchises for a total of $7.3 million in cash in March 202413 - Business combinations resulted in a $77.1 million increase in goodwill, primarily due to the Covenant acquisition at VITAS103 | Pro Forma Financials (in thousands, except per share) | 3 Months Ended June 30, 2024 | 3 Months Ended June 30, 2023 | 6 Months Ended June 30, 2024 | 6 Months Ended June 30, 2023 | | :---------------------------------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | | Service revenues and sales | $598,164 | $567,756 | $1,202,245 | $1,141,852 | | Net income | $71,450 | $55,154 | $140,129 | $111,052 | | Diluted earnings per share | $4.68 | $3.62 | $9.16 | $7.32 | Note 18. Recent Accounting Standards The company is currently analyzing the impact of new FASB Accounting Standards Updates on its financial statements - The company is analyzing the impact of ASU 2023-07 (Reportable Segments) and ASU 2023-09 (Income Tax Disclosure) on its footnote disclosures104105 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations Provides management's analysis of financial condition, operating results, liquidity, and segment performance Executive Summary Chemed Corporation operates through its two wholly-owned subsidiaries, VITAS Healthcare and Roto-Rooter Group - Chemed operates two wholly-owned subsidiaries: VITAS Healthcare Corporation (hospice care) and Roto-Rooter Group, Inc. (plumbing and drain cleaning services)107 - The vast majority of the company's operations are located in the United States, and employees are considered the most critical resource108 | Key Operating Results (in thousands, except per share) | 3 Months Ended June 30, 2024 | 3 Months Ended June 30, 2023 | 6 Months Ended June 30, 2024 | 6 Months Ended June 30, 2023 | | :----------------------------------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | | Service revenues and sales | $595,880 | $553,816 | $1,185,113 | $1,113,973 | | Net income | $70,887 | $53,377 | $135,904 | $107,498 | | Diluted EPS | $4.65 | $3.51 | $8.89 | $7.09 | | Adjusted net income | $83,419 | $62,112 | $163,250 | $126,836 | | Adjusted diluted EPS | $5.47 | $4.08 | $10.67 | $8.36 | | Adjusted EBITDA | $119,890 | $96,300 | $234,512 | $196,417 | | Adjusted EBITDA as a % of revenue | 20.1% | 17.4% | 19.8% | 17.6% | Liquidity and Capital Resources The company's liquidity and capital resources are satisfactory, with $404.8 million of unused credit available - The company has approximately $404.8 million of unused lines of credit available under its revolving credit facility as of June 30, 2024135 - Management believes its liquidity and sources of capital are satisfactory for the company's needs in the foreseeable future136 - Net cash provided by operating activities decreased by $30.7 million from June 30, 2023, to June 30, 2024, mainly due to changes in working capital146 Commitments and Contingencies The company is subject to various lawsuits and regulatory inquiries, particularly concerning Medicare and Medicaid billing at VITAS - The company is subject to various lawsuits and claims, and periodically receives communications from governmental and regulatory agencies concerning Medicare and Medicaid billing requirements at its VITAS subsidiary149 - Reserves are established for specific, uninsured liabilities deemed probable and estimable, but a reasonable estimate of potential liability is often not possible due to litigation uncertainty149 Financial Condition Material balance sheet changes include increased goodwill from acquisitions and decreased accounts payable and other current liabilities - Investments of deferred compensation plans increased by $14.7 million due to market valuation gains, with a similar increase in the associated liability140 - Goodwill increased by $77.1 million, primarily due to the Covenant acquisition at VITAS140 - Accounts payable decreased by $21.0 million, and other current liabilities decreased by $16.3 million, driven by timing of payments and reductions in specific liabilities140 Results of Operations - Three months ended June 30, 2024 versus 2023 Consolidated revenues increased 7.6% in Q2 2024, driven by VITAS's growth, leading to a 32.8% increase in net income Consolidated Results (Three Months) Consolidated revenues increased by 7.6% for Q2 2024, with net income rising by 32.8% and gross margin improving to 34.6% | Consolidated Financials (in thousands) | 3 Months Ended June 30, 2024 | 3 Months Ended June 30, 2023 | % Change | | :------------------------------------- | :--------------------------- | :--------------------------- | :------- | | Service revenues and sales | $595,880 | $553,816 | 7.6% | | Net income | $70,887 | $53,377 | 32.8% | | Consolidated gross margin | 34.6% | 32.4% | +2.2 pp | - SG&A expenses before long-term incentive compensation increased by 4.7% due mainly to normal salary increases and an increase in variable selling expenses155 - The effective tax rate increased to 24.5% in Q2 2024 from 24.1% in Q2 2023158 Segment Results (Three Months) VITAS' after-tax earnings increased by 88.5%, while Roto-Rooter's net income decreased by 8.7% due to declining revenue | After-tax Income (in thousands) | 3 Months Ended June 30, 2024 | 3 Months Ended June 30, 2023 | % Change | | :------------------------------ | :--------------------------- | :--------------------------- | :------- | | VITAS | $49,252 | $26,128 | 88.5% | | Roto-Rooter | $40,517 | $44,374 | (8.7)% | | Corporate | ($18,882) | ($17,125) | (10.3)% | - VITAS' gross margin increased to 23.8% (from 18.0%) primarily due to increased revenues and the expiration of the $12.8 million Retention Bonus Program154 - Roto-Rooter's net income was negatively impacted by declining revenue, with after-tax earnings as a percent of revenue at 18.3% in Q2 2024, compared to 19.0% in Q2 2023162 Results of Operations - Six months ended June 30, 2024 versus 2023 Consolidated revenues increased 6.4% in H1 2024, driven by VITAS's growth, leading to a 26.4% increase in net income Consolidated Results (Six Months) Consolidated revenues increased by 6.4% for H1 2024, with net income rising by 26.4% and gross margin improving to 34.6% | Consolidated Financials (in thousands) | 6 Months Ended June 30, 2024 | 6 Months Ended June 30, 2023 | % Change | | :------------------------------------- | :--------------------------- | :--------------------------- | :------- | | Service revenues and sales | $1,185,113 | $1,113,973 | 6.4% | | Net income | $135,904 | $107,498 | 26.4% | | Consolidated gross margin | 34.6% | 33.1% | +1.5 pp | - SG&A expenses before long-term incentive compensation increased by 2.5% due mainly to normal salary increases and an increase in variable selling expenses168 - The effective tax rate slightly decreased to 23.8% in H1 2024 from 24.0% in H1 2023169 Segment Results (Six Months) VITAS' after-tax earnings increased by 83.2%, while Roto-Rooter's net income decreased by 11.6% due to declining revenue | After-tax Income (in thousands) | 6 Months Ended June 30, 2024 | 6 Months Ended June 30, 2023 | % Change | | :------------------------------ | :--------------------------- | :--------------------------- | :------- | | VITAS | $93,221 | $50,892 | 83.2% | | Roto-Rooter | $81,371 | $92,027 | (11.6)% | | Corporate | ($38,688) | ($35,421) | (9.2)% | - VITAS' gross margin increased to 23.5% (from 18.2%) primarily due to increased revenues and the expiration of the $23.8 million Retention Bonus Program166 - Roto-Rooter's gross margin slightly declined to 52.4% (from 52.7%) due to declining revenue, negatively impacting net income166177 Unaudited Consolidating Summary and Reconciliation of Adjusted EBITDA This section reconciles net income to Adjusted EBITDA, showing consolidated Adjusted EBITDA increased for both Q2 and H1 2024 | Adjusted EBITDA (in thousands) | 3 Months Ended June 30, 2024 | 3 Months Ended June 30, 2023 | 6 Months Ended June 30, 2024 | 6 Months Ended June 30, 2023 | | :----------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | | VITAS | $65,600 | $35,085 | $123,912 | $68,630 | | Roto-Rooter | $59,801 | $65,880 | $120,451 | $137,723 | | Corporate | ($5,511) | ($4,665) | ($9,851) | ($9,936) | | Consolidated Adjusted EBITDA | $119,890 | $96,300 | $234,512 | $196,417 | - Adjusted EBITDA as a percentage of revenue increased to 20.1% for Q2 2024 (from 17.4%) and 19.8% for H1 2024 (from 17.6%)5 Reconciliation of Adjusted Net Income This section reconciles reported net income to adjusted net income, excluding non-cash and discrete items | Adjusted Net Income (in thousands, except per share) | 3 Months Ended June 30, 2024 | 3 Months Ended June 30, 2023 | 6 Months Ended June 30, 2024 | 6 Months Ended June 30, 2023 | | :--------------------------------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | | Net income as reported | $70,887 | $53,377 | $135,904 | $107,498 | | Adjusted net income | $83,419 | $62,112 | $163,250 | $126,836 | | Diluted Earnings Per Share As Reported | $4.65 | $3.51 | $8.89 | $7.09 | | Adjusted Diluted Earnings Per Share | $5.47 | $4.08 | $10.67 | $8.36 | - Full-year 2024 adjusted diluted EPS guidance was raised to a range of $23.55 to $23.80, from the previous range of $23.30 to $23.70145 Operating Statistics (VITAS) This section provides detailed operating statistics for VITAS, showing a 13.0% increase in total days of care for H1 2024 | VITAS Operating Statistics | 3 Months Ended June 30, 2024 | 3 Months Ended June 30, 2023 | 6 Months Ended June 30, 2024 | 6 Months Ended June 30, 2023 | | :------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | | Total Net Revenue ($000) | $374,558 | $320,861 | $728,564 | $631,339 | | Total Days of Care | 1,914,284 | 1,673,710 | 3,703,788 | 3,278,391 | | Average Daily Census (days) | 21,036 | 18,392 | 20,350 | 18,114 | | Total Admissions | 17,334 | 15,611 | 32,245 | 31,790 | | Average length of stay (days) | 100.6 | 99.5 | 102.2 | 99.7 | | Median length of stay (days) | 18.0 | 16.0 | 17.0 | 15.0 | - The increase in service revenues at VITAS is comprised primarily of a 14.4% increase in days-of-care for Q2 2024 (13.0% for H1 2024)151164 - Cerebrovascular diagnoses accounted for 42.5% of the Average Daily Census and 27.1% of Total Admissions for Q2 2024194 Item 3. Quantitative and Qualitative Disclosures about Market Risk The company's primary market risk is interest rate risk from its variable interest line of credit, though no such debt was outstanding - The company's primary market risk exposure relates to interest rate risk through its variable interest line of credit197 - As of June 30, 2024, the company had no variable rate debt outstanding197 - For each $10 million borrowed, a 100 basis point (1%) change in interest rate impacts annual interest expense by $100,000197 Item 4. Controls and Procedures The company's disclosure controls and procedures were evaluated and deemed effective, with no material changes in internal control - The effectiveness of the design and operation of disclosure controls and procedures was evaluated and concluded to be effective as of June 30, 2024199 - There has been no material change in internal control over financial reporting during the quarter covered by this report199 PART II. OTHER INFORMATION Item 1. Legal Proceedings Information regarding legal proceedings is cross-referenced to Note 10, Legal and Regulatory Matters - For information regarding the company's legal proceedings, refer to Note 10, Legal and Regulatory Matters, under Part I, Item 1 of this Quarterly Report on Form 10-Q200 Item 1A. Risk Factors There have been no material changes from the risk factors previously disclosed in the company's most recent Annual Report - There have been no other material changes from the risk factors previously disclosed in the company's most recent Annual Report on Form 10-K201 Item 2. Unregistered Sales of Equity Securities and Use of Proceeds This section details the company's share repurchase activity, with $225.9 million remaining authorized under the current program | Share Repurchase Activity (February 2011 Program) | Q1 2024 Total | Q2 2024 Total | H1 2024 Total | | :------------------------------------------------ | :------------ | :------------ | :------------ | | Total Number of Shares Repurchased | 50,000 | 100,000 | 150,000 | | Weighted Average Price Paid Per Share | $646.87 | $557.68 | $587.41 | | Dollar Amount Remaining Under The Program | $281,710,685 | $225,943,169 | $225,943,169 | - As of June 30, 2024, $225.9 million of authorization remains under the February 2011 repurchase program204 Item 3. Defaults Upon Senior Securities The company reported no defaults upon senior securities for the period - No defaults upon senior securities were reported205 Item 4. Mine Safety Disclosures The company reported no mine safety disclosures for the period - No mine safety disclosures were reported206 Item 5. Other Information The company reported no other information for the period - No other information was reported207 Item 6. Exhibits This section lists the exhibits filed with the Form 10-Q, including certifications and iXBRL formatted financial statements - Exhibits include certifications (EX-31.1, EX-31.2, EX-32.1, EX-32.2) and iXBRL formatted financial statements (EX-101, EX-104)211212 SIGNATURES The report is duly signed by the President and Chief Executive Officer and the Vice President, Chief Financial Officer and Controller - The report is signed by Kevin J. McNamara (President and Chief Executive Officer) and Michael D. Witzeman (Vice President, Chief Financial Officer and Controller) on July 26, 2024210214