Huntington Ingalls Industries(HII) - 2024 Q2 - Quarterly Report

PART I – FINANCIAL INFORMATION This part contains the company's unaudited condensed consolidated financial statements and management's discussion and analysis of financial condition and results of operations Item 1. Financial Statements (Unaudited) This section presents the unaudited condensed consolidated financial statements, including statements of operations, financial position, cash flows, and changes in equity, along with detailed notes explaining the company's business, accounting policies, segment performance, and other financial details for the periods ended June 30, 2024 and 2023 Condensed Consolidated Statements of Operations and Comprehensive Income This statement provides a detailed overview of the company's financial performance, including revenues, operating income, and net earnings, for the specified periods Table: Condensed Consolidated Statements of Operations and Comprehensive Income | (in millions, except per share amounts) | Three Months 2024 | Ended June 30 2023 | Six Months 2024 | Ended June 30 2023 | |:----------------------------------------|:------------------|:-------------------|:----------------|:-------------------| | Sales and service revenues | $ 2,977 | $ 2,787 | $ 5,782 | $ 5,461 | | Operating income | $ 189 | $ 156 | $ 343 | $ 297 | | Net earnings | $ 173 | $ 130 | $ 326 | $ 259 | | Basic earnings per share | $ 4.38 | $ 3.27 | $ 8.25 | $ 6.49 | | Diluted earnings per share | $ 4.38 | $ 3.27 | $ 8.25 | $ 6.49 | | Dividends declared per share | $ 1.30 | $ 1.24 | $ 2.60 | $ 2.48 | - Sales and service revenues increased by $190 million (7%) for the three months ended June 30, 2024, and by $321 million (6%) for the six months ended June 30, 2024, compared to the respective prior periods[5] - Net earnings increased by $43 million (33%) to $173 million for the three months ended June 30, 2024, and by $67 million (26%) to $326 million for the six months ended June 30, 2024, compared to the respective prior periods[5] Condensed Consolidated Statements of Financial Position This statement presents the company's assets, liabilities, and equity at specific points in time, reflecting its financial health Table: Condensed Consolidated Statements of Financial Position | ($ in millions) | June 30, 2024 | December 31, 2023 | |:----------------------------|:--------------|:------------------| | Total assets | $ 11,310 | $ 11,215 | | Total liabilities | $ 7,132 | $ 7,122 | | Total stockholders' equity | $ 4,178 | $ 4,093 | | Cash and cash equivalents | $ 11 | $ 430 | | Short-term debt and current portion of long-term debt | $ 942 | $ 231 | - Total assets increased slightly from $11,215 million at December 31, 2023, to $11,310 million at June 30, 2024[6] - Cash and cash equivalents significantly decreased from $430 million at December 31, 2023, to $11 million at June 30, 2024[6] Condensed Consolidated Statements of Cash Flows This statement details the cash inflows and outflows from operating, investing, and financing activities, illustrating liquidity Table: Condensed Consolidated Statements of Cash Flows | ($ in millions) | Six Months 2024 | Ended June 30 2023 | |:--------------------------------------------------|:----------------|:-------------------| | Net cash provided by (used in) operating activities | $ (211) | $ 73 | | Net cash used in investing activities | $ (162) | $ (70) | | Net cash used in financing activities | $ (46) | $ (157) | | Change in cash and cash equivalents | $ (419) | $ (154) | | Cash and cash equivalents, end of period | $ 11 | $ 313 | - Operating activities shifted from providing $73 million in cash in 2023 to using $211 million in 2024 for the six-month period[9] - Investing activities used more cash, increasing from $70 million in 2023 to $162 million in 2024 for the six-month period[9] Condensed Consolidated Statements of Changes in Equity This statement outlines the changes in stockholders' equity, reflecting net earnings, dividends, and stock repurchases Table: Condensed Consolidated Statements of Changes in Equity | ($ in millions) | Balance as of Dec 31, 2023 | Net Earnings | Dividends Declared | Treasury Stock Activity | Balance as of June 30, 2024 | |:----------------------------|:---------------------------|:-------------|:-------------------|:------------------------|:----------------------------|\ | Total Stockholders' Equity | $ 4,093 | $ 326 | $ (102) | $ (128) | $ 4,178 | - Total stockholders' equity increased from $4,093 million at December 31, 2023, to $4,178 million at June 30, 2024, driven by net earnings, partially offset by dividends and treasury stock repurchases[11] Notes to Condensed Consolidated Financial Statements This section provides detailed explanations and disclosures supporting the condensed consolidated financial statements 1. DESCRIPTION OF BUSINESS This section outlines the company's core business activities, operational segments, and strategic focus as a global defense partner - Huntington Ingalls Industries, Inc. (HII) is a global, all-domain defense partner, specializing in naval ships and defense technologies[12] - HII operates through three reportable segments: Ingalls Shipbuilding, Newport News Shipbuilding, and Mission Technologies[12] - Ingalls and Newport News are America's largest shipbuilders, while Mission Technologies develops integrated technology solutions for connected, all-domain forces[12] 2. BASIS OF PRESENTATION This section describes the accounting principles and methods used in preparing the financial statements, including fair value measurements - The unaudited condensed consolidated financial statements are prepared in conformity with GAAP and SEC Form 10-Q instructions, with all intercompany transactions eliminated[13] - The Company uses the duration of its long-term production contracts as its operating cycle for current asset and liability classification, which is generally longer than one year[13] - Fair values of long-term debt were $2,081 million as of June 30, 2024, and $2,309 million as of December 31, 2023, calculated based on recent trades in inactive markets (Level 2)[18] 3. ACCOUNTING STANDARDS UPDATES This section details recent accounting standard updates and their potential impact on the company's financial reporting - FASB issued ASU 2023-07 (Segment Reporting) effective for annual periods after December 15, 2023, requiring new tabular and narrative segment disclosures of significant expenses[19] - FASB issued ASU 2023-09 (Income Taxes) effective for annual periods after December 15, 2024, requiring disaggregated effective tax rate reconciliation and additional taxes paid information[20] - The Company is currently evaluating the impacts of these new ASUs on its consolidated financial statements and disclosures[19][20] 4. STOCKHOLDERS' EQUITY This section provides details on changes in stockholders' equity, including stock repurchase programs and accumulated other comprehensive loss - In January 2024, the board authorized an increase in the stock repurchase program to $3.8 billion and extended it to December 31, 2028[21] Table: Stock Repurchase and Dividend Activity | Activity | Six Months Ended June 30, 2024 | Six Months Ended June 30, 2023 | |:--------------------------|:-------------------------------|:-------------------------------| | Shares repurchased | 473,438 | 75,849 | | Aggregate cost | $128 million | $16 million | | Cash dividends paid | $102 million | $99 million | - Accumulated other comprehensive loss was $415 million as of June 30, 2024, primarily from unamortized benefit plan costs[22][24][25] 5. EARNINGS PER SHARE This section presents the calculation of basic and diluted earnings per share, reflecting profitability on a per-share basis Table: Earnings Per Share | (in millions, except per share amounts) | Three Months 2024 | Ended June 30 2023 | Six Months 2024 | Ended June 30 2023 | |:----------------------------------------|:------------------|:-------------------|:----------------|:-------------------|\ | Net earnings | $ 173 | $ 130 | $ 326 | $ 259 | | Basic earnings per share | $ 4.38 | $ 3.27 | $ 8.25 | $ 6.49 | | Diluted earnings per share | $ 4.38 | $ 3.27 | $ 8.25 | $ 6.49 | | Weighted-average common shares outstanding | 39.5 | 39.8 | 39.5 | 39.9 | - Basic and diluted EPS for the three months ended June 30, 2024, increased to $4.38 from $3.27 in the prior year[27] - Basic and diluted EPS for the six months ended June 30, 2024, increased to $8.25 from $6.49 in the prior year[27] 6. REVENUE This section details the company's revenue recognition policies, disaggregated revenue by type and customer, and remaining performance obligations Table: Revenue by Type and Segment | Revenue Type (Three Months Ended June 30, 2024) | Ingalls | Newport News | Mission Technologies | Intersegment Eliminations | Total | |:------------------------------------------------|:--------|:-------------|:---------------------|:--------------------------|:------|\ | Product sales | $631 | $1,263 | $32 | $— | $1,926| | Service revenues | $80 | $271 | $700 | $— | $1,051| Table: Revenue by Customer Type and Segment | Customer Type (Three Months Ended June 30, 2024) | Ingalls | Newport News | Mission Technologies | Intersegment Eliminations | Total | |:-------------------------------------------------|:--------|:-------------|:---------------------|:--------------------------|:------|\ | Federal | $711 | $1,533 | $730 | $— | $2,974| - As of June 30, 2024, the Company had $48.5 billion of remaining performance obligations, with approximately 35% expected to be recognized as revenue through 2025[38] Table: Cumulative Catch-up Revenue Adjustments | Cumulative Catch-up Revenue Adjustments | Three Months 2024 | Ended June 30 2023 | Six Months 2024 | Ended June 30 2023 | |:----------------------------------------|:------------------|:-------------------|:----------------|:-------------------|\ | Effect on operating income | $24 | $20 | $26 | $29 | | Effect on diluted earnings per share | $0.48 | $0.41 | $0.51 | $0.58 | - Net contract assets increased by $334 million from December 31, 2023, to June 30, 2024, primarily due to increased revenue on U.S. Navy contracts[42] 7. SEGMENT INFORMATION This section provides financial data for the company's reportable segments, including sales, operating income, and assets Table: Segment Sales and Service Revenues | Sales and Service Revenues ($ in millions) | Three Months 2024 | Ended June 30 2023 | Six Months 2024 | Ended June 30 2023 | |:-------------------------------------------|:------------------|:-------------------|:----------------|:-------------------|\ | Ingalls | $712 | $664 | $1,367 | $1,241 | | Newport News | $1,535 | $1,509 | $2,969 | $3,015 | | Mission Technologies | $765 | $645 | $1,515 | $1,269 | Table: Segment Operating Income | Operating Income ($ in millions) | Three Months 2024 | Ended June 30 2023 | Six Months 2024 | Ended June 30 2023 | |:---------------------------------|:------------------|:-------------------|:----------------|:-------------------|\ | Ingalls | $56 | $65 | $116 | $120 | | Newport News | $111 | $95 | $193 | $179 | | Mission Technologies | $36 | $9 | $64 | $26 | Table: Segment Assets | Assets ($ in millions) | June 30, 2024 | December 31, 2023 | |:-----------------------|:--------------|:------------------|\ | Ingalls | $1,715 | $1,619 | | Newport News | $4,829 | $4,612 | | Mission Technologies | $3,243 | $3,161 | | Corporate | $1,523 | $1,823 | | Total assets | $11,310 | $11,215 | 8. INCOME TAXES This section details the company's effective income tax rates, unrecognized tax benefits, and other tax-related disclosures Table: Effective Income Tax Rate | Effective Income Tax Rate | Three Months Ended June 30, 2024 | Three Months Ended June 30, 2023 | Six Months Ended June 30, 2024 | Six Months Ended June 30, 2023 | |:--------------------------|:---------------------------------|:---------------------------------|:-------------------------------|:-------------------------------|\ | Rate | 19.9% | 23.1% | 18.5% | 22.0% | - The lower effective tax rate in 2024 was primarily due to a taxable gain from the sale of the Titan joint venture in 2023[46] - Unrecognized tax benefits, excluding interest and penalties, were $102 million as of June 30, 2024, with a potential $79 million favorable reversal in future periods[48] 9. INVESTIGATIONS, CLAIMS, AND LITIGATION This section outlines ongoing legal proceedings, claims, and investigations, including their potential financial implications - An antitrust class action lawsuit filed in October 2023 was dismissed against all defendants in April 2024[51][52] - A COVID-19 business interruption insurance claim, initially dismissed, was reversed and remanded by the Vermont Supreme Court in September 2022, allowing the claim to proceed[53] - The Company is involved in longstanding asbestos-related claims, with costs to resolve not material individually or in aggregate for the six months ended June 30, 2024 and 2023[55] 10. COMMITMENTS AND CONTINGENCIES This section describes the company's contractual commitments, environmental remediation estimates, and other contingent liabilities - Contract profit margins include estimates for unagreed matters like settlements and modifications, based on management's best assessment of expected recovery[57] - The estimated probable future cost for environmental remediation was not material as of June 30, 2024[58] - As of June 30, 2024, the Company had $11 million in issued but undrawn letters of credit and $360 million of surety bonds outstanding[59] 11. EMPLOYEE PENSION AND OTHER POSTRETIREMENT BENEFITS This section details the components of net periodic benefit cost and contributions for the company's pension and postretirement plans Table: Components of Net Periodic Benefit Cost | Components of net periodic benefit cost ($ in millions) | Pension Plans (2024) | Pension Plans (2023) | Other Postretirement Plans (2024) | Other Postretirement Plans (2023) | |:--------------------------------------------------------|:---------------------|:---------------------|:----------------------------------|:----------------------------------|\ | Service cost | $54 | $56 | $3 | $3 | | Interest cost | $161 | $172 | $9 | $10 | | Expected return on plan assets | $(269) | $(265) | $— | $— | Table: Total Benefit Plan Contributions | Total Contributions ($ in millions) | Six Months Ended June 30, 2024 | Six Months Ended June 30, 2023 | |:------------------------------------|:-------------------------------|:-------------------------------|\ | Qualified | $— | $— | | Non-qualified | $6 | $5 | | Other benefit plans | $18 | $16 | | Total contributions | $24 | $21 | - The Company anticipates no further significant cash contributions to its qualified defined benefit pension plans in 2024[65] 12. STOCK COMPENSATION PLANS This section provides information on the company's stock compensation plans, including granted awards and their fair values - For the six months ended June 30, 2024, the Company granted approximately 0.1 million RPSRs at a weighted average share price of $288.33, subject to cliff vesting on December 31, 2026, based on performance targets[66] - Approximately 0.1 million compensation RSRs were granted for the six months ended June 30, 2024, at a weighted average share price of $288.26, vesting 33 1/3% annually over three years[67] Table: Stock Awards Summary | Stock Awards (in thousands) | Weighted Average Grant Date Fair Value | Weighted Average Remaining Contractual Term (in years) | |:----------------------------|:---------------------------------------|:-------------------------------------------------------|\ | Total stock awards | 550 | $221.69 | 1.2 | Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations This section provides management's perspective on the company's financial condition and results of operations, discussing overall business environment, consolidated performance, segment-specific results, revenue and cost analysis, and other financial details for the periods ended June 30, 2024 and 2023 OVERVIEW This section provides a high-level summary of the company's business, operating environment, and strategic priorities - HII is a global, all-domain defense partner, primarily serving the U.S. Government, particularly the Department of Defense[69] - The company's business environment is characterized by economic uncertainty, labor and supply chain challenges, inflation, and heightened geopolitical tensions[71][74][76] - The fiscal year 2025 Budget Request reflects continued investment in shipbuilding, including two Arleigh Burke class destroyers, one San Antonio class amphibious warship, and the lead Block VI Virginia class submarine[72] CONSOLIDATED OPERATING RESULTS This section analyzes the company's overall financial performance, including sales, costs, operating income, and net earnings Table: Consolidated Operating Results Summary | ($ in millions) | Three Months 2024 | Ended June 30 2023 | Six Months 2024 | Ended June 30 2023 | |:--------------------------------|:------------------|:-------------------|:----------------|:-------------------|\ | Sales and service revenues | $2,977 | $2,787 | $5,782 | $5,461 | | Cost of product sales and service revenues | $2,545 | $2,398 | $4,975 | $4,722 | | Operating income | $189 | $156 | $343 | $297 | | Net earnings | $173 | $130 | $326 | $259 | - Sales and service revenues increased by $190 million (7%) for the three months and $321 million (6%) for the six months ended June 30, 2024, primarily due to higher volumes across all segments[84] - General and administrative expenses increased by $17 million and $29 million for the three and six months ended June 30, 2024, respectively, mainly due to higher overhead and bid/proposal costs[87] Table: Operating Income Reconciliation | ($ in millions) | Three Months 2024 | Ended June 30 2023 | Six Months 2024 | Ended June 30 2023 | |:----------------------------|:------------------|:-------------------|:----------------|:-------------------|\ | Operating income | $189 | $156 | $343 | $297 | | Operating FAS/CAS Adjustment| $15 | $17 | $32 | $36 | | Non-current state income taxes | $(1) | $(4) | $(2) | $(8) | | Segment operating income | $203 | $169 | $373 | $325 | SEGMENT OPERATING RESULTS This section details the financial performance of each reportable segment, including sales and operating income trends Table: Segment Sales and Service Revenues | Sales and Service Revenues ($ in millions) | Three Months 2024 | Ended June 30 2023 | Six Months 2024 | Ended June 30 2023 | |:-------------------------------------------|:------------------|:-------------------|:----------------|:-------------------|\ | Ingalls | $712 | $664 | $1,367 | $1,241 | | Newport News | $1,535 | $1,509 | $2,969 | $3,015 | | Mission Technologies | $765 | $645 | $1,515 | $1,269 | Table: Segment Operating Income | Operating Income ($ in millions) | Three Months 2024 | Ended June 30 2023 | Six Months 2024 | Ended June 30 2023 | |:---------------------------------|:------------------|:-------------------|:----------------|:-------------------|\ | Ingalls | $56 | $65 | $116 | $120 | | Newport News | $111 | $95 | $193 | $179 | | Mission Technologies | $36 | $9 | $64 | $26 | - Mission Technologies saw significant operating income growth, increasing 300% to $36 million for the three months and 146% to $64 million for the six months ended June 30, 2024, driven by higher volumes in C5ISR and CEW&S, and improved fleet sustainment performance[108][109][110] - Ingalls' operating income decreased due to lower performance on surface combatants, partially offset by a delivery contract incentive on LPD 29[103] - Newport News' operating income increased due to contract adjustments, incentives, and volumes on the RCOH program, partially offset by lower performance on aircraft carrier construction and the Virginia class submarine program[106] PRODUCT AND SERVICE REVENUES AND COST ANALYSIS This section provides a detailed breakdown of revenues and costs by product and service categories across segments Table: Product and Service Sales and Costs by Segment | Segment Totals ($ in millions) | Three Months Ended June 30, 2024 (Sales) | Three Months Ended June 30, 2023 (Sales) | Three Months Ended June 30, 2024 (Cost) | Three Months Ended June 30, 2023 (Cost) | |:-------------------------------|:-----------------------------------------|:-----------------------------------------|:----------------------------------------|:----------------------------------------|\ | Product | $1,926 | $1,879 | $1,614 | $1,587 | | Service | $1,051 | $908 | $916 | $794 | Table: Product and Service Sales and Costs by Segment | Segment Totals ($ in millions) | Six Months Ended June 30, 2024 (Sales) | Six Months Ended June 30, 2023 (Sales) | Six Months Ended June 30, 2024 (Cost) | Six Months Ended June 30, 2023 (Cost) | |:-------------------------------|:---------------------------------------|:---------------------------------------|:--------------------------------------|:--------------------------------------|\ | Product | $3,713 | $3,708 | $3,137 | $3,139 | | Service | $2,069 | $1,753 | $1,806 | $1,547 | - Service revenues for the three and six months ended June 30, 2024, increased by 16% and 18% respectively, primarily driven by higher volumes at Mission Technologies in C5ISR and CEW&S[116] OTHER FINANCIAL INFORMATION This section covers additional financial details such as interest expense, retirement benefits, and effective income tax rates - Interest expense remained flat at $24 million for the three months ended June 30, 2024 and 2023, but decreased to $45 million for the six months ended June 30, 2024, from $48 million in 2023, due to lower long-term debt[117] - Non-operating retirement benefit increased to $46 million and $90 million for the three and six months ended June 30, 2024, respectively, primarily due to higher 2023 returns on plan assets[118] - The effective income tax rate decreased to 19.9% and 18.5% for the three and six months ended June 30, 2024, respectively, mainly due to a taxable gain from the sale of the Titan joint venture in 2023 and R&D tax credits[120][121] BACKLOG This section presents the company's funded and unfunded contract backlog, indicating future revenue potential Table: Total Backlog by Segment | ($ in millions) | June 30, 2024 (Funded) | June 30, 2024 (Unfunded) | June 30, 2024 (Total) | Dec 31, 2023 (Funded) | Dec 31, 2023 (Unfunded) | Dec 31, 2023 (Total) | |:-----------------------|:-----------------------|:-------------------------|:----------------------|:----------------------|:------------------------|:---------------------|\ | Ingalls | $13,917 | $2,232 | $16,149 | $12,546 | $3,201 | $15,747 | | Newport News | $12,006 | $15,468 | $27,474 | $11,890 | $15,349 | $27,239 | | Mission Technologies | $1,521 | $3,392 | $4,913 | $1,545 | $3,590 | $5,135 | | Total backlog | $27,444 | $21,092 | $48,536 | $25,981 | $22,140 | $48,121 | - Total backlog increased to $48.5 billion as of June 30, 2024, from $48.1 billion at December 31, 2023[122] - New contract awards for the six months ended June 30, 2024, totaled $6.2 billion, including awards for USS Boise maintenance, USS Harry S. Truman RCOH planning, and USS Richard J. Danzig construction[124] LIQUIDITY AND CAPITAL RESOURCES This section discusses the company's cash flows, capital expenditures, debt, and overall financial flexibility Table: Cash Flow Summary | ($ in millions) | Six Months Ended June 30, 2024 | Six Months Ended June 30, 2023 | |:--------------------------------------------------|:-------------------------------|:-------------------------------|\ | Net cash provided by (used in) operating activities | $(211) | $73 | | Depreciation and amortization | $160 | $174 | | Trade working capital increase | $(610) | $(282) | - Cash used in operating activities was $211 million for the six months ended June 30, 2024, compared to cash provided of $73 million in the prior year, primarily due to an unfavorable change in trade working capital[127] - Cash used in investing activities increased to $162 million from $70 million, driven by the sale of a joint venture interest in 2023 and increased capital expenditures[128] - Cash used in financing activities decreased to $46 million from $157 million, primarily due to a $440 million increase in commercial paper proceeds, partially offset by higher debt repayments and stock repurchases[128] Table: Free Cash Flow Calculation | Free Cash Flow ($ in millions) | Six Months Ended June 30, 2024 | Six Months Ended June 30, 2023 | |:-------------------------------|:-------------------------------|:-------------------------------|\ | Net cash provided by (used in) operating activities | $(211) | $73 | | Less capital expenditures | $(165) | $(111) | | Grant proceeds | $3 | $3 | | Free cash flow | $(373) | $(35) | Governmental Regulation and Supervision This section addresses the impact of government regulations and oversight on the company's operations and contract payments - The U.S. Government can decrease or withhold contract payments if significant deficiencies are found in contractor business systems[131] - As of June 30, 2024 and 2023, cumulative payment withholdings by the U.S. Government were not material to the Company's liquidity or cash flows[131] Off-Balance Sheet Arrangements This section discloses the company's off-balance sheet commitments, such as letters of credit and surety bonds - As of June 30, 2024, the Company had $11 million in issued but undrawn letters of credit and $360 million of surety bonds outstanding[133] - The Company had no other significant off-balance sheet arrangements as of June 30, 2024[133] ACCOUNTING STANDARDS UPDATES This section refers to accounting standards updates relevant to the company's financial reporting - Refer to Note 3 for information related to accounting standards updates[134] FORWARD-LOOKING STATEMENTS AND PROJECTIONS This section highlights the inherent uncertainties and risks associated with forward-looking statements and future projections - The report contains forward-looking statements subject to known and unknown risks and uncertainties that could cause actual results to differ materially[135] - Key risk factors include changes in government priorities, ability to estimate contract costs (including inflation), supply chain disruptions, and ability to attract and retain a qualified workforce[135] - The Company undertakes no obligation to update or revise any forward-looking statements[136] GLOSSARY OF PROGRAMS This section provides descriptions of the company's major defense programs and projects - Provides descriptions of major programs including Aircraft carrier RCOH, America class amphibious assault ships, Arleigh Burke class destroyers, Columbia class submarines, and USS Gerald R. Ford class aircraft carriers[138] - Includes descriptions for Legend class National Security Cutter, Naval nuclear support services, Nuclear and environmental services, San Antonio class amphibious transport dock ships, and Virginia class fast attack submarines[140] Item 3. Quantitative and Qualitative Disclosures about Market Risk This section discusses the Company's exposure to market risks, specifically interest rates and inflation, and the strategies employed to mitigate these risks - The Company is exposed to interest rate risk through its $1.5 billion revolving credit facility and $1 billion commercial paper program[141] - An increase of 1% in interest rates on the $440 million outstanding commercial paper program as of June 30, 2024, would increase annual interest expense by approximately $4 million[141] - The Company mitigates cost inflation risk by negotiating long-term agreements with suppliers and incorporating price escalation provisions in customer contracts[142] Item 4. Controls and Procedures This section confirms the effectiveness of the Company's disclosure controls and procedures and reports no material changes in internal control over financial reporting during the quarter - The Company's disclosure controls and procedures were evaluated and deemed effective as of June 30, 2024, by the CEO and CFO[143] - No material changes in internal control over financial reporting occurred during the quarterly period covered by this report[144] PART II – OTHER INFORMATION This part includes other information such as legal proceedings, risk factors, equity sales, and exhibits Item 1. Legal Proceedings This section refers to the legal proceedings detailed in the financial statements (Part I, Item 1, Note 9) and reiterates that other ongoing matters are not expected to have a material adverse effect on the Company's financial condition, results of operations, or cash flows - Information on legal proceedings is incorporated by reference from Note 9 of the unaudited condensed consolidated financial statements[146] - The Company does not believe other ongoing legal matters will individually or in aggregate have a not expected to have a material adverse effect on the Company's financial condition, results of operations, or cash flows[146] - The disclosure threshold for environmental legal proceedings involving a governmental authority is potential monetary sanctions exceeding $1 million[147] Item 1A. Risk Factors This section directs readers to the comprehensive risk factors discussed in the Company's 2023 Annual Report on Form 10-K, which could materially affect the business, financial condition, or future results - Readers should carefully consider the risk factors discussed in Part I, Item 1A of the 2023 Annual Report on Form 10-K[148] Item 2. Unregistered Sales of Equity Securities and Use of Proceeds This section details the Company's common stock repurchases during the quarter ended June 30, 2024, under its publicly announced stock repurchase program Table: Common Stock Repurchases | Period | Total Number of Shares Purchased | Average Price Paid per Share | Total Number of Shares Purchased as Part of Publicly Announced Program | |:-----------------------------|:---------------------------------|:-----------------------------|:-----------------------------------------------------------------------|\ | April 1, 2024 to April 30, 2024 | 80,003 | $279.55 | 80,003 | | May 1, 2024 to May 31, 2024 | 69,769 | $249.81 | 69,769 | | June 1, 2024 to June 30, 2024 | 100,337 | $248.12 | 100,337 | | Total | 250,109 | $258.65 | 250,109 | - As of June 30, 2024, the approximate dollar value of shares that may be purchased under the program was $1,387.7 million[150] - From inception through June 30, 2024, the Company purchased 14,450,306 shares at an average price of $166.94 per share, totaling $2.4 billion[150] Item 3. Defaults Upon Senior Securities This section states that there were no defaults upon senior securities during the reported period - No defaults upon senior securities occurred[151] Item 4. Mine Safety Disclosures This section indicates that there are no mine safety disclosures to report - No mine safety disclosures are applicable[151] Item 5. Other Information This section confirms that no directors or officers adopted or terminated Rule 10b5-1 or non-Rule 10b5-1 trading arrangements during the quarter - No directors or officers adopted or terminated a Rule 10b5-1 or non-Rule 10b5-1 trading arrangement during the quarterly period[152] Item 6. Exhibits This section lists the exhibits filed as part of the Form 10-Q, including corporate governance documents, certifications, and XBRL financial information - Exhibits include Restated Certificate of Incorporation, Certificate of Amendment, Restated Bylaws, and various certifications (CEO, CFO) pursuant to Sarbanes-Oxley Act[153] - Financial information formatted in XBRL is included, covering statements of operations, financial position, cash flows, changes in equity, and notes to financial statements[153] Signatures This section contains the official signatures, confirming the due authorization and filing of the report - The report was signed on August 1, 2024, by Nicolas Schuck, Corporate Vice President, Controller and Chief Accounting Officer[156]