Transcontinental Realty Investors(TCI) - 2025 Q1 - Quarterly Report

PART I. FINANCIAL INFORMATION This section provides the company's unaudited consolidated financial statements and management's discussion and analysis for the quarter Item 1. Financial Statements Unaudited consolidated financial statements and comprehensive notes for Transcontinental Realty Investors, Inc. for Q1 2025 and 2024 Consolidated Balance Sheets The balance sheet details the company's financial position, including assets, liabilities, and equity, for Q1 2025 Consolidated Balance Sheets (in thousands) | Metric | March 31, 2025 (in thousands) | December 31, 2024 (in thousands) | Change (in thousands) | % Change | | :-------------------------------- | :----------------------------- | :------------------------------ | :-------------------- | :------- | | Assets: | | | | | | Real estate | $582,232 | $557,388 | $24,844 | 4.46% | | Cash and cash equivalents | $13,779 | $19,915 | $(6,136) | -30.81% | | Restricted cash | $18,237 | $20,557 | $(2,320) | -11.28% | | Short-term investments | $74,859 | $79,800 | $(4,941) | -6.19% | | Notes receivable | $126,564 | $128,229 | $(1,665) | -1.30% | | Receivables from related party | $165,783 | $163,518 | $2,265 | 1.39% | | Other assets | $102,086 | $101,138 | $948 | 0.94% | | Total assets | $1,083,540 | $1,070,545 | $12,945 | 1.21% | | Liabilities: | | | | | | Mortgages and other notes payable | $198,153 | $181,856 | $16,297 | 8.96% | | Accounts payable and other liabilities | $24,604 | $32,103 | $(7,499) | -23.36% | | Accrued interest | $3,289 | $3,194 | $95 | 2.97% | | Deferred revenue | $581 | $581 | $0 | 0.00% | | Total liabilities | $226,627 | $217,734 | $8,893 | 4.08% | | Equity: | | | | | | Total shareholders' equity | $837,259 | $832,278 | $4,981 | 0.60% | | Noncontrolling interest | $19,654 | $20,533 | $(879) | -4.28% | | Total equity | $856,913 | $852,811 | **$4,102 | 0.48% | | Total liabilities and equity | $1,083,540 | $1,070,545 | $12,945 | 1.21% | Consolidated Statements of Operations The statement of operations presents the company's revenues, expenses, and net income for Q1 2025 and 2024 Consolidated Statements of Operations (in thousands) | Metric | Three Months Ended March 31, 2025 (in thousands) | Three Months Ended March 31, 2024 (in thousands) | Change (in thousands) | % Change | | :--------------------------------------- | :------------------------------------------ | :------------------------------------------ | :-------------------- | :------- | | Total revenue | $12,008 | $11,899 | $109 | 0.92% | | Total operating expenses | $12,643 | $13,232 | $(589) | -4.45% | | Net operating loss | $(635) | $(1,333) | $698 | -52.36% | | Interest income | $4,628 | $6,127 | $(1,499) | -24.47% | | Interest expense | $(1,781) | $(1,869) | $88 | -4.71% | | Gain on sale or write-down of assets, net | $3,891 | $0 | $3,891 | N/A | | Income tax provision | $(1,322) | $(603) | $(719) | 119.24% | | Net income attributable to the Company | $4,618 | $2,549 | $2,069 | 81.17% | | Earnings per share - basic and diluted | $0.53 | $0.30 | $0.23 | 76.67% | Consolidated Statements of Equity This statement outlines changes in the company's total equity and noncontrolling interest for Q1 2025 Consolidated Statements of Equity (in thousands) | Metric | March 31, 2025 (in thousands) | January 1, 2025 (in thousands) | Change (in thousands) | | :-------------------------------- | :----------------------------- | :---------------------------- | :-------------------- | | Total Shareholders' Equity | $837,259 | $832,278 | $4,981 | | Noncontrolling Interest | $19,654 | $20,533 | $(879) | | Total Equity | $856,913 | $852,811 | $4,102 | Key Changes (Q1 2025) - Net income attributable to the Company was $4,618 thousand[15] - Repurchase of treasury shares by IOR amounted to $(679) thousand[15] - Adjustment to noncontrolling interest was $363 thousand[15] Consolidated Statements of Cash Flows This statement summarizes cash flows from operating, investing, and financing activities for Q1 2025 and 2024 Consolidated Statements of Cash Flows (in thousands) | Cash Flow Activity | Three Months Ended March 31, 2025 (in thousands) | Three Months Ended March 31, 2024 (in thousands) | Change (in thousands) | | :--------------------------------------- | :------------------------------------------ | :------------------------------------------ | :-------------------- | | Net cash (used in) provided by operating activities | $(7,426) | $3,869 | $(11,295) | | Net cash (used in) provided by investing activities | $(16,630) | $11,574 | $(28,204) | | Net cash provided by (used in) financing activities | $15,600 | $(1,456) | $17,056 | | Net (decrease) increase in cash, cash equivalents and restricted cash | $(8,456) | $13,987 | $(22,443) | | Cash, cash equivalents and restricted cash, end of period | $32,016 | $93,014 | $(60,998) | Notes to Consolidated Financial Statements This section provides detailed explanations and disclosures supporting the consolidated financial statements 1. Organization This note describes TCI's corporate structure, business activities, and management arrangements - Transcontinental Realty Investors, Inc. (TCI) is a Nevada corporation formed in 1984, listed on the NYSE under 'TCI', and approximately 78% owned by American Realty Investors, Inc. (ARL)[20] - The primary business involves the acquisition, development, and ownership of income-producing residential and commercial real estate, along with opportunistic land acquisition and sales[21] - As of March 31, 2025, the property portfolio includes four office buildings (1,060,236 sq ft), fourteen directly owned multifamily properties (2,328 units), four multifamily properties in development (906 units), and approximately 1,797 acres of developed and undeveloped land[27] - Day-to-day operations are managed by Pillar Income Asset Management, Inc. ('Pillar'), a related party, which handles investment opportunities, asset management, development, construction management, and financing, with the company having no direct employees[22] 2. Summary of Significant Accounting Policies This note outlines key accounting principles and policies used in preparing the consolidated financial statements - The unaudited consolidated financial statements are prepared in accordance with Form 10-Q and Article 10 of Regulation S-X, with certain GAAP disclosures condensed or omitted[23] - The company consolidates entities where it is the primary beneficiary of a variable interest entity (VIE) or holds a majority voting interest, based on power to direct activities and obligation/right to absorb losses/benefits[26][29] 3. Earnings Per Share This note details the calculation of basic and diluted earnings per share for the reporting periods Earnings Per Share (in thousands) | Metric | Three Months Ended March 31, 2025 | Three Months Ended March 31, 2024 | | :------------------------------------------ | :-------------------------------- | :-------------------------------- | | Net income attributable to the Company | $4,618 | $2,549 | | Weighted-average common shares outstanding | 8,639,316 | 8,639,316 | | EPS - basic and diluted | $0.53 | $0.30 | - Basic and diluted EPS increased by $0.23 (76.67%) from $0.30 in Q1 2024 to $0.53 in Q1 2025, driven by higher net income attributable to the Company[30] 4. Supplemental Cash Flow Information This note provides additional details on non-cash activities and cash paid for interest and taxes Supplemental Cash Flow Information (in thousands) | Metric | Three Months Ended March 31, 2025 (in thousands) | Three Months Ended March 31, 2024 (in thousands) | | :----------------------- | :------------------------------------------ | :------------------------------------------ | | Cash paid for interest | $1,504 | $1,544 | | Cash paid for taxes | $3,206 | $0 | | Accrued development costs | $13,880 | $1,571 | - Cash paid for taxes significantly increased from $0 in Q1 2024 to $3,206 thousand in Q1 2025; accrued development costs also saw a substantial increase from $1,571 thousand to $13,880 thousand[31] 5. Operating Segments This note presents financial information for the company's Residential and Commercial operating segments - The company operates in two reportable segments: Residential (multifamily properties) and Commercial (commercial real estate properties)[33] Operating Segment Performance (in thousands) | Segment | Three Months Ended March 31, 2025 (in thousands) | Three Months Ended March 31, 2024 (in thousands) | Change (in thousands) | % Change | | :-------------------- | :------------------------------------------ | :------------------------------------------ | :-------------------- | :------- | | Multifamily Segment: | | | | | | Revenues | $8,764 | $8,510 | $254 | 2.98% | | Operating expenses | $(4,040) | $(4,219) | $179 | -4.24% | | Profit from segment | $4,724 | $4,291 | $433 | 10.09% | | Commercial Segment: | | | | | | Revenues | $3,244 | $3,389 | $(145) | -4.28% | | Operating expenses | $(1,937) | $(2,415) | $478 | -19.79% | | Profit from segment | $1,307 | $974 | $333 | 34.19% | | Total profit from segments | $6,031 | $5,265 | $766 | 14.55% | - Total profit from segments increased by $766 thousand (14.55%) year-over-year, driven by a 10.09% increase in Multifamily segment profit and a 34.19% increase in Commercial segment profit[34] 6. Lease Revenue This note details lease revenue components and future rental payments from non-cancelable commercial leases - Lease revenues are generated from multifamily and commercial properties, classified as operating leases, with minimum rental revenues recognized on a straight-line basis[36] Lease Revenue Components (in thousands) | Component | Three Months Ended March 31, 2025 (in thousands) | Three Months Ended March 31, 2024 (in thousands) | | :---------------- | :------------------------------------------ | :------------------------------------------ | | Fixed component | $11,162 | $10,999 | | Variable component | $265 | $280 | | Total | $11,427 | $11,279 | Future Rental Payments from Non-Cancelable Commercial Leases (in thousands) | Year | Amount | | :--- | :----- | | 2025 | $11,726 | | 2026 | $12,478 | | 2027 | $12,366 | | 2028 | $11,569 | | 2029 | $8,886 | | Thereafter | $19,356 | | Total | $76,381 | 7. Real Estate Activity This note provides a breakdown of real estate assets, construction in progress, and asset disposition gains Real Estate Components (in thousands) | Real Estate Component | March 31, 2025 (in thousands) | December 31, 2024 (in thousands) | | :---------------------- | :----------------------------- | :------------------------------ | | Land | $104,076 | $104,076 | | Building and improvements | $375,487 | $375,430 | | Tenant improvements | $17,784 | $16,629 | | Construction in progress | $166,399 | $140,046 | | Total cost | $663,746 | $636,181 | | Less accumulated depreciation | $(81,514) | $(78,793) | | Total real estate | $582,232 | $557,388 | - Construction in progress increased by $26,353 thousand (18.82%) from December 31, 2024, to March 31, 2025, primarily due to development activities at Windmill Farms and new multifamily projects[38][39][41] Multifamily Construction Projects (as of March 31, 2025, in thousands) | Project | Units | Location | Total Project Cost | Costs Incurred | Expected Completion Date | | :------------ | :---- | :----------- | :----------------- | :------------- | :----------------------- | | Alera | 240 | Lake Wales, FL | $55,330 | $43,901 | December 2025 | | Bandera Ridge | 216 | Temple, TX | $49,603 | $35,692 | November 2025 | | Merano | 216 | McKinney, TX | $51,910 | $34,323 | November 2025 | | Mountain Creek | 234 | Dallas, TX | $49,971 | $5,122 | October 2026 | | Total | 906 | | $206,814 | $119,038 | | - The company recognized a net gain on sale or write-down of assets of $3,891 thousand for the three months ended March 31, 2025, primarily from land dispositions in Windmill Farms and other holdings[43] 8. Short-term Investments This note details the composition and changes in the company's short-term investment portfolio Short-term Investments (in thousands) | Investment Type | March 31, 2025 (in thousands) | December 31, 2024 (in thousands) | | :-------------------- | :----------------------------- | :------------------------------ | | Corporate bonds | $75,000 | $80,000 | | Demand notes | $329 | $325 | | Less discount | $(470) | $(525) | | Total | $74,859 | $79,800 | - Short-term investments decreased by $4,941 thousand (6.19%) from December 31, 2024, to March 31, 2025, mainly due to a reduction in corporate bonds[44] - The average interest rate on investments decreased from 5.20% at December 31, 2024, to 4.92% at March 31, 2025[44] 9. Notes Receivable This note describes the company's notes receivable, including convertible and related party receivables - Total notes receivable decreased slightly from $128,229 thousand at December 31, 2024, to $126,564 thousand at March 31, 2025[46] - Several notes are convertible into 100% ownership interest in the underlying property at the company's option and are collateralized by the property[46] - Notes from Unified Housing Foundation, Inc. (UHF) are considered related party receivables, with principal and interest payments funded from surplus cash flow, property sales, or refinancing, and are cross-collateralized[47][48] 10. Other Assets This note details other assets, including district receivables and deferred tax assets Other Asset Components (in thousands) | Other Asset Component | March 31, 2025 (in thousands) | December 31, 2024 (in thousands) | | :-------------------------- | :----------------------------- | :------------------------------ | | Acquisition deposits | $15,409 | $17,642 | | District receivables | $55,211 | $52,700 | | Interest receivable | $16,326 | $16,388 | | Tenant and other receivables | $3,996 | $3,989 | | Prepaid expenses and other assets | $7,558 | $7,964 | | Deferred tax assets | $3,586 | $2,455 | | Total | $102,086 | $101,138 | - District receivables, related to infrastructure costs in Windmill Farms, increased by $2,511 thousand (4.76%) to $55,211 thousand[51] - Deferred tax assets increased by $1,131 thousand (46.07%) to $3,586 thousand[51] 11. Mortgages and Other Notes Payable This note details mortgages and other notes payable, including new borrowings and covenant compliance Mortgages and Other Notes Payable (in thousands) | Metric | March 31, 2025 (in thousands) | December 31, 2024 (in thousands) | | :----------------------------- | :----------------------------- | :------------------------------ | | Mortgages and other notes payable | $198,153 | $181,856 | - Total mortgages and other notes payable increased by $16,297 thousand (8.96%) from December 31, 2024, to March 31, 2025, primarily due to new construction loan borrowings for Alera, Bandera Ridge, and Merano[55][56][60] - The company was not in compliance with the minimum debt service coverage ratio (DSCR) covenant for the loan on 770 South Post Oak, leading to the lender requiring surplus cash flow to be locked into a designated deposit account[58] - The company has guaranteed loans on Alera, Bandera Ridge, Merano, Mountain Creek, Villas at Bon Secour, and Windmill Farms[59] 12. Related Party Transactions This note discloses transactions with related entities, including management fees and interest income - The company engages in business transactions with related parties, including Pillar Income Asset Management, Inc. ('Pillar') and Regis Realty Prime, LLC ('Regis'), both wholly owned by a subsidiary of May Realty Holdings, Inc. ('MRHI'), which controls ARL, the company's majority shareholder[62][63] Related Party Transactions (Three Months Ended March 31, in thousands) | Transaction Type | 2025 | 2024 | | :-------------------------- | :--- | :--- | | Rental income from Pillar/Regis | $145 | $178 | | Property operating expense to Regis | $86 | $80 | | General and administrative to Pillar | $971 | $914 | | Advisory fees paid to Pillar | $2,431 | $2,165 | | Development fees paid to Pillar | $730 | $388 | | Interest income on UHF notes/Pillar Receivable | $2,517 | $2,692 | - Advisory fees paid to Pillar increased by $266 thousand (12.29%) and development fees increased by $342 thousand (88.14%) in Q1 2025 compared to Q1 2024[65] 13. Noncontrolling Interests This note explains the nature of noncontrolling interests and changes in the company's ownership of IOR - Noncontrolling interest represents third-party ownership in Income Opportunity Realty Investors, Inc. ('IOR'), whose shares are listed on the NYSE American[67] - The company completed a tender offer on January 29, 2025, acquiring 21,678 shares of IOR for $454 thousand, and purchased an additional 12,680 shares in the open market for $225 thousand during Q1 2025[68][90][91] - The company's ownership in IOR increased from approximately 83.2% at December 31, 2024, to 84.0% at March 31, 2025[69] 14. Deferred Income This note describes deferred gain recognition from property sales to related parties - The company has deferred gain recognition of $581 thousand from property sales to related parties, as sales criteria for the full accrual method were not met; this gain will be recognized when properties are sold to non-related third parties[70] 15. Income Taxes This note details the company's income tax provision and tax sharing agreement with related entities - The company is part of a tax sharing and compensating agreement with MRHI, ARL, and IOR, with expenses calculated based on losses absorbed by taxable income multiplied by a 21% statutory tax rate[72] Income Tax Provision (Three Months Ended March 31, in thousands) | Component | 2025 | 2024 | | :-------- | :--- | :--- | | Current | $2,453 | $603 | | Deferred | $(1,131) | $0 | | Total | $1,322 | $603 | - The total income tax provision increased by $719 thousand (119.24%) in Q1 2025 compared to Q1 2024, primarily due to a significant increase in current tax provision and a deferred tax benefit in 2025[73] 16. Commitments and Contingencies This note outlines the company's liquidity plans and ongoing legal proceedings - The company plans to meet liquidity requirements by generating excess cash from property operations, selling income-producing assets, refinancing real estate, and obtaining additional borrowings[74] - A legal proceeding related to a 2008 property sale (Nixdorf) was reversed by the Fifth District Court of Appeals at Dallas on January 7, 2025, remanding the case for a new trial, which the company is challenging[75] 17. Subsequent Events This note confirms the evaluation of events occurring after the balance sheet date - Subsequent events occurring after March 31, 2025, have been evaluated up to May 8, 2025, the date the consolidated financial statements were available for issuance[76] Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations Management discusses financial condition, operational results, business strategy, development, financing, and FFO for the period Forward-Looking Statements This section outlines forward-looking statements based on management's beliefs, subject to inherent risks and uncertainties - The report contains forward-looking statements based on management's beliefs and assumptions, subject to risks and uncertainties that could cause actual results to differ materially[78] - Key risks include general real estate industry factors, availability of financing, demand for properties, ability to obtain financing for development, timing of property sales, growth management, construction delays, economic downturns, compliance costs, uninsured losses, environmental contamination, and dependence on key personnel[79][80] Management's Overview Management provides an overview of the company's real estate portfolio, development, and strategic actions - The company is an externally advised and managed real estate investment company owning a diverse portfolio of income-producing properties and land for development across the Southern United States[81] - Operations are managed by Pillar Income Asset Management, Inc., a related party, which handles investment opportunities, asset management, and financing[82] - Development activities include Windmill Farms, a collection of freshwater districts in Kaufman County, Texas, being developed into single-family lots, multifamily, and retail properties, with $55.2 million in District Receivables as of March 31, 2025[84][85] - Four multifamily properties (Alera, Bandera Ridge, Merano, Mountain Creek) are under development with Pillar, funded by construction loans, totaling $119.038 million in costs incurred as of March 31, 2025[86][88] - Recent acquisitions and dispositions include the sale of 30 single-family lots from Windmill Farms for $1.4 million (gain of $1.1 million) and a $3.5 million condemnation settlement for 11.2 acres in Windmill Farms (gain of $3.1 million)[87] - Financing activities include amending the cash management agreement with Pillar (interest rate change to SOFR), extending the Windmill Farms loan maturity to February 2026, and securing new construction loans for Forest Grove and Mountain Creek[87] - The company acquired 21,678 shares of IOR for $0.5 million through a tender offer completed January 29, 2025, and an additional 12,680 shares for $0.2 million in the open market during Q1 2025[90][91] Critical Accounting Policies This section discusses key accounting policies requiring significant management judgment and estimation - The preparation of financial statements requires management to make estimates and assumptions, including judgments on revenue recognition, accruals, bad debt provisions, impairment of long-lived assets, purchase price allocation, capitalization of costs, and fair value measurements[92][93] - Fair value measurements for financial instruments follow ASC Topic 820, using a three-level hierarchy based on the transparency of inputs: Level 1 (quoted prices in active markets), Level 2 (observable inputs for similar assets/liabilities), and Level 3 (unobservable inputs)[94][95][96] - Related parties are defined by ASC Topic 805, including entities with significant equity investments, trusts, management personnel, and parties with controlling or significant influence over decision-making[97] Results of Operations This section analyzes the company's financial performance, covering segment revenues, expenses, and net income Results of Operations (Three Months Ended March 31, in thousands) | Metric | Three Months Ended March 31, 2025 (in thousands) | Three Months Ended March 31, 2024 (in thousands) | Variance (in thousands) | | :--------------------------------------- | :------------------------------------------ | :------------------------------------------ | :---------------------- | | Multifamily Segment Revenue | $8,764 | $8,510 | $254 | | Multifamily Segment Operating expenses | $(4,040) | $(4,219) | $179 | | Multifamily Segment Profit | $4,724 | $4,291 | $433 | | Commercial Segment Revenue | $3,244 | $3,389 | $(145) | | Commercial Segment Operating expenses | $(1,937) | $(2,415) | $478 | | Commercial Segment Profit | $1,307 | $974 | $333 | | Segment operating income | $6,031 | $5,265 | $766 | | Depreciation and amortization | $(2,883) | $(3,172) | $289 | | General, administrative and advisory | $(3,783) | $(3,426) | $(357) | | Interest income, net | $2,847 | $4,258 | $(1,411) | | Gain on sale or write down of assets | $3,891 | $0 | $3,891 | | Income from joint venture | $0 | $435 | $(435) | | Other expense | $(1,322) | $(603) | $(719) | | Net income | $4,781 | $2,757 | $2,024 | - Net income increased by $2.0 million, primarily due to increased profit from the multifamily segment (higher rents) and commercial segment (lower insurance and property taxes), and a $3.1 million gain from a condemnation settlement[101][107] - Net interest income decreased by $1.4 million due to a $1.5 million decrease in interest income, partially offset by a $0.1 million decrease in interest expense, mainly from a lower average balance and interest rates on short-term investments[107] Liquidity and Capital Resources This section discusses the company's cash sources, liquidity needs, and capital resource management strategies - Principal cash sources include property operations, proceeds from asset sales, collection of notes receivable, refinancing, and additional borrowings[101] - Liquidity needs are for recurring expenses, debt service, capital expenditures, development costs not covered by loans, and potential property acquisitions[102] - Management anticipates that current cash, along with cash from notes, related party receivables, and investments, will be sufficient for cash requirements; the company may sell assets, refinance debt, or seek additional borrowings[103] Cash Flow Activities (Three Months Ended March 31, in thousands) | Cash Flow Activity | Three Months Ended March 31, 2025 (in thousands) | Three Months Ended March 31, 2024 (in thousands) | Variance (in thousands) | | :--------------------------------------- | :------------------------------------------ | :------------------------------------------ | :---------------------- | | Net cash (used in) provided by operating activities | $(7,426) | $3,869 | $(11,295) | | Net cash (used in) provided by investing activities | $(16,630) | $11,574 | $(28,204) | | Net cash provided by (used in) financing activities | $15,600 | $(1,456) | $17,056 | - The $11.3 million increase in cash used in operating activities is primarily due to a $5.2 million decrease in accounts payable and other liabilities and a $3.1 million increase in other assets[104] - The $28.2 million increase in cash used in investing activities is mainly due to a $20.7 million increase in real estate development and renovation (Alera, Bandera Ridge, Merano) and a $9.4 million increase in net redemption of short-term investments[105] - The $17.1 million increase in cash provided by financing activities resulted from borrowings on construction loans for Alera, Bandera Ridge, and Merano[106] Funds From Operations ("FFO") This section defines and reconciles Funds From Operations (FFO) as a supplemental real estate performance measure - FFO is used as a supplemental measure for the real estate industry, defined by Nareit as net income excluding gains/losses from property sales, plus real estate-related depreciation and amortization, impairment write-downs, and adjustments for unconsolidated joint ventures[108] - FFO is considered useful for comparing operating and financial results between periods, as it excludes real estate depreciation and amortization, which management believes fluctuates with market conditions rather than depreciating ratably[109] - FFO does not represent GAAP cash flow from operations, should not be an alternative to GAAP net income, and may not be comparable to similarly titled measures by other companies[110] Reconciliation of Net Income to FFO (Three Months Ended March 31, in thousands) | Metric | 2025 | 2024 | | :--------------------------------------- | :--- | :--- | | Net income attributable to the Company | $4,618 | $2,549 | | Depreciation and amortization | $2,883 | $3,172 | | Gain on sale or write down of assets, net | $(3,891) | $0 | | Gain on sale of land | $3,145 | $0 | | FFO-Basic and Diluted | $6,755 | $5,721 | - FFO-Basic and Diluted increased by $1,034 thousand (18.07%) from $5,721 thousand in Q1 2024 to $6,755 thousand in Q1 2025[112] Item 3. Quantitative and Qualitative Disclosures About Market Risks This section is optional and not included in the report - This item is optional and not included in the current report[113] Item 4. Controls and Procedures Management confirmed effective disclosure controls and no material changes to internal control over financial reporting - Disclosure controls and procedures were deemed effective as of March 31, 2025, providing reasonable assurance that required information is recorded, processed, summarized, and reported timely[114] - No material changes to internal control over financial reporting occurred during the most recent fiscal quarter[115] PART II. OTHER INFORMATION This section covers legal proceedings, risk factors, equity sales, defaults, and other required disclosures Item 1. Legal Proceedings No legal proceedings are reported under this item - No legal proceedings are reported under this item[116] Item 1A. Risk Factors No material changes have occurred to the risk factors previously disclosed in the 2024 Form 10-K - No material changes have occurred to the risk factors previously disclosed in the 2024 Form 10-K[116] Item 2. Unregistered Sales of Equity Securities and Use of Proceeds The company's share repurchase program has 406,465 shares remaining, with no purchases made in Q1 2025 - The company has an ongoing share repurchase program for up to 1,637,000 shares of common stock, with no termination date[117] - As of March 31, 2025, 1,230,535 shares have been purchased under the program, leaving 406,465 shares available for future repurchase[117] - No shares were purchased under this program during the three months ended March 31, 2025[117] Item 3. Defaults Upon Senior Securities No defaults upon senior securities are reported - No defaults upon senior securities are reported[118] Item 4. Mine Safety Disclosures No mine safety disclosures are reported - No mine safety disclosures are reported[118] Item 5. Other Information No other information is reported under this item - No other information is reported under this item[118] Item 6. Exhibits This section lists exhibits filed with the report, including corporate documents and certifications - The report includes various exhibits, such as Articles of Incorporation, Certificates of Amendment, By-Laws, and Section 302 and 906 Certifications[119] Signatures The report was duly signed by Erik L. Johnson, President and CEO, on May 8, 2025 - The report was signed by Erik L. Johnson, President and Chief Executive Officer, on May 8, 2025[123]