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Consensus(CCSI) - 2025 Q2 - Quarterly Report

Part I. Financial Information Item 1. Financial Statements This section presents the unaudited condensed consolidated financial statements and accompanying notes for the period Condensed Consolidated Balance Sheets (unaudited) | Metric | June 30, 2025 (in thousands) | December 31, 2024 (in thousands) | | :--------------------------------- | :----------------------------- | :------------------------------- | | Total Assets | $641,518 | $602,201 | | Total Liabilities | $667,997 | $681,664 | | Total Stockholders' Deficit | $(26,479) | $(79,463) | | Cash and cash equivalents | $57,894 | $33,545 | | Current portion of long-term debt | $— | $18,902 | Condensed Consolidated Statements of Income (unaudited) | Metric (in thousands) | 3 Months Ended June 30, 2025 | 3 Months Ended June 30, 2024 | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | | :-------------------- | :--------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | | Revenues | $87,721 | $87,500 | $174,859 | $175,646 | | Gross profit | $70,097 | $70,378 | $139,165 | $141,476 | | Income from operations| $39,049 | $39,881 | $76,546 | $77,548 | | Net income | $20,781 | $23,874 | $41,933 | $50,244 | | Basic EPS | $1.07 | $1.24 | $2.15 | $2.61 | | Diluted EPS | $1.07 | $1.24 | $2.14 | $2.61 | Condensed Consolidated Statements of Comprehensive Income (unaudited) | Metric (in thousands) | 3 Months Ended June 30, 2025 | 3 Months Ended June 30, 2024 | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | | :------------------------------ | :--------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | | Net income | $20,781 | $23,874 | $41,933 | $50,244 | | Foreign currency translation adjustment | $9,859 | $(1,337) | $14,227 | $(7,651) | | Comprehensive income | $30,640 | $22,537 | $56,160 | $42,593 | Condensed Consolidated Statements of Cash Flows (unaudited) | Metric (in thousands) | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | | :-------------------------------- | :--------------------------- | :--------------------------- | | Net cash provided by operating activities | $69,242 | $69,054 | | Net cash used in investing activities | $(20,150) | $(17,479) | | Net cash used in financing activities | $(28,588) | $(86,101) | | Net change in cash and cash equivalents | $24,349 | $(39,514) | | Cash and cash equivalents at end of period| $57,894 | $49,201 | Condensed Consolidated Statements of Stockholders' Deficit (unaudited) | Metric (in thousands) | June 30, 2025 | December 31, 2024 | | :-------------------------------- | :------------ | :---------------- | | Total Stockholders' Deficit | $(26,479) | $(79,463) | | Net income (6 months) | $41,933 | $50,244 | | Foreign currency translation adjustment (6 months) | $14,227 | $(7,651) | | Repurchase of common stock (6 months) | $(12,574) | $(708) | | Share-based compensation (6 months) | $9,878 | $9,665 | Notes to Condensed Consolidated Financial Statements (unaudited) 1. Basis of Presentation The company provides secure SaaS information delivery services and operates as a single 'Cloud Fax' segment - Consensus Cloud Solutions, Inc is a provider of secure information delivery services with a scalable Software-as-a-Service ("SaaS") platform, serving customers globally across healthcare, government, financial services, law, and education21 - The Company operates one reportable segment known as Cloud Fax, with the CEO reviewing financial information on a consolidated basis for performance assessment and resource allocation28 2. Recent Accounting Pronouncements The company is evaluating the impact of recent FASB accounting standards updates on its financial statements - ASU No 2023-09, 'Income Taxes (Topic 740): Improvements to Income Tax Disclosures,' is effective for annual periods beginning after December 15, 2024, and is expected to impact the Company's income tax disclosures from the fiscal year ending December 31, 202531 - ASU No 2024-03, 'Income Statement: Expense Disaggregation Disclosures,' is effective for fiscal periods beginning after December 15, 2026, and the Company is currently evaluating its potential impact32 3. Revenues Revenue is primarily generated from cloud-based solutions, with Corporate revenue growing while SoHo revenue declines Revenues by Source (in thousands) | Revenue Source | 3 Months Ended June 30, 2025 | 3 Months Ended June 30, 2024 | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | | :--------------- | :--------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | | Corporate | $55,302 | $51,720 | $109,591 | $103,110 | | SoHo | $32,414 | $35,779 | $65,263 | $72,533 | | Total | $87,721 | $87,500 | $174,859 | $175,646 | - The Company's business primarily consists of performance obligations satisfied over time, with revenue for cloud-based services recognized on a straight-line basis over the subscription period3940 4. Fair Value Measurements The company uses a three-tier hierarchy for fair value measurements, with cash valued using Level 1 inputs - Cash and cash equivalents, including money market funds, are valued based on Level 1 inputs (quoted prices in active markets)45 - The fair value of long-term debt is determined using Level 1 inputs (recent quoted market prices or dealer quotes)47 - Non-financial assets are reported at carrying value and written down to fair value using Level 3 inputs if impaired48 5. Property and Equipment Net property and equipment increased, driven by costs for internal-use software development Property and Equipment, Net (in thousands) | Category | June 30, 2025 | December 31, 2024 | | :-------------------------------------- | :------------ | :---------------- | | Internal-use software development costs | $91,047 | $88,244 | | Internal-use software development costs in process | $60,296 | $46,676 | | Total property and equipment, net | $108,111 | $100,076 | - Depreciation and amortization expense for property and equipment was $8.4 million for the six months ended June 30, 202550 6. Goodwill and Intangible Assets Goodwill increased due to foreign exchange translation, while customer relationships remain the largest intangible asset Goodwill (in thousands) | Metric | Amount | | :------------------------ | :---------- | | Balance as of January 1, 2025 | $345,036 | | Foreign exchange translation | $7,707 | | Balance as of June 30, 2025 | $352,743 | Intangible Assets Subject to Amortization (Net, in thousands) | Category | June 30, 2025 | December 31, 2024 | | :------------------- | :------------ | :---------------- | | Customer relationships | $7,166 | $8,233 | | Other purchased intangibles | $1,174 | $1,338 | | Trade names | $216 | $281 | | Total | $8,556 | $9,852 | - Amortization expense for intangible assets was $1.3 million for the six months ended June 30, 202555 7. Long-Term Debt Total long-term debt stands at $578.2 million, with the company actively repurchasing senior notes Long-Term Debt (in thousands) | Debt Type | June 30, 2025 | December 31, 2024 | | :----------------- | :------------ | :---------------- | | 2026 Senior Notes | $234,139 | $248,980 | | 2028 Senior Notes | $348,247 | $349,137 | | Total debt, net | $578,155 | $592,982 | - The Company has a Debt Repurchase Program authorizing up to $300 million in principal reduction, with $222.6 million retired as of June 30, 20256768 - The Company is in compliance with all debt covenants as of June 30, 2025626466 8. Commitments and Contingencies The company faces no material adverse effects from legal proceedings but has reserved for sales tax liabilities - The Company does not believe any current legal proceedings or claims are likely to have a material adverse effect on its consolidated financial position, results of operations, or cash flows71 - The Company has reserved for historical sales tax liabilities, but state taxing authorities may challenge its position or impose other taxes72 9. Other Balance Sheet Account Details Prepaid expenses and accounts payable both decreased, driven by lower marketing and compensation accruals Prepaid Expenses and Other Current Assets (in thousands) | Category | June 30, 2025 | December 31, 2024 | | :------------------------ | :------------ | :---------------- | | Prepaid insurance | $1,204 | $2,601 | | Prepaid income taxes | $1,360 | $2,065 | | Prepaid marketing expense | $— | $3,365 | | Prepaid software licenses | $3,657 | $4,346 | | Other prepaid expenses | $3,266 | $3,389 | | Other current assets | $214 | $293 | | Total | $9,701 | $16,059 | Accounts Payable and Accrued Expenses (in thousands) | Category | June 30, 2025 | December 31, 2024 | | :------------------------ | :------------ | :---------------- | | Accounts payable | $5,991 | $7,383 | | Accrued sales and other taxes | $7,042 | $6,796 | | Accrued interest | $7,638 | $7,939 | | Accrued compensation | $6,102 | $10,425 | | Accrued advertising expenses | $1,643 | $2,719 | | Other accrued expenses | $3,186 | $1,215 | | Total | $31,602 | $36,477 | 10. Income Taxes The effective tax rate fluctuated due to geographical income mix, with liabilities for uncertain tax positions noted Effective Tax Rates | Period | 2025 | 2024 | | :------------------------ | :---- | :---- | | Three Months Ended June 30 | 27.2% | 26.5% | | Six Months Ended June 30 | 25.7% | 26.9% | - The increase in the effective tax rate for the three months ended June 30, 2025, was primarily due to a change in the geographical mix of income and other factors75 - As of June 30, 2025, the Company had $14.1 million in liabilities for uncertain income tax positions and is evaluating the impact of the new OBBBA legislation7778 11. Stockholders' Deficit The company extended its $100 million stock repurchase program and repurchased $12.6 million in shares - The common stock repurchase program was extended through February 2028, with an authorization of up to $100.0 million8081 Common Stock Repurchase Activity | Period | Shares Repurchased | Aggregate Cost (in millions) | | :------------------------ | :----------------- | :--------------------------- | | 3 Months Ended June 30, 2025 | 551,873 | $12.5 | | 6 Months Ended June 30, 2025 | 553,344 | $12.6 | | 6 Months Ended June 30, 2024 | 42,962 | $0.7 | | Cumulatively as of June 30, 2025 | 1,639,069 | $44.9 | - The Company withheld 51,045 shares in the six-month period for tax withholding obligations related to vested restricted stock82 12. Equity Incentive Plan The company has 1.4 million shares available for grant and $29.6 million in unrecognized compensation cost - Under the 2021 Equity Incentive Plan, 4,000,000 shares of common stock are authorized, with 1,397,224 shares available as of June 30, 202585 - As of June 30, 2025, unrecognized share-based compensation cost related to restricted stock units was $29.6 million, to be recognized over a weighted-average period of 2.4 years86 13. Earnings Per Share Basic and diluted earnings per share declined compared to the prior year for both three and six-month periods Net Income Per Common Share | Metric | 3 Months Ended June 30, 2025 | 3 Months Ended June 30, 2024 | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | | :----- | :--------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | | Basic | $1.07 | $1.24 | $2.15 | $2.61 | | Diluted| $1.07 | $1.24 | $2.14 | $2.61 | - For the three and six months ended June 30, 2025, 1,017,505 and 994,209 anti-dilutive shares, respectively, were excluded from the earnings per share calculation88 14. Segment Information The company operates a single 'Cloud Fax' segment, with the majority of its revenue generated in the United States Segment Operating Profit (in thousands) | Metric | 3 Months Ended June 30, 2025 | 3 Months Ended June 30, 2024 | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | | :--------------------- | :--------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | | Segment operating profit | $39,049 | $39,881 | $76,546 | $77,548 | Revenues by Geographic Region (in thousands) | Region | 3 Months Ended June 30, 2025 | 3 Months Ended June 30, 2024 | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | | :-------------- | :--------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | | United States | $68,620 | $69,199 | $137,376 | $138,911 | | Canada | $14,113 | $13,254 | $27,736 | $26,373 | | Ireland | $2,775 | $3,037 | $5,477 | $6,211 | | All other countries | $2,213 | $2,010 | $4,270 | $4,151 | | Foreign countries | $19,101 | $18,301 | $37,483 | $36,735 | 15. Subsequent Events The company repurchased additional shares and entered into a new, larger credit facility after the quarter ended - Subsequent to June 30, 2025, the Company repurchased 115,652 shares for $2.6 million under its share buyback program91 - On July 9, 2025, the Company entered into a new $75.0 million Revolving Credit Facility and a $150.0 million Delayed-Draw Term Loan (DDTL) Facility92 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations Management discusses the company's financial condition, operational results, and liquidity for the reporting period Forward-Looking Information - The report contains forward-looking statements subject to risks and uncertainties, for which the Company claims the protection of the safe harbor provisions of the Private Securities Litigation Reform Act of 199594 - Factors that could cause actual results to differ include economic uncertainty, ability to sustain growth/profitability, customer acquisition/retention, and managing technological changes95 Overview - Consensus is a leading provider of secure information delivery services with a scalable SaaS platform, serving approximately 745,000 customers across 44 countries97 - The Company's mission is to democratize secure information interchange and solve the healthcare interoperability challenge97 Key Performance Metrics Key Performance Metrics (in thousands, except percentages and ARPA) | Metric | 3 Months Ended June 30, 2025 | 3 Months Ended June 30, 2024 | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | | :-------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | | Corporate Revenue | $55,302 | $51,720 | $109,591 | $103,110 | | SoHo Revenue | $32,414 | $35,779 | $65,263 | $72,533 | | Consolidated Revenue | $87,721 | $87,500 | $174,859 | $175,646 | | Corporate ARPA | $301.29 | $310.18 | $300.99 | $313.13 | | SoHo ARPA | $15.62 | $15.45 | $15.51 | $15.41 | | Consolidated ARPA | $38.82 | $35.24 | $38.24 | $34.87 | | Corporate Customer Accounts | 63 | 56 | 63 | 56 | | SoHo Customer Accounts | 682 | 760 | 682 | 760 | | Consolidated Customer Accounts | 745 | 816 | 745 | 816 | | Corporate Monthly Churn % | 2.86 % | 2.29 % | 2.68 % | 2.10 % | | SoHo Monthly Churn % | 3.84 % | 3.55 % | 3.68 % | 3.57 % | | Consolidated Monthly Churn % | 3.76 % | 3.46 % | 3.60 % | 3.48 % | - The Company eliminated dormant accounts not contributing to revenue from the number of SoHo customer accounts in the current period, and prior year periods were revised for consistency101 Critical Accounting Estimates - There were no significant changes in the Company's critical accounting policies and estimates during the six months ended June 30, 2025102 Results of Operations for the Three and Six Months Ended June 30, 2025 and 2024 Revenues Consolidated revenues remained flat as Corporate growth was offset by a decline in the SoHo business segment Revenue Changes (in thousands) | Period | 2025 | 2024 | Change (3M) | Change (6M) | | :------------------------ | :-------- | :-------- | :---------- | :---------- | | 3 Months Ended June 30 | $87,721 | $87,500 | +$0.2M | | | 6 Months Ended June 30 | $174,859 | $175,646 | | -$0.8M | - For the three months ended June 30, 2025, Corporate business revenue increased by $3.6 million (7%), while SoHo business revenue declined by $3.4 million (9%)106 - For the six months ended June 30, 2025, Corporate business revenue increased by $6.5 million (6%), while SoHo business revenue declined by $7.3 million (10%)107 Cost of Revenues Cost of revenues increased due to higher network operations, personnel, and data transmission costs Cost of Revenues (in thousands) | Period | 2025 | 2024 | Change (3M) | Change (6M) | | :------------------------ | :-------- | :-------- | :---------- | :---------- | | 3 Months Ended June 30 | $17,624 | $17,122 | +$0.5M | | | 6 Months Ended June 30 | $35,694 | $34,170 | | +$1.5M | - The increase in cost of revenues for the three months was primarily due to increases of $0.5 million in network operations costs and $0.3 million in personnel-related expenses109 - The increase for the six months was primarily due to increases of $1.3 million in network operations costs, $0.5 million in depreciation, and $0.4 million in data transmission costs111 Operating Expenses Operating expenses varied, with higher sales and marketing costs and lower general and administrative expenses Sales and Marketing Sales and Marketing Expenses (in thousands) | Period | 2025 | 2024 | Change (3M) | Change (6M) | | :------------------------ | :-------- | :-------- | :---------- | :---------- | | 3 Months Ended June 30 | $12,452 | $11,718 | +$0.7M | | | 6 Months Ended June 30 | $25,240 | $24,276 | | +$1.0M | - The increase in sales and marketing expenses for the three months was primarily due to increases of $0.4 million in third-party advertising spend and $0.2 million in personnel-related expenses113 - The increase for the six months was primarily due to an increase of $1.0 million in third-party advertising spend113 Research, Development and Engineering Research, Development and Engineering Expenses (in thousands) | Period | 2025 | 2024 | Change (3M) | Change (6M) | | :------------------------ | :-------- | :-------- | :---------- | :---------- | | 3 Months Ended June 30 | $1,744 | $1,643 | +$0.1M | | | 6 Months Ended June 30 | $3,456 | $3,548 | | -$0.092M | - Research, development and engineering costs for both the three and six months ended June 30, 2025, remained consistent with the prior year comparable periods115 General and Administrative General and Administrative Expenses (in thousands) | Period | 2025 | 2024 | Change (3M) | Change (6M) | | :------------------------ | :-------- | :-------- | :---------- | :---------- | | 3 Months Ended June 30 | $16,852 | $17,136 | -$0.3M | | | 6 Months Ended June 30 | $33,923 | $36,104 | | -$2.2M | - The decrease in G&A expenses for the three months was primarily due to decreases of $0.5 million in bad debt expense and $0.4 million in depreciation and amortization expense117 - The decrease for the six months was primarily due to decreases of $0.9 million in non-income related tax expenses and $0.6 million in depreciation and amortization expense118 Share-Based Compensation Total share-based compensation expense increased, with the largest portion allocated to general and administrative costs Share-Based Compensation Expense (in thousands) | Category | 3 Months Ended June 30, 2025 | 3 Months Ended June 30, 2024 | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | | :---------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | | Cost of revenues | $511 | $481 | $987 | $984 | | Sales and marketing | $702 | $585 | $1,416 | $1,264 | | Research, development and engineering | $107 | $70 | $212 | $165 | | General and administrative | $2,887 | $2,602 | $5,856 | $5,775 | | Total | $4,207 | $3,738 | $8,471 | $8,188 | Non-Operating Income and Expenses Changes were driven by a loss on debt extinguishment, lower interest income, and foreign currency fluctuations Interest expense Interest Expense (in thousands) | Period | 2025 | 2024 | Change (3M) | Change (6M) | | :------------------------ | :-------- | :-------- | :---------- | :---------- | | 3 Months Ended June 30 | $(8,673) | $(8,657) | $(16) | | | 6 Months Ended June 30 | $(17,649) | $(14,856) | | $(2,793) | - The increase in interest expense for the six months was due to a net loss on debt extinguishment of $(0.1) million in 2025 compared to a net gain of $6.6 million in 2024120 Interest income Interest Income (in thousands) | Period | 2025 | 2024 | Change (3M) | Change (6M) | | :------------------------ | :------ | :------ | :---------- | :---------- | | 3 Months Ended June 30 | $484 | $593 | $(109) | | | 6 Months Ended June 30 | $935 | $1,516 | | $(581) | - Interest income decreased for both periods as the Company decreased its investment in money market funds to repurchase common stock and long-term debt121 Other (expense) income, net Other (Expense) Income, Net (in thousands) | Period | 2025 | 2024 | Change (3M) | Change (6M) | | :------------------------ | :-------- | :------ | :---------- | :---------- | | 3 Months Ended June 30 | $(2,316) | $663 | $(2,979) | | | 6 Months Ended June 30 | $(3,413) | $4,565 | | $(7,978) | - The change was primarily attributable to exchange rate fluctuations on intercompany balances between periods in foreign subsidiaries122 Income Taxes The effective tax rate fluctuated due to geographical income mix, valuation allowances, and uncertain tax positions Income Tax Expense (in thousands) | Period | 2025 | 2024 | | :------------------------ | :------ | :------ | | 3 Months Ended June 30 | $7,763 | $8,606 | | 6 Months Ended June 30 | $14,486 | $18,529 | Effective Tax Rates | Period | 2025 | 2024 | | :------------------------ | :---- | :---- | | 3 Months Ended June 30 | 27.2% | 26.5% | | 6 Months Ended June 30 | 25.7% | 26.9% | - The increase in the effective income tax rate for the three months ended June 30, 2025, was primarily due to a change in the geographical mix of income126 Liquidity and Capital Resources Cash and Cash Equivalents Cash and cash equivalents increased, driven by operating cash flow partially offset by repurchase activities Cash and Cash Equivalents (in millions) | Date | Amount | | :------------ | :----- | | June 30, 2025 | $57.9 | | Dec 31, 2024 | $33.5 | - The increase in cash and cash equivalents resulted primarily from cash provided by operations, partially offset by cash used for debt repurchases, capitalized expenditures, and share repurchases128 Credit Agreement The company retired its previous credit facility and entered into a new, larger agreement in July 2025 - The previous $25.0 million revolving credit facility was retired subsequent to June 30, 2025, with no amount drawn down129 - A new 2025 Credit Agreement was entered into in July 2025, providing a $75.0 million revolving credit facility and a $150.0 million delayed-draw term loan facility129 Material Cash Requirements Material cash requirements include debt principal, lease payments, and liabilities for uncertain tax positions - As of June 30, 2025, the Company had $582.4 million in aggregate principal amount of indebtedness outstanding130 - Total minimum lease payments were $15.6 million with a weighted average remaining lease term of 5.2 years130 - Liability for uncertain tax positions was $14.1 million, with timing of cash settlement uncertain130 Debt Repurchase Program The company has retired $222.6 million in principal under its $300 million debt repurchase authorization - The Debt Repurchase Program authorizes an aggregate principal amount reduction of up to $300 million and expires on November 9, 2026132 - As of June 30, 2025, the Company had retired an aggregate of $222.6 million in principal of its senior notes under this program133 Common Stock Repurchase Program The company's $100 million stock repurchase program was extended, with $12.5 million in shares bought back - The common stock repurchase program was extended through February 2028, with an authorization to purchase up to $100.0 million of common stock134 Common Stock Repurchase Activity (in millions) | Period | Shares Repurchased | Aggregate Cost | | :------------------------ | :----------------- | :------------- | | 3 Months Ended June 30, 2025 | 551,873 | $12.5 | | 6 Months Ended June 30, 2025 | 553,344 | $12.6 | | Cumulatively as of June 30, 2025 | 1,639,069 | $44.9 | Vested Restricted Stock The company withholds shares from vested restricted stock awards to satisfy employee tax obligations - During the three months ended June 30, 2025, the Company withheld 37,568 shares related to net share settlement for vested restricted stock135 - During the six months ended June 30, 2025, the Company withheld 51,045 shares related to net share settlement for vested restricted stock135 Cash Flows Operating cash flow was stable, while financing cash use decreased significantly due to lower debt repurchases - Net cash provided by operating activities was $69.2 million for the six months ended June 30, 2025, consistent with the prior year136 - Net cash used in investing activities increased to $20.2 million for the six months ended June 30, 2025, primarily due to the purchase of investments137 - Net cash used in financing activities decreased to $28.6 million for the six months ended June 30, 2025, primarily due to a decrease in cash outflows related to debt repurchases138 Item 3. Quantitative and Qualitative Disclosures About Market Risk The company is exposed to interest rate and foreign currency risks but does not currently use hedging instruments Interest Rate Risk - The Company's cash and cash equivalents are not subject to significant interest rate risk due to their short maturities140 - The Company does not have interest rate risk on its outstanding long-term debt as these arrangements have fixed interest rates141 Foreign Currency Risk - The Company's principal exposure to foreign currency risk relates to investment and intercompany debt in foreign subsidiaries, primarily in the Euro and the Japanese Yen143 - Foreign exchange (loss) gain was $(2.3) million for the three months ended June 30, 2025, compared to a gain of $0.7 million in the prior year period147 - The Company currently does not have derivative financial instruments for hedging purposes but may engage in hedging transactions in the future146 Item 4. Controls and Procedures Management concluded that disclosure controls and procedures were effective, with no material changes in internal controls Evaluation of Disclosure Controls and Procedures - The CEO and CFO concluded that the Company's disclosure controls and procedures were effective, at a reasonable assurance level, as of June 30, 2025150 Limitations on the Effectiveness of Controls - Management acknowledges that disclosure controls and internal control over financial reporting are designed to provide reasonable, not absolute, assurance151 Changes in Internal Controls - There were no changes in internal control over financial reporting during the second quarter ended June 30, 2025, that materially affected, or are reasonably likely to materially affect, the Company's internal control152 Part II. Other Information Item 1. Legal Proceedings This section refers to Note 8 of the financial statements for details on legal proceedings - Information regarding legal proceedings is provided in Note 8 - Commitments and Contingencies of the Notes to the Condensed Consolidated Financial Statements153 Item 1A. Risk Factors This section directs readers to the Annual Report on Form 10-K for risk factors, noting no material changes - There have been no material changes to the risk factors described in the Company's Annual Report on Form 10-K for the year ended December 31, 2024154 Item 2. Unregistered Sales of Equity Securities and Use of Proceeds The company details its common stock repurchase activity and confirms no unregistered sales of equity securities Unregistered Sales of Equity Securities - There were no unregistered sales of equity securities155 Issuer Purchases of Equity Securities - The Company's Board of Directors approved a share buyback program authorizing up to $100.0 million of common stock purchases, which was extended through February 2028156 Share Repurchase Activity for Three Months Ended June 30, 2025 | Period | Total Number of Shares Purchased | Average Price Paid Per Share | Approximate Dollar Value of Shares that May Yet Be Purchased Under the Plans or Program (in thousands) | | :---------------- | :------------------------------- | :--------------------------- | :------------------------------------------------------------------------------------------------- | | April 1 - 30, 2025 | — | $— | $67,853 | | May 1 - 31, 2025 | 221,816 | $22.56 | $62,849 | | June 1 - 30, 2025 | 330,057 | $22.51 | $55,419 | | Total | 551,873 | | $55,419 | Item 3. Defaults Upon Senior Securities This item is not applicable to the Company for the reporting period - This item is not applicable159 Item 4. Mine Safety Disclosures This item is not applicable to the Company for the reporting period - This item is not applicable160 Item 5. Other Information This section indicates that there are no trading plans to disclose Trading Plans - There are no trading plans to disclose161 Item 6. Exhibits This section lists the exhibits filed as part of the Form 10-Q, including corporate and financial documents - Key exhibits include the Amended and Restated Certificate of Incorporation and Bylaws, the Credit Agreement dated July 9, 2025, officer certifications, and XBRL financial information162 Signatures The report is duly signed by the Chief Executive Officer and Chief Financial Officer - The report was signed on August 7, 2025, by R. Scott Turicchi, Chief Executive Officer and Director, and James C. Malone, Chief Financial Officer164166