Apple Hospitality REIT(APLE) - 2024 Q1 - Quarterly Report

Filing Information General Information Apple Hospitality REIT, Inc. is a large accelerated filer with 242,346,188 common shares outstanding listed on the NYSE under APLE - Apple Hospitality REIT, Inc. is a large accelerated filer, indicating its market capitalization and reporting requirements[3] General Information Table | Metric | Value | | :----- | :---- | | Trading Symbol | APLE | | Exchange | New York Stock Exchange | | Common Shares Outstanding (as of April 29, 2024) | 242,346,188 | PART I. FINANCIAL INFORMATION Item 1. Financial Statements (Unaudited) Unaudited consolidated financial statements for Q1 2024 and 2023, including balance sheets, income statements, equity, cash flows, and detailed notes Consolidated Balance Sheets Total assets and liabilities increased from December 2023 to March 2024, driven by real estate investments and debt, while cash decreased Consolidated Balance Sheets (in thousands) | Metric (in thousands) | March 31, 2024 | December 31, 2023 | | :-------------------- | :------------- | :---------------- | | Total Assets | $5,032,498 | $4,937,298 | | Total Liabilities | $1,698,196 | $1,613,317 | | Total Shareholders' Equity | $3,334,302 | $3,323,981 | | Investment in real estate, net | $4,871,476 | $4,777,374 | | Debt, net | $1,500,698 | $1,371,494 | | Cash and cash equivalents | $4,942 | $10,287 | - Total Assets increased by approximately $95.2 million, and Total Liabilities increased by approximately $84.9 million, primarily due to increased real estate investments and debt[8] Consolidated Statements of Operations and Comprehensive Income Net income significantly increased in Q1 2024 due to higher revenue and a substantial gain on real estate sales Consolidated Statements of Operations and Comprehensive Income (in thousands, except per share data) | Metric (in thousands, except per share data) | Three Months Ended March 31, 2024 | Three Months Ended March 31, 2023 | Percent Change | | :------------------------------------------- | :-------------------------------- | :-------------------------------- | :------------- | | Total revenue | $329,512 | $311,454 | 5.8% | | Total expense | $275,663 | $262,207 | 5.1% | | Gain on sale of real estate | $17,766 | $- | N/A | | Operating income | $71,615 | $49,247 | 45.4% | | Net income | $54,050 | $32,923 | 64.2% | | Basic and diluted net income per common share | $0.22 | $0.14 | 57.1% | - The significant increase in net income and EPS was largely attributable to a $17.8 million gain on the sale of real estate in Q1 2024, which was absent in Q1 2023[10] Consolidated Statements of Shareholders' Equity Total shareholders' equity increased due to net income and share-based compensation, partially offset by distributions Consolidated Statements of Shareholders' Equity (in thousands) | Metric (in thousands) | March 31, 2024 | December 31, 2023 | | :-------------------- | :------------- | :---------------- | | Total Shareholders' Equity | $3,334,302 | $3,323,981 | | Common Stock Amount | $4,805,504 | $4,794,804 | | Net Income | $54,050 | N/A (for Q1 2024 activity) | | Distributions Declared to Shareholders | $(58,137) | N/A (for Q1 2024 activity) | - Share-based compensation, net of surrendered shares, contributed $10.971 million to common stock in Q1 2024[12] - Distributions declared to shareholders were $0.24 per share for both periods, totaling $58.137 million in Q1 2024 and $55.169 million in Q1 2023[12][13] Consolidated Statements of Cash Flows Net cash decreased in Q1 2024 due to significant investing activities for hotel acquisitions, partially offset by operating and financing cash Consolidated Statements of Cash Flows (in thousands) | Cash Flow Activity (in thousands) | Three Months Ended March 31, 2024 | Three Months Ended March 31, 2023 | | :-------------------------------- | :-------------------------------- | :-------------------------------- | | Net cash provided by operating activities | $54,652 | $51,691 | | Net cash used in investing activities | $(116,947) | $(24,576) | | Net cash provided by (used in) financing activities | $53,257 | $(31,848) | | Net change in cash, cash equivalents and restricted cash | $(9,038) | $(4,733) | | Cash, cash equivalents and restricted cash, end of period | $34,580 | $38,779 | - Investing activities saw a substantial increase in cash outflow, primarily due to $118.3 million for acquisition of hotel properties in Q1 2024, compared to none in Q1 2023[14] - Financing activities shifted from a net cash outflow in Q1 2023 to a net cash inflow in Q1 2024, largely driven by $180.4 million in proceeds from the revolving credit facility[14] Notes to Consolidated Financial Statements Detailed explanations and disclosures for the financial statements, covering organization, policies, investments, debt, and subsequent events 1. Organization and Summary of Significant Accounting Policies Outlines the company's REIT structure, investment focus, financial statement presentation, and impact of new accounting standards - The Company is a self-advised REIT that owns 224 hotels with 29,886 guest rooms across 37 states and D.C. as of March 31, 2024[17] - New accounting standards (ASU 2023-07 on Segment Reporting and ASU 2023-09 on Income Tax Disclosures) are expected to impact only disclosures, not the consolidated financial statements[19][20] 2. Investment in Real Estate Details the real estate portfolio, including composition, recent acquisitions, and outstanding purchase commitments for future hotel properties Investment in Real Estate (in thousands) | Investment in Real Estate (in thousands) | March 31, 2024 | December 31, 2023 | | :--------------------------------------- | :------------- | :---------------- | | Land | $844,560 | $828,868 | | Building and improvements | $5,029,149 | $4,917,105 | | Investment in real estate, net | $4,871,476 | $4,777,374 | - The company acquired one AC Hotel in Washington, D.C. for $116.8 million in Q1 2024, using proceeds from property sales and revolving credit facility borrowings[25][27] - As of March 31, 2024, the company had commitments to potentially purchase two hotels (Madison, WI and Nashville, TN) for a combined $177.5 million, with expected completions in mid-2024 and late 2025, respectively[28][30] 3. Dispositions The company sold two hotels for approximately $33.5 million, realizing a combined gain of $17.8 million, with a portion of proceeds used for a like-kind exchange - Two hotels (Hampton and Homewood Suites in Rogers, AR) were sold on February 9, 2024, for a gross sales price of approximately $33.5 million[31][32] - The sales resulted in a combined gain of approximately $17.8 million, net of transaction costs, and a deferral of taxable gains of $15.1 million through a like-kind exchange[31][32] 4. Debt Comprehensive overview of the company's debt structure, including credit facilities, term loans, senior notes, and mortgage debt, totaling $1.5 billion Debt (in thousands) | Debt Type (in thousands) | March 31, 2024 | December 31, 2023 | | :----------------------- | :------------- | :---------------- | | Revolving credit facility | $131,000 | $- | | Term loans and senior notes, net | $1,089,402 | $1,088,904 | | Mortgage debt, net | $280,296 | $282,590 | | Total Debt, net | $1,500,698 | $1,371,494 | | Weighted-average interest rate of debt | 4.56% | 4.26% | - As of March 31, 2024, 78% of the company's debt was fixed-rate (including hedged variable-rate debt), and 22% was variable-rate[36] - The company was in compliance with all applicable financial and restrictive covenants under its credit facilities as of March 31, 2024[49] 5. Fair Value of Financial Instruments Discusses the fair value of debt and derivative instruments, including interest rate swaps used to manage variable-rate debt risk - The carrying value and estimated fair value of the company's debt were approximately $1.5 billion as of March 31, 2024[53] Derivative Instruments (in thousands) | Derivative Instrument (in thousands) | March 31, 2024 | December 31, 2023 | | :----------------------------------- | :------------- | :---------------- | | Notional Amount of Active Swaps | $770,000 | N/A | | Fair Value (Asset) | $24,112 | $20,290 | | Net Unrealized Gain Reclassified to Interest and Other Expense, net (Q1) | $6,001 | $5,015 | | Net Unrealized Gain (Loss) Recognized in Other Comprehensive Income (Loss) (Q1) | $9,709 | $(3,091) | - Approximately $15.2 million of net unrealized gains from interest rate derivatives are expected to be reclassified as a decrease to interest and other expense within the next 12 months[57] 6. Related Parties Details transactions with related parties, primarily Apple Realty Group, Inc., for cost-sharing and aircraft use - The company provides support services to ARG and is reimbursed for costs, totaling approximately $0.3 million in Q1 2024 (vs. $0.2 million in Q1 2023), reducing general and administrative expenses[61] - Amounts due from ARG for reimbursements totaled approximately $0.4 million as of March 31, 2024[62] - The company did not use aircraft owned by an entity of its Executive Chairman during Q1 2024, compared to less than $0.1 million in Q1 2023[63] 7. Shareholders' Equity Covers distributions to shareholders, share issuance activities, and the share repurchase program, with $335.4 million remaining available Distributions Paid | Metric | Three Months Ended March 31, 2024 | Three Months Ended March 31, 2023 | | :----- | :-------------------------------- | :-------------------------------- | | Distributions Paid per Common Share | $0.29 | $0.32 | | Total Distributions Paid (in millions) | $70.2 | $73.4 | - The company established a new $500 million at-the-market (ATM) offering program in February 2024 but did not sell any common shares under it or the prior program during Q1 2024[65] - No common shares were repurchased in Q1 2024; approximately $335.4 million remained available under the Share Repurchase Program as of March 31, 2024[66] 8. Compensation Plans Describes incentive plans for executive management based on operational performance and shareholder return metrics, including share-based awards - The 2024 Incentive Plan bases executive compensation 50% on operational performance goals (RevPAR growth, Adjusted Hotel EBITDA margin, Adjusted EBITDAre, MFFO per share, capital expenditures) and 50% on shareholder return metrics[67] - Approximately $3.7 million was accrued as a liability for potential executive incentive compensation payments under the 2024 Incentive Plan as of March 31, 2024[67] Share-Based Compensation | Share-Based Compensation | 2023 Incentive Plan (Q1 2024 issuance) | 2022 Incentive Plan (Q1 2023 issuance) | | :----------------------- | :------------------------------------- | :------------------------------------- | | Common shares earned | 1,110,664 | 935,189 | | Common shares issued, net of tax withholding | 804,318 | 672,163 | | Total share-based compensation earned (in millions) | $18.1 | $15.6 | 9. Subsequent Events Reports on post-balance sheet events, specifically the payment and declaration of monthly cash distributions - On April 15, 2024, the company paid $19.4 million ($0.08 per common share) in distributions[72] - On April 18, 2024, a monthly cash distribution of $0.08 per common share was declared, payable on May 15, 2024[72] Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations Management's perspective on Q1 2024 financial condition and operating results, covering KPIs, portfolio activities, and liquidity Overview Apple Hospitality REIT, Inc. is a self-advised REIT owning 224 hotels across 37 states and D.C., primarily under Marriott or Hilton brands - The company operates as a self-advised REIT, investing in income-producing real estate within the U.S. lodging sector[77] - As of March 31, 2024, the portfolio comprised 224 hotels (29,886 guest rooms) predominantly under Marriott or Hilton brands, managed by 16 unaffiliated hotel management companies[77] Recent Hotel Portfolio Activities The company acquired one hotel for $116.8 million and sold two for $33.5 million in Q1 2024, with commitments for two more under development - Acquired an AC Hotel in Washington, D.C. for $116.8 million in Q1 2024, funded by property sales and revolving credit facility borrowings[78] - Sold two hotels for approximately $33.5 million in Q1 2024, resulting in a $17.8 million gain, with proceeds used for a like-kind exchange for the D.C. acquisition[81] - Outstanding contracts for two hotels under development (Madison, WI and Nashville, TN) for a combined $177.5 million, with expected completions in mid-2024 and late 2025[79] - Terminated an operating lease for a non-hotel property in New York due to payment failure and commenced legal proceedings to remove the tenant[83] Hotel Operations Total revenue increased by 5.8% and net income by 64.2% in Q1 2024, largely due to real estate sales, with stable RevPAR for Comparable Hotels Hotel Operations (in thousands, except statistical data) | Metric (in thousands, except statistical data) | Three Months Ended March 31, 2024 | Three Months Ended March 31, 2023 | Percent Change | | :------------------------------------------- | :-------------------------------- | :-------------------------------- | :------------- | | Total revenue | $329,512 | $311,454 | 5.8% | | Net income | $54,050 | $32,923 | 64.2% | | Adjusted Hotel EBITDA | $109,793 | $106,749 | 2.9% | | Number of hotels owned at end of period | 224 | 220 | 1.8% | | ADR | $153.18 | $152.01 | 0.8% | | Occupancy | 72.0% | 72.0% | 0.0% | | RevPAR | $110.25 | $109.46 | 0.7% | Comparable and Same Store Hotels Operating Results Comparable Hotels Operating Results: | Metric | Three Months Ended March 31, 2024 | Three Months Ended March 31, 2023 | Percent Change | | :----- | :-------------------------------- | :-------------------------------- | :------------- | | ADR | $154.10 | $154.08 | 0.0% | | Occupancy | 72.1% | 72.1% | 0.0% | | RevPAR | $111.09 | $111.14 | 0.0% | Same Store Operating Results: | Metric | Three Months Ended March 31, 2024 | Three Months Ended March 31, 2023 | Percent Change | | :----- | :-------------------------------- | :-------------------------------- | :------------- | | ADR | $151.86 | $152.31 | -0.3% | | Occupancy | 71.9% | 72.0% | -0.1% | | RevPAR | $109.23 | $109.73 | -0.5% | - RevPAR growth and operating results for Comparable Hotels are expected to improve for the full year 2024, despite negative impacts in Q1 from Super Bowl comparison and Easter holiday timing[91][92] Revenues Total revenue increased by 5.8% to $329.5 million, driven by acquisitions and strong leisure/corporate demand, while Comparable Hotels' RevPAR remained stable Revenues (in millions) | Revenue (in millions) | Three Months Ended March 31, 2024 | Three Months Ended March 31, 2023 | Percent Change | | :-------------------- | :-------------------------------- | :-------------------------------- | :------------- | | Total Revenue | $329.5 | $311.5 | 5.8% | Comparable Hotels Operating Statistics: | Metric | Three Months Ended March 31, 2024 | Three Months Ended March 31, 2023 | | :----- | :-------------------------------- | :-------------------------------- | | Occupancy | 72.1% | 72.1% | | ADR | $154.10 | $154.08 | | RevPAR | $111.09 | $111.14 | - Revenue growth was led by hotels acquired in 2023 and supported by strong leisure transient, small group, and corporate business demand[94] - Markets with above-average growth in Q1 2024 included Las Vegas, Washington, D.C., Houston, Seattle, Richmond, Tucson, Anchorage, and Pittsburgh[94] Hotel Operating Expense Hotel operating expense increased by 6.5% to $197.3 million, primarily due to higher labor, maintenance, and sales/marketing costs from inflation Hotel Operating Expense (in millions) | Expense (in millions) | Three Months Ended March 31, 2024 | Three Months Ended March 31, 2023 | Percent Change | | :-------------------- | :-------------------------------- | :-------------------------------- | :------------- | | Hotel Operating Expense | $197.3 | $185.2 | 6.5% | | % of Total Revenue | 59.9% | 59.5% | 0.4 pp | - Increased labor costs, repairs and maintenance, and sales and marketing costs, driven by inflationary pressures, were the main contributors to the expense increase[95] - The company is working with management companies to achieve operational efficiencies and mitigate cost pressures from inflation, shortages, and staffing challenges[95] Property Taxes, Insurance and Other Expense Property taxes, insurance, and other expenses rose by 6.7% to $21.0 million due to increased insurance premiums and property tax reassessments Property Taxes, Insurance and Other Expense (in millions) | Expense (in millions) | Three Months Ended March 31, 2024 | Three Months Ended March 31, 2023 | Percent Change | | :-------------------- | :-------------------------------- | :-------------------------------- | :------------- | | Property Taxes, Insurance and Other | $21.0 | $19.7 | 6.7% | | % of Total Revenue | 6.4% | 6.3% | 0.1 pp | - The increase was mainly due to higher insurance premiums and property tax increases from reassessments in certain areas[96] General and Administrative Expense General and administrative expense decreased by 7.7% to $10.6 million, mainly due to lower accruals for executive incentive compensation General and Administrative Expense (in millions) | Expense (in millions) | Three Months Ended March 31, 2024 | Three Months Ended March 31, 2023 | Percent Change | | :-------------------- | :-------------------------------- | :-------------------------------- | :------------- | | General and Administrative Expense | $10.6 | $11.5 | -7.7% | | % of Total Revenue | 3.2% | 3.7% | -0.5 pp | - The decrease was mainly driven by reduced accruals for executive incentive compensation, partially offset by higher payroll and benefit costs[97] Depreciation and Amortization Expense Depreciation and amortization expense increased by 2.0% to $46.8 million due to new hotel acquisitions and completed renovations Depreciation and Amortization Expense (in millions) | Expense (in millions) | Three Months Ended March 31, 2024 | Three Months Ended March 31, 2023 | Percent Change | | :-------------------- | :-------------------------------- | :-------------------------------- | :------------- | | Depreciation and Amortization Expense | $46.8 | $45.9 | 2.0% | - The increase of approximately $0.9 million was mainly attributable to recent hotel acquisitions and renovations[99] Interest and Other Expense, net Interest and other expense, net, increased by 8.2% to $17.3 million due to higher average borrowings and increased interest rates on variable-rate debt Interest and Other Expense, net (in millions) | Expense (in millions) | Three Months Ended March 31, 2024 | Three Months Ended March 31, 2023 | Percent Change | | :-------------------- | :-------------------------------- | :-------------------------------- | :------------- | | Interest and Other Expense, net | $17.3 | $16.0 | 8.2% | - The increase was due to higher average borrowings and interest rates on variable-rate debt[101] - Interest expense is expected to be higher for the remainder of 2024 due to increased Revolving Credit Facility borrowings and the maturity of several interest rate swaps, which will reduce the proportion of fixed-rate debt[101] Non-GAAP Financial Measures Defines and reconciles key non-GAAP measures like FFO, MFFO, EBITDA, and Adjusted Hotel EBITDA, used to evaluate operating performance FFO and MFFO FFO increased by 5.5% to $82.3 million and MFFO by 5.4% to $83.2 million in Q1 2024, reflecting adjustments to GAAP net income FFO and MFFO (in thousands) | Metric (in thousands) | Three Months Ended March 31, 2024 | Three Months Ended March 31, 2023 | | :-------------------- | :-------------------------------- | :-------------------------------- | | Net income | $54,050 | $32,923 | | Funds from operations | $82,343 | $78,065 | | Modified funds from operations | $83,240 | $78,959 | - FFO increased by $4.278 million (5.5%) and MFFO increased by $4.281 million (5.4%) year-over-year[105] EBITDA, EBITDAre, Adjusted EBITDAre and Adjusted Hotel EBITDA Adjusted Hotel EBITDA increased by 2.9% to $109.8 million in Q1 2024, indicating improved property-level operational performance EBITDA, EBITDAre, Adjusted EBITDAre and Adjusted Hotel EBITDA (in thousands) | Metric (in thousands) | Three Months Ended March 31, 2024 | Three Months Ended March 31, 2023 | | :-------------------- | :-------------------------------- | :-------------------------------- | | Net income | $54,050 | $32,923 | | EBITDA | $118,540 | $95,250 | | EBITDAre | $100,774 | $95,250 | | Adjusted EBITDAre | $100,810 | $95,288 | | Adjusted Hotel EBITDA | $109,793 | $106,749 | - Adjusted Hotel EBITDA, which isolates property-level operational performance, increased by $3.044 million (2.9%) year-over-year[111] - The non-hotel property in New York, leased to a third-party operator, is excluded from Adjusted Hotel EBITDA starting in the second half of 2023[111] Hotels Owned The company's portfolio comprises 224 hotels with 29,886 guest rooms across 37 states and D.C., diversified by Hilton and Marriott brands - The company's portfolio consists of 224 hotels with 29,886 guest rooms as of March 31, 2024[112] Number of Hotels and Guest Rooms by Brand | Brand | Number of Hotels | Number of Rooms | | :-------------------- | :--------------- | :-------------- | | Hilton Garden Inn | 40 | 5,593 | | Hampton | 36 | 4,831 | | Courtyard | 35 | 4,982 | | Residence Inn | 30 | 3,694 | | Homewood Suites | 29 | 3,291 | | SpringHill Suites | 10 | 1,544 | | Fairfield | 10 | 1,213 | | Home2 Suites | 10 | 1,146 | | TownePlace Suites | 9 | 931 | | AC Hotels | 4 | 702 | | Embassy Suites | 3 | 508 | | Hyatt Place | 3 | 411 | | Marriott | 2 | 619 | | Hyatt House | 2 | 264 | | Aloft Hotels | 1 | 157 | | Total | 224 | 29,886 | - 14 properties are subject to ground leases, and 15 hotels are encumbered by mortgages[116] Related Parties (MD&A) The company continues to engage in related party transactions with Apple Realty Group, Inc., as detailed in Note 6 to the financial statements - Transactions with related parties, such as Apple Realty Group, Inc., are ongoing and may not be at arm's length[125] Liquidity and Capital Resources Discusses the company's liquidity strategy, capital resources, and anticipated uses of capital, including operating cash flows and credit facilities Capital Resources Primary short-term liquidity sources are operating cash flows and the Revolving Credit Facility, with $519 million unused capacity as of March 31, 2024 - Principal short-term liquidity sources are operating cash flows and the Revolving Credit Facility[126] Capital Resources (in millions) | Metric (in millions) | March 31, 2024 | | :------------------- | :------------- | | Total Outstanding Debt | $1,500 | | Corporate Cash on Hand | $4.9 | | Unused Revolving Credit Facility Capacity | $519 | - The company has a $500 million at-the-market (ATM) offering program for common shares, with no shares sold in Q1 2024[129] Capital Uses Anticipated capital uses include shareholder distributions, share repurchases, capital improvements, debt service, and hotel acquisitions - The company's current annual distribution rate is $0.96 per common share, payable monthly at $0.08 per share[132] - Approximately $335.4 million remained available for purchase under the Share Repurchase Program as of March 31, 2024[134] - Anticipated capital expenditures for 2024 are $75 million to $85 million, including comprehensive renovations for approximately 20 properties[135] Upcoming Debt Maturities and Debt Service Payments Approximately $184.9 million in principal and interest payments are due over the next 12 months, including two term loans maturing in Q3 2024 - Approximately $184.9 million in principal and interest payments are due on debt over the next 12 months[136] - An $85.0 million term loan and a $20.1 million mortgage loan are maturing in Q3 2024[136] - Interest expense is expected to increase over the next 12 months due to higher market interest rates on variable-rate debt and the maturity of $235.0 million in interest rate swaps[136] Purchase Contract Commitments Outstanding contracts for two hotels totaling $177.5 million, with expected completions in mid-2024 and late 2025, contingent on closing conditions - Outstanding contracts for two hotels (Madison, WI and Nashville, TN) for a combined purchase price of approximately $177.5 million[137] - Expected completion and acquisition dates are mid-2024 for Madison, WI, and late 2025 for Nashville, TN[137] - Acquisitions are contingent on sellers meeting closing conditions, and funding is planned through available cash or unsecured credit facilities[137][138] Cash Management Activities Cash management with related parties allows for advances or deferrals up to $1 million, settled quarterly, to optimize cash flow - Cash management with related parties allows for advances or deferrals up to $1 million, settled quarterly, to optimize cash flow and reduce costs[139] Impact of Inflation The company relies on hotel operators to adjust room rates to offset inflation, but competitive conditions may limit this ability - Hotel operators can adjust room rates daily to reflect inflation, but competitive pressures may limit this ability[140] Business Interruption The company is exposed to natural disasters, and while insured, there's no assurance against material adverse financial effects - The company is exposed to natural disasters, and while insured, there's no assurance against material adverse effects on financials[141] Seasonality The hotel industry is seasonal, with higher occupancy and revenues in Q2 and Q3, requiring cash management for lower revenue periods - Hotel occupancy and revenues are generally higher in Q2 and Q3 compared to Q1 and Q4[142] - The company plans to use cash on hand or available financing to meet cash needs during seasonal fluctuations[142] Critical Accounting Policies and Estimates No material changes to critical accounting policies or estimates have occurred since the 2023 Annual Report on Form 10-K - No material changes to critical accounting policies or estimates have occurred since the 2023 Form 10-K[143] Subsequent Events (MD&A) Post-quarter-end, the company paid a $0.08 per common share distribution and declared another $0.08 distribution payable in May 2024 - Paid $0.08 per common share distribution on April 15, 2024[144] - Declared $0.08 per common share distribution payable on May 15, 2024[144] Item 3. Quantitative and Qualitative Disclosures About Market Risk The company's primary market risk is interest rate fluctuations on variable-rate debt, with 22% of total debt being variable-rate - The company's main market risk is interest rate risk on its variable-rate debt[146] Market Risk Metrics | Metric | Value | | :------------------------------------------------ | :---- | | Variable-rate debt outstanding (as of March 31, 2024) | $331.0 million | | % of total debt outstanding | 22% | | Impact on annual net income per 100 bps interest rate change | $3.3 million | | Notional amount of variable-rate debt fixed by swaps | $770.0 million | - The company uses 13 interest rate swap agreements to effectively fix interest payments on approximately $770.0 million of its variable-rate debt[147] Item 4. Controls and Procedures Senior management concluded that disclosure controls and procedures were effective as of March 31, 2024, with no material changes to internal controls - Disclosure controls and procedures were effective as of March 31, 2024, as evaluated by senior management[150] - No material changes to internal control over financial reporting occurred during the last fiscal quarter[150] PART II. OTHER INFORMATION Item 1. Legal Proceedings No current or threatened litigation is expected to materially adversely affect the company's financial position or operations - No current or threatened legal proceedings are expected to have a material adverse effect on the company's financial position or operations[152] Item 2. Unregistered Sales of Equity Securities and Use of Proceeds No shares were repurchased in Q1 2024, but 310,404 common shares were surrendered for tax withholding, with $335.4 million remaining for repurchases Share Repurchase Activity | Period | Total Number of Shares Purchased | Average Price Paid per Share | | :----- | :------------------------------- | :--------------------------- | | January 1 - January 31, 2024 | - | - | | February 1 - February 29, 2024 | - | - | | March 1 - March 31, 2024 | 310,404 (surrendered for tax) | $16.27 | | Total | 310,404 | N/A | - No shares were repurchased under the Share Repurchase Program in Q1 2024[153] - Approximately $335.4 million remained available under the Share Repurchase Program as of March 31, 2024[153] Item 5. Other Information No Rule 10b5-1 or non-Rule 10b5-1 trading arrangements were adopted or terminated by directors or officers in Q1 2024 - No Rule 10b5-1 or non-Rule 10b5-1 trading arrangements were adopted or terminated by directors or officers in Q1 2024[154] Item 6. Exhibits Lists exhibits filed with the Form 10-Q, including corporate governance documents, certifications under the Sarbanes-Oxley Act, and financial statements formatted in iXBRL - Exhibits include Amended and Restated Articles of Incorporation and Bylaws, certifications (302 and 906) from CEO, CFO, and CAO, and iXBRL formatted financial statements[155] Signatures Signatures The Form 10-Q report was duly signed on May 6, 2024, by the CEO, CFO, and CAO, affirming compliance with Securities Exchange Act requirements - The report was signed by the Chief Executive Officer, Chief Financial Officer, and Chief Accounting Officer on May 6, 2024[157][158]