KIMBERLY-CLARK CORPORATION Introduction
This management's discussion and analysis ("MD&A") of financial condition and
results of operations is intended to provide investors with an understanding of
our recent performance, financial condition and prospects. Dollar amounts are
reported in millions, except per share dollar amounts, unless otherwise noted.
The following will be discussed and analyzed:
•Overview of Second Quarter 2020 Results
•Impact of COVID-19
•Results of Operations and Related Information
•Liquidity and Capital Resources
•Information Concerning Forward-Looking Statements
We describe our business outside North America in two groups - Developing and
Emerging Markets ("D&E") and Developed Markets. D&E markets comprise Eastern
Europe , the Middle East and Africa , Latin America and Asia-Pacific , excluding
Australia and South Korea . Developed Markets consist of Western and Central
Europe , Australia and South Korea . We have three reportable business segments:
Personal Care, Consumer Tissue and K-C Professional. These business segments are
described in greater detail in Note 7 to the unaudited interim consolidated
financial statements.
This section presents a discussion and analysis of our second quarter 2020 net
sales, operating profit and other information relevant to an understanding of
the results of operations. In addition, we provide commentary regarding organic
sales growth, which describes the impact of changes in volume, net selling
prices and product mix on net sales. Change in foreign currency exchange rates
and exited businesses also impact the year-over-year change in net sales. Our
analysis compares the three and six months ended June 30, 2020 results to the
same periods in 2019.
Throughout this MD&A, we refer to financial measures that have not been
calculated in accordance with accounting principles generally accepted in the
U.S. , or GAAP, and are therefore referred to as non-GAAP financial measures.
These measures include adjusted gross and operating profit, adjusted net income,
adjusted earnings per share, adjusted other (income) and expense, net and
adjusted effective tax rate. We believe these measures provide our investors
with additional information about our underlying results and trends, as well as
insight into some of the financial measures used to evaluate management.
Non-GAAP financial measures are not meant to be considered in isolation or as a
substitute for the comparable GAAP measures, and they should be read only in
conjunction with our unaudited interim consolidated financial statements
prepared in accordance with GAAP. There are limitations to these non-GAAP
financial measures because they are not prepared in accordance with GAAP and may
not be comparable to similarly titled measures of other companies due to
potential differences in methods of calculation and items being excluded. We
compensate for these limitations by using these non-GAAP financial measures as a
supplement to the GAAP measures and by providing reconciliations of the non-GAAP
and comparable GAAP financial measures.
The non-GAAP financial measures exclude the following item for the relevant time
periods as indicated in the reconciliations included later in this MD&A:
•2018 Global Restructuring Program - In 2018, we initiated this restructuring
program to reduce our structural cost base by streamlining and simplifying our
manufacturing supply chain and overhead organization. See Item 1, Note 2 to the
unaudited interim consolidated financial statements for details.
Overview of Second Quarter 2020 Results
•Net sales of $4.6 billion increased slightly compared to the year-ago period.
Changes in foreign currency exchange rates reduced sales approximately 4
percent, while organic sales increased 4 percent.
•Operating profit was $925 in 2020 and $670 in 2019. Net Income Attributable to
Kimberly-Clark Corporation was $681 in 2020 compared to $485 in 2019, and
diluted earnings per share were $1.99 in 2020 compared to $1.40 in 2019. Results
in both periods include charges related to the 2018 Global Restructuring
Program.
Impact of COVID-19
We continue to actively address the COVID-19 situation and its impact globally.
We believe that we will emerge from these events well positioned for long-term
growth, though we cannot reasonably estimate the duration and severity of this
global pandemic or its ultimate impact on the global economy and our business
and results.
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We have experienced increased volatility in demand for some of our products as
consumers adapt to the evolving environment. Beginning in the first quarter,
particularly in March, demand across all business segments and major geographies
increased as consumers increased home inventory levels in response to COVID-19.
We expect the increase to be followed by periods of potential demand softness
and volatility as consumers use existing home inventories and demand potentially
returns to more normal levels. Demand for our consumer tissue products has been
elevated so far this year as more people spend more time at home. Our K-C
Professional business experienced volume declines in the second quarter
reflecting the reduction in away from home demand.
During 2020, we have experienced temporary closures of certain facilities,
though we have not experienced a material impact from a plant closure to date
and our facilities have largely been exempt or partially exempt from government
closure orders. At many of our facilities, we have been experiencing increased
employee absences, which may continue in the current situation.
During 2020, we experienced increased volatility in foreign currency exchange
rates and commodity prices, as discussed below.
Results of Operations and Related Information
This section presents a discussion and analysis of our second quarter 2020 net
sales, operating profit and other information relevant to an understanding of
the results of operations.
Consolidated
Selected Financial Results Three Months Ended June 30 Six Months Ended June 30
Percent Percent
2020 2019 Change 2020 2019 Change
Net Sales:
North America $ 2,623 $ 2,430 +8 % $ 5,224 $ 4,820 +8 %
Outside North America 2,052 2,235 -8 % 4,536 4,550 - %
Intergeographic sales (63) (71) N.M. (139) (143) N.M.
Total Net Sales 4,612 4,594 - % 9,621 9,227 +4 %
Operating Profit:
North America 769 608 +26 % 1,428 1,180 +21 %
Outside North America 333 260 +28 % 747 563 +33 %
Corporate & Other(a) (169) (193) N.M. (324) (409) N.M.
Other (income) and expense, net(a) 8 5 +60 % 22 9 +144 %
Total Operating Profit 925 670 +38 % 1,829 1,325 +38 %
Share of net income of equity companies 35 33 +6 % 73 60 +22 %
Net Income Attributable to Kimberly-Clark
Corporation 681 485 +40 % 1,341 939 +43 %
Diluted Earnings per Share 1.99 1.40 +42 % 3.92 2.71 +45 %
(a) Corporate & Other and Other (income) and expense, net include income and
expense not associated with the business segments, including adjustments as
indicated in the Non-GAAP Reconciliations.
N.M. - Not Meaningful
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--------------------------------------------------------------------------------GAAP to Non-GAAP Reconciliations of Selected Financial Results
Three Months Ended
2018 Global As
As Restructuring Adjusted
Reported Program Non-GAAP
Cost of products sold $ 2,835 $ 60 $ 2,775
Gross Profit 1,777 (60) 1,837
Marketing, research and general expenses 844 27 817
Operating Profit 925 (87) 1,012
Provision for income taxes (199) 15 (214)
Effective tax rate 23.2 % - 22.7 %
Share of net income of equity companies 35 (1) 36
Net income attributable to noncontrolling interests (11) 1 (12)
Net Income Attributable to Kimberly-Clark Corporation 681 (72) 753
Diluted Earnings per Share(a) 1.99 (0.21) 2.20
Three Months Ended
2018 Global As
As Restructuring Adjusted
Reported Program Non-GAAP
Cost of products sold $ 3,108 $ 102 $ 3,006
Gross Profit 1,486 (102) 1,588
Marketing, research and general expenses 811 17 794
Operating Profit 670 (119) 789
Provision for income taxes (132) 27 (159)
Effective tax rate 22.2 % - 22.3 %
Net Income Attributable to Kimberly-Clark Corporation 485 (92) 577
Diluted Earnings per Share(a) 1.40 (0.27) 1.67
Six Months Ended June 30, 2020
2018 Global As
As Restructuring Adjusted
Reported Program Non-GAAP
Cost of products sold $ 6,053 $ 130 $ 5,923
Gross Profit 3,568 (130) 3,698
Marketing, research and general expenses 1,717 50 1,667
Operating Profit 1,829 (180) 2,009
Provision for income taxes (396) 33 (429)
Effective tax rate 23.4 % - 22.9 %
Share of net income of equity companies 73 (1) 74
Net income attributable to noncontrolling interests (26) 2 (28)
Net Income Attributable to Kimberly-Clark Corporation 1,341 (146) 1,487
Diluted Earnings per Share(a) 3.92 (0.43) 4.34
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Six Months Ended June 30, 2019
2018 Global As
As Restructuring Adjusted
Reported Program Non-GAAP
Cost of products sold $ 6,313 $ 227 $ 6,086
Gross Profit 2,914 (227) 3,141
Marketing, research and general expenses 1,580 45 1,535
Other (income) and expense, net 9 (1) 10
Operating Profit 1,325 (271) 1,596
Provision for income taxes (275) 58 (333)
Effective tax rate 23.4 % - 23.0 %
Share of net income of equity companies 60 (2) 62
Net income attributable to noncontrolling interests (22) 1 (23)
Net Income Attributable to Kimberly-Clark Corporation 939 (214) 1,153
Diluted Earnings per Share(a) 2.71 (0.62) 3.33
(a) "As Adjusted Non-GAAP" may not equal "As Reported" plus "Adjustments" as a result of rounding.
Analysis of Consolidated Results
Adjusted Operating
Net Sales Percent Change Profit Percent Change
Three Months Ended Six Months Three Months Ended Six Months
June 30 Ended June 30 June 30 Ended June 30
Volume 2 5 Volume 8 13
Net Price 1 1 Net Price 7 6
Mix/Other 1 1 Input Costs 10 12
Currency (4) (3) Cost Savings(c) 22 19
Total(a) - 4 Currency Translation (2) (2)
Other(d) (17) (22)
Organic(b) 4 7 Total 28 26
(a) Total may not equal the sum of volume, net price, mix/other and currency due
to rounding.
(b) Combined impact of changes in volume, net price and mix/other.
(c) Combined benefits of the FORCE (Focused On Reducing Costs Everywhere)
program and 2018 Global Restructuring Program.
(d) Includes impact of changes in product mix, marketing, research and general
expenses, foreign currency transaction effects and other manufacturing costs.
Net sales in the second quarter of $4.6 billion increased slightly compared to
the year-ago period. Changes in foreign currency exchange rates reduced sales
approximately 4 percent, while organic sales increased 4 percent. Volumes
increased 2 percent and changes in net selling prices and product mix each
increased sales by 1 percent. In North America , organic sales increased 12
percent in consumer products but fell 3 percent in K-C Professional. Outside
North America , organic sales rose 3 percent in developed markets but fell 3
percent in D&E markets, driven by Latin America .
Operating profit in the second quarter was $925 in 2020 and $670 in 2019.
Results in both periods include charges related to the 2018 Global Restructuring
Program. Second quarter adjusted operating profit was $1,012 in 2020 and $789 in
2019. Results benefited from organic sales growth, $120 of cost savings from our
FORCE program and $55 of cost savings from the 2018 Global Restructuring
Program. Input costs decreased $80 , driven by pulp, while other manufacturing
costs rose year-on-year. Advertising spending increased and general and
administrative costs were also higher compared to the prior year. Foreign
currency translation effects reduced operating profit by $15 and transaction
effects also negatively impacted the comparison.
The second quarter effective tax rate was 23.2 percent in 2020 and 22.2 percent
in 2019. The second quarter adjusted effective tax rate was 22.7 percent in 2020
and 22.3 percent in 2019.
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Our share of net income of equity companies in the second quarter was $35 in
2020 and $33 in 2019. The results benefited from organic sales growth and lower
input costs, partially offset by negative foreign currency effects.
Diluted net income per share for the second quarter of 2020 was $1.99 in 2020
and $1.40 in 2019. Second quarter adjusted earnings per share were $2.20 in
2020, an increase of 32 percent compared to $1.67 in 2019.
Year-to-date net sales of $9.6 billion increased 4 percent compared to the year
ago period. Organic sales increased 7 percent, as volumes rose 5 percent and
changes in net selling prices and product mix each increased sales by 1 percent.
Changes in foreign currency exchange rates reduced sales by 3 percent and
business exits in conjunction with the 2018 Global Restructuring Program reduced
sales slightly. Year-to-date operating profit was $1,829 in 2020 and $1,325 in
2019. Results in both periods include charges related to the 2018 Global
Restructuring Program. Year-to-date adjusted operating profit was $2,009 in 2020
and $1,596 in 2019. Results benefited from organic sales growth, $220 of FORCE
cost savings and $80 of cost savings from the 2018 Global Restructuring Program.
Input costs decreased $195 , driven by pulp. The comparison was impacted by
unfavorable foreign currency effects, other manufacturing cost increases,
increased advertising spending and higher general and administrative costs.
Through six months, diluted net income per share was $3.92 in 2020 and $2.71 in
2019. Year-to-date adjusted earnings per share were $4.34 in 2020 and $3.33 in
2019.
Results by Business Segments
Personal Care
Six Months
Three Months Ended June 30 Six Months Ended June 30 Three Months Ended June 30 Ended June 30
2020 2019 2020 2019 2020 2019 2020 2019
Net Sales $ 2,229 $ 2,286 $ 4,651 $ 4,561 Operating Profit $ 519 $ 485 $ 1,046 $ 969
Net Sales Percent Change Percent Change Operating Profit Percent Change Percent Change
Volume - 4 Volume 3 8
Net Price - 1 Net Price 1 3
Mix/Other 2 2 Input Costs 4 3
Currency (5) (4) Cost Savings(c) 15 14
Total(a) (2) 2 Currency Translation (2) (2)
Other(d) (14) (18)
Organic(b) 2 6 Total 7 8
(a) Total may not equal the sum of volume, net price, mix/other and currency due
to rounding.
(b) Combined impact of changes in volume, net price and mix/other.
(c) Combined benefits of the FORCE program and 2018 Global Restructuring
Program.
(d) Includes impact of changes in product mix, marketing, research and general
expenses, foreign currency transaction effects and other manufacturing costs.
Second quarter net sales in North America increased 4 percent. Volumes increased
2 percent, and changes in product mix and net selling prices increased sales by
2 percent and 1 percent, respectively. The improved volumes and product mix were
driven by baby and child care.
Net sales in D&E markets decreased 9 percent. Changes in foreign currency
exchange rates reduced sales 11 percent. Changes in product mix improved sales
by 2 percent and volumes rose slightly, while changes in net selling prices
decreased sales by 1 percent.
Net sales in developed markets outside North America decreased 8 percent.
Changes in foreign currency exchange rates reduced sales by 5 percent. Volumes
fell 6 percent, while the combined impact of changes in net selling prices and
product mix increased sales by 3 percent.
Operating profit of $519 increased 7 percent. The comparison benefited from
organic sales growth, cost savings and lower input costs. Results were impacted
by unfavorable foreign currency effects, other manufacturing cost increases,
higher advertising spending and increased general and administrative costs.
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Consumer Tissue
Six Months
Three Months Ended June 30 Six Months Ended June 30 Three Months Ended June 30 Ended June 30
2020 2019 2020 2019 2020 2019 2020 2019
Net Sales $ 1,645 $ 1,472 $ 3,368 $ 2,998 Operating Profit $ 428 $ 221 $ 793 $ 462
Net Sales Percent Change Percent Change Operating Profit Percent Change Percent Change
Volume 14 14 Volume 41 33
Net Price 1 1 Net Price 9 7
Mix/Other (1) - Input Costs 27 30
Currency (3) (2) Cost Savings(c) 33 26
Total(a) 12 12 Currency Translation (2) (1)
Other(d) (14) (23)
Organic(b) 14 14 Total 94 72
(a) Total may not equal the sum of volume, net price, mix/other and currency due
to rounding.
(b) Combined impact of changes in volume, net price and mix/other.
(c) Combined benefits of the FORCE program and 2018 Global Restructuring
Program.
(d) Includes impact of changes in marketing, research and general expenses,
foreign currency transaction effects and other manufacturing costs.
Second quarter net sales in North America increased 22 percent. Volumes rose 24
percent and changes in net selling prices improved sales by 1 percent, while
changes in product mix decreased sales by 2 percent. Volumes increased
double-digits in all major product categories. The volume increase was driven by
increased shipments to support higher consumer and customer demand related to
the global outbreak of COVID-19, including the significant increase in the
number of people working from home.
Net sales in D&E markets decreased 9 percent including a 7 percent negative
impact from changes in foreign currency exchange rates. Volumes decreased 2
percent and changes in net selling prices decreased sales by 1 percent, while
changes in product mix increased sales by 1 percent.
Net sales in developed markets outside North America increased 8 percent.
Volumes rose 7 percent, driven by South Korea and Western/Central Europe . The
volume increase was driven by increased shipments to support higher consumer and
customer demand related to the global outbreak of COVID-19. Changes in net
selling prices and product mix increased sales by 4 percent and 1 percent,
respectively. Changes in foreign currency exchange rates reduced sales by 4
percent.
Operating profit of $428 increased 94 percent. Results benefited from organic
sales growth, cost savings and lower input costs. The comparison was impacted by
increased advertising spending and unfavorable foreign currency effects.
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K-C Professional
Six Months
Three Months Ended June 30 Six Months Ended June 30 Three Months Ended June 30 Ended June 30
2020 2019 2020 2019 2020 2019 2020 2019
Net Sales $ 724 $ 821 $ 1,572 $ 1,638 Operating Profit $ 155 $ 162 $ 336 $ 312
Net Sales Percent Change Percent Change Operating Profit Percent Change Percent Change Volume (16) (6) Volume (24) (9)Net Price 4 3Net Price 18 14 Mix/Other 3 2 Input Costs 2 8 Exited Businesses(e) - (1) Cost Savings(c) 16 14 Currency (2) (2) Currency Translation (2) (2) Total(a) (12) (4) Other(d) (14) (17) Organic(b) (10) (1) Total (4) 8 (a) Total may not equal the sum of volume, net price, mix/other, exited businesses and currency due to rounding. (b) Combined impact of changes in volume, net price and mix/other. (c) Combined benefits of the FORCE program and 2018 Global Restructuring Program. (d) Includes impact of changes in product mix, marketing, research and general expenses, foreign currency transaction effects and other manufacturing costs. (e) Exited businesses in conjunction with the 2018 Global Restructuring Program. Second quarter net sales inNorth America decreased 3 percent. Volumes decreased 9 percent, as double-digit declines in washroom and safety products were partially offset by double-digit increases in wipers and other products. Changes in net selling prices and product mix increased sales by 4 percent and 3 percent, respectively. Net sales in D&E markets decreased 35 percent including a 5 percent negative impact from changes in foreign currency exchange rates. Volumes fell 32 percent, with significant declines in all major geographies, and changes in product mix decreased sales by 1 percent. Changes in net selling prices increased sales by 3 percent. Net sales in developed markets outsideNorth America decreased 12 percent. Volumes decreased 17 percent, while changes in product mix and net selling prices increased sales by 5 percent and 3 percent, respectively. The changes were driven by Western/Central Europe . Changes in foreign currency exchange rates decreased sales by 4 percent. Operating profit of$155 decreased 4 percent. The comparison was impacted by lower volumes, other manufacturing cost increases and unfavorable currency effects. Results benefited from increased net selling prices, improved product mix and cost savings. 2018 Global Restructuring Program As a result of the outbreak of COVID-19 and the related uncertainty and complexity of the environment, consistent with our Form 10-Q filed onApril 22, 2020 , we expect that some restructuring activity and the related charges will extend into 2021 rather than being completed at the end of 2020 as previously planned. Total restructuring charges to implement the program are expected to be toward the high end of the range of$1.7 billion to$1.9 billion pre-tax ($1.3 billion to$1.4 billion after tax). We continue to expect the program will generate annual pre-tax cost savings of$500 to$550 . We target to achieve those savings by the end of 2021, although it is possible the full realization could occur in 2022 because of the uncertainties related to COVID-19. Savings for the first six months of 2020 were$80 , bringing cumulative savings to$380 . See Item 1, Note 2 to the unaudited interim consolidated financial statements for additional information. Liquidity and Capital Resources Cash Provided by Operations Cash provided by operations was$2,283 for the first six months of 2020 compared to$926 in the prior year. The increase was driven by improved working capital, higher earnings and the timing of tax payments. 21 --------------------------------------------------------------------------------
Investing
During the six months endedJune 30, 2020 , our capital spending was$636 compared to$569 in the prior year. We anticipate that full year capital spending will be$1.2 billion to$1.3 billion . Financing Our short-term debt, which consists ofU.S. commercial paper with original maturities up to 90 days and/or other similar short-term debt issued by non-U.S. subsidiaries, was$93 as ofJune 30, 2020 (included in Debt payable within one year on the consolidated balance sheet). The average month-end balance of short-term debt for the second quarter of 2020 was$112 . These short-term borrowings provide supplemental funding for supporting our operations. The level of short-term debt generally fluctuates depending upon the amount of operating cash flows and the timing of customer receipts and payments for items such as dividends and income taxes. AtJune 30, 2020 andDecember 31, 2019 , total debt was$8.1 billion and$7.7 billion , respectively. InFebruary 2020 , we issued$500 aggregate principal amount of 2.875% notes dueFebruary 7, 2050 . Proceeds from the offering were used for general corporate purposes including the repayment of a portion of our commercial paper indebtedness. InMarch 2020 , we issued$750 aggregate principal amount of 3.10% notes dueMarch 26, 2030 . Proceeds from the offering were used for general corporate purposes including the repayment of a portion of our commercial paper indebtedness. We maintain a$2.0 billion revolving credit facility which expires inJune 2023 and a$750 revolving credit facility which expires inJune 2021 . These facilities, currently unused, support our commercial paper program, and would provide liquidity in the event our access to the commercial paper markets is unavailable for any reason. InJuly 2017 , theUnited Kingdom's Financial Conduct Authority , which regulates the London Interbank Offered Rate (LIBOR), announced that it intends to phase out LIBOR by the end of 2021. We are currently evaluating the potential effect of the eventual replacement of the LIBOR, but we do not expect the effect to be material. Accounting guidance has been recently issued to ease the transition to alternative reference rates from a financial reporting perspective. See Item 1, Note 1 to the unaudited interim consolidated financial statements for details. We repurchase shares of Kimberly-Clark common stock from time to time pursuant to publicly announced share repurchase programs. During the first six months of 2020, we repurchased 1.9 million shares of our common stock at a cost of$263 through a broker in the open market. We temporarily suspended our share repurchase program effectiveApril 24, 2020 to enhance flexibility in the current environment, but we will be restarting our share repurchase program effectiveJuly 24, 2020 with full year share repurchases anticipated to be in the range of$700 to$900 . K-C Argentina began accounting for their operations as highly inflationary effectiveJuly 1, 2018 , as required by GAAP. Under highly inflationary accounting, K-C Argentina's functional currency became theU.S. dollar, and its income statement and balance sheet have been measured inU.S. dollars using both current and historical rates of exchange. The effect of changes in exchange rates on peso-denominated monetary assets and liabilities has been reflected in earnings in Other (income) and expense, net and was not material. As ofJune 30, 2020 , K-C Argentina had a small net peso monetary position. Net sales of K-CArgentina were approximately 1 percent of our consolidated net sales for the three and six months endedJune 30, 2020 . We believe that our ability to generate cash from operations and our capacity to issue short-term and long-term debt are adequate to fund working capital, payments for our 2018 Global Restructuring Program, capital spending, pension contributions, dividends and other needs for the foreseeable future. Further, we do not expect restrictions or taxes on repatriation of cash held outside of theU.S. to have a material effect on our overall business, liquidity, financial condition or results of operations for the foreseeable future. Information Concerning Forward-Looking Statements Certain matters contained in this report concerning the business outlook, including the anticipated cost savings from our FORCE program, costs and savings from the 2018 Global Restructuring Program, cash flow and uses of cash, growth initiatives, innovations, marketing and other spending, net sales, anticipated currency rates and exchange risks, including the impact inArgentina , raw material, energy and other input costs, effective tax rate, contingencies and anticipated transactions of Kimberly-Clark, including dividends, share repurchases and pension contributions, constitute "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995 and are based upon management's expectations and beliefs concerning future events impacting Kimberly-Clark. There can be no assurance that these future events will occur as anticipated or that our results will be as estimated. Forward-looking statements speak only as of the date they were made, and we undertake no obligation to publicly update them. 22 -------------------------------------------------------------------------------- The assumptions used as a basis for the forward-looking statements include many estimates that, among other things, depend on the achievement of future cost savings and projected volume increases. In addition, many factors outside our control, including pandemics (including the ongoing COVID-19 outbreak), epidemics, fluctuations in foreign currency exchange rates, the prices and availability of our raw materials, potential competitive pressures on selling prices for our products, energy costs, our ability to maintain key customer relationships and retail trade customer actions, as well as general economic and political conditions globally and in the markets in which we do business, could affect the realization of these estimates. For a description of certain factors that could cause our future results to differ from those expressed in these forward-looking statements, see Item 1A entitled "Risk Factors" in each of our Quarterly Report on Form 10-Q for the quarter endedMarch 31, 2020 and our Annual Report on Form 10-K for the year endedDecember 31, 2019 . Other factors not presently known to us or that we presently consider immaterial could also affect our business operations and financial results. Item 4. Controls and Procedures As ofJune 30, 2020 , an evaluation was performed under the supervision and with the participation of management, including the Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and operation of our disclosure controls and procedures. Based on that evaluation, management, including the Chief Executive Officer and Chief Financial Officer, concluded that our disclosure controls and procedures were effective as ofJune 30, 2020 . There were no changes in our internal control over financial reporting during the quarter covered by this report that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting. 23
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