Item 2. |
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
|
Overview
Management’s discussion and analysis (“MD&A”) of the Company’s financial condition and results of operations should be read in conjunction with its condensed consolidated financial statements
and related notes. Various segments of this MD&A contain forward-looking statements, all of which are presented based on current expectations, which may be adversely affected by uncertainties and risk factors (presented throughout this filing
and in the Company’s Form 10-K for fiscal 2021), that may cause actual results to materially differ from these expectations.
We sell substantially all of our photomasks to semiconductor designers and manufacturers, and manufacturers of FPDs. Photomask technology is also being applied to the fabrication of other
higher-performance electronic products such as photonics, microelectronic mechanical systems and certain nanotechnology applications. Our selling cycle is tightly interwoven with the development and release of new semiconductor and display
designs and applications, particularly as they relate to the semiconductor industry’s migration to more advanced product innovation, design methodologies, and fabrication processes. The demand for photomasks primarily depends on design activity
rather than sales volumes from products manufactured using photomask technologies. Consequently, an increase in semiconductor or display sales does not necessarily result in a corresponding increase in photomask sales. However, the reduced use of
customized ICs, reductions in design complexity, other changes in the technology or methods of manufacturing or designing semiconductors, or a slowdown in the introduction of new semiconductor or display designs could reduce demand for photomasks
‒ even if the demand for semiconductors and displays increases. Advances in semiconductor, display, and photomask design and production methods that shift the burden of achieving device performance away from lithography could also reduce the
demand for photomasks. Historically, the microelectronics industry has been volatile, experiencing periodic downturns and slowdowns in design activity. These negative trends have been characterized by, among other things, diminished product
demand, excess production capacity, and accelerated erosion of selling prices, with a concomitant effect on revenue and profitability.
We are typically required to fulfill
customer orders within a short period of time. This
results in a minimal level of backlog, typically two to three weeks of backlog for FPD photomasks and one to two weeks of backlog for IC photomasks. However, the demand for some IC photomasks has expanded beyond the industry’s capacity to supply them within the
traditional time period, thus the backlog in some cases can
expand to as long as 2-3 months.
The global semiconductor and FPD industries are driven by end markets which have been closely tied to consumer-driven applications of high-performance devices, including, but not limited to,
mobile display devices, mobile communications, and computing solutions. While we cannot predict the timing of the industry’s transition to volume production of next-generation technology nodes, or the timing of up and down-cycles with precise
accuracy, we believe that such transitions and cycles will continue into the future, beneficially and adversely affecting our business, financial condition, and operating results as they occur. We believe our ability to remain successful in these
environments is dependent upon the achievement of our goals of being a service and technology leader and efficient solutions supplier, which we believe should enable us to continually reinvest in our global infrastructure.
Impact of the COVID-19 Pandemic
All of our facilities have continued to operate throughout the COVID-19 pandemic. The pandemic, particularly at its height, impacted our business in a number of ways including customer shut
downs, which led to delays in new photomask design releases, and travel restrictions, which delayed tool installations and servicing. To date we have not experienced significant raw material shortages, however, supply chain disruptions could
potentially delay or prevent us from fulfilling customer orders. While our business has continued to grow over the course of the pandemic, we cannot predict its future impact on our business with a high level of certainty.
Results of Operations
Three-Months ended January 30, 2022
The following table presents selected operating information expressed as a percentage of revenue. The columns may not foot due to rounding.
|
|
Three Months Ended
|
|
|
|
January 30,
2022
|
|
|
October 31,
2021
|
|
|
January 31,
2021
|
|
|
|
|
|
|
|
|
|
|
|
Revenue
|
|
|
100.0
|
%
|
|
|
100.0
|
%
|
|
|
100.0
|
%
|
Cost of goods sold
|
|
|
68.5
|
|
|
|
71.3
|
|
|
|
79.9
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross margin
|
|
|
31.5
|
|
|
|
28.7
|
|
|
|
20.1
|
|
Selling, general and administrative expenses
|
|
|
8.3
|
|
|
|
7.9
|
|
|
|
9.2
|
|
Research and development expenses
|
|
|
3.1
|
|
|
|
2.3
|
|
|
|
3.1
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating income
|
|
|
20.1
|
|
|
|
18.5
|
|
|
|
7.7
|
|
Other income, net
|
|
|
2.5
|
|
|
|
2.1
|
|
|
|
0.4
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income before income tax provision
|
|
|
22.6
|
|
|
|
20.6
|
|
|
|
8.2
|
|
Income tax provision
|
|
|
5.9
|
|
|
|
4.8
|
|
|
|
1.9
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income
|
|
|
16.7
|
|
|
|
15.8
|
|
|
|
6.3
|
|
Net income attributable to noncontrolling interests
|
|
|
4.6
|
|
|
|
4.9
|
|
|
|
1.0
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income attributable to Photronics, Inc. shareholders
|
|
|
12.2
|
%
|
|
|
10.9
|
%
|
|
|
5.3
|
%
|
Note: All the following tabular comparisons, unless otherwise indicated, are for the three-months ended January 30, 2022 (Q1 FY22), October 31, 2021 (Q4 FY21), and January 31,
2021 (Q1 FY21). The columns may not foot due to rounding.
Revenue
Our quarterly revenues can be affected by the seasonal purchasing practices of our customers. As a result, demand for our
products is typically reduced during the first quarter of our fiscal year by the North American, European, and Asian holiday periods, as some of our customers reduce their development and, consequently, their buying activities during those
periods.
The following tables present changes in disaggregated revenue in Q1 FY22 from revenue in prior reporting periods.
Quarterly Changes in Revenue by Product Type
|
|
Q1 FY22 from Q4 FY21
|
|
|
Q1 FY22 from Q1 FY21
|
|
|
|
Revenue in
Q1 FY22
|
|
|
Increase
(Decrease)
|
|
|
Percent
Change
|
|
|
Increase
(Decrease)
|
|
|
Percent
Change
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
IC
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
High-end *
|
|
$
|
46.5
|
|
|
$
|
4.0
|
|
|
|
9.3
|
%
|
|
$
|
9.8
|
|
|
|
26.5
|
%
|
Mainstream
|
|
|
83.2
|
|
|
|
0.4
|
|
|
|
0.4
|
%
|
|
|
15.1
|
|
|
|
22.1
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total IC
|
|
$
|
129.8
|
|
|
$
|
4.3
|
|
|
|
3.4
|
%
|
|
$
|
24.8
|
|
|
|
23.6
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
FPD
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
High-end *
|
|
$
|
46.3
|
|
|
$
|
5.3
|
|
|
|
12.9
|
%
|
|
$
|
11.6
|
|
|
|
33.6
|
%
|
Mainstream
|
|
|
13.8
|
|
|
|
(1.1
|
)
|
|
|
(7.2
|
)%
|
|
|
1.3
|
|
|
|
10.6
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total FPD
|
|
$
|
60.1
|
|
|
$
|
4.2
|
|
|
|
7.6
|
%
|
|
$
|
13.0
|
|
|
|
27.5
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Revenue
|
|
$
|
189.8
|
|
|
$
|
8.5
|
|
|
|
4.7
|
%
|
|
$
|
37.8
|
|
|
|
24.8
|
%
|
* High-end photomasks typically have higher average selling prices (ASPs) than mainstream products.
Quarterly Changes in Revenue by Geographic Origin**
|
|
Q1 FY22 from Q4 FY21
|
|
|
Q1 FY22 from Q1 FY21
|
|
|
|
Revenue in
Q1 FY22
|
|
|
Increase
(Decrease)
|
|
|
Percent
Change
|
|
|
Increase
(Decrease)
|
|
|
Percent
Change
|
|
Taiwan
|
|
$
|
67.8
|
|
|
$
|
(1.3
|
)
|
|
|
(1.9
|
)%
|
|
$
|
11.3
|
|
|
|
19.9
|
%
|
China
|
|
|
46.0
|
|
|
|
7.6
|
|
|
|
19.9
|
%
|
|
|
25.0
|
|
|
|
118.9
|
%
|
Korea
|
|
|
39.5
|
|
|
|
1.7
|
|
|
|
4.6
|
%
|
|
|
0.7
|
|
|
|
1.9
|
%
|
United States
|
|
|
27.2
|
|
|
|
0.6
|
|
|
|
2.3
|
%
|
|
|
0.6
|
|
|
|
2.1
|
%
|
Europe
|
|
|
8.9
|
|
|
|
(0.1
|
)
|
|
|
(0.7
|
)%
|
|
|
0.3
|
|
|
|
3.9
|
%
|
Other
|
|
|
0.4
|
|
|
|
0.0
|
|
|
|
(4.5
|
)%
|
|
|
(0.1
|
)
|
|
|
(17.4
|
)%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
189.8
|
|
|
$
|
8.5
|
|
|
|
4.7
|
%
|
|
$
|
37.8
|
|
|
|
24.8
|
%
|
** This table disaggregates revenue by the location in which it was earned.
Revenue in Q1 FY22 of $189.8 million increased 4.7% compared with Q4 FY21 and 24.8% from Q1 FY21.
IC revenue increased 3.4% and 23.6%, compared with Q4 FY21 and Q1 FY21, respectively. These increases were driven by strong demand for high-end logic photomasks in Asia and improved demand for mainstream photomasks
used for computer chips needed for the production of internet-of-things products, 5G wireless technology applications, cryptocurrency mining, and consumer products. The strengthened demand for mainstream photomasks also allowed for better
pricing.
FPD revenue increased 7.6% in Q1 FY22, compared with Q4 FY21, and 27.5% compared with Q1 FY21. Improved demand for photomasks used in high-end mobile AMOLED and G10.5+ applications gave rise to these increases.
Revenues from mainstream FPD products were up 10.6% from the prior year quarter but declined 7.2% consecutively due to capacity being dedicated to high-end production.
Gross Margin
|
|
Three Months Ended
|
|
|
|
Q1 FY22
|
|
|
Q4 FY21
|
|
|
Percent
Change
|
|
|
Q1 FY21
|
|
|
Percent
Change
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross profit
|
|
$
|
59.9
|
|
|
$
|
51.9
|
|
|
|
15.3
|
%
|
|
$
|
30.5
|
|
|
|
96.1
|
%
|
Gross margin
|
|
|
31.5
|
%
|
|
|
28.7
|
%
|
|
|
|
|
|
|
20.1
|
%
|
|
|
|
|
Gross margin increased by 2.8 percentage points in Q1 FY22, from Q4 FY21, primarily as a result of the increase in revenue
from the prior quarter. Material costs increased 2.4% from the prior quarter, but decreased, as a percentage of revenue, by 60 basis points. Labor costs increased 6.8% (20 basis points, as a percentage of revenue), primarily driven by higher
labor costs in Asia. Equipment and other overhead costs decreased 3.3%, or 250 basis points as a percentage of revenue, primarily driven by increased tool utilization for customer qualifications, which also drove the increase in our research
and development costs in the current quarter.
Gross margin increased by 11.4 percentage points in Q1 FY22, from Q1 FY21, primarily as a result of the increase in revenue from the prior year quarter. Material costs increased 10.4% from the prior year quarter, but
decreased 360 basis points, as a percentage of revenue. Labor costs increased 9.3% from the prior year quarter, but fell 160 basis points as a percent of revenue; the increase was primarily the result of increased labor costs in Asia. Equipment
and other overhead costs rose 3.1%, but fell 630 basis points, as a percentage of revenue. Increased outsourced manufacturing costs, which were partially offset by decreased depreciation expense, were the most significant contributors to the net
increase in equipment and other overhead costs.
Selling, General and Administrative Expenses
Selling, general and administrative expenses were $15.7 million in Q1 FY22, compared with $14.3 million in Q4 FY21, and $14.1 million in Q1 FY21. The increase from Q4 FY21 was primarily the result of increased
professional fees of $0.7 million and compensation and related expenses of $0.4 million, and the increase from the prior-year quarter was primarily the result of increased compensation and related expenses of $1.5 million.
Research and Development Expenses
Research and development expenses, which primarily consist of development and qualification efforts related to high-end
process technologies for high-end IC and FPD applications, were $5.9 million in Q1 FY22, compared with $4.1 million in Q4 FY21; the increase was primarily caused by increased development activities in the U.S. Research and development expenses
increased by $1.2 million in Q1 FY22, compared with $4.7 million in Q1 FY21, with increased development activities in the U.S. exceeding a decrease of activities at our Asia-based facilities.
Other Income (Expense)
|
|
Three Months Ended
|
|
|
|
Q1 FY22
|
|
|
Q4 FY21
|
|
|
Q1 FY21
|
|
|
|
|
|
|
|
|
|
|
|
Foreign currency transactions impact, net
|
|
$
|
5.3
|
|
|
$
|
4.3
|
|
|
$
|
1.4
|
|
Interest expense
|
|
|
(0.9
|
)
|
|
|
(1.0
|
)
|
|
|
(0.8
|
)
|
Interest income and other income, net
|
|
|
0.3
|
|
|
|
0.5
|
|
|
|
0.1
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other income (expense)
|
|
$
|
4.7
|
|
|
$
|
3.8
|
|
|
$
|
0.7
|
|
Other income (expense) increased $0.9 million in Q1
QY22, compared with Q4 FY21, primarily due to favorable movements of the South Korean won against the U.S. dollar offsetting unfavorable movements of the RMB against the U.S. dollar. Other income (expense) increased $4.0 million in Q1 FY22,
compared with Q1 FY21, primarily due to favorable movements of the South Korean won and the New Taiwan dollar against the U.S. dollar, which were partially offset by unfavorable movements of the RMB against the U.S. dollar.
Income Tax Provision
|
|
Three Months Ended
|
|
|
|
Q1 FY22
|
|
|
Q4 FY21
|
|
|
Q1 FY21
|
|
|
|
|
|
|
|
|
|
|
|
Income tax provision
|
|
$
|
11.2
|
|
|
$
|
8.7
|
|
|
$
|
2.9
|
|
Effective income tax rate
|
|
|
26.1
|
%
|
|
|
23.3
|
%
|
|
|
23.6
|
%
|
The effective income tax rate is sensitive to the jurisdictional mix of earnings, due, in part, to the non-recognition of tax benefits on losses in jurisdictions with
valuation allowances where the tax benefit of the losses is not available.
The effective income tax rate increase in Q1 FY22, compared with Q4 FY21, is primarily due to a decrease in credits in a non-US jurisdiction and an increase of uncertain tax positions in non-U.S. jurisdictions in Q1
FY22.
The effective income tax rate increase in Q1 FY22, compared with Q1 FY21, is primarily due to a decrease in credits in a non-US jurisdiction and an increase of uncertain tax positions in non-U.S. jurisdictions in Q1
FY22.
Net Income Attributable to Noncontrolling Interests
Net income attributable to noncontrolling interests was $8.7 million in Q1 FY22, compared with $8.8 million in Q4 FY21, and $1.5 million in Q1 FY21. The decrease from the prior quarter was due to lower net income at
our China-based IC facility, which was partially offset by increased net income at our Taiwan-based IC facility. The increase from the prior-year quarter resulted from increased net income at both of these majority-owned facilities in the
current-year quarter.
Liquidity and Capital Resources
Cash and cash equivalents totaled $314.2 million and $276.7 million as of January 30, 2022, and October 31, 2021, respectively. As of the most recent
balance sheet date, total cash and cash equivalents included $255.1 million held by foreign subsidiaries. Net Cash, a non-GAAP financial measure as defined and
discussed in the “Non-GAAP financial measures” section below, was $217.3 million and $165.0 million as of January 30, 2022 and October 31, 2021. Our
primary sources of liquidity are our cash on hand, cash we generate from operations, and borrowing capacity we have available from financial institutions. Our corporate credit agreement has a $50 million borrowing limit, with an
expansion capacity to $100 million. Although we have not accessed funds under our corporate credit facilities since 2011, it continues to afford us financial flexibility. In addition, in China, we currently have approximately $30.6 million of borrowing capacity to support local operations. See Note 5 to the condensed consolidated financial statements for additional information.
We continually evaluate alternatives for efficiently funding our capital expenditures and ongoing operations. These reviews may result in our engagement in a variety of financing transactions, in
the transfer of cash among subsidiaries, and/or the repatriation of cash to the U.S. The transfer of funds among subsidiaries could be subject to foreign withholding taxes; in certain jurisdictions, repatriation of these funds to the U.S. may
subject them to U.S. state income taxes and/or local country withholding taxes. We believe that our liquidity, including available financing, is sufficient to meet our requirements through the next twelve months and thereafter for the foreseeable
future. Through the utilization of our existing liquidity, cash we generate from operations, and (potentially) our borrowing capacity under our financing arrangements, we plan to continue to invest in our business, with our investments targeted
to align with our customers’ technology road maps. In addition, we stand ready to invest in mergers, acquisitions, or strategic partnerships, should the right opportunity be available.
We estimate capital expenditures for the remainder of FY22 will be approximately $81 million; these
investments will be targeted towards high-end and mainstream point tools that will increase our operating capacity and efficiency, and enable us to support our customers’ near-term demands. As of January 30, 2022, we had outstanding capital commitments of approximately $108 million and recognized liabilities related to capital equipment purchases of approximately $10 million. Although payment timing
could vary, primarily as a result of the timing of tool installation and testing, we currently estimate that we will fund $100 million of our total $118 million committed and recognized obligations for capital expenditures over the next
twelve months. Please refer to Notes 5 and 7, respectively, to the condensed consolidated financial statements for information on our outstanding debt and lease commitments.
In September 2020, the Company’s board of directors authorized the repurchase of up to $100 million of its common stock, pursuant to a repurchase plan under Rule 10b5-1 of the Securities Act. This authorization does not obligate the Company to repurchase any dollar amount or number of shares of common stock. As of January 30, 2022, our current share repurchase program had approximately $31.7 million remaining
under its authorization. Depending on market conditions, we may utilize some or the entire remaining approved amount to reacquire additional shares.
As discussed in Note 4 to the condensed consolidated financial statements, DNP, the noncontrolling interest in our China-based joint venture has, under certain circumstances, the right to put its
interest in the joint venture to Photronics, or to purchase our interest in the joint venture. Under all such circumstances, the sale of DNP’s interest would be at its ownership percentage of the joint venture’s net book value, with closing to
take place within three business days of obtaining required approvals and clearance. As of the date of issuance of this report, DNP had not indicated its intention to exercise this right. As of January 30, 2022, Photronics and DNP each had net
investments in this joint venture of approximately $81.3 million.
|
|
Three Months Ended
|
|
|
|
January 30,
2022
|
|
|
January 31,
2021
|
|
|
|
|
|
|
|
|
Net cash provided by operating activities
|
|
$
|
59.1
|
|
|
$
|
26.3
|
|
Net cash used in investing activities
|
|
$
|
(19.2
|
)
|
|
$
|
(17.2
|
)
|
Net cash used in financing activities
|
|
$
|
(0.3
|
)
|
|
$
|
(14.4
|
)
|
Operating Activities: Net cash provided by operating activities reflects net income adjusted for certain non-cash items, including depreciation and amortization, share-based compensation,
and the effects of changes in operating assets and liabilities. Net cash provided by operating activities increased by $32.8 million in Q1 FY22, compared with Q1 FY21, due to increased net income and net changes in working capital, predominantly
in Asia.
Free Cash Flow and LTM Free Cash Flow both of which
are non-GAAP financial measures as discussed in the “Non-GAAP financial measures” section below, increased by $30.8 and $11.1 million, respectively, compared with Q1 FY21, primarily due to the increase in Net cash provided by operating activities discussed above.
Investing Activities: Net cash flows used in investing activities primarily consisted of purchases of property, plant and equipment, which increased $1.6 million in Q1 FY22, as compared
with Q1 FY21. The remainder of the $2.0 million increase was primarily due to our receiving $0.4 million of investment related government incentives in China in Q1 FY21; we did not receive any investment related government incentives in Q1 FY22.
Financing Activities: Net cash flows used in financing activities primarily consist of share repurchases, proceeds from and repayments of debt, and contributions from and distributions to
noncontrolling interests. Net cash used in financing activities decreased by $14.0 million in Q1 FY22, compared with Q1 FY21, primarily due to a contribution from noncontrolling interests in our majority owned subsidiaries in Taiwan and China of
$15.0 million, decreased share repurchases of $10.7 million, and increased debt repayments of $7.4 million. In addition, we received debt proceeds of $6.2 million in Q1 FY21, and did not incur debt in Q1 FY22.
Non-GAAP Financial Measures
We consider Free Cash Flow, LTM Free Cash Flow, and Net Cash, which are “non-GAAP financial measures” (as such term is defined by the
SEC), to be useful metrics in measuring our cash-generating performance. (Note that we may define these terms differently than other companies that use similarly named non-GAAP financial measures.) These non-GAAP metrics are not intended to
represent funds available for our discretionary use or to be used as a substitute for Cash and cash equivalents or Net cash provided by operating activities, as measured under GAAP. The following tables reconcile Free Cash Flow to Net cash
provided by operating activities and present the calculations of LTM Free Cash Flow for Q1 FY22 and Q1 FY21. The columns may not foot due to rounding.
|
|
Three Months Ended
|
|
|
|
January 30,
2022
|
|
|
January 31,
2021
|
|
Free Cash Flow
|
|
|
|
|
|
|
Net cash provided by operating activities
|
|
$
|
59.1
|
|
|
$
|
26.3
|
|
Purchases of property, plant and equipment
|
|
|
(19.2
|
)
|
|
|
(17.5
|
)
|
Government incentives
|
|
|
-
|
|
|
|
0.4
|
|
Free Cash Flow
|
|
$
|
40.0
|
|
|
$
|
9.2
|
|
|
|
Q1 FY22
|
|
|
Q1 FY21
|
|
LTM Free Cash Flow
|
|
|
|
|
|
|
First three months of the respective fiscal year
|
|
$
|
40.0
|
|
|
$
|
9.2
|
|
October fiscal year end
|
|
|
47.4
|
|
|
|
77.4
|
|
First three months of the prior year
|
|
|
(9.2
|
)
|
|
|
(19.4
|
)
|
LTM
|
|
$
|
78.3
|
|
|
$
|
67.2
|
|
The following table reconciles Cash and cash equivalents to Net Cash at the balance sheet dates. The increase in Net Cash was primarily driven by an increase in Net cash provided by operating
activities, as discussed above. The columns may not foot due to rounding.
|
|
As of
|
|
|
|
January 30,
2022
|
|
|
October 31,
2021
|
|
Net Cash
|
|
|
|
|
|
|
Cash and cash equivalents
|
|
$
|
314.2
|
|
|
$
|
276.7
|
|
Current portion of Long-term debt
|
|
|
(18.3
|
)
|
|
|
(22.2
|
)
|
Long-term debt
|
|
|
(78.5
|
)
|
|
|
(89.4
|
)
|
Net Cash
|
|
$
|
217.3
|
|
|
$
|
165.0
|
|
Business Outlook
Our current business outlook and guidance was provided in the Photronics Q1-FY22 Earnings Release, Earnings Presentation, and Investor conference call, but is not incorporated herein. These can be accessed in the
investor section of our website - www.photronics.com.
Our future results of operations and the other forward-looking statements contained in this filing and in the Photronics Q1-FY22 Earnings Presentation and the related earnings call and slide deck
involve a number of risks and uncertainties, some of which are discussed in Part I, Item 1A of our 2021 Form 10-K. A number of other unforeseeable factors could cause actual results to differ materially from our expectations.
Critical Accounting Estimates
Please refer to Part II, Item 7 of our 2021 Form 10-K for discussion of our critical accounting estimates. There have been no changes to our critical accounting estimates since the filing of our Annual Report on Form
10-K for the year ended October 31, 2021.