I
tem 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
The following discussion and analysis of our financial condition and results of operations should be read in conjunction with our historical consolidated financial statements and related notes thereto in this Quarterly Report on Form 10-Q and with our A
nnual Report on Form 10-K for the year ended
December 31, 201
8
. This Quarterly Report on Form 10-Q contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and S
ection 21E of the Securities
Exchange Act of 1934, as amended, that are intended to be covered by the “safe harbor” created by those sections. Forward-looking statements, which are based on certain assumptions and describe our future plans, strategies and expectations, can generally be identified by the use of forward-looking terms such
as
“anticipates,” “believes,” “could,” “estimates,” “expects,” “feel,” “forecasts,” “intends,” “may,” “plan,” “potential,” “predict,” “project,” “seek,” “should,” “will,” “would,”
or other comparable terms
. These forward-looking statements are subject to uncertainty and changes in circumstances. Actual results may differ materially from these expectations due to inaccurate assumptions and known or unknown risks and uncertainties, including those identified in “Cautionary Note Regarding Forward-Looking Statements” in this Item 2 and in “Risk Factors” in Item 1A of Part I of our Annual Report on Form 10-K for the year ended
December 31, 201
8
.
We urge you to consider those risks and uncertainties in evaluating our forward-looking statements. We caution readers not to place undue reliance upon any such forward-looking statements, which speak only as of the date made. Except as otherwise required by the federal securities laws, we disclaim any obligation or undertaking to publicly release
any updates or revisions to any forward-looking statement contained herein (or elsewhere) to reflect any change in our expectations with regard thereto or any change in events, conditions or circumstances on which any such statement is based.
Overview
Primo Water Corporation (together with its consolidated subsidiaries, “Primo,” “we,” “our,” or “us”) is North America’s leading single source provider of multi-gallon purified bottled water, self-service refill drinking water and water dispensers sold through major retailers in the United States and Canada. We believe the market for purified water continues to grow due to evolving taste preferences, perceived health benefits and concerns regarding the quality of municipal tap water. Our products provide an environmentally friendly, economical, convenient and healthy solution for consuming purified and filtered water. We are a Delaware corporation that was incorporated in 2017 in connection with the creation of a holding company structure. Our predecessor was founded in Delaware in 2004.
Business
Our business is designed to generate recurring demand for our purified bottled water or self-service refill drinking water through the sale of innovative water dispensers. This business strategy is commonly referred to as “razor-razorblade” because the initial sale of a product creates a base of users who frequently purchase complementary consumable products. Once our bottled water is consumed using a water dispenser, empty bottles are exchanged at our recycling center displays, which provide a recycling ticket that offers a discount toward the purchase of a new bottle of Primo purified water or they are refilled at a self-service refill drinking water location. Each of our multi-gallon Exchange water bottles can be sanitized and reused up to 40 times before being taken out of use, crushed and recycled, substantially reducing landfill waste compared to consumption of equivalent volumes of single-serve bottled water. As of March 31, 2019, our products were offered in the United States and in Canada at approximately 45,000 combined retail locations, including Lowe’s Home Improvement, Walmart, Sam’s Club, The Home Depot, Meijer, Kroger, Food Lion, H-E-B Grocery, Circle K, Family Dollar, Walgreens, Albertsons, Publix, and CVS. We believe the market for purified water continues to grow due to evolving taste preferences, perceived health benefits and concerns regarding the quality of municipal tap water. Our products provide an environmentally friendly, economical, convenient and healthy solution for consuming purified and refill drinking water.
We provide major retailers throughout the United States and Canada with a single-vendor solution for our three reporting segments, Primo Refill (“Refill”), Primo Exchange (“Exchange”), and Primo Dispensers (“Dispensers”), addressing a market demand that we believe was previously unmet. Our approximately 45,000 locations include approximately 24,300 Refill locations, 13,200 Exchange locations and 7,200 Dispenser locations. Our solutions are easy for retailers to implement, require minimal management supervision and store-based labor, and provide centralized billing and detailed performance reports. Exchange offers retailers attractive financial margins and the ability to optimize typically unused retail space with our displays. Refill provides drinking water for consumer purchase through the installation of self-service vending displays at retail locations. The Refill business model eliminates the bottling and distribution infrastructure required to deliver traditional bottled water, thereby allowing us to provide refill drinking water at a value price as compared to alternatives in the marketplace. Additionally, due to the recurring nature of water consumption, retailers benefit from year-round customer traffic, highly predictable revenue and health and wellness focused consumers.
Business Segments
We have three operating and reportable segments, Refill, Exchange, and Dispensers.
Our Refill segment sales consist of the sale of filtered drinking water dispensed directly to consumers through technologically advanced, self-service machines located at major retailers throughout the United States and Canada.
Our Exchange segment sales consist of the sale of multi-gallon purified bottled water offered through retailers in the United States and Canada. Our Exchange products are offered through point of purchase display racks and recycling centers that are prominently located at major retailers in space that is often underutilized.
Our Dispensers segment sells water dispensers that are designed to dispense Primo and other dispenser-compatible bottled water. Our Dispensers sales are primarily generated through major retailers in the United States and Canada, where we recognize revenues for the sale of the water dispensers when the customer obtains control. We support retail sell-through with domestic inventory.
We evaluate the financial results of these segments focusing primarily on segment net sales and segment (loss) income from operations before depreciation and amortization (“segment (loss) income from operations”). We utilize segment net sales and segment (loss) income from operations because we believe they provide useful information for effectively allocating our resources between business segments, evaluating the health of our business segments based on metrics that management can actively influence and gauging our investments and our ability to service, incur or pay down debt.
Cost of sales for Refill consists primarily of costs associated with routine maintenance of reverse osmosis water filtration systems and filtered water displays, costs of our field service operations and commissions paid to retailers associated with revenues earned. Cost of sales for Exchange consists primarily of costs for bottling, distribution and bottles. Cost of sales for Dispensers consists of contract manufacturing, freight and duties.
Selling, general and administrative expenses for Refill, Exchange, and Dispensers consist primarily of personnel costs for operations support as well as other supporting costs for operating each segment.
Expenses not specifically related to operating segments are shown separately as Corporate. Corporate expenses are comprised mainly of compensation and other related expenses for corporate support, information systems and administration. Corporate expenses also include certain professional fees and expenses and compensation of our Board of Directors.
In this Management’s Discussion and Analysis of Financial Condition and Results of Operations, when we refer to “same-store unit growth”, we are comparing retail locations at which our products have been available for at least 12 months at the beginning of the relevant period. In addition, “gross margin percentage” is defined as net sales less cost of sales, as a percentage of net sales.
Results of Operations
The following table sets forth our results of operations (dollars in thousands):
|
|
Three months ended March 31,
|
|
|
|
2019
|
|
|
2018
|
|
Consolidated statements of operations data:
|
|
|
|
|
|
|
|
|
Net sales
|
|
$
|
70,047
|
|
|
$
|
73,659
|
|
Operating costs and expenses:
|
|
|
|
|
|
|
|
|
Cost of sales
|
|
|
51,522
|
|
|
|
53,421
|
|
Selling, general and administrative expenses
|
|
|
10,330
|
|
|
|
9,200
|
|
Special items
|
|
|
261
|
|
|
|
77
|
|
Depreciation and amortization
|
|
|
6,550
|
|
|
|
6,057
|
|
Impairment charges and other
|
|
|
75
|
|
|
|
132
|
|
Total operating costs and expenses
|
|
|
68,738
|
|
|
|
68,888
|
|
Income from operations
|
|
|
1,309
|
|
|
|
4,771
|
|
Interest expense, net
|
|
|
2,581
|
|
|
|
5,286
|
|
Loss before income taxes
|
|
|
(1,272
|
)
|
|
|
(515
|
)
|
Income tax benefit
|
|
|
–
|
|
|
|
(1,725
|
)
|
Net (loss) income
|
|
$
|
(1,272
|
)
|
|
$
|
1,210
|
|
The following table sets forth our results of operations expressed as a percentage of net sales (percentage amounts may not add to totals due to rounding):
|
|
Three months ended March 31,
|
|
|
|
2019
|
|
|
2018
|
|
Consolidated statements of operations data:
|
|
|
|
|
|
|
|
|
Net sales
|
|
|
100.0
|
%
|
|
|
100.0
|
%
|
Operating costs and expenses:
|
|
|
|
|
|
|
|
|
Cost of sales
|
|
|
73.6
|
|
|
|
72.5
|
|
Selling, general and administrative expenses
|
|
|
14.7
|
|
|
|
12.5
|
|
Special items
|
|
|
0.4
|
|
|
|
0.1
|
|
Depreciation and amortization
|
|
|
9.4
|
|
|
|
8.2
|
|
Impairment charges and other
|
|
|
0.1
|
|
|
|
0.2
|
|
Total operating costs and expenses
|
|
|
98.2
|
|
|
|
93.5
|
|
Income from operations
|
|
|
1.9
|
|
|
|
6.5
|
|
Interest expense, net
|
|
|
3.7
|
|
|
|
7.2
|
|
Loss before income taxes
|
|
|
(1.8
|
)
|
|
|
(0.7
|
)
|
Income tax benefit
|
|
|
–
|
|
|
|
(2.3
|
)
|
Net (loss) income
|
|
|
(1.8
|
)%
|
|
|
1.6
|
%
|
The following tables set forth our segment net sales in dollars and as a percent of net sales, segment (loss) income from operations presented on a segment basis and reconciled to our consolidated income from operations, and segment gross margin percentages (dollars in thousands) (percentage amounts may not add to totals due to rounding):
|
|
Three months ended March 31,
|
|
|
|
2019
|
|
|
2018
|
|
|
|
|
|
|
|
Percent
|
|
|
|
|
|
|
Percent
|
|
|
|
Dollars
|
|
|
of Net Sales
|
|
|
Dollars
|
|
|
of Net Sales
|
|
Segment net sales:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Refill
|
|
$
|
38,326
|
|
|
|
54.7
|
%
|
|
$
|
41,475
|
|
|
|
56.3
|
%
|
Exchange
|
|
|
19,352
|
|
|
|
27.6
|
%
|
|
|
18,258
|
|
|
|
24.8
|
%
|
Dispensers
|
|
|
12,369
|
|
|
|
17.7
|
%
|
|
|
13,926
|
|
|
|
18.9
|
%
|
Total net sales
|
|
$
|
70,047
|
|
|
|
100.0
|
%
|
|
$
|
73,659
|
|
|
|
100.0
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Segment income from operations:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Refill
|
|
$
|
10,084
|
|
|
|
|
|
|
$
|
11,584
|
|
|
|
|
|
Exchange
|
|
|
5,468
|
|
|
|
|
|
|
|
5,263
|
|
|
|
|
|
Dispensers
|
|
|
584
|
|
|
|
|
|
|
|
1,144
|
|
|
|
|
|
Corporate
|
|
|
(7,941
|
)
|
|
|
|
|
|
|
(6,953
|
)
|
|
|
|
|
Special items
|
|
|
(261
|
)
|
|
|
|
|
|
|
(77
|
)
|
|
|
|
|
Depreciation and amortization
|
|
|
(6,550
|
)
|
|
|
|
|
|
|
(6,057
|
)
|
|
|
|
|
Impairment charges and other
|
|
|
(75
|
)
|
|
|
|
|
|
|
(133
|
)
|
|
|
|
|
|
|
$
|
1,309
|
|
|
|
|
|
|
$
|
4,771
|
|
|
|
|
|
|
|
Three Months Ended March 31,
|
|
|
|
2019
|
|
|
2018
|
|
Segment gross margin:
|
|
|
|
|
|
|
|
|
Refill
|
|
|
30.1
|
%
|
|
|
31.6
|
%
|
Exchange
|
|
|
30.8
|
%
|
|
|
31.3
|
%
|
Dispensers
|
|
|
8.4
|
%
|
|
|
10.2
|
%
|
Total gross margin
|
|
|
26.4
|
%
|
|
|
27.5
|
%
|
Three Months Ended
March 31, 2019
Compared to
Three Months Ended
March 31, 2018
Net sales
. Net sales decreased 4.9%, or $3.6 million, to $70.0 million for the three months ended March 31, 2019 from $73.7 million for the three months ended March 31, 2018. The change was due to decreases in sales for Refill and Dispensers of $3.1 million and $1.6 million, respectively, partially offset by the $1.1 million increase for Exchange.
Refill
.
Refill net sales decreased 7.6% to $38.3 million for the three months ended March 31, 2019. The decrease in Refill net sales was primarily due to a 14.8% decline in five-gallon equivalent units to 20.4 million attributable in part to fewer locations, partially offset by the implementation of price increases. The decline in Refill net sales was partially attributable to issues identified in 2018 related to the downtime of certain Refill machines and the speed at which those out-of-service machines were identified. Among other factors, these downtime issues may have prevented sales to current or prospective Refill customers, and may have impaired relationships with existing customers or prevented us from establishing relationships with new customers, and the effects of the previously identified downtime issues may continue through the foreseeable future. We continue to drive implementation of a number of changes to our Refill business arising from the identification and correction of these issues, and we believe that these changes will help drive incremental, sustainable and long-term growth in our Refill business.
Exchange.
Exchange net sales increased 6.0% to $19.4 million for the three months ended March 31, 2019. Exchange sales growth was driven by the increase in U.S. same-store units of 13.6% for the three months ended March 31, 2019. In addition, five-gallon equivalent units for Exchange increased 10.2% to 4.1 million units for the three months ended March 31, 2019 from 3.7 million units for the same period in 2018. The increase in sales units was greater than the increase in sales dollars, primarily due to the impact of consumer-focused promotional efforts including the instantly redeemable coupons for free water with the purchase of a dispenser.
Dispensers.
Dispensers net sales decreased 11.2% to $12.4 million for the three months ended March 31, 2019 due primarily to the timing of orders from major retailers compared to the same period in the prior year. Consumer demand, which we measure as the dispenser unit sales to end consumers, was virtually unchanged for the three months ended March 31, 2019 at 185,000 units.
Gross margin percentage.
The overall gross margin percentage was 26.4% for the three months ended March 31, 2019, compared to 27.5% for the three months ended March 31, 2018.
Refill.
Gross margin as a percentage of net sales for our Refill segment was 30.1% for the three months ended March 31, 2019 compared to 31.6% for the three months ended March 31, 2018. While certain operational initiatives have driven a reduction in cost of sales, the magnitude of the decrease in net sales for Refill described above drove a lower gross margin percentage due to the fixed nature of certain costs in our Refill segment.
Exchange.
Gross margin as a percentage of net sales for our Exchange segment was 30.8% for the three months ended March 31, 2019, compared to 31.3% for the three months ended March 31, 2018. The decrease was primarily due to costs associated with certain promotional efforts.
Dispensers.
Gross margin as a percentage of net sales for our Dispensers segment decreased to 8.4% for the three months ended March 31, 2019 from 10.2% for the three months ended March 31, 2018. The decrease in gross margin percentage was primarily due to an increase in promotional activities as well as a shift in customer mix.
Selling, general and administrative expenses (“SG&A”).
SG&A increased 12.3% to $10.3 million for the three months ended March 31, 2019 from $9.2 million for the three months ended March 31, 2018. The increase in SG&A expense was driven primarily by the increase in costs associated with marketing, advertising and consumer experience-related initiatives. In addition, we continue to develop and implement new marketing and brand activation strategies in order to increase awareness of the healthy and environmentally-friendly aspects of our products and the risks associated with consumption of tap water, and to drive increased sales and customer loyalty. While we expect these strategies to drive increased net sales and market penetration in the long-term, the near-term incremental costs associated with such strategies may adversely impact our expenses.
Special items
.
Special items were $0.3 million for the three months ended March 31, 2019 compared to $0.1 million for the three months ended March 31, 2018.
Depreciation and amortization.
Depreciation and amortization increased 8.1% to $6.6 million for the three months ended March 31, 2019 from $6.1 million for the three months ended March 31, 2018.
Impairment Charges and Other
. Impairment charges and other remained flat at $0.1 million for the three months ended March 31, 2019 and 2018, respectively. Impairment charges and other for the three months ended March 31, 2019 and 2018 were primarily related to losses on disposal of property and equipment.
Interest expense, net.
Interest expense, net decreased to $2.6 million for the three months ended March 31, 2019 from $5.3 million for the three months ended March 31, 2018. The decrease was due primarily to the June 2018 refinancing of our outstanding senior indebtedness which resulted in lower interest rates and lower outstanding indebtedness. See “Note 5 – Debt and Finance Leases, net of Debt Issuance Costs” in the Notes to the Condensed Consolidated Financial Statements.
Income Tax Benefit
. We recorded no income tax benefit for the three months ended March 31, 2019 compared to a benefit of $1.7 million for the three months ended March 31, 2018. The benefit recorded for the three months ended March 31, 2018 was primarily due to the Tax Cuts and Jobs Act changes that went into effect on January 1, 2018 related to federal net operating losses, which can be carried forward indefinitely.
Liquidity and Capital Resources
Adequacy of Capital Resources
We had capital expenditures of $7.7 million for the three months ended March 31, 2019 and we anticipate net capital expenditures to range between $15.0 million and $20.0 million for the remainder of 2019. Anticipated capital expenditures are related primarily to growth and maintenance in Refill and Exchange locations.
At March 31, 2019, our cash and cash equivalents totaled $4.2 million and we had $16.4 million in availability under our Revolving Facility. We anticipate using current cash, cash flow from operations and availability under our Revolving Facility to meet our current needs for working capital and capital expenditures in the ordinary course of business for the foreseeable future. If we do require additional debt financing, such debt financing may not be available to us on terms favorable to us, if at all.
Our future capital requirements may vary materially from those now anticipated and will depend on many factors including: the number of growth initiatives, including our marketing and brand activation strategies and changes implemented in our Refill business resulting from the downtime issues identified in 2018 that we believe will drive same store sales and the rate of growth in new Refill and Exchange locations and related display, rack and reverse osmosis filtration system costs, cost to develop new Dispenser product lines, sales and marketing resources needed to further penetrate our markets, the expansion of our operations in the United States and Canada, the response of competitors to our solutions and products, as well as the completion of future acquisitions. Historically, we have experienced increases in our capital expenditures consistent with the growth in our operations, and we anticipate that our expenditures will continue to increase as we grow our business.
Our ability to satisfy our obligations or to fund planned capital expenditures will depend on our future performance, which to a certain extent is subject to general economic, financial, competitive, legislative, regulatory and other factors beyond our control. We also believe that if we pursue any material acquisitions in the foreseeable future we will need to finance this activity through the issuance of equity or additional debt financing, and such financing may not be available to us on terms favorable to us, if at all.
Changes in Cash Flows
The following table shows the components of our cash flows for the periods presented (in millions):
|
|
Three months ended March 31,
|
|
|
|
2019
|
|
|
|
|
|
Net cash (used in) provided by operating activities
|
|
$
|
(0.9
|
)
|
|
$
|
4.5
|
|
Net cash used in investing activities
|
|
$
|
(7.7
|
)
|
|
$
|
(3.7
|
)
|
Net cash provided by (used in) financing activities
|
|
$
|
5.5
|
|
|
$
|
(1.0
|
)
|
Net Cash Flows from Operating Activities
Net cash used in operating activities was $0.9 million for the three months ended March 31, 2019 compared to net cash provided by operating activities of $4.5 million for the same period of the prior year. The decrease was driven by changes in working capital, primarily the increase in inventory on hand at March 31, 2019 compared to March 31, 2018. We expect working capital to be a use of cash in the first half of the year and to be a source of cash in the second half of the year.
Net Cash Flows from Investing Activities
Net cash used in investing activities increased to $7.7 million for the three months ended March 31, 2019 from $3.7 million for the same period of the prior year, primarily due to an increase in purchases of property and equipment related to the growth and maintenance in Refill and Exchange locations.
Net Cash Flows from Financing Activities
Net cash provided by financing activities was $5.5 million for the three months ended March 31, 2019 compared to net cash used in financing activities of $1.0 million for the same period of the prior year. The change was due primarily to an increase in borrowings under the SunTrust Credit Facility, driven by the decrease in cash flow from operations and the increase in cash used in investing activities, partially offset by a decrease in shares purchased to pay taxes associated with equity awards.
Adjusted EBITDA U.S. GAAP Reconciliation
Adjusted EBITDA is a non-U.S. GAAP financial measure that is calculated as net (loss) income before depreciation and amortization; interest expense, net; income taxes; change in fair value of warrant liability; non-cash stock-based compensation expense; non-recurring and acquisition-related costs; and impairment charges and other. Our SunTrust Credit Facility contains financial covenants that use Adjusted EBITDA. We believe Adjusted EBITDA provides useful information to management, investors and financial analysts regarding certain financial and business trends relating to our financial condition and results of operations. Adjusted EBITDA is used by management to compare our performance to that of prior periods for trend analyses and planning purposes and is presented to our Board of Directors.
Non-U.S. GAAP measures should not be considered a substitute for, or superior to, financial measures calculated in accordance with U.S. GAAP. Adjusted EBITDA excludes significant expenses that are required by U.S. GAAP to be recorded in our financial statements and is subject to inherent limitations. In addition, other companies in our industry may calculate this non-U.S. GAAP measure differently than we do or may not calculate it at all, limiting its usefulness as a comparative measure. The table below provides a reconciliation between net loss and Adjusted EBITDA (dollars in thousands).
|
|
Three Months Ended
|
|
|
|
March 31,
|
|
|
|
2019
|
|
|
2018
|
|
Net (loss) income
|
|
$
|
(1,272
|
)
|
|
$
|
1,210
|
|
Depreciation and amortization
|
|
|
6,550
|
|
|
|
6,057
|
|
Interest expense, net
|
|
|
2,581
|
|
|
|
5,286
|
|
Income tax benefit
|
|
|
–
|
|
|
|
(1,725
|
)
|
EBITDA
|
|
|
7,859
|
|
|
|
10,828
|
|
Non-cash, stock-based compensation expense
|
|
|
1,475
|
|
|
|
1,292
|
|
Special items
(1)
|
|
|
261
|
|
|
|
77
|
|
Impairment charges and other
|
|
|
173
|
|
|
|
184
|
|
Adjusted EBITDA
|
|
$
|
9,768
|
|
|
$
|
12,381
|
|
|
(1)
|
For the three months ended March 31, 2019, “Special items” consisted of approximately $0.1 million of acquisition-related expenses associated with the Glacier Acquisition, including fees payable to legal advisors associated with restructuring, and $0.2 million of costs associated with restructuring and other costs. For the three months ended March 31, 2018, “Special items” consisted of approximately $0.1 million of transactional expenses associated with the Glacier Acquisition, including fees payable to financial, legal, accounting and other advisors.
|
Off-Balance Sheet Arrangements
We do not have any off-balance sheet arrangements, investments in special purpose entities or undisclosed borrowings or debt. Additionally, we were not a party to any derivative contracts or synthetic leases as of March 31, 2019.
Inflation
and Changing Prices
In the three most recent fiscal years, inflation and changing prices have not had a material effect on our business and we do not expect that inflation or changing prices will materially affect our business in the foreseeable future.
Seasonality; Fluctuations of Results
We have experienced and expect to continue to experience seasonal fluctuations in our sales and operating income. Our sales and operating income have been highest in the spring and summer and lowest in the fall and winter. Our Refill and Exchange segments, which generally enjoy higher margins than our Dispensers segment, experience higher sales and operating income in the spring and summer. We have historically experienced higher sales and operating income from our Dispensers segment in spring and summer; however, we believe the seasonality of dispenser sales are more dependent on retailer inventory management and purchasing cycles and not correlated to weather. Sustained periods of poor weather, particularly in the spring and summer, can negatively impact our sales in our higher margin Refill and Exchange segments. Accordingly, our results of operations in any quarter will not necessarily be indicative of the results that we may achieve for a fiscal year or any future quarter.
Critical Accounting Policies and Estimates
Other than the adoption of ASC 842 on January 1, 2019, as described in “Note 3 - Leases” in the condensed consolidated financial statements, there have been no material changes to our critical accounting policies and estimates from the information provided in Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” included in our Annual Report on Form 10-K for the year ended December 31, 2018.
Cautionary Note Regarding Forward-Looking Statements
This document includes and other information we make public from time to time may include “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements include statements about our estimates, expectations, projections, beliefs, intentions or strategies for the future, and the assumptions underlying such statements. We use the words “anticipates,” “believes,” “could,” “estimates,” “expects,” “feel,” “forecasts,” “intends,” “may,” “plan,” “potential,” “predict,” “project,” “seek,” “should,” “will,” “would,” and similar expressions to identify our forward-looking statements. These forward-looking statements are subject to uncertainty and changes in circumstances. Actual results may differ materially from these expectations due to inaccurate assumptions and known and unknown risks, including those factors set forth in Part I, Item 1A, “Risk Factors” of our Annual Report on Form 10-K for the fiscal year ended December 31, 2018. We caution readers not to place undue reliance upon any such forward-looking statements, which speak only as of the date made. Except as otherwise required by federal securities laws, we disclaim any obligation or undertaking to publicly release any updates or revisions to any forward-looking statement contained herein (or elsewhere) to reflect any change in our expectations with regard thereto or any change in events, conditions or circumstances on which any such statement is based.