DEADLINE ALERT: Bragar Eagel & Squire, P.C. Reminds Investors That a Class Action Lawsuit Has Been Filed Against MacroGenics, Inc. and Encourages Investors to Contact the Firm

PR Newswire

NEW YORK, Nov. 6, 2019 /PRNewswire/ — Bragar Eagel & Squire, P.C., a nationally recognized shareholder law firm, reminds investors that a class action lawsuit has been filed in the United States District Court for the District of Maryland on behalf of all investors that purchased MacroGenics, Inc. (NASDAQ: MGNX) securities between February 6, 2019 and June 3, 2019  (“the “Class Period”).  Investors have until November 12, 2019 to apply to the Court to be appointed as lead plaintiff in the lawsuit.

(PRNewsfoto/Bragar Eagel & Squire, P.C.)

Click here to participate in the action.

The SOPHIA study is a study that was conducted by MacroGenics. The SOPHIA study is a randomized, open-label Phase III clinical trial evaluating margetuximab plus chemotherapy compared to trastuzumab plus chemotherapy in patients with HER2-positive metastatic breast cancer.

The complaint, filed on September 13, 2019, alleges that throughout the Class Period defendants violated the federal securities laws by disseminating false and misleading statements to the investing public and/or failing to disclose adverse facts pertaining to the company’s Phase III SOPHIA trial. 

Specifically, defendants concealed material information and/or failed to disclose that: (a) the company had conducted the progression-free survival (“PFS”) and first interim overall survival (“OS”) analyses for the SOPHIA trial by no later than October 10, 2018; (b) the October 2018 PFS analysis showed a 0.9 month improvement in PFS; and (c) the October 2018 OS interim analysis did not produce a statistically significant result and the interim OS Kaplan-Meier curves (a non-parametric statistic used to estimate the survival function from lifetime data) crossed in several spots (thereby violating the constant hazard assumption) and separated late.  As a result of this information being withheld from the market, MacroGenics common stock traded at artificially inflated prices during the Class Period, reaching a high of $25.60 per share on February 6, 2019.

On May 13, 2019, the American Society of Clinical Oncologists (“ASCO”) posted the SOPHIA study abstract on the Internet.  The abstract disclosed that the October 2018 PFS analysis resulted in a 0.9 month improvement in PFS.  On this news, the price of MacroGenics common stock dropped $1.17 per share, to close at $16.25 per share on May 13, 2019, a decline of 7%.

Then on June 4, 2019, during the ASCO annual meeting, the company disclosed additional data for the SOPHIA trial.  In its presentation, MacroGenics revealed that it had conducted the PFS and OS analyses in October 2018, and the OS analyses for the SOPHIA trial demonstrated Kaplan-Meier curves crossing at several spots with late separation. On this news, the price of MacroGenics common stock dropped 17%, or $3.13 per share, to close at $15.58 per share on June 4, 2019.

If you purchased MacroGenics securities during the Class Period, are a long-term stockholder, have information, would like to learn more about these claims, or have any questions concerning this announcement or your rights or interests with respect to these matters, please contact Brandon Walker or Melissa Fortunato by email at investigations@bespc.com, or telephone at (212) 355-4648, or by filling out this contact form.  There is no cost or obligation to you.

About Bragar Eagel & Squire, P.C.:
Bragar Eagel & Squire, P.C. is a nationally recognized law firm with offices in New York and California. The firm represents individual and institutional investors in commercial, securities, derivative, and other complex litigation in state and federal courts across the country. For more information about the firm, please visit www.bespc.com.  Attorney advertising.  Prior results do not guarantee similar outcomes. 

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SOURCE Bragar Eagel & Squire, P.C.

DXP Enterprises Reports Third Quarter 2019 Results

DXP Enterprises Reports Third Quarter 2019 Results

  • $327.2 million in sales, up 6.2 percent, compared to $308.0 million in sales in Q3 2018
  • Net income of $13.1 million versus $8.4 million compared to Q3 2018
  • GAAP diluted EPS of $0.71, compared to $0.46 in Q3 2018
  • $28.2 million in earnings before interest, taxes, depreciation and amortization (“EBITDA”)

HOUSTON–(BUSINESS WIRE)–DXP Enterprises, Inc. (NASDAQ: DXPE) today announced financial results for the third quarter ended September 30, 2019. The following are results for the three months and nine months ended September 30, 2019, compared to the three months and nine months ended September 30, 2018. A reconciliation of the non-GAAP financial measures can be found in the back of this press release.

Third Quarter 2019 financial highlights:

  • Sales increased 6.2 percent to $327.2 million, compared to $308.0 million for the third quarter of 2018.
  • Earnings per diluted share for the third quarter was $0.71 based upon 18.4 million diluted shares, compared to $0.46 per share in the third quarter of 2018, based on 18.4 million diluted shares.
  • Earnings before interest, taxes, depreciation and amortization (EBITDA) for the third quarter was $28.2 million compared to $23.2 million for the third quarter of 2018, an increase of 21.4 percent.

David R. Little, Chairman and CEO commented, “DXP reported excellent sales and net income for the third quarter. We are pleased with our results, which reflect continued execution of our strategy and a focus on being customer driven experts in MROP solutions. Underlying demand in our end markets has wavered but we continue to take market share and focus on execution. We achieved 6.2 percent sales growth, maintained EBITDA margins and drove outstanding diluted earnings per share growth. During the third quarter of 2019, sales were $193.7 million for Service Centers, $82.2 million for Innovative Pumping Solutions and $51.3 million for Supply Chain Services. Business segment operating income increased 15.1 percent year-over-year. DXP’s third quarter 2019 total sales were $327.2 million and EBITDA grew 21.4 percent year-over-year. Overall, we maintained margin performance, continued to improve cash flow and executed in a changing end market backdrop. We will remain focused on growing the top-line and bottom-line as we move into fiscal 2020.”

Kent Yee, CFO, commented, “We are pleased with 6.2 percent sales growth and 8.6 percent EBITDA margins. This translated into $0.71 diluted earnings per share or 54.3 percent earnings growth year-over-year. Total debt outstanding as of September 30, 2019 was $245.0 million. DXP’s secured leverage ratio or net debt to EBITDA was 2.0:1.0. Our strong execution with our focus on sales growth and margin improvement delivered strong earnings, generated cash flow and continues to position us drive shareholder value.”

We will host a conference call regarding 2019 third quarter results on the Company’s website (www.dxpe.com) Thursday, November 7, 2019 at 10 am CST. Web participants are encouraged to go to the Company’s website at least 15 minutes prior to the start of the call to register, download and install any necessary audio software. The on-line archived replay will be available immediately after the conference call at www.dxpe.com.

Non-GAAP Financial Measures

DXP supplements reporting of net income with non-GAAP measurements, including EBITDA, adjusted EBITDA and free cash flow. This supplemental information should not be considered in isolation or as a substitute for the unaudited GAAP measurements. Additional information regarding EBITDA and free cash flow referred to in this press release are included below under “Unaudited Reconciliation of Non-GAAP Financial Information.”

The Company believes EBITDA provides additional information about: (i) operating performance, because it assists in comparing the operating performance of the business, as it removes the impact of non-cash depreciation and amortization expense as well as items not directly resulting from core operations such as interest expense and income taxes and (ii) the performance and the effectiveness of operational strategies. Additionally, EBITDA performance is a component of a measure of the Company’s financial covenants under its credit facility. Furthermore, some investors use EBITDA as a supplemental measure to evaluate the overall operating performance of companies in the industry. Management believes that some investors’ understanding of performance is enhanced by including this non-GAAP financial measure as a reasonable basis for comparing ongoing results of operations. By providing this non-GAAP financial measure, together with a reconciliation from net income, the Company believes it is enhancing investors’ understanding of the business and results of operations, as well as assisting investors in evaluating how well the Company is executing strategic initiatives.

About DXP Enterprises, Inc.

DXP Enterprises, Inc. is a leading products and service distributor that adds value and total cost savings solutions to industrial customers throughout the United States, Canada, Mexico and Dubai. DXP provides innovative pumping solutions, supply chain services and maintenance, repair, operating and production (“MROP”) services that emphasize and utilize DXP’s vast product knowledge and technical expertise in rotating equipment, bearings, power transmission, metal working, industrial supplies and safety products and services. DXP’s breadth of MROP products and service solutions allows DXP to be flexible and customer-driven, creating competitive advantages for our customers. DXP’s business segments include Service Centers, Innovative Pumping Solutions and Supply Chain Services. For more information, go to www.dxpe.com.

The Private Securities Litigation Reform Act of 1995 provides a “safe-harbor” for forward-looking statements. Certain information included in this press release (as well as information included in oral statements or other written statements made by or to be made by the Company) contains statements that are forward-looking. Such forward-looking information involves important risks and uncertainties that could significantly affect anticipated results in the future; and accordingly, such results may differ from those expressed in any forward-looking statement made by or on behalf of the Company. These risks and uncertainties include, but are not limited to; ability to obtain needed capital, dependence on existing management, leverage and debt service, domestic or global economic conditions, and changes in customer preferences and attitudes. In some cases, you can identify forward-looking statements by terminology such as, but not limited to, “may,” “will,” “should,” “intend,” “expect,” “plan,” “anticipate,” “believe,” “estimate,” “predict,” “potential,” “goal,” or “continue” or the negative of such terms or other comparable terminology. For more information, review the Company’s filings with the Securities and Exchange Commission.

DXP ENTERPRISES, INC. AND SUBSIDIARIES

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

($ thousands, except per share amounts)

 

 

 

 

 

 

 

Three Months Ended September 30,

 

Nine Months Ended September 30,

 

 

2019

 

2018

 

2019

 

2018

Sales

 

$

327,178

 

 

$

308,028

 

 

$

971,721

 

 

$

905,191

 

Cost of sales

 

234,474

 

 

223,958

 

 

702,830

 

 

659,560

 

Gross profit

 

92,704

 

 

84,070

 

 

268,891

 

 

245,631

 

Selling, general and administrative expenses

 

70,987

 

 

67,257

 

 

209,511

 

 

197,609

 

Operating income

 

21,717

 

 

16,813

 

 

59,380

 

 

48,022

 

Other (income) expense, net

 

(25

)

 

120

 

 

127

 

 

(1,318

)

Interest expense

 

4,986

 

 

4,781

 

 

14,911

 

 

15,959

 

Income before income taxes

 

16,756

 

 

11,912

 

 

44,342

 

 

33,381

 

Provision for income taxes

 

3,606

 

 

3,550

 

 

10,655

 

 

8,962

 

Net income

 

13,150

 

 

8,362

 

 

33,687

 

 

24,419

 

Net income (loss) attributable to NCI*

 

41

 

 

(35

)

 

(172

)

 

(91

)

Net income attributable to DXP Enterprises, Inc.

 

$

13,109

 

 

$

8,397

 

 

$

33,859

 

 

$

24,510

 

Preferred stock dividend

 

23

 

 

23

 

 

68

 

 

68

 

Net income attributable to common shareholders

 

$

13,086

 

 

$

8,374

 

 

$

33,791

 

 

$

24,442

 

Diluted earnings per share attributable to DXP Enterprises, Inc.

 

$

0.71

 

 

$

0.46

 

 

$

1.84

 

 

$

1.33

 

Weighted average common shares and common equivalent shares outstanding

 

18,442

 

 

18,404

 

 

18,428

 

 

18,387

 

 

 

 

 

 

 

 

 

 

*NCI represents non-controlling interest

Business segment financial highlights:

  • Service Centers’ revenue for the third quarter was $193.7 million, an increase of 3.2 percent year-over-year with a 12.9 percent operating income margin.
  • Innovative Pumping Solutions’ revenue for the third quarter was $82.2 million, an increase of 7.2 percent year-over-year with a 12.3 percent operating income margin.
  • Supply Chain Services’ revenue for the third quarter was $51.3 million, an increase of 17.6 percent year-over-year with a 6.1 percent operating income margin.

SEGMENT DATA

($ thousands, unaudited)

 

 

Three Months Ended

September 30,

 

Nine Months Ended

September 30,

Sales

2019

 

2018

 

2019

 

2018

Service Centers

$

193,727

 

 

$

187,763

 

 

$

579,884

 

 

$

556,700

 

Innovative Pumping Solutions

82,169

 

 

76,662

 

 

237,920

 

 

218,561

 

Supply Chain Services

51,282

 

 

43,603

 

 

153,917

 

 

129,930

 

Total DXP Sales

$

327,178

 

 

$

308,028

 

 

$

971,721

 

 

$

905,191

 

 

 

 

 

 

 

 

 

 

Three Months Ended

September 30,

 

Nine Months Ended

September 30,

Operating Income

2019

 

2018

 

2019

 

2018

Service Centers

$

25,071

 

 

$

20,590

 

 

$

67,281

 

 

$

58,353

 

Innovative Pumping Solutions

10,097

 

 

8,773

 

 

28,924

 

 

24,109

 

Supply Chain Services

3,110

 

 

3,886

 

 

10,980

 

 

12,196

 

Total segments operating income

$

38,278

 

 

$

33,249

 

 

$

107,185

 

 

$

94,658

 

Reconciliation of Operating Income for Reportable Segments

($ thousands, unaudited)

 

 

Three Months Ended September 30,

 

Nine Months Ended September 30,

 

2019

 

2018

 

2019

 

2018

Operating income for reportable segments

$

38,278

 

 

$

33,249

 

 

$

107,185

 

 

$

94,658

 

Adjustment for:

 

 

 

 

 

 

 

Amortization of intangibles

3,806

 

 

4,098

 

 

11,424

 

 

12,575

 

Corporate expenses

12,755

 

 

12,338

 

 

36,381

 

 

34,061

 

Total operating income

21,717

 

 

16,813

 

 

59,380

 

 

48,022

 

Interest expense

4,986

 

 

4,781

 

 

14,911

 

 

15,959

 

Other expense (income), net

(25

)

 

120

 

 

127

 

 

(1,318

)

Income before income taxes

$

16,756

 

 

$

11,912

 

 

$

44,342

 

 

$

33,381

 

Unaudited Reconciliation of Non-GAAP Financial Information

($ thousands, unaudited)

The following table is a reconciliation of EBITDA and adjusted EBITDA, a non-GAAP financial measure, to income before income taxes, calculated and reported in accordance with U.S. GAAP.

 

Three Months Ended September 30,

 

Nine Months Ended September 30,

 

2019

 

2018

 

2019

 

2018

Income before income taxes

$

16,756

 

 

$

11,912

 

 

$

44,342

 

 

$

33,381

 

Plus: interest expense

4,986

 

 

4,781

 

 

14,911

 

 

15,959

 

Plus: depreciation and amortization

6,422

 

 

6,506

 

 

18,693

 

 

19,710

 

 

 

 

 

 

 

 

 

EBITDA

$

28,164

 

 

$

23,199

 

 

$

77,946

 

 

$

69,050

 

 

 

 

 

 

 

 

 

Plus: NCI (income) loss before tax

(55

)

 

64

 

 

228

 

 

120

 

Plus: Stock compensation expense

473

 

 

526

 

 

1,502

 

 

2,023

 

 

 

 

 

 

 

 

 

Adjusted EBITDA

$

28,582

 

 

$

23,789

 

 

$

79,676

 

 

$

71,193

 

DXP ENTERPRISES, INC. AND SUBSIDIARIES

UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS

($ thousands, except per share amounts)

 

September 30, 2019

 

December 31, 2018

ASSETS

 

 

 

Current assets:

 

 

 

Cash

$

28,436

 

 

$

40,304

 

Restricted Cash

124

 

 

215

 

Accounts receivable, net of allowances for doubtful accounts

210,098

 

 

191,829

 

Inventories

131,916

 

 

114,830

 

Costs and estimated profits in excess of billings

33,898

 

 

32,514

 

Prepaid expenses and other current assets

6,328

 

 

4,938

 

Federal income taxes receivable

1,518

 

 

960

 

Total current assets

412,318

 

 

385,590

 

Property and equipment, net

58,516

 

 

51,330

 

Goodwill

194,052

 

 

194,052

 

Other intangible assets, net of accumulated amortization

56,072

 

 

67,207

 

Operating lease ROU asset

67,296

 

 

 

Other long-term assets

3,300

 

 

1,783

 

Total assets

$

791,554

 

 

$

699,962

 

 

 

 

 

LIABILITIES AND EQUITY

 

 

 

Current liabilities:

 

 

 

Current maturities of long-term debt

$

2,500

 

 

$

3,407

 

Trade accounts payable

83,174

 

 

87,407

 

Accrued wages and benefits

20,242

 

 

21,275

 

Customer advances

4,606

 

 

3,223

 

Billings in excess of costs and estimated profits

7,201

 

 

10,696

 

Short-term operating lease liability

17,711

 

 

 

Other current liabilities

16,544

 

 

17,269

 

Total current liabilities

151,978

 

 

143,277

 

Long-term debt, less unamortized debt issuance costs

235,576

 

 

236,979

 

Long-term operating lease liability

49,602

 

 

 

Other long-term liabilities

951

 

 

2,819

 

Deferred income taxes

11,056

 

 

8,633

 

Total long-term liabilities

297,185

 

 

248,431

 

Total Liabilities

449,163

 

 

391,708

 

Equity:

 

 

 

Total DXP Enterprises, Inc. equity

341,157

 

 

306,848

 

Non-controlling interest

1,234

 

 

1,406

 

Total Equity

342,391

 

 

308,254

 

Total liabilities and equity

$

791,554

 

 

$

699,962

 

Unaudited Reconciliation of Non-GAAP Financial Information

($ thousands, unaudited)

The following table is a reconciliation of free cash flow, a non-GAAP financial measure, to cash flow from operating activities, calculated and reported in accordance with U.S. GAAP.

 

Three Months Ended

September 30,

 

Nine Months Ended

September 30,

 

2019

 

2018

 

2019

 

2018

 

 

 

 

 

 

 

 

Net cash provided by operating activities

$

10,943

 

 

$

16,825

 

 

$

7,483

 

 

$

9,842

 

Less: capital expenditures

(5,663

)

 

(2,189

)

 

(14,247

)

 

(7,705

)

 

 

 

 

 

 

 

 

Free cash flow

$

5,280

 

 

$

14,636

 

 

$

(6,764

)

 

$

2,137

 

 

Kent Yee

Senior Vice President, CFO

kent.yee@dxpe.com

www.dxpe.com

KEYWORDS: Texas United States North America

INDUSTRY KEYWORDS: Oil/Gas Chemicals/Plastics Retail Commercial Building & Real Estate Construction & Property Energy Manufacturing Other Transport Mining/Minerals Forest Products Agriculture Natural Resources Transport Logistics/Supply Chain Management Food/Beverage

MEDIA:

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SJW Group Appoints Three Former CTWS Directors to its Board

SJW Group Appoints Three Former CTWS Directors to its Board

Addition of Three Directors from New England bolsters geographic and gender diversity. Women now comprise nearly half of the Company’s board.

SAN JOSE, Calif.–(BUSINESS WIRE)–
SJW Group (NYSE: SJW) has appointed Carol P. Wallace, Mary Ann Hanley and Heather Hunt to the company’s board of directors effective October 9, 2019. All three women served on the board of Connecticut Water Service, Inc. (CTWS), which recently merged with SJW Group.

“Carol, Mary Ann, and Heather are proven leaders with a wealth of experience,” stated Eric W. Thornburg, Chairman, President and CEO of SJW Group. “As well-respected leaders who each have more than a decade of service on the board of an investor-owned water utility, they will make important contributions to the SJW Board. They bring their expertise in the New England market and history with CTWS as we leverage the strengths of our newly combined companies to better serve our customers and their communities.”

Each board member brings deep expertise, background, skills and dedication to the water service industry. Carol is the retired president and CEO, of the Cooper-Atkins Corporation; Heather is an attorney and executive director of the New England States Committee on Electricity and previously served as director of state and local government affairs at United Technologies; Mary Ann, having worked in state government for over a decade as Legal Counsel to the Governor and Director of the Office for Workforce Competitiveness, is currently the Liaison for Advocacy and Community Relations at Trinity Health Of New England.

Katharine Armstrong, Chairman of the SJW Group Nominating and Governance Committee, said, “We are proud of these exceedingly qualified new directors. The SJW Group board appreciates the value in having gender parity among its independent directors. We look forward to leveraging the strength of their experience and talent in our mission to serve customers, communities and shareholders.”

SJW Group’s board consists of 11 directors.

About SJW Group

SJW Group is the third largest investor-owned pure play water and wastewater utility based on rate base in the United States, providing life-saving and high-quality water service to nearly 1.5 million people. SJW Group’s locally led and operated water utilities – San Jose Water Company in California; Connecticut Water Company, Avon Water Company and Heritage Village Water Company in Connecticut; Maine Water Company in Maine; and SJWTX, Inc. (dba Canyon Lake Water Service Company) in Texas – possess the financial strength, operational expertise and technological innovation to safeguard the environment, deliver outstanding service to customers and provide opportunities to employees. SJW Group remains focused on investing in its operations, remaining actively engaged in its local communities and delivering continued sustainable value to its shareholders. For more information about SJW Group, please visit www.sjwgroup.com.

Forward-Looking Statements

This release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, as amended. Some of these forward-looking statements can be identified by the use of forward-looking words such as “believes,” “expects,” “may,” “will,” “should,” “seeks,” “approximately,” “intends,” “plans,” “estimates,” “projects,” “strategy,” or “anticipates,” or the negative of those words or other comparable terminology.

The accuracy of such statements is subject to a number of risks, uncertainties and assumptions including, but not limited to, the following factors: (1) the risk that the benefits expected from the merger of SJW Group and Connecticut Water Service, Inc. (the “Merger”) will not be realized; (2) the risk that the integration of Connecticut Water Service, Inc. will be more difficult, time-consuming or expensive than anticipated; (3) the effect of water, utility, environmental and other governmental policies and regulations, including actions concerning rates, authorized return on equity, authorized debt-to-equity ratios, capital expenditures and other decisions; (4) the outcome of the California Public Utilities Commission’s investigation into the Merger; (5) litigation, including litigation relating to the Merger; (6) changes in demand for water and other products and services; (7) unanticipated weather conditions and changes in seasonality; (8) climate change and the effects thereof; (9) catastrophic events such as fires, earthquakes, explosions, floods, ice storms, tornadoes, hurricanes, terrorist acts, physical attacks, cyber-attacks, or other similar occurrences that could adversely affect our facilities, operations, financial condition, results of operations and reputation; (10) unexpected costs, charges or expenses resulting from the Merger; (11) our ability to successfully evaluate investments in new business and growth initiatives; (12) the risk of work stoppages, strikes and other labor-related actions; (13) changes in general economic, political, business and financial market conditions; (14) the ability to obtain financing on favorable terms, which can be affected by various factors, including credit ratings, changes in interest rates, compliance with regulatory requirements, compliance with the terms and conditions of our outstanding indebtedness, and general market and economic conditions; and (15) legislative and economic developments.

Results for a quarter are not indicative of results for a full year due to seasonality and other factors. In addition, actual results are subject to other risks and uncertainties that relate more broadly to our overall business, including those more fully described in our filings with the SEC, including our most recent reports on Form 10-K, Form 10-Q and Form 8-K. Forward-looking statements are not guarantees of performance, and speak only as of the date made, and we undertake no obligation to update or revise any forward-looking statements except as required by law.

Investors

Suzy Papazian, SJW Group

General Counsel and Corporate Secretary

408-279-7961, Suzy.Papazian@sjwater.com

Media — California and Texas

Liann Walborsky

Director of Corporate Communications

408-279-7247, Liann.Walborsky@sjwater.com

Media — New England

Daniel J. Meaney, APR

Director of Public Affairs and Corporate Communications, Connecticut Water Service

860-664-6016, Daniel.Meaney@ctwater.com

KEYWORDS: California United States North America

INDUSTRY KEYWORDS: Utilities Energy

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Federal Home Loan Bank of San Francisco Announces 2019 Director Election Results

SAN FRANCISCO, Nov. 06, 2019 (GLOBE NEWSWIRE) — The Federal Home Loan Bank of San Francisco announced today the results of its 2019 director elections.

The Bank’s members re-elected Melinda Guzman and Kevin Murray to nonmember independent director positions. Ms. Guzman is Chief Executive Officer/Attorney of Melinda Guzman Professional Corporation, Sacramento, California. Mr. Murray is President and Chief Executive Officer of Weingart Center Association, Los Angeles, California.

The Bank’s California members also elected Shruti Miyashiro as a California member director. Ms. Miyashiro is President and Chief Executive Officer of Orange County’s Credit Union, Santa Ana, California.

The Bank’s Nevada members also elected Matthew Hendricksen as a Nevada member director. Mr. Hendricksen is Vice President, Treasury & Investments, of Employers Insurance Company of Nevada, Reno, Nevada.

Each of these four positions has a four-year term beginning January 1, 2020, and ending December 31, 2023.

Federal Home Loan Bank of San Francisco 
The Federal Home Loan Bank of San Francisco is a member-driven cooperative helping local lenders in Arizona, California, and Nevada build strong communities, create opportunity, and change lives for the better. The tools and resources we provide to our member financial institutions–commercial banks, credit unions, industrial loan companies, savings institutions, insurance companies, and community development financial institutions–foster homeownership, expand access to quality housing, seed or sustain small businesses, and revitalize whole neighborhoods. Together with our members and other partners, we are making the communities we serve more vibrant and resilient.

Contact:

Mary Long, (415) 616-2556
longm@fhlbsf.com

Stingray Reports Second Quarter 2020 Results

Free cash flow reached $18.8 million, up 226.1%

Second Quarter Highlights

  • Revenues increased 120.7% to $76.6 million
  • Recurring Broadcasting and Commercial Music revenues(1) increased 9.4% to $33.5 million
  • Radio accounted for 49.4% of total revenues at $37.8 million
  • Overall organic growth of 3.0%
  • Subscription video on demand (“SVOD”) subscribers increased 15.5% to 365,000 compared to last year, stable compared to last quarter
  • Adjusted EBITDA(2) increased 142.1% to $27.7 million, with a 36.1% margin compared to 32.9%. Excluding the impact of IFRS 16, Adjusted EBITDA(2) would have been $26.0 million
  • Adjusted EBITDA(2) by segment of $15.2 million or 39.3% of revenues for Broadcasting and Commercial Music, $13.7 million or 36.3% of revenues for Radio and $(1.2) million for Corporate
  • Net income of $5.2 million or $0.07 per share (basic and diluted) compared to a net income of $0.8 million or $0.01 per share (basic and diluted)
  • Adjusted Net income(3) up 78.6% to $12.0 million or $0.16 per share (basic and diluted)
  • Cash flow from operating activities increased to $19.0 million compared to $5.6 million
  • Adjusted free cash flow(4) up 226.1% of $18.8 million or $0.25 per share (basic and diluted) compared to $5.8 million or $0.10 per share (basic and diluted)
  • Net debt to Pro Forma Adjusted EBITDA(2) ratio of 2.95x
  • As part of the Corporation’s Normal Course Issuer Bid (“NCIB”), 254,864 subordinate voting shares and variable subordinated voting shares were repurchased for a total cash consideration of $1.9 million.

MONTREAL, Nov. 06, 2019 (GLOBE NEWSWIRE) — Stingray Group Inc. (TSX: RAY.A; RAY.B) (the “Corporation”; “Stingray”), a leading business-to-business multi-platform music and in-store media solutions provider, today announced its financial results for the second quarter ended September 30, 2019.

     
Financial Highlights

(in thousands of dollars, except per share data)
Three months ended

September 30
Six months ended
September 30
  2019 2018 % 2019 2018 %
Revenues 76,573 34,692 120.7 157,010 69,148 127.1
Recurring revenues(1) 33,528 30,651 9.4 67,510 61,447 9.9
Adjusted EBITDA(2) 27,671 11,429 142.1 58,836 22,608 160.2
Net income 5,184 777 567.2 14,367 2,123 576.7
Per share – diluted ($) 0.07 0.01 600.0 0.19 0.04 375.0
Adjusted Net income(3) 11,981 6,708 78.6 27,802 12,606 120.5
Per share – diluted ($)(3) 0.16 0.12 33.3 0.36 0.22 63.6
Cash flow from operating activities 18,952 5,610 237.8 45,250 12,822 252.9
Adjusted free cash flow(4) 18,756 5,751 226.1 39,343 12,006 227.7

(1) Recurring Broadcasting and Commercial Music revenues include subscriptions and usage in addition to fixed fees charged to our customers on a monthly, quarterly and annual basis for continuous music services. Non-recurring revenues mainly include advertising, support, installation, equipment and one-time fees.
(2) Adjusted EBITDA is a non-IFRS measure and is defined as net income before net finance expense (income), change in fair value of investments, income taxes, depreciation and write-off of property and equipment, depreciation of right-of-use assets, amortization of intangible assets, share-based compensation, performance and deferred share unit expense, CRTC Tangible benefit, and acquisition, legal, restructuring and other expenses.
(3) Adjusted Net income is a non-IFRS measure and is defined as net income before change in fair value of investments, amortization of intangible assets, share-based compensation, performance and deferred share unit expense, CRTC Tangible benefit, and acquisition, legal, restructuring and other expenses, net of related income taxes.
(4) Adjusted free cash flow is a non-IFRS measure and is defined as cash flow from operating activities less capital expenditures, interests paid and repayment of lease liabilities, plus acquisition, legal, restructuring and other expenses, and adjusted for unrealized gain or loss on foreign exchange and for the net change in non-cash working capital items.
   

“We are pleased with our second quarter results which continued to build on the significant momentum created by the acquisition of NCC, coupled with the solid growth from the Broadcasting and Commercial Music segment. A key measure of our achievement continues to be our Adjusted free cash flow which more than tripled to $18.8 million. For the first six months of the year, we have generated $0.52 of Adjusted free cash flow per share compared to $0.21 a year ago” said Eric Boyko, President, CEO, and Co-Founder of Stingray.

“While the second quarter is a slow period in the radio business, this segment reported solid Adjusted EBITDA of $13.7 million with a 36.3% margin. At this stage, most of the operational synergies have been captured. With our increased emphasis on an ad-supported business model and our comprehensive approach to a customer journey, we have far more potential cross-selling opportunities to capitalize on with radio. The Adjusted EBITDA for Broadcast and Commercial Music increased by 21.6% to $15.2 million and the margin expanded by almost 300 basis points over the prior year due to acquisitions and organic growth in SVOD.

“The recent launch of Audio360™, an advanced, multi-platform audio sales solution in partnership with Bell Media brings together the largest multi-platform audio network in Canada with 22 million unique weekly listeners through digital audio and podcasts, TV and radio. Audio360™ helps brands connect with listeners on the right audio platform, across the right channel, at the right moment in time.

“Also during the quarter, we made the Stingray Music free mobile app accessible to everyone in Canada, the U.S, the U.K. and the Netherlands will bring new listeners and visibility to the Stingray brand. The basic service is free and ad-supported, while the premium service is very compelling and competitive at $3.99 per month.

“While the global music industry is in consistent evolution, Stingray has clearly demonstrated its ability to rapidly adapt and capitalize on changes. Our Vision remains to unleash the power of music by delivering the best curated video and audio experiences for people and businesses globally.,” concluded Mr. Boyko.

Second Quarter Results
Revenues increased 120.7% to $76.6 million in the second quarter of 2020, compared with revenues of $34.7 million a year ago. The increase was primarily due to the acquisition of Newfoundland Capital Corporation (“NCC”) and DJ Matic, as well as to organic growth in subscription video-on-demand (“SVOD”).

Recurring Broadcasting and Commercial Music revenues were up 9.4% to $33.5 million in the second quarter over the same period last year, representing a 1.2% organic growth. The marginal organic growth is explained by a delay in estimated time to market to deploy advertising solutions.

For the quarter, revenues in Canada increased 270.7% to $52.8 million (68.9% of total revenues) primarily due to the acquisition of NCC and Novramedia. Revenues in the United States increased 12.0% to $9.0 million (11.8% of total revenues) and in Other Countries, revenues increased 19.5% to $14.8 million (19.3% of total revenues).

Broadcasting and Commercial Music revenues increased 11.7% to $38.8 million in the second quarter, compared to revenues of $34.7 million a year ago. The increase is primarily due to the acquisition of DJ Matic and Novramedia, as well as to organic growth in SVOD. This increase was partially offset by a delay in estimated time to market to deploy advertising solutions and by the termination of some low margin international contracts.

Radio revenues represented $37.8 million for the second quarter of 2020 reflecting the contribution from the acquisition of NCC.

Adjusted EBITDA for the second quarter increased to $27.7 million or 36.1% of revenues, compared to $11.4 million or 32.9% of revenues a year earlier. The increase in Adjusted EBITDA was primarily due to the above-mentioned acquisitions, to organic growth in SVOD and to the adoption of IFRS 16. The increase in Adjusted EBITDA margin was mainly related to the adoption of IFRS 16 and to reduced operating expenses in the Broadcasting and Commercial Music segment. Excluding the impact of IFRS 16, the Adjusted EBITDA would have been $26.0 million and the Adjusted EBITDA margin 34.0%.

For the second quarter, the Corporation reported a net income of $5.2 million, or $0.07 per share (basic and diluted), compared to $0.8 million, or $0.01 per share (basic and diluted) for the same period last year. The increase was mainly attributable to higher operating results, partially offset by higher interest, income taxes, depreciation and amortization, and legal expenses. Adjusted Net income was $12.0 million, or $0.16 per share (basic and diluted), compared to $6.7 million, or $0.12 per share (basic and diluted) a year ago. The increase was due to higher operating results, partially offset by higher interest, income taxes, depreciation and mark-to-market losses on derivative financial instruments.

Cash flow generated from operating activities increased to $19.0 million in the second quarter of 2020 from $5.6 million a year earlier. Adjusted free cash flow increased to $18.8 million, from $5.8 million for the second quarter of 2019. The increase was mainly due to the acquisition of NCC, higher operating results, lower capital expenditures and lower income taxes paid, partially offset by higher interest paid.

As of September 30, 2019, the Corporation had cash and cash equivalents of $8.4 million, a subordinated debt of $49.6 million and credit facilities of $380 million, of which approximately $53.5 million was available as the Corporation reduced the authorized amount under the revolving facility by $70.0 million on July 9, 2019.

Six Months Results

Revenues for the first six months of Fiscal 2020 increased 127.1% to $157.0 million compared to $69.1 million a year ago. The increase in revenues was primarily due to the acquisition of NCC, DJ Matic and Novramedia, as well as organic growth in SVOD, partially offset by a delay in estimated time to market to deploy advertising solutions and by the termination of some low margin contracts.

Adjusted EBITDA for the first six months of Fiscal 2020 increased 160.2% to $58.8 million or 37.5% of revenues, compared to $22.6 million or 32.7% of revenues for the same period last year. The increase in Adjusted EBITDA was primarily due to the above-mentioned acquisitions, to organic growth in SVOD, and to the adoption of IFRS 16, partially offset by a delay in estimated time to market to deploy advertising solutions. The increase in Adjusted EBITDA margin was mainly related to the new Radio segment, which has a higher Adjusted EBITDA margin in the first quarter due to normal business seasonality, to the adoption of IFRS 16, and to reduced operating expenses in the Broadcasting and Commercial Music segment. Excluding the impact of IFRS 16, the Adjusted EBITDA would have been $55.7 million and the Adjusted EBITDA margin 35.4%.

Adjusted Net income for the first six month of Fiscal 2020 increased 120.5% to $27.8 million, or $0.36 per share (basic and diluted), compared to $12.6 million, or $0.22 per share (basic and diluted) a year ago.

Declaration of Dividend

On November 6, 2019, the Corporation declared a quarterly dividend of $0.07 per subordinate voting share, variable subordinate voting share and multiple voting share. The dividend will be payable on or around December 13, 2019 to shareholders on record as of November 29, 2019.

The Corporation’s dividend policy is at the discretion of the Board of Directors and may vary depending upon, among other things, our available cash flow, results of operations, financial condition, business growth opportunities and other factors that the Board of Directors may deem relevant.

The dividends paid are designated as “eligible” dividends for the purposes of the Income Tax Act (Canada) and any corresponding provisions of provincial and territorial tax legislation.

Additional Business Highlights
In early October 2019, the Corporation announced that its highly-rated music app is now available to all Canadians and Americans. Previously available exclusively to pay-TV subscribers, the Stingray Music app offers an unparalleled listening experience of local and international content. The app is available for free or with an upgrade to Premium for a monthly subscription fee.

On September 26, 2019, Stingray Karaoke was launched in Tesla cars worldwide as part of their major operating system release. Today, Tesla drivers and passengers can enjoy thousands of karaoke videos from the seat of their car wherever they travel to.

On September 26, 2019, the Corporation announced that it had partnered with Bell Media to introduce AUDIO360™, an advanced, multi-platform audio sales solution that brings together brands and consumers through the power of sound. AUDIO360 gives brands access to 22 million weekly Canadian listeners across an unrivaled multi-platform audio offering.

On August 26, 2019, the Corporation entered into an agreement to acquire the assets of CHOO-FM, a radio station in Drumheller, Alberta.

Conference Call

The Corporation will hold a conference call to discuss these results on Thursday, November 7, 2019, at 10:00 AM (ET). Interested parties can join the call by dialing 647-788-4922 (Toronto) or 1-877-223-4471 (toll free). If you are unable to call at this time, you may access a tape recording of the conference call by dialing 416-621-4642 (Toronto) or 1-800-585-8367 (toll free) followed by access code: 7459327. This tape recording will be available until December 6, 2019.

About Stingray

Montreal-based Stingray Group is a leading music, media and technology company with over 1,200 employees worldwide. Stingray is a premium provider of curated direct-to-consumer and B2B (business to business) services, including audio television channels, more than 100 radio stations, SVOD content, 4K UHD television channels, karaoke products, digital signage, in-store music and music apps, which have been downloaded over 140 million times. Stingray reaches 400 million subscribers (or users) in 156 countries.

Forward-Looking Information

This news release contains forward-looking information within the meaning of applicable Canadian securities law. Such forward-looking information includes, but is not limited to, information with respect to Stingray’s goals, beliefs, plans, expectations, anticipations, estimates and intentions. Forward-looking information is identified by the use of terms and phrases such as “may”, “would”, “should”, “could”, “expect”, “intend”, “estimate”, “anticipate”, “plan”, “foresee”, “believe”, and “continue”, or the negative of these terms and similar terminology, including references to assumptions. Please note, however, that not all forward-looking information contains these terms and phrases. Forward-looking information is based upon a number of assumptions and is subject to a number of risks and uncertainties, many of which are beyond Stingray’s control. These risks and uncertainties could cause actual results to differ materially from those that are disclosed in or implied by such forward-looking information. These risks and uncertainties include, but are not limited to, the risk factors identified in Stingray’s Annual Information Form for the year ended March 31, 2019, which is available on SEDAR at www.sedar.com. Consequently, all of the forward-looking information contained herein is qualified by the foregoing cautionary statements, and there can be no guarantee that the results or developments that Stingray anticipates will be realized or, even if substantially realized, that they will have the expected consequences or effects on Stingray’s business, financial condition or results of operation. Unless otherwise noted or the context otherwise indicates, the forward-looking information contained herein is provided as of the date hereof, and Stingray does not undertake to update or amend such forward-looking information whether as a result of new information, future events or otherwise, except as may be required by applicable law.

Non-IFRS Measures

The Corporation believes that Adjusted EBITDA and Adjusted EBITDA margin are important measures when analyzing its operating profitability without being influenced by financing decisions, non-cash items and income taxes strategies. Comparison with peers is also easier as companies rarely have the same capital and financing structure. The Corporation believes that Adjusted net income and Adjusted net income per share are important measures as it demonstrates its core bottom-line profitability. The Corporation believes that Adjusted free cash flow is an important measure when assessing the amount of cash generated after accounting for capital expenditures and non-core charges. It demonstrates cash available to make business acquisitions, pay dividend and reduce debt. The Corporation believes that Net debt and Net debt to Adjusted EBITDA are important measures when analyzing the significance of debt on the Corporation’s statement of financial position. Each of these non-IFRS financial measures is not an earnings or cash flow measure recognized by IFRS and does not have a standardized meaning prescribed by IFRS.

Our method of calculating such financial measures may differ from the methods used by other issuers and, accordingly, our definition of these non-IFRS financial measures may not be comparable to similar measures presented by other issuers. Investors are cautioned that non-IFRS financial measures should not be construed as an alternative to net income determined in accordance with IFRS as indicators of our performance or to cash flows from operating activities as measures of liquidity and cash flows.

Adjusted EBITDA and Adjusted Net income reconciliation to Net income

       
  3 months   6 months
(in thousands of Canadian dollars) Sept. 30,
2019
Q2 2020
Sept. 30,
2018
Q2 2019
  Sept. 30,
2019
YTD 2020
Sept. 30,
2018
YTD 2019
Net income 5,184   777     14,367   2,123  
Net finance expense (income) 6,362   910     13,742   2,831  
Change in fair value of investments (188 ) 436     145   (61 )
Income taxes 2,479   567     3,960   1,056  
Depreciation and write-off of property and equipment 2,989   1,274     5,811   2,443  
Depreciation of right-of-use assets 1,419       2,790    
Amortization of intangible assets 5,935   5,255     12,054   9,842  
Share-based compensation 257   358     505   533  
Performance and deferred share unit expense 794   518     1,575   885  
Acquisition, legal, restructuring and other expenses 2,440   1,334     3,887   2,956  
Adjusted EBITDA 27,671   11,429     58,836   22,608  
Net finance expense (income) (6,362 ) (910 )   (13,742 ) (2,831 )
Income taxes (2,479 ) (567 )   (3,960 ) (1,056 )
Depreciation of property and equipment and write-off (2,989 ) (1,274 )   (5,811 ) (2,443 )
Depreciation of right-of-use assets (1,419 )     (2,790 )  
Income taxes related to change in fair value of investments, share-based compensation, performance and deferred share unit expense, amortization of intangible assets, CRTC Tangible benefits and acquisition, legal, restructuring and other expenses (2,441 ) (1,970 )   (4,731 ) (3,672 )
Adjusted Net income 11,981   6,708     27,802   12,606  
                   

Adjusted free cash flow reconciliation to Cash flow from operating activities

       
  3 months   6 months
(in thousands of Canadian dollars) Sept. 30,
2019
Q2 2020
Sept. 30,
2018
Q2 2019
  Sept. 30,
2019
YTD 2020
Sept. 30,
2018
YTD 2019
Cash flow from operating activities 18,952   5,610     45,250   12,822  
Add / Less :          
Acquisition of property and equipment (1,459 ) (1,488 )   (3,072 ) (3,716 )
Acquisition of intangible assets other than internally developed intangible assets (292 ) (1,383 )   (811 ) (1,730 )
Addition to internally developed intangible assets (1,559 ) (1,390 )   (3,082 ) (2,595 )
Interest paid (4,493 ) (424 )   (9,473 ) (860 )
Repayment of lease liabilities (1,303 )     (2,398 )  
Net change in non-cash operating working capital items 6,143   3,189     8,271   4,769  
Unrealized loss on foreign exchange 327   303     771   360  
Acquisition, legal, restructuring and other expenses 2,440   1,334     3,887   2,956  
Adjusted free cash flow 18,756   5,751     39,343   12,006  
                   

Note to readers: Condensed interim consolidated financial statements and Management’s Discussion & Analysis of Operating Results and Financial Position are available on the Corporation’s website at www.stingray.com and on SEDAR at www.sedar.com.

Contact information:

Mathieu Péloquin
Senior Vice-President, Marketing and Communications
Stingray
(514) 664-1244, ext. 2362
mpeloquin@stingray.com

GeoPark Reports Third Quarter 2019 Results

GeoPark Reports Third Quarter 2019 Results

Exploration and Operational Success

Cost and Capital Efficiency Improvements

New High Impact Acreage Added

Self-Funded Growth With Value Back to Shareholders

BOGOTA, Colombia–(BUSINESS WIRE)–
GeoPark Limited (“GeoPark” or the “Company”) (NYSE: GPRK), a leading independent Latin American oil and gas explorer, operator and consolidator with operations and growth platforms in Colombia, Peru, Argentina, Brazil, Chile and Ecuador reports its consolidated financial results for the three-month period ended September 30, 2019 (“Third Quarter” or “3Q2019”). A conference call to discuss 3Q2019 financial results and the work program and investment guidelines for 2020 will be held on November 7, 2019 at 10:00 am Eastern Standard Time.

All figures are expressed in US Dollars and growth comparisons refer to the same period of the prior year, except when specified. Definitions and terms used herein are provided in the Glossary at the end of this document. This release does not contain all of the Company’s financial information and should be read in conjunction with GeoPark’s consolidated financial statements and the notes to those statements for the period ended September 30, 2019 and 2018, available on the Company’s website.

THIRD QUARTER 2019 HIGHLIGHTS

Consistently Growing Oil and Gas Production

  • Consolidated oil and gas production up 6% to 39,619 boepd – adjusting for divested blocks, consolidated production increased by 9% (3% higher compared to 2Q2019)
  • Oil production increased by 8% to 33,693 bopd
  • Colombian oil production increased by 8% to 31,394 bopd (12% increase adjusting for divested blocks)
  • Chilean production increased by 28% to 3,358 boepd

Consistently Successful Exploration and Development Drilling

In Colombia, in the Llanos 34 block (GeoPark operated, 45% WI)

  • New Guaco discovery, the fourteenth oil field discovered by GeoPark in the block, and along the most western fault trend potentially opening up a new opportunity
  • Five new development and appraisal wells were tested and put on production in the block

In Brazil on the REC-T-128 block (GeoPark operated, 70% WI)

  • Newly discovered Praia dos Castelhanos oil field initiated long-term testing

Consistently Reducing Operating and Capital Costs

  • Lower transportation costs in Colombia improved Adjusted EBITDA by $2.0 per bbl
  • Consolidated operating costs reduced by 4% to $8.1 per boe
  • Colombian operating costs reduced by 10% to $5.6 per boe

Consistently Improving Cashflow and Financial Returns

  • Revenue of $151.2 million, just 9% lower despite 18% drop in Brent oil prices
  • Adjusted EBITDA1 of $86.7 million or $25.3 per boe
  • Net Profit of $6.8 million / 9M2019 net profit of $57.9 million
  • Every $1 invested in Capital Expenditures yielded $3.9 in Adjusted EBITDA
  • Return on capital employed of 41%2 in the last twelve months

Consistently Strengthening Balance Sheet

  • Last twelve months Adjusted EBITDA of $363.4 million
  • Net debt to Adjusted EBITDA ratio of 1.0x
  • Cash and Cash Equivalents of $81.6 million

Consistently Expanding Acreage Platform, Partnerships and Project Fairway

  • Jointly with Ecopetrol/Hocol, acquired three low-cost, low-risk high potential exploration blocks in the Llanos basin, surrounding the prolific Llanos 34 block, adding 86-155 mmbbl of gross unrisked exploration resources3
  • Acquired four new, attractive, low-risk, low-cost blocks in Brazil, strengthening GeoPark’s existing portfolio in the Reconcavo and Potiguar basins and adjacent to existing producing fields

Consistently Returning Value to Shareholders

  • New quarterly dividend announced of $0.0413 per share
  • Accelerated share buyback program, having acquired 4,448,000 shares (7% of total outstanding shares) for $72.6 million since December 2018, while executing self-funded, growth work programs

James F. Park, Chief Executive Officer of GeoPark, said: “Many thanks to the GeoPark team for delivering and continuing to fight to improve every element of our business. Again, during this period, we realized short-term results while making long-term investments for the future – always operating within and funded by our own cashflow. We believe this relentless and disciplined drive to become better in every way is a powerful intangible asset that differentiates GeoPark and positions us to become the leading Latin American independent. We are excited by the big new high potential acreage we acquired surrounding the rich Llanos 34 block – and honored to be partnering with and operating for the national oil company of Colombia in its home basin. We now have 5 drilling rigs operating across our asset platform – and are encouraged about completing 2019 with even better results and extending our growth track-record to a hard-earned 17th year. From our shareholders’ perspective, GeoPark has been returning value to shareholders by its leading share price performance (up more than 330% since 2017) and an ambitious share buyback program during the year – which has now been expanded to include our first quarterly cash dividend.”

CONSOLIDATED OPERATING PERFORMANCE

Key performance indicators:

 

Key Indicators

3Q2019

2Q2019

3Q2018

9M2019

9M2018

Oil productiona (bopd)

33,693

34,261

31,266

34,102

29,634

Gas production (mcfpd)

35,555

29,642

35,690

32,148

32,862

Average net production (boepd)

39,619

39,201

37,214

39,460

35,111

Brent oil price ($ per bbl)

62.1

68.4

76.0

64.7

72.7

Combined realized price ($ per boe)

44.2

50.5

51.4

46.4

49.5

⁻ Oil ($ per bbl)

49.3

56.0

57.0

51.3

54.5

⁻ Gas ($ per mcf)

4.4

4.5

5.1

4.6

5.2

Sale of crude oil ($ million)

138.2

158.8

152.2

434.6

408.9

Sale of gas ($ million)

13.0

10.7

14.6

36.2

41.1

Revenue ($ million)

151.2

169.5

166.8

470.9

450.0

Commodity risk management contracts ($ million)

4.4

0.8

-0.6

-16.0

-15.8

Production & operating costsb ($ million)

-41.7

-46.0

-48.7

-126.7

-127.6

G&G, G&A and Selling expenses ($ million)

-21.1

-22.9

-17.5

-63.7

-50.2

Adjusted EBITDA ($ million)

86.7

98.7

98.2

277.7

244.8

Adjusted EBITDA ($ per boe)

25.3

29.4

30.3

27.4

26.9

Operating Netback ($ per boe)

31.4

35.2

35.1

33.0

32.2

Net Profit ($ million)

6.8

31.5

29.7

57.9

60.1

Capital expenditures ($ million)

15.0 c

28.8

33.2

81.1

90.9

Argentina acquisition ($ million)

48.8

Cash and cash equivalents ($ million)

81.6

68.9

152.7

81.6

152.7

Short-term financial debt ($ million)

10.6

18.0

15.8

10.6

15.8

Long-term financial debt ($ million)

424.4

424.6

419.1

424.4

419.1

Net debt ($ million)

353.4

373.7

282.2

353.4

282.2

  1. Includes government royalties paid in kind in Colombia for approximately 1,419, 1,196 and 1,175 bopd in 3Q2019, 2Q2019 and 3Q2018 respectively. No royalties were paid in kind in Chile, Brazil or Argentina.
  2. Production and operating costs include operating costs, royalties paid in cash and share-based payments.
  3. Capital expenditures is net of $7.1 million collected in 3Q2019 related to remaining amounts for the divestiture of the La Cuerva and Yamu blocks that was completed on July 1, 2019.

Production: Oil and gas production grew by 6% to 39,619 boepd in 3Q2019 due to increased production in Colombia, Chile and Argentina, partially offset by lower production in Brazil. Adjusting for the sale of the La Cuerva and Yamu blocks in Colombia (1,007 bopd in 3Q2018), the Company’s consolidated oil and gas production increased by 9% in 3Q2019 and Colombian production increased by 12%.

Oil represented 85% of total reported production compared to 84% in 3Q2018.

For further details, please refer to the 3Q2019 Operational Update published on October 17, 2019.

Reference and Realized Oil Prices: Brent oil prices averaged $62.1 per bbl in 3Q2019, 18% or $13.9 per bbl less than in 3Q2018. The realized oil price was just 14% lower at $49.3 per bbl, $7.7 per bbl lower than in 3Q2018. This significant improvement reflected both a lower Vasconia discount and real improvements in commercial and transportation discounts. Please also refer to the selling expenses section below.

The tables below provide a breakdown of Brent oil and realized oil prices in Colombia, Chile and Argentina in 3Q2019 and 3Q2018:

3Q2019 – Realized Oil Prices

($ per bbl)

Colombia

Chile

Argentina

Brent oil price

62.1

62.1

62.1

Vasconia differential

(1.7)

Commercial and transportation discounts

(11.1)

(7.8)

 

Other

(13.2)

Realized oil price

49.3

54.3

48.9

Weight on oil sales mix

94%

1%

5%

3Q2018 – Realized Oil Prices

($ per bbl)

Colombia

Chile

Argentina

Brent oil price

76.0

76.0

76.0

Vasconia differential

(5.8)

Commercial and transportation discounts

(14.0)

(9.1)

Other

(9.5)

Realized oil price

56.2

66.9

66.5

Weight on oil sales mix

92%

2%

6%

Revenue: Lower Brent oil prices affected consolidated revenues which decreased by 9% to $151.2 million in 3Q2019 versus $166.8 million in 3Q2018. The lower Brent oil prices were partially offset by higher deliveries and lower discounts.

Sales of crude oil: Consolidated oil revenues decreased by 9% to $138.2 million in 3Q2019, driven by a 14% fall in realized oil prices, partially offset by a 6% increase in oil deliveries. Oil revenues were 91% of total revenues in both 3Q2019 and 3Q2018.

  • Colombia: In 3Q2019, oil revenues decreased by 6% to $129.0 million following lower realized oil prices, partially offset by higher deliveries. Realized prices decreased by 12% to $49.3 per bbl following 18% lower Brent oil prices, partially offset by a lower Vasconia differential and improved commercial and transportation discounts. Oil deliveries increased by 8% to 29,788 bopd. Colombian earn-out payments increased to $6.0 million in 3Q2019, compared to $5.5 million in 3Q2018.
  • Chile: In 3Q2019, oil revenues decreased by 47% to $2.3 million, due to lower volumes sold and lower realized oil prices. Oil deliveries decreased by 35% to 458 bopd due to the natural decline of the fields whereas realized oil prices decreased by 19% to $54.3 per bbl, in line with lower Brent prices.
  • Argentina: In 3Q2019, oil revenues decreased by 34% to $6.7 million, due to lower volumes sold and lower realized oil prices. Oil deliveries decreased by 10% to 1,490 bopd due to the natural decline of the fields whereas realized oil prices decreased by 26% to $48.9 per bbl, lower than Brent oil prices due to oil price controls implemented in the second half of 3Q2019.

Sales of gas: Consolidated gas revenues decreased by 11% to $13.0 million in 3Q2019 compared to $14.6 million in 3Q2018. Gas revenues declined due to a 15% decrease in gas prices, partially offset by a 4% increase in gas deliveries.

  • Chile: In 3Q2019, gas revenues increased by 17% to $5.8 million reflecting a significant increase in gas deliveries, partially offset by lower gas prices. Deliveries increased by 60% in 3Q2019 to 15,535 mcfpd (2,589 boepd), resulting from the successful discovery and development of the Jauke gas field. Gas prices were 27% lower, or $4.1 per mcf ($24.4 per boe) in 3Q2019 due to lower methanol prices.
  • Brazil: In 3Q2019, gas revenues decreased by 22% to $5.7 million, due to lower deliveries, partially offset by higher gas prices. Gas deliveries in Manati decreased by 27% to 12,428 mcfpd (2,071 boepd), resulting from lower industrial and power plant consumption and availability of other gas sources. Gas prices increased by 7% to $4.9 per mcf ($29.7 per boe), following the annual price inflation adjustment of approximately 6%, effective in January 2019.

The long-term gas sales contract in the Manati gas field contains a take or pay (ToP) clause that significantly reduces demand risk below certain levels. Net gas production during the 9M2019 period was below minimum annual ToP levels applicable for the year 2019. In case full-year 2019 production levels are below annual ToP levels, GeoPark is allowed to collect cash amounts for the difference between actual deliveries and ToP levels.

  • Argentina: In 3Q2019, gas revenues decreased by 51% to $1.0 million from $2.0 million, resulting from both lower deliveries and gas prices. Deliveries decreased by 4% to 3,653 mcfpd (609 boepd) while prices fell by 49% to $2.9 per mcf ($17.4 per boe) due to lower local gas prices.

Commodity Risk Management Contracts: Consolidated commodity risk management contracts contributed a $4.4 million gain in 3Q2019 compared to a $0.6 million loss in 3Q2018. Commodity risk management contracts have two different components, a realized and an unrealized portion.

The realized gain of $1.4 million in 3Q2019 compared to a $3.4 million loss in 3Q2018 reflected Brent oil prices and commodity risk management contracts effective during the respective periods.

The unrealized gains were $3.0 million in 3Q2019 and $2.9 million in 3Q2018. Unrealized gains during 3Q2019 resulted from changes in the forward Brent oil price curve compared to June 2019.

The Company uses risk management contracts to minimize the impact of oil price fluctuations on its work program. (Refer to the “Commodity Risk Oil Management Contracts” section below for details of the contracts in place.)

Production and Operating Costs4: Consolidated operating costs per boe decreased by 4% to $8.1 per boe from $8.4 per boe. Overall, consolidated production and operating costs decreased by 14% to $41.7 million in 3Q2019 compared to $48.7 million in 3Q2018, as a result of lower royalties and operating costs.

The table below provides a breakdown of production and operating costs in 3Q2019 and 3Q2018:

(In millions of $)

3Q2019

3Q2018

Operating costs

26.6

27.3

Royalties

15.1

21.1

Shared based payments

0.3

Production and operating costs

41.7

48.7

Consolidated operating costs decreased by 3% or $0.7 million to $26.6 million in 3Q2019 compared to $27.3 million in 3Q2018, despite a 6% increase in deliveries. Consolidated operating costs per boe decreased by 4% to $8.1 in 3Q2019 compared to $8.4 in 3Q2018.

The breakdown of operating costs is as follows:

  • Colombia: Operating costs per boe decreased by 10% to $5.6 in 3Q2019 compared to $6.2 in 3Q2018 mainly due to the impact of fixed costs over 8% higher deliveries and the sale of the La Cuerva and Yamu blocks5, mature oil fields with higher operating costs. Total operating costs decreased by 5% to $15.1 million.
  • Chile: Operating costs per boe increased by 10% to $19.3 in 3Q2019 compared to $17.5 in 3Q2018, reflecting higher well-intervention activities. Total operating costs increased to $5.4 million in 3Q2019 from $3.7 million in 3Q2018.
  • Brazil: Operating costs per boe increased by 7% to $5.3 in 3Q2019 compared to $4.9 in 3Q2018, mainly due to the impact of fixed costs over 22% lower deliveries in Manati and to a lesser extent, due to costs associated with initial testing activities in the Praia dos Castelhanos oil field. These were partially offset by the adoption of IFRS 16 for approximately $0.5 million (or $2.7 per boe) in 3Q2019. IFRS 16 changes the treatment and valuation of operating leases, that are, as from 2019, recorded as depreciation charges, which were recorded as operating costs in 3Q2018. Total operating costs decreased by 21% to $1.0 million in 3Q2019 from $1.3 million in 3Q2018.
  • Argentina: Operating costs per boe decreased to $27.0 in 3Q2019 compared to $30.0 in 3Q2018. Total operating costs decreased by 20% to $5.1 million in 3Q2019 from $6.3 million in 3Q2018.

Consolidated royalties decreased by $6.0 million to $15.1 million in 3Q2019 compared to $21.1 million in 3Q2018, resulting from lower realized prices in 3Q2019. Consolidated royalties were 10% of revenue in 3Q2019 and 13% in 3Q2018.

Selling Expenses: Consolidated selling expenses increased by $1.1 million to $2.4 million in 3Q2019 (of which $2.1 million correspond to Colombia), compared to $1.3 million in 3Q2018.

The increase in selling expenses in Colombia reflects the difference in accounting for different points of sale and costs associated with the operation of the flowline connecting Llanos 34 block to the ODL regional pipeline. Sales at the wellhead are deducted from revenues whereas transportation costs for sales to other delivery points are accounted for as selling expenses.

Commercial and transportation discounts in Colombia improved by $2.9 per bbl during 3Q2019, positively impacting realized oil prices. This was partially offset by approximately $0.9 per bbl of higher selling expenses, thus improving net margins by approximately $2.0 per bbl. Please also refer to the “Evolution of Transportation and Commercial Discounts and Selling Expenses in Colombia” section below.

Administrative Expenses6: Total consolidated G&A increased by 17% to $14.5 million in 3Q2019 compared to $12.3 million in 3Q2018 due to higher staff costs associated with an increased scale of operations and other administrative costs related to new business efforts.

Geological & Geophysical Expenses7: Total consolidated G&G expenses increased by 9% to $4.3 million in 3Q2019 compared to $3.9 million in 3Q2018 due to an increased scale of operations and continuing investments to expand GeoPark’s technical capabilities.

Adjusted EBITDA: Consolidated Adjusted EBITDA8 decreased by 12% to $86.7 million. The Adjusted EBITDA per boe was $25.3 per boe in 3Q2019, compared to $30.3 per boe in 3Q2018.

By country, 3Q2019 Adjusted EBITDA was:

  • Colombia: Adjusted EBITDA of $92.5 million
  • Chile: Adjusted EBITDA of $1.3 million
  • Brazil: Adjusted EBITDA of $2.7 million
  • Argentina: Adjusted EBITDA of negative $1.7 million
  • Corporate, Peru and Ecuador: Adjusted EBITDA of negative $8.1 million

The table below shows production, volumes sold and the breakdown of the most significant components of Adjusted EBITDA for 3Q2019 and 3Q2018, on a per country and per boe basis:

Adjusted EBITDA/boec

Colombia

Chile

Brazil

Argentina

Total

 

 

3Q19

3Q18

3Q19

3Q18

3Q19

3Q18

3Q19

3Q18

3Q19

3Q18

Production (boepd)

31,578

29,139

3,358

2,632

2,299

3,124

2,384

2,319

39,619

37,214

Stock variation /RIKa

(1,629)

(1,383)

(311)

(304)

(190)

(245)

(285)

(23)

(2,414)

(1,955)

Sales volume (boepd)

29,949

27,756

3,047

2,328

2,109

2,879

2,099

2,296

37,205

35,259

% Oil

99.5%

99.6%

15%

30%

2%

2%

71%

72%

85%

85%

($ per boe)

 

 

 

 

 

 

 

 

 

 

Realized oil price

49.3

56.2

54.3

66.9

69.2

83.7

48.9

66.5

49.3

57.0

Realized gas priceb

34.5

38.8

24.4

33.4

29.7

27.7

17.4

34.2

25.9

30.5

Earn-out

(2.2)

(2.2)

(1.7)

(2.0)

Combined Price

47.0

53.9

28.9

43.6

30.4

28.6

39.8

57.5

44.2

51.4

Realized commodity risk

management contracts

0.5

(1.3)

 

 

 

0.4

(1.1)

Operating costs

(5.6)

(6.2)

(19.3)

(17.5)

(7.9)

(4.9)

(27.0)

(30.0)

(8.1)

(8.4)

Royalties in cash

(4.8)

(7.2)

(1.0)

(1.7)

(2.3)

(2.7)

(6.1)

(7.9)

(4.4)

(6.5)

Selling & other expenses

(0.7)

(0.1)

(0.3)

(0.6)

(1.3)

(3.9)

(0.7)

(0.4)

Operating Netback/boe

36.4

39.1

8.2

23.8

20.1

21.0

5.4

15.7

31.4

35.1

G&A, G&G & other

 

 

 

 

 

 

 

 

(6.1)

(4.8)

Adjusted EBITDA/boe

 

 

 

 

 

 

 

 

25.3

30.3

 
  1. RIK (Royalties in kind). Includes royalties paid in kind in Colombia for approximately 1,419 and 1,175 bopd in 3Q2019 and 3Q2018 respectively. No royalties were paid in kind in Chile, Brazil or Argentina.
  2. Conversion rate of $mcf/$boe=1/6.
  3. Adjusted EBITDA is calculated as if IFRS 16 has not been adopted, so the figures included in the table above for 3Q2019 figures are comparable to those of prior periods. See the “Adoption of IFRS 16” and “Reconciliation of Adjusted EBITDA to Profit (Loss) Before Income Tax” sections included in this press release.

Depreciation9: Consolidated depreciation charges increased by 9% to $26.5 million in 3Q2019, compared to $24.3 million in 3Q2018. The 6% increase in volumes delivered explained the change in addition to the adoption of IFRS 16.

Write-off of Unsuccessful Exploration Efforts: The consolidated write-off of unsuccessful exploration efforts was $8.4 million in 3Q2019 compared to $3.5 million in 3Q2018. Amounts recorded in 3Q2019 mainly refer to unsuccessful exploration wells and other exploration costs incurred in the CN-V (GeoPark non-operated, 50% WI) and Sierra del Nevado (GeoPark non-operated, 18% WI) blocks in Argentina.

Other Income (Expenses): Other operating expenses amounted to $1.4 million in 3Q2019, compared to $1.2 million in 3Q2018.

CONSOLIDATED NON-OPERATING RESULTS AND PROFIT FOR THE PERIOD

Financial Expenses: Net financial expenses decreased slightly to $8.6 million in 3Q2019, compared to $8.7 million in 3Q2018.

Foreign Exchange: Net foreign exchange charges were a gain of $0.8 million in 3Q2019 compared to a loss of $2.9 million in 3Q2018. The comparative period was affected by the devaluation of the Brazilian real and its impact on US dollar-denominated intercompany debt which was cancelled in 4Q2018.

Income Tax: Income tax expenses were $41.8 million in 3Q2019 compared to $29.7 million in 3Q2018, in line with higher taxable income in 3Q2019. Current income taxes accrued in 3Q2019 amounted to $25.3 million.

Profit: Profit of $6.8 million in 3Q2019 compared to $29.7 million in 3Q2018, reflecting lower operating profits mainly derived from lower Brent oil prices and higher income taxes, partially offset by lower operating costs and royalties.

BALANCE SHEET

Cash and Cash Equivalents: Cash and cash equivalents totaled $81.6 million as of September 30, 2019 compared to $127.7 million as of December 31, 2018. Cash generated from operating activities equaled $156.9 million and was partially offset by cash used in investing activities of $81.1 million and in financing activities of $121.7 million.

Cash generated from operating activities was $156.9 million after income tax payments of $88.6 million paid in 1H2019. The tax payment included $58.1 million related to tax gains of fiscal year 2018 and the remaining $30.5 million are tax prepayments which will be deducted against tax gains of fiscal year 2019 (to be paid in 2020). The Company does not expect to pay additional cash income taxes during 4Q2019.

Cash used in financing activities of $121.7 million mainly included $69.0 million from the buyback program, interest payments of $28.5 million mainly related to the $425 million Notes (“2024 Notes”), $15.0 million related to the acquisition of the LGI’s non-controlling interest in Colombia and Chile in 2018 and $4.9 million related to principal payments on short-term borrowings.

Financial Debt: Total financial debt, net of issuance cost, was $435.0 million, including the 2024 Notes and other bank loans totaling $14.3 million. Short-term financial debt was $10.6 million as of September 30, 2019.

For further details, please refer to Note 13 of GeoPark’s consolidated financial statements as of September 30, 2019, available on the Company’s website.

FINANCIAL RATIOSa

 

($ million)

 

 

 

Period-end

Financial

Debt

Cash and Cash

Equivalents

Net Debt

Net Debt/LTM

Adj. EBITDAb

LTM Interest

Coveragec

 

 

3Q2018

434.9

152.7

282.2

0.9x

10.5x

 

 

4Q2018

447.0

127.7

319.3

1.0x

11.4x

 

 

1Q2019

440.6

146.6

294.0

0.8x

12.2x

 

 

2Q2019

442.6

68.9

373.7

1.0x

12.9x

 

 

3Q2019

435.0

81.6

353.4

1.0x

12.1x

 

 

 
  1. Based on trailing last twelve-month financial results.

Covenants in 2024 Notes: The 2024 Notes include incurrence test covenants that require the net debt to Adjusted EBITDA ratio to be lower than 3.25 times and the Adjusted EBITDA to interest ratio higher than 2.25 times until September 2021. The Company is well within both covenants.

COMMODITY RISK OIL MANAGEMENT CONTRACTS

The Company has the following commodity risk management contracts (reference ICE Brent) in place as of the date of this release:

Period

Type

Volume (bopd)

 

 

Contract Terms

($ per bbl)

 

 

 

 

 

Purchased Put

Sold Put

Sold Call

4Q2019

Zero cost 3-way

8,000

55.0

45.0

79.0-81.5

 

Zero cost 3-way

4,000

55.0

45.0

71.0-73.8

 

Zero cost 3-way

2,000*

55.0

45.0

65.2

1Q2020

Zero cost 3-way

8,000

55.0

45.0

79.0-81.5

 

Zero cost 3-way

4,000

55.0

45.0

71.0-73.8

 

Zero cost 3-way

2,000

55.0

45.0

65.2

2Q2020

Zero cost 3-way

4,000

55.0

45.0

71.0-73.8

 

Zero cost 3-way

2,000

55.0

45.0

65.2

3Q2020

Zero cost 3-way

4,000

55.0

45.0

71.0-73.8

 

Zero cost 3-way

2,000

55.0

45.0

65.2

4Q2020

Zero cost 3-way

4,000

55.0

45.0

71.0-73.8

 

Zero cost 3-way

2,000

55.0

45.0

65.2

*Since November 1, 2019

For further details, please refer to Note 4 of GeoPark’s consolidated financial statements for the period ended September 30, 2019, available on the Company’s website.

SELECTED INFORMATION BY BUSINESS SEGMENT

(UNAUDITED)

Colombia

3Q2019

3Q2018

Sale of crude oil ($ million)

129.0

137.3

Sale of gas ($ million)

0.5

0.4

Revenue ($ million)

129.5

137.7

Production and operating costsa ($ million)

-28.2

-34.4

Adjusted EBITDA ($ million)

92.5

92.4

Capital expendituresb ($ million)

15.4

23.2

Chile

3Q2019

3Q2018

Sale of crude oil ($ million)

2.3

4.3

Sale of gas ($ million)

5.8

5.0

Revenue ($ million)

8.1

9.3

Production and operating costsa ($ million)

-5.7

-4.2

Adjusted EBITDA ($ million)

1.3

3.6

Capital expendituresb ($ million)

0.4

5.6

Brazil

3Q2019

3Q2018

Sale of crude oil ($ million)

0.2

0.4

Sale of gas ($ million)

5.7

7.2

Revenue ($ million)

5.9

7.6

Production and operating costsa ($ million)

-1.5

-2.0

Adjusted EBITDA ($ million)

2.7

4.6

Capital expendituresb ($ million)

0.3

0.0

Argentina

3Q2019

3Q2018

Sale of crude oil ($ million)

6.7

10.1

Sale of gas ($ million)

1.0

2.0

Revenue ($ million)

7.7

12.1

Production and operating costsa ($ million)

-6.3

-8.1

Adjusted EBITDA ($ million)

-1.7

2.4

Capital expendituresb ($ million)

4.0

3.2

 

  1. Production and operating costs = Operating costs + Royalties + Share-based payments.
  2. Capital expenditures in Peru explain the difference with the reported figure in the Key performance indicators table.

CONSOLIDATED STATEMENT OF INCOME

(UNAUDITED)

 

 

 

 

 

 

 

 

 

 

(In millions of $)

3Q2019

3Q2018

9M2019

9M2018

 

REVENUE

 

 

 

 

Sale of crude oil

138.2

152.2

434.6

408.9

Sale of gas

13.0

14.6

36.2

41.1

TOTAL REVENUE

151.2

166.8

470.9

450.0

Commodity risk management contracts

4.4

-0.6

-16.0

-15.8

Production and operating costs

-41.7

-48.7

-126.7

-127.6

Geological and geophysical expenses (G&G)

-4.3

-3.9

-12.9

-9.9

Administrative expenses (G&A)

-14.5

-12.3

-39.5

-37.4

Selling expenses

-2.4

-1.3

-11.3

-2.8

Depreciation

-26.5

-24.3

-76.8

-68.3

Write-off of unsuccessful exploration efforts

-8.4

-3.5

-9.3

-14.5

Other operating

-1.4

-1.2

0.6

-0.6

OPERATING PROFIT

56.4

71.0

179.0

173.0

 

 

 

 

 

Financial costs, net

-8.6

-8.7

-26.6

-25.9

Foreign exchange gain (loss)

0.8

-2.9

-0.7

-17.9

PROFIT BEFORE INCOME TAX

48.5

59.3

151.8

129.2

 

 

 

 

 

Income tax

-41.8

-29.7

-93.9

-69.1

PROFIT FOR THE PERIOD

6.8

29.7

57.9

60.1

Non‑controlling minority interest

8.3

20.9

ATTRIBUTABLE TO OWNERS OF GEOPARK

6.8

21.4

57.9

39.2

SUMMARIZED CONSOLIDATED STATEMENT OF FINANCIAL POSITION

(QUARTERLY INFORMATION UNAUDITED)

(In millions of $)

Sept ‘19

Dec ‘18

 

 

 

Non-Current Assets

 

 

Property, plant and equipment

564.8

557.2

Other non-current assets

60.9

45.8

Total Non-Current Assets

625.7

603.0

 

 

 

Current Assets

 

 

Inventories

10.1

9.3

Trade receivables

34.7

16.2

Other current assets

41.3

106.5

Cash at bank and in hand

81.6

127.7

Total Current Assets

167.7

259.7

 

 

 

Total Assets

793.4

862.7

 

 

 

Equity

 

 

Equity attributable to owners of GeoPark

131.3

143.1

Total Equity

131.3

143.1

 

 

 

Non-Current Liabilities

 

 

Borrowings

424.4

429.0

Other non-current liabilities

79.4

72.2

Total Non-Current Liabilities

503.8

501.2

 

 

 

Current Liabilities

 

 

Borrowings

10.6

18.0

Other current liabilities

147.7

200.4

Total Current Liabilities

158.3

218.4

 

Total Liabilities

 

662.1

719.6

Total Liabilities and Equity

793.4

862.7

SUMMARIZED CONSOLIDATED STATEMENT OF CASH FLOW

(UNAUDITED)

(In millions of $)

3Q2019

3Q2018

9M2019

9M2018

 

 

 

 

 

Cash flow from operating activities

63.8

79.9

156.9

178.5

Cash flow (used) in investing activities

-15.0

-33.3

-81.1

-139.8

Cash flow (used) in financing activities

-35.9

1.2

-121.7

-20.8

RECONCILIATION OF ADJUSTED EBITDA TO PROFIT BEFORE INCOME TAX

(UNAUDITED)

9M2019 (In millions of $)

Colombia

Chile

Brazil

Argentina

Other(a)

 

Total

Adjusted EBITDA

281.5

5.8

7.5

2.8

-19.9

 

277.7

Depreciation

-34.3

-25.7

-5.1

-11.1

-0.6

 

-76.8

Unrealized commodity risk management contracts

-19.9

 

-19.9

Write-off of unsuccessful exploration efforts

-0.2

-9.0

 

-9.3

Share-based payment

-0.4

-0.0

-0.1

-0.1

-0.9

 

-1.4

IFRS 16

1.5

0.1

1.6

0.7

0.4

 

4.3

Others

2.8

-0.9

0.5

0.1

2.0

 

4.4

OPERATING PROFIT (LOSS)

230.9

-20.7

4.5

-16.6

-19.0

 

179.0

Financial costs, net

 

 

 

 

 

 

-26.6

Foreign exchange charges, net

 

 

 

 

 

 

-0.7

PROFIT BEFORE INCOME TAX

 

 

 

 

 

 

151.8

 

 

 

 

 

 

 

 

9M2018 (In millions of $)

Colombia

Chile

Brazil

Argentina

Other(a)

 

Total

Adjusted EBITDA

233.8

7.3

13.6

3.9

-13.8

 

244.8

Depreciation

-32.8

-20.4

-7.9

-7.0

-0.2

 

-68.3

Unrealized commodity risk management contracts

11.5

 

11.5

Write-off of unsuccessful exploration efforts

-11.9

-0.4

-1.9

-0.4

 

-14.5

Share-based payments

-0.5

-0.3

-0.1

-0.5

-2.3

 

-3.6

Other

-1.2

3.0

-0.3

1.0

0.7

 

3.2

OPERATING PROFIT (LOSS)

198.8

-10.8

3.5

-2.9

-15.6

 

173.0

Financial costs, net

 

 

 

 

 

 

-25.9

Foreign exchange charges, net

 

 

 

 

 

 

-17.9

PROFIT BEFORE INCOME TAX

 

 

129.2

(a) Includes Peru, Ecuador and Corporate.

EVOLUTION OF COMMERCIAL AND TRANSPORTATION DISCOUNTS AND SELLING EXPENSES IN COLOMBIA (UNAUDITED)

($/bbl)

3Q2018

4Q2018

1Q2019

2Q2019

3Q2019

 

 

 

 

 

 

Commercial and Transportation Discounts

14.0

14.6

12.0

11.0

11.1

Selling Expenses

0.1

0.2

1.1

1.8

1.0

 

14.1

14.8

13.1

12.8

12.1

RETURN ON CAPITAL EMPLOYED CALCULATION

(UNAUDITED)

Return on capital employed defined as operating profit divided by total assets minus current liabilities, as follows:

(In millions of $)

September 30, 2019

 

 

Last 12 months operating profit

262.5

Total assets less current liabilities – September 30, 2019

635.1

Return on Capital Employed

41%

ADOPTION OF IFRS 16

(UNAUDITED)

GeoPark adopted IFRS 16 accounting rules in January 2019, but did not restate comparative figures for 2018, as permitted by the accounting standard. IFRS 16 requires the recognition of certain charges related to operating leases as depreciation charges, that in comparative periods were recorded in production and operating costs, administrative and geophysical expenses. Please refer to Note 1 of the Company’s consolidated financial statements for further details.

Adjusted EBITDA is calculated as if IFRS 16 had not been adopted, making the figures included in the table on page 6, “Adjusted EBITDA per boe” comparable to those of prior periods.

The following adjustments have been made to production and operating costs, administrative and geological and geophysical expenses to calculate Adjusted EBITDA:

(In millions of $)

3Q2019

9M2019

Gain (Loss)

 

 

Production and operating costs

-1.0

-2.6

Administrative expenses

-0.3

-1.5

Geological and geophysical expenses

-0.1

-0.2

 

 

 

CONFERENCE CALL INFORMATION

GeoPark management will host a conference call on November 7, 2019 at 10:00 am (Eastern Standard Time) to discuss these 3Q2019 financial results and the work program and investment guidelines for 2020. To listen to the call, participants can access the webcast located in the Investor Support section of the Company’s website at www.geo-park.com.

Interested parties may participate in the conference call by dialing the numbers provided below:

United States Participants: 866-547-1509

International Participants: +1 920-663-6208

Passcode: 9391975

Please allow extra time prior to the call to visit the website and download any streaming media software that might be required to listen to the webcast.

An archive of the webcast replay will be made available in the Investor Support section of the Company’s website at www.geo-park.com after the conclusion of the live call.

GeoPark can be visited online at www.geo-park.com.

 

 

GLOSSARY

Adjusted EBITDA

Adjusted EBITDA is defined as profit for the period before net

finance costs, income tax, depreciation, amortization, the effect of

IFRS 16, certain non-cash items such as impairments and write-offs

of unsuccessful efforts, accrual of share-based payments,

unrealized results on commodity risk management contracts and

other non-recurring events

 

Adjusted EBITDA per boe

Adjusted EBITDA divided by total boe deliveries

 

Operating Netback per boe

Revenue, less production and operating costs (net of depreciation

charges and accrual of stock options and stock awards,

the effect of IFRS 16), selling expenses, and realized results on commodity

risk management contracts, divided by total boe deliveries.

Operating Netback is equivalent to Adjusted EBITDA net of cash

expenses included in Administrative, Geological and Geophysical

and Other operating costs

 

Bbl

Barrel

 

 

Boe

Barrels of oil equivalent

 

Boepd

Barrels of oil equivalent per day

 

Bopd

Barrels of oil per day

 

D&M

DeGolyer and MacNaughton

 

Free Cash Flow

 

 

 

F&D costs

 

 

Operating cash flow less cash flow used in investment activities

 

Finding and Development costs, calculated as capital expenditures

divided by the applicable net reserve additions before changes in

Future Development Capital

 

Mboe

Thousand barrels of oil equivalent

 

Mmbo

Million barrels of oil

 

Mmboe

Million barrels of oil equivalent

 

Mcfpd

Thousand cubic feet per day

 

Mmcfpd

Million cubic feet per day

 

Mm3/day

Thousand cubic meters per day

 

PRMS

Petroleum Resources Management System

 

WI

Working interest

 

NPV10

Present value of estimated future oil and gas revenues, net of

estimated direct expenses, discounted at an annual rate of 10%

 

Sqkm

Square kilometers

NOTICE

Additional information about GeoPark can be found in the “Investor Support” section on the website at www.geo-park.com.

Rounding amounts and percentages: Certain amounts and percentages included in this press release have been rounded for ease of presentation. Percentage figures included in this press release have not in all cases been calculated on the basis of such rounded figures, but on the basis of such amounts prior to rounding. For this reason, certain percentage amounts in this press release may vary from those obtained by performing the same calculations using the figures in the financial statements. In addition, certain other amounts that appear in this press release may not sum due to rounding.

This press release contains certain oil and gas metrics, including information per share, Operating Netback, reserve life index and others, which do not have standardized meanings or standard methods of calculation and therefore such measures may not be comparable to similar measures used by other companies. Such metrics have been included herein to provide readers with additional measures to evaluate the Company’s performance; however, such measures are not reliable indicators of the future performance of the Company and future performance may not compare to the performance in previous periods.

CAUTIONARY STATEMENTS RELEVANT TO FORWARD-LOOKING INFORMATION

This press release contains statements that constitute forward-looking statements. Many of the forward- looking statements contained in this press release can be identified by the use of forward-looking words such as ‘‘anticipate,’’ ‘‘believe,’’ ‘‘could,’’ ‘‘expect,’’ ‘‘should,’’ ‘‘plan,’’ ‘‘intend,’’ ‘‘will,’’ ‘‘estimate’’ and ‘‘potential,’’ among others.

Forward-looking statements that appear in a number of places in this press release include, but are not limited to, statements regarding the intent, belief or current expectations, regarding various matters, including expected 2019, 2020 or future production, production growth and operating and financial performance, Operating Netback per boe and capital expenditures plan. Forward-looking statements are based on management’s beliefs and assumptions, and on information currently available to the management. Such statements are subject to risks and uncertainties, and actual results may differ materially from those expressed or implied in the forward-looking statements due to various factors.

Forward-looking statements speak only as of the date they are made, and the Company does not undertake any obligation to update them in light of new information or future developments or to release publicly any revisions to these statements in order to reflect later events or circumstances, or to reflect the occurrence of unanticipated events. For a discussion of the risks facing the Company which could affect whether these forward-looking statements are realized, see filings with the U.S. Securities and Exchange Commission (SEC).

Oil and gas production figures included in this release are stated before the effect of royalties paid in kind, consumption and losses. Annual production per day is obtained by dividing total production for 365 days.

Information about oil and gas reserves: The SEC permits oil and gas companies, in their filings with the SEC, to disclose only proven, probable and possible reserves that meet the SEC’s definitions for such terms. GeoPark uses certain terms in this press release, such as “PRMS Reserves” that the SEC’s guidelines do not permit GeoPark from including in filings with the SEC. As a result, the information in the Company’s SEC filings with respect to reserves will differ significantly from the information in this press release.

NPV10 for PRMS 1P, 2P and 3P reserves is not a substitute for the standardized measure of discounted future net cash flow for SEC proved reserves.

The reserve estimates provided in this release are estimates only, and there is no guarantee that the estimated reserves will be recovered. Actual reserves may eventually prove to be greater than, or less than, the estimates provided herein. Statements relating to reserves are by their nature forward-looking statements.

Non-GAAP Measures: The Company believes Adjusted EBITDA, free cash flow and operating netback per boe, which are each non-GAAP measures, are useful because they allow the Company to more effectively evaluate our operating performance and compare the results of our operations from period to period without regard to our financing methods or capital structure. The Company’s computation of Adjusted EBITDA, free cash flow, return on capital employed and operating netback per boe may not be comparable to other similarly titled measures of other companies.

Adjusted EBITDA: The Company defines Adjusted EBITDA as profit for the period before net finance costs, income tax, depreciation, amortization and certain non-cash items such as impairments and write-offs of unsuccessful exploration and evaluation assets, accrual of stock options stock awards, unrealized results on commodity risk management contracts and other non-recurring events. Adjusted EBITDA is not a measure of profit or cash flow as determined by IFRS. The Company excludes the items listed above from profit for the period in arriving at Adjusted EBITDA because these amounts can vary substantially from company to company within our industry depending upon accounting methods and book values of assets, capital structures and the method by which the assets were acquired. Adjusted EBITDA should not be considered as an alternative to, or more meaningful than, profit for the period or cash flow from operating activities as determined in accordance with IFRS or as an indicator of our operating performance or liquidity. Certain items excluded from Adjusted EBITDA are significant components in understanding and assessing a company’s financial performance, such as a company’s cost of capital and tax structure and significant and/or recurring write-offs, as well as the historic costs of depreciable assets, none of which are components of Adjusted EBITDA. For a reconciliation of Adjusted EBITDA to the IFRS financial measure of profit for the year or corresponding period, see the accompanying financial tables.

Free cash flow: Free cash flow is a non-GAAP measure and does not have a standardized meaning under GAAP. Free cash flow is defined as cash provided by operating activities less cash used in investing activities excluding Argentina acquisition and cash advances from disposal of long-term assets.

Operating Netback per boe: Operating netback per boe should not be considered as an alternative to, or more meaningful than, profit for the period or cash flow from operating activities as determined in accordance with IFRS or as an indicator of our operating performance or liquidity. Certain items excluded from Operating Netback per boe are significant components in understanding and assessing a company’s financial performance, such as a company’s cost of capital and tax structure and significant and/or recurring write-offs, as well as the historic costs of depreciable assets, none of which are components of Operating Netback per boe. The Company’s computation of Operating Netback per boe may not be comparable to other similarly titled measures of other companies. For a reconciliation of Operating Netback per boe to the IFRS financial measure of profit for the year or corresponding period, see the accompanying financial tables.

Net Debt: Net debt is defined as current and non-current Borrowings less Cash and Cash equivalents.


1 See the “Adoption of IFRS 16” section included in this press release.

2 Return on capital employed defined as operating profit divided by total assets minus current liabilities.

3 Independently audited by Gaffney, Cline and Associates

4 See the “Adoption of IFRS 16” section included in this press release.

5 GeoPark completed the divestiture of the La Cuerva and Yamu blocks on July 1, 2019.

6 See the “Adoption of IFRS 16” section included in this press release.

7 See the “Adoption of IFRS 16” section included in this press release.

8 See the “Reconciliation of Adjusted EBITDA to Profit Before Income Tax” section included in this press release.

9 See the “Adoption of IFRS 16” section included in this press release.

INVESTORS:

Stacy Steimel – Shareholder Value Director

Santiago, Chile ssteimel@geo-park.com

T: +562 2242 9600

Miguel Bello – Market Access Director

Santiago, Chile

T: +562 2242 9600

mbello@geo-park.com

 

MEDIA:

Jared Levy – Sard Verbinnen & Co

jlevy@sardverb.com

New York, USA

T: +1 (212) 687-8080

Kelsey Markovich – Sard Verbinnen & Co

New York, USA

T: +1 (212) 687-8080

kmarkovich@sardverb.com

KEYWORDS: South America Colombia

INDUSTRY KEYWORDS: Energy Other Energy Oil/Gas

MEDIA:

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GeoPark Announces Initiation of Quarterly Dividends

GeoPark Announces Initiation of Quarterly Dividends

BOGOTA, Colombia–(BUSINESS WIRE)–
GeoPark Limited (“GeoPark” or the “Company”) (NYSE: GPRK), a leading independent Latin American oil and gas explorer, operator and consolidator with operations and growth platforms in Colombia, Peru, Argentina, Brazil, Chile and Ecuador, today announced that its Board of Directors declared the initiation of a quarterly cash dividend of $0.0413 per share.

Quarterly Cash Dividend

  • GeoPark Board of Directors declared the initiation of a quarterly cash dividend of $0.0413 per share to be paid on December 10, 2019, to the shareholders of record at the close of business on November 22, 2019
  • The quarterly cash dividend complements the existing share buyback program, which as of the date of this release has returned $72.6 million in value during 2019
  • With the announcement of the work program and investment guidelines for 2020, GeoPark plans to deliver another year of production growth, strong operational and financial performance and free cash flow generation while remaining committed to returning value to its shareholders

James F. Park, Chief Executive Officer of GeoPark, said: “Following our long-term, risk-balanced, diversified portfolio business plan, GeoPark has achieved a unique track record of growing production, reserves and net present value for 17 straight years. Everything in our business begins with our on-the-ground operational performance – and these consistent results have created significant value for our shareholders by making GeoPark the top-performing E&P on the NYSE in 2017 and 2018. To complement this share price increase (up more than 330% since January 2017), we implemented an ambitious share buyback program in late 2018 and throughout 2019. Now, as an additional way to share our superior financial results and free cash flow directly with our shareholders, GeoPark has decided to initiate a quarterly cash dividend payment, effective beginning this quarter. We believe that a company that can consistently execute, invest, grow, and return value back to its shareholders, all funded from its own cashflow, is the right model for our industry today.”

CONFERENCE CALL INFORMATION

GeoPark management will host a conference call on November 7, 2019 at 10:00 am (Eastern Standard Time) to discuss its 3Q2019 financial results and the work program and investment guidelines for 2020. To listen to the call, participants can access the webcast located in the Investor Support section of the Company’s website at www.geo-park.com.

Interested parties may participate in the conference call by dialing the numbers provided below:

United States Participants: 866-547-1509

International Participants: +1 920-663-6208

Passcode: 9391975

Please allow extra time prior to the call to visit the website and download any streaming media software that might be required to listen to the webcast. An archive of the webcast replay will be made available in the Investor Support section of the Company’s website at www.geo-park.com after the conclusion of the live call.

NOTICE

Additional information about GeoPark can be found in the “Investor Support” section on the Web site at www.geo-park.com

CAUTIONARY STATEMENTS RELEVANT TO FORWARD-LOOKING INFORMATION

This press release contains statements that constitute forward-looking statements. Many of the forward looking statements contained in this press release can be identified by the use of forward-looking words such as ‘‘anticipate,’’ ‘‘believe,’’ ‘‘could,’’ ‘‘expect,’’ ‘‘should,’’ ‘‘plan,’’ ‘‘intend,’’ ‘‘will,’’ ‘‘estimate’’ and ‘‘potential,’’ among others.

Forward-looking statements appear in a number of places in this press release and include, but are not limited to, statements regarding the Repurchase Program and expectations for our production, reserves growth, financial performance, costs and portfolio. Forward-looking statements are based on management’s beliefs and assumptions and on information currently available to the management. Such statements are subject to risks and uncertainties, and actual results may differ materially from those expressed or implied in the forward-looking statements due to various factors.

Forward-looking statements speak only as of the date they are made, and the Company does not undertake any obligation to update them in light of new information or future developments or to release publicly any revisions to these statements in order to reflect later events or circumstances or to reflect the occurrence of unanticipated events. For a discussion the risks facing the Company which could affect whether these forward-looking are realized, see filings with the U.S. Securities and Exchange Commission.

Adjusted EBITDA: The company defines Adjusted EBITDA as profit for the period before net finance costs, income tax, depreciation, amortization and certain non-cash items such as impairments and write-offs of unsuccessful exploration and evaluation assets, accrual of stock options stock awards, unrealized results on commodity risk management contracts and other non-recurring events. Adjusted EBITDA is not a measure of profit or cash flows as determined by IFRS. The Company believes Adjusted EBITDA is useful because it allows us to more effectively evaluate our operating performance and compare the results of our operations from 15 period to period without regard to our financing methods or capital structure. The Company excludes the items listed above from profit for the period in arriving at Adjusted EBITDA because these amounts can vary substantially from company to company within our industry depending upon accounting methods and book values of assets, capital structures and the method by which the assets were acquired. Adjusted EBITDA should not be considered as an alternative to, or more meaningful than, profit for the period or cash flows from operating activities as determined in accordance with IFRS or as an indicator of our operating performance or liquidity. Certain items excluded from Adjusted EBITDA are significant components in understanding and assessing a company’s financial performance, such as a company’s cost of capital and tax structure and significant and/or recurring write-offs, as well as the historic costs of depreciable assets, none of which are components of Adjusted EBITDA. The company’s computation of Adjusted EBITDA may not be comparable to other similarly titled measures of other companies.

INVESTORS:

Stacy Steimel – Shareholder Value Director

Santiago, Chile

T: +562 2242 9600

ssteimel@geo-park.com

Miguel Bello – Market Access Director

Santiago, Chile

T: +562 2242 9600

mbello@geo-park.com

MEDIA:

Jared Levy – Sard Verbinnen & Co

New York, USA

T: +1 (212) 687-8080

jlevy@sardverb.com

Kelsey Markovich – Sard Verbinnen & Co

New York, USA

T: +1 (212) 687-8080

kmarkovich@sardverb.com

GeoPark can be visited online at www.geo-park.com

KEYWORDS: Florida United States South America Colombia North America

INDUSTRY KEYWORDS: Oil/Gas Energy

MEDIA:

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Innovative Industrial Properties Reports Third Quarter 2019 Results

Innovative Industrial Properties Reports Third Quarter 2019 Results

Acquisitions Drive 201% Q3 Rental Revenue, 314% Q3 Net Income and 270% Q3 AFFO Growth Year-over-Year

SAN DIEGO–(BUSINESS WIRE)–
Innovative Industrial Properties, Inc. (IIP), the first and only real estate company on the New York Stock Exchange (NYSE: IIPR) focused on the regulated U.S. cannabis industry, announced today results for the quarter ended September 30, 2019.

Third Quarter 2019 Highlights

Financial Results and Financing Activity

  • IIP generated rental revenues of approximately $11.2 million in the quarter, representing a 201% increase from the prior year’s third quarter.
  • IIP recorded net income available to common stockholders of approximately $6.2 million for the quarter, or $0.55 per diluted share, and adjusted funds from operations (AFFO) of approximately $9.5 million, or $0.86 per diluted share. Net income available to common stockholders and AFFO increased by 314% and 270% from the prior year’s third quarter, respectively.
  • IIP paid a quarterly dividend of $0.78 per share on October 15, 2019 to common stockholders of record as of September 30, 2019, representing a 30% increase from IIP’s second quarter 2019 dividend and an approximately 123% increase over the third quarter 2018’s dividend.
  • In July, IIP completed an underwritten public offering of 1,495,000 shares of common stock, including the exercise in full of the underwriters’ option to purchase an additional 195,000 shares, resulting in net proceeds of approximately $180.1 million.
  • In September and October, IIP issued shares of common stock for net proceeds of approximately $46.9 million under an “at-the-market” equity offering program.

Key Hires

  • IIP hired Tracie Hager as Vice President, Asset Management, bringing nearly 30 years of senior management experience in institutional commercial property management.
  • IIP hired Kelly Spicher as Senior Real Estate Counsel, a commercial real estate transactional attorney with over 16 years of big law firm experience representing institutional clients on complex real estate transactions.

Investments

  • In July, IIP acquired a 145,000 square foot industrial property in Michigan and entered into a long-term triple-net lease with a subsidiary of Ascend Wellness Holdings, LLC (AWH), which intends to operate the facility for medical-use cannabis cultivation and processing upon completion of redevelopment, with IIP’s total investment in the acquisition and redevelopment of the property expected to be approximately $19.8 million (excluding transaction costs).
  • In July, IIP acquired a 43,000 square foot industrial property in Nevada and entered into a long-term triple-net lease with a subsidiary of MJardin Group, Inc. (MJardin) for continued use as a regulated cannabis cultivation and processing facility, with IIP’s total investment in the acquisition and redevelopment of the property expected to be $9.6 million (excluding transaction costs).
  • In July, IIP acquired a 35,000 square foot industrial property in California and entered into a long-term triple-net lease with DionyMed Brands, Inc. (DYME) for continued use as a regulated cannabis cultivation and processing facility and dispensary, with IIP’s total investment in the acquisition and redevelopment of the property expected to be $15.0 million (excluding transaction costs).
  • In July, IIP acquired a 150,000 square foot industrial property in Massachusetts and entered into a long-term triple-net lease with a subsidiary of Trulieve Cannabis Corp. (Trulieve), which intends to operate the facility for regulated cannabis cultivation and processing upon completion of redevelopment, with an initial purchase price of $3.5 million (excluding transaction costs) and an additional commitment by IIP to fund up to $40.0 million for redevelopment of the property, which funding is subject to reduction at Trulieve’s option within the first six months of the lease term.
  • In August, IIP acquired a property in Pennsylvania and entered into a long-term triple-net lease with a subsidiary of PharmaCann LLC (PharmaCann) for two industrial and greenhouse facilities that are expected to comprise a total of 54,000 square feet upon completion of development, with IIP’s total investment in the acquisition and development of the property expected to be $26.0 million (excluding transaction costs), which excludes up to an additional $4.0 million which may be requested by PharmaCann within nine months following closing.
  • In September, IIP amended its lease with AWH at one of its Illinois properties to provide an additional $8.0 million for tenant improvements at the property, which resulted in a corresponding adjustment to base rent.
  • In September, IIP amended its lease with Holistic Industries, Inc. (Holistic) at one of its Massachusetts properties to provide up to $2.0 million for tenant improvements at the property, which may be requested by Holistic until March 31, 2020, which funding will result in a corresponding adjustment to base rent.
  • In September, IIP completed the acquisition of a four-property portfolio in southern California for a $17.3 million total purchase price (excluding transaction costs), comprising approximately 79,000 square feet of industrial space in the aggregate, and entered into long-term leases with subsidiaries of Medical Investor Holdings LLC (Vertical) for continued operation as licensed cannabis cultivation, extraction, manufacturing and distribution facilities.
  • In September, IIP amended its lease with PharmaCann at one of its Massachusetts properties to provide an additional $8.0 million for tenant improvements at the property, which resulted in a corresponding adjustment to base rent.
  • In September, IIP completed the acquisition of a 2,000 square foot dispensary location in Arizona for a total investment of $2.5 million (excluding transaction costs), including reimbursement for certain development costs, and entered into a long-term lease with a subsidiary of The Pharm, LLC (The Pharm) for operation as a licensed dispensary upon completion of development.
  • In September, IIP amended its lease with a subsidiary of Vireo Health, Inc. (Vireo) at its Minnesota property to provide an additional $2.6 million for tenant improvements at the property, which resulted in a corresponding adjustment to base rent.
  • Subsequent to quarter end, in October, IIP acquired a 156,000 square foot industrial property in Michigan and entered into a long-term triple-net lease with a licensee of LivWell Holdings, Inc. (LivWell), which intends to operate the facility for regulated cannabis cultivation and processing upon completion of redevelopment, with IIP’s total investment in the acquisition and redevelopment of the property expected to be approximately $42.0 million (excluding transaction costs).
  • Subsequent to quarter end, in October, IIP acquired two properties in Illinois comprising a total of 90,000 square feet of industrial space and entered into a long-term triple-net lease with a subsidiary of Cresco Labs Inc. (Cresco), for continued operation as regulated cannabis cultivation and processing facilities, and pursuant to which IIP has agreed to provide reimbursement for certain tenant improvements, with IIP’s total investment in the acquisition and tenant improvements at the properties expected to be $46.6 million in the aggregate (excluding transaction costs).
  • Subsequent to quarter end, in October, IIP completed the acquisition of a property in Florida for $17.0 million (excluding transaction costs), comprising approximately 120,000 square feet of industrial space, and entered into a long-term with a subsidiary of Trulieve for continued operation as a licensed cannabis cultivation facility.
  • Subsequent to quarter end, in October, IIP acquired a 48,000 square foot industrial property in Illinois and entered into a long-term triple-net lease with PharmaCann, for continued operation as a regulated cannabis cultivation and processing facility, and pursuant to which IIP has agreed to provide reimbursement for certain tenant improvements, including an 18,000 square foot planned expansion, with IIP’s total investment in the acquisition and tenant improvements at the property expected to be $25.0 million in the aggregate (excluding transaction costs).
  • Subsequent to quarter end, in October, IIP acquired a 70,000 square foot industrial property in Illinois and entered into a long-term triple-net lease with a subsidiary of GR Companies Inc. (Grassroots), for continued operation as a regulated cannabis cultivation and processing facility, and pursuant to which IIP agreed to provide reimbursement for certain tenant improvements, including a 50,000 square foot planned expansion, with IIP’s total investment in the acquisition and tenant improvements at the property expected to be approximately $28.2 million in the aggregate (excluding transaction costs).
  • Subsequent to quarter end, in October and November, IIP completed the acquisitions and leases of four dispensary locations in Michigan for a total investment of approximately $9.0 million (excluding transaction costs), including reimbursement for certain tenant improvements, and entered into long-term leases with Green Peak Industries, LLC (GPI) for operation as licensed dispensaries.

Portfolio Update

Since January 1, 2019, IIP has acquired 30 properties in nine states. IIP entered into new tenant relationships with Cresco, DYME, EGP, Grassroots, Green Leaf, LivWell, Maitri, MJardin, Trulieve, Vertical and two other licensed operators in California, while expanding its tenant relationships with AWH, GPI, Holistic, PharmaCann, The Pharm and Vireo as each company continues to execute on its growth initiatives.

As of November 6, 2019, IIP owned 41 properties located in Arizona, California, Colorado, Florida, Illinois, Maryland, Massachusetts, Michigan, Minnesota, New York, Nevada, Ohio and Pennsylvania, totaling approximately 2.8 million rentable square feet (including approximately 903,000 rentable square feet under development/redevelopment), which were 100% leased with a weighted-average remaining lease term of approximately 15.5 years. As of November 6, 2019, IIP had invested approximately $410.2 million in the aggregate (excluding transaction costs) and had committed an additional approximately $138.9 million to reimburse certain tenants and sellers for completion of construction and tenant improvements at IIP’s properties. IIP’s average current yield on invested capital is approximately 13.8% for these 41 properties, calculated as (a) the sum of the current base rents (after the expiration of applicable base rent abatement or deferral periods), supplemental rent (with respect to the lease with PharmaCann at one of IIP’s New York properties) and property management fees, divided by (b) IIP’s aggregate investment in these properties (excluding transaction costs and including aggregate potential development/redevelopment funding and tenant reimbursements of approximately $138.9 million).

These statistics do not include up to $17.7 million that may be funded in the future pursuant to IIP’s lease with Grassroots at one of IIP’s Illinois properties, $40.0 million that may be funded in the future pursuant to IIP’s lease with Trulieve at one of IIP’s Massachusetts properties, the additional $4.0 million which may be requested by PharmaCann at one of IIP’s Pennsylvania properties or $2.0 million that may be funded in the future pursuant to IIP’s lease with Holistic at one of IIP’s Massachusetts properties, as the tenants at those properties may not elect to have IIP disburse those funds to them and pay IIP the corresponding base rent on those funds.

Financing Activity

In July 2019, IIP completed an underwritten public offering of 1,495,000 shares of common stock, including the exercise in full of the underwriters’ option to purchase an additional 195,000 shares, resulting in net proceeds of approximately $180.1 million.

In September 2019, IIP entered into equity distribution agreements with three sales agents, pursuant to which IIP may offer and sell from time to time through an “at-the-market” offering program up to $250 million in shares of its common stock. In September and October, IIP sold shares of its common stock for net proceeds of approximately $46.9 million under this program.

IIP expects to use the proceeds from these offerings to invest in specialized industrial real estate assets that support the regulated cannabis cultivation and processing industry and for general corporate purposes.

Financial Results

IIP generated rental revenues of approximately $11.2 million and $26.1 million for the three and nine months ended September 30, 2019, respectively, and rental revenues of approximately $3.7 million and $9.6 million for the three and nine months ended September 30, 2018, respectively. The increase for both periods was driven primarily by the acquisition and leasing of new properties, additional tenant improvement allowances provided to tenants at certain properties that resulted in base rent adjustments, and contractual rental escalations at certain properties.

For the three months ended September 30, 2019, IIP recorded net income and net income per diluted share of approximately $6.2 million and $0.55, respectively; funds from operations (FFO) and FFO per diluted share of approximately $8.4 million and $0.76, respectively; and AFFO and AFFO per diluted share of approximately $9.5 million and $0.86, respectively. For the three months ended September 30, 2019, AFFO and AFFO per diluted share increased by approximately 270% and 126% from the prior year period, respectively.

For the nine months ended September 30, 2019, IIP recorded net income and net income per diluted share of approximately $12.6 million and $1.20, respectively; FFO and FFO per diluted share of approximately $17.6 million and $1.72, respectively; and AFFO and AFFO per diluted share of approximately $20.6 million and $2.02, respectively. For the nine months ended September 30, 2019, AFFO and AFFO per diluted share increased by approximately 238% and 117% from the prior year period, respectively.

FFO and AFFO are supplemental non-GAAP financial measures used in the real estate industry to measure and compare the operating performance of real estate companies. A complete reconciliation containing adjustments from GAAP net income attributable to common stockholders to FFO and AFFO and definitions of terms are included at the end of this release.

Teleconference and Webcast

Innovative Industrial Properties, Inc. will conduct a conference call and webcast at 10:00 a.m. Pacific Time (1:00 p.m. Eastern Time) on Thursday, November 7, 2019 to discuss IIP’s financial results and operations for the third quarter ended September 30, 2019. The call will be open to all interested investors through a live audio webcast at the Investor Relations section of IIP’s website at www.innovativeindustrialproperties.com, or live by calling 1-877-328-5514 (domestic) or 1-412-902-6764 (international) and asking to be joined to the Innovative Industrial Properties, Inc. conference call. The complete webcast will be archived for 90 days on IIP’s website. A telephone playback of the conference call will also be available from 12:00 p.m. Pacific Time on Thursday, November 7, 2019 until 12:00 p.m. Pacific Time on Thursday, November 14, 2019, by calling 1-877-344-7529 (domestic), 855-669-9658 (Canada) or 1-412-317-0088 (international) and using access code 10136465.

About Innovative Industrial Properties

Innovative Industrial Properties, Inc. is a self-advised Maryland corporation focused on the acquisition, ownership and management of specialized properties leased to experienced, state-licensed operators for their regulated medical-use cannabis facilities. Innovative Industrial Properties, Inc. has elected to be taxed as a real estate investment trust, commencing with the year ended December 31, 2017. Additional information is available at www.innovativeindustrialproperties.com.

This press release contains statements that IIP believes to be “forward-looking statements” within the meaning of the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. All statements other than historical facts are forward-looking statements. When used in this press release, words such as IIP “expects,” “intends,” “plans,” “estimates,” “anticipates,” “believes” or “should” or the negative thereof or similar terminology are generally intended to identify forward-looking statements. Such forward-looking statements are subject to risks and uncertainties that could cause actual results to differ materially from those expressed in, or implied by, such statements. Investors should not place undue reliance upon forward-looking statements. IIP disclaims any obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.

INNOVATIVE INDUSTRIAL PROPERTIES, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(
Unaudited)

(In thousands, except share and per share amounts)

 

 

September 30,

2019

December 31,

2018

 

Assets

 

 

 

 

 

Real estate, at cost:

 

 

 

 

 

Land

$

37,959

$

20,475

 

Buildings and improvements

 

231,252

 

109,425

 

Tenant improvements

 

43,397

 

14,732

 

Construction in progress

 

 

6,298

 

Total real estate, at cost

 

312,608

 

150,930

 

Less accumulated depreciation

 

(8,625

)

 

(3,571

)

Net real estate held for investment

 

303,983

 

147,359

 

Cash and cash equivalents

 

99,917

 

13,050

 

Restricted cash

 

9,354

 

 

Short-term investments, net

 

208,828

 

120,443

 

Other assets, net

 

1,068

 

614

 

Total assets

$

623,150

$

281,466

 

Liabilities and stockholders’ equity

 

 

 

 

 

Exchangeable senior notes, net

$

134,158

$

 

Tenant improvements and construction funding payable

 

12,700

 

2,433

 

Accounts payable and accrued expenses

 

1,044

 

1,968

 

Dividends payable

 

9,204

 

3,759

 

Offering cost liability

 

62

 

 

Rent received in advance and tenant security deposits

 

16,199

 

9,014

 

Total liabilities

 

173,367

 

17,174

 

Commitments and contingencies

 

 

 

 

 

Stockholders’ equity:

 

 

 

 

 

Preferred stock, par value $0.001 per share, 50,000,000 shares authorized:

9.00% Series A cumulative redeemable preferred stock, $15,000 liquidation

preference ($25.00 per share), 600,000 shares issued and outstanding at

September 30, 2019 and December 31, 2018

 

14,009

 

14,009

 

Common stock, par value $0.001 per share, 50,000,000 shares authorized:

11,367,828 and 9,775,800 shares issued and outstanding at September 30,

2019 and December 31, 2018, respectively

 

11

 

10

 

Additional paid-in capital

 

452,634

 

260,540

 

Dividends in excess of earnings

 

(16,871

)

 

(10,267

)

Total stockholders’ equity

 

449,783

 

264,292

 

Total liabilities and stockholders’ equity

$

623,150

$

281,466

 

INNOVATIVE INDUSTRIAL PROPERTIES, INC.

CONDENSED CONSOLIDATED STATEMENTS OF INCOME

For the Three and Nine Months Ended September 30, 2019 and 2018

(Unaudited)

(In thousands, except share and per share amounts)

 

 

For the Three Months Ended

September 30,

For the Nine Months Ended

September 30,

 

2019

2018

2019

2018

Revenues:

 

 

 

 

 

 

 

 

Rental

$

11,198

 

$

3,716

 

$

26,054

 

$

9,639

 

Tenant reimbursements

 

357

 

 

210

 

 

941

 

 

365

 

Total revenues

 

11,555

 

 

3,926

 

 

26,995

 

 

10,004

 

Expenses:

 

 

 

 

 

 

 

 

 

 

 

 

Property expenses

 

357

 

 

210

 

 

941

 

 

365

 

General and administrative expense

 

2,156

 

 

1,442

 

 

6,667

 

 

4,393

 

Depreciation expense

 

2,221

 

 

703

 

 

5,054

 

 

1,715

 

Total expenses

 

4,734

 

 

2,355

 

 

12,662

 

 

6,473

 

Income from operations

 

6,821

 

 

1,571

 

 

14,333

 

 

3,531

 

Interest and other income

 

1,537

 

 

261

 

 

3,702

 

 

788

 

Interest expense

 

(1,838

)

 

 

 

(4,462

)

 

 

Net income

 

6,520

 

 

1,832

 

 

13,573

 

 

4,319

 

Preferred stock dividend

 

(338

)

 

(338

)

 

(1,014

)

 

(1,014

)

Net income attributable to common stockholders

$

6,182

 

$

1,494

 

$

12,559

 

$

3,305

 

Net income attributable to common stockholders per share:

 

 

 

 

 

 

 

 

 

 

 

 

Basic

$

0.56

 

$

0.22

 

$

1.22

 

$

0.50

 

Diluted

$

0.55

 

$

0.21

 

$

1.20

 

$

0.49

 

Weighted average shares outstanding:

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

10,918,477

 

 

6,636,638

 

 

10,088,036

 

 

6,388,058

 

Diluted

 

11,057,697

 

 

6,785,800

 

 

10,225,574

 

 

6,534,300

 

INNOVATIVE INDUSTRIAL PROPERTIES, INC.

CONDENSED CONSOLIDATED FFO AND AFFO

For the Three and Nine Months Ended September 30, 2019 and 2018

(Unaudited)

(In thousands, except share and per share amounts)

 

 

For the Three Months Ended

September 30,

For the Nine Months Ended

September 30,

 

2019

2018

2019

2018

Net income attributable to common stockholders

$

6,182

$

1,494

$

12,559

$

3,305

Real estate depreciation

 

2,221

 

703

 

5,054

 

1,715

FFO available to common stockholders

 

8,403

 

2,197

 

17,613

 

5,020

Stock-based compensation

 

655

 

386

 

1,841

 

1,079

Non-cash interest expense

 

489

 

 

1,181

 

AFFO available to common stockholders

$

9,547

$

2,583

$

20,635

$

6,099

FFO per share — basic

$

0.77

$

0.33

$

1.75

$

0.79

FFO per share — diluted

$

0.76

$

0.32

$

1.72

$

0.77

AFFO per share — basic

$

0.87

$

0.39

$

2.05

$

0.95

AFFO per share — diluted

$

0.86

$

0.38

$

2.02

$

0.93

Weighted average shares outstanding — basic

 

10,918,477

 

6,636,638

 

10,088,036

 

6,388,058

Weighted average shares outstanding — diluted

 

11,057,697

 

6,785,800

 

10,225,574

 

6,534,300

FFO and FFO per share are operating performance measures adopted by the National Association of Real Estate Investment Trusts, Inc. (NAREIT). NAREIT defines FFO as the most commonly accepted and reported measure of a REIT’s operating performance equal to “net income, computed in accordance with accounting principles generally accepted in the United States (GAAP), excluding gains (or losses) from sales of property, plus depreciation, amortization and impairment related to real estate properties, and after adjustments for unconsolidated partnerships and joint ventures.”

Management believes that net income, as defined by GAAP, is the most appropriate earnings measurement. However, management believes FFO and FFO per share to be important supplemental measures of a REIT’s performance because they provide an understanding of the operating performance of IIP’s properties without giving effect to certain significant non-cash items, primarily depreciation expense. Historical cost accounting for real estate assets in accordance with GAAP assumes that the value of real estate assets diminishes predictably over time. However, real estate values instead have historically risen or fallen with market conditions. IIP believes that by excluding the effect of depreciation, FFO and FFO per share can facilitate comparisons of operating performance between periods. IIP reports FFO and FFO per share because these measures are observed by management to also be the predominant measures used by the REIT industry and by industry analysts to evaluate REITs and because FFO per share is consistently reported, discussed, and compared by research analysts in their notes and publications about REITs. For these reasons, management has deemed it appropriate to disclose and discuss FFO and FFO per share.

Management believes that AFFO and AFFO per share are also appropriate supplemental measures of a REIT’s operating performance. IIP calculates AFFO by adding to FFO certain non-cash and infrequent or unpredictable expenses which may impact comparability, consisting of non-cash stock-based compensation expense and non-cash interest expense.

IIP’s computation of FFO and AFFO may differ from the methodology for calculating FFO and AFFO utilized by other equity REITs and, accordingly, may not be comparable to such REITs. Further, FFO and AFFO do not represent cash flow available for management’s discretionary use. FFO and AFFO should not be considered as an alternative to net income (computed in accordance with GAAP) as an indicator of IIP’s financial performance or to cash flow from operating activities (computed in accordance with GAAP) as an indicator of IIP’s liquidity, nor is it indicative of funds available to fund IIP’s cash needs, including IIP’s ability to pay dividends or make distributions. FFO and AFFO should be considered only as supplements to net income computed in accordance with GAAP as measures of IIP’s operations.

Catherine Hastings

Chief Financial Officer

Innovative Industrial Properties, Inc.

(858) 997-3332

KEYWORDS: United States North America California

INDUSTRY KEYWORDS: Commercial Building & Real Estate Alternative Medicine Construction & Property REIT Tobacco Health General Health Specialty Agriculture Natural Resources Retail

MEDIA:

GeoPark Announces 2020 Work Program and Investment Guidelines

GeoPark Announces 2020 Work Program and Investment Guidelines

Production Growth and More Free Cashflow

BOGOTA, Colombia–(BUSINESS WIRE)–
(“GeoPark” or the “Company”) (NYSE: GPRK), a leading independent Latin American oil and gas explorer, operator and consolidator with operations and growth platforms in Colombia, Peru, Argentina, Brazil, Chile and Ecuador, today announced its work program and investment guidelines for 2020. (All figures are expressed in US Dollars).

A conference call to discuss third quarter 2019 financial results and the 2020 work program and investment guidelines will be held on November 7, 2019 at 10:00 a.m. Eastern Standard Time.

2020 Work Program: Main Principles and Approach

Technical

  • Increase oil and gas production and reserves
  • Effective development and production growth in the Llanos 34 block (GeoPark operated, 45% WI)
  • Define new plays, leads and prospects
  • Initiate exploration studies in the recently acquired exploration acreage adjacent and nearby to GeoPark’s core Llanos 34 block, targeting to start drilling in 2021
  • Initiate exploration drilling in the prolific Oriente basin in Ecuador
  • Test oil prospects in the Tierra del Fuego blocks in Chile

Economic

  • Allocate investment capital to best shareholder value-adding projects
  • Capital expenditure program fully funded within cashflow
  • Grow adjusted EBITDA and operating cashflow
  • Develop and add new projects with break evens below $40-50/bbl oil price
  • Ongoing cost reduction efforts to become lowest cost operator
  • Maximize net present value per share for existing assets
  • Continue returning value to shareholders through dividends and buybacks

     

Strategic

  • Proven flexible program, adaptable to lower oil price scenarios
  • Achieve scale
  • Continue developing long-term strategy in the Marañon-Oriente-Putumayo petroleum system
  • Testing high-potential unconventional projects
  • Develop and grow strategic partnerships with Ecopetrol/Hocol and ONGC
  • Continue strengthening ESG metrics with GeoPark’s proven internal SPEED program
  • Promote innovation and the adoption of best practices across the portfolio

2020 Guidance ($60-65/bbl Brent)

The 2020 production guidance reflects 5-10% growth over 2019 average production and excludes potential production from the 2020 exploration drilling program.

The 2020 work program of $130-145 million includes drilling of 36+ gross wells, with approximately 75% of the total amount expected to be allocated to development capital and 25% to exploration activities.

Using the base case price assumption of $60-65/bbl Brent, GeoPark can execute a risk-balanced work program to continue growing its business by producing, developing and exploring its portfolio of assets, fully funded within cashflow, and maintaining a strong balance sheet.

The table below provides main highlights of the 2020 work program:

2020 Work Program

Base Case ($60-65/bbl Brent)

Production Growth

5-10%

Total 2020 Capital Expenditures

$130-145 million

Maintenance Capital

$50-60 million

Operating Netback1

$420-460 million

Development/Appraisal Wells (Gross)

30-32 wells

Exploration Wells (Gross)

6-8 wells

Total Wells (Gross)

36-40 wells

2020 Work Program Details

  • Production target: 5-10% increase over 2019 average production
  • Capital expenditure program: $130-145 million fully funded by cashflow, to be allocated as follows:
  • Colombia – $110-115 million: Continue developing the Llanos 34 block and delineating new leads and prospects in the recently acquired blocks in the Llanos basin. The work program in Colombia includes:
    • 30-32 development and appraisal wells and 1-2 exploration wells in the Llanos 34 block
    • One exploration well in the Llanos 32 block (GeoPark non-operated, 12.5% WI)
    • Seismic reprocessing and other preliminary activities in the Llanos 86, Llanos 87 and Llanos 104 blocks (GeoPark operated, 50% WI)
    • Construction of additional facilities to support production growth and to continue optimizing operating and transportation costs. These activities include investments to evacuate production from the Tigana oil field using existing infrastructure connecting the Llanos 34 block to the Oleoducto de los Llanos (ODL) pipeline
  • Chile – $10-15 million: Focus on exploration drilling in the Flamenco (GeoPark operated, 100% WI), Isla Norte (GeoPark operated, 60% WI) and Campanario (GeoPark operated, 50% WI) blocks in Tierra del Fuego. The work program in Chile includes:
    • Four exploration wells with a focus on oil prospects
    • Continue testing high-potential unconventional projects including a large shale oil project in the Estratos con Favrella formation in the Fell block (220-600 mmboe potential)
  • Ecuador – $7-10 million: Initiate exploration activities in the Oriente basin. The work program in Ecuador includes:
    • One exploration well in the Perico block (GeoPark non-operated, 50% WI)
    • Seismic and other preliminary studies in the Espejo block (GeoPark operated, 50% WI)
  • Argentina – $2-5 million: Well intervention activities and facilities revamping in the Aguada Baguales, El Porvenir and Puesto Touquet blocks (GeoPark operated, 100% WI) in the Neuquen basin. Explore strategic opportunities within existing acreage position in the Vaca Muerta formation in the Aguada Baguales block
  • Brazil – $0.5-1.5 million: Maintenance works in the Manati gas field (GeoPark non-operated, 10% WI) plus testing activities for the recent Praia dos Castelhanos oil field discovery in the REC-T-128 block (GeoPark operated, 70% WI)
  • Peru – $0.5-1.5 million: Social and environmental activities in the Morona block (GeoPark operated, 75% WI)

Work Program Flexible at Different Oil Price Scenarios

Consistent with the Company’s approach in prior years, GeoPark’s 2020 work program can be rapidly adapted to different oil price scenarios, which illustrates the high quality of its assets and strong financial performance in lower or volatile oil price environments.

  • Above $70/bbl Brent oil price: Capital expenditures can be expanded to $170-200 million – by adding incremental projects, targeting production growth of 10+%
  • Below $50/bbl Brent oil price: Capital expenditures can be reduced to $80-95 million – focusing on the lowest-risk projects that produce the fastest cashflow, and targeting 0-5% production growth compared to 2019

GeoPark currently has commodity risk management contracts in place covering a portion of its production for 2020 with floors of $55/bbl Brent. GeoPark monitors market conditions on a continuous basis and may enter into new commodity risk management contracts to secure minimum oil prices for its 2020 production and beyond.

CONFERENCE CALL INFORMATION

GeoPark will host its Third Quarter 2019 Financial Results conference call and webcast on November 7, 2019, at 10:00 a.m. Eastern Standard Time.

Interested parties may participate in the conference call by dialing the numbers provided below:

United States Participants: 866-547-1509

International Participants: +1 920-663-6208

Passcode: 9391975

Please allow extra time prior to the call to visit the website and download any streaming media software that might be required to listen to the webcast. An archive of the webcast replay will be made available in the Investor Support section of the Company’s website at www.geo-park.com after the conclusion of the live call

1 Assuming $4/bbl Vasconia-Brent differential.

GLOSSARY

Adjusted EBITDA

Adjusted EBITDA is defined as profit for the period before net finance costs, income tax, depreciation, amortization, the effect of IFRS 16, certain non-cash items such as impairments and write-offs of unsuccessful efforts, accrual of share-based payments, unrealized results on commodity risk management contracts and other non-recurring events 

Adjusted EBITDA per boe

Adjusted EBITDA divided by total boe sales volumes

 

Bbl

Barrel

Boe

Barrels of oil equivalent

 

Boepd

Barrels of oil equivalent per day

 

Bopd

Barrels of oil per day

 

CEOP

Contrato Especial de Operacion Petrolera (Special Petroleum Operation Contract)

 

D&M

DeGolyer and MacNaughton

 

F&D costs

Finding and development costs, calculated as capital expenditures divided by the applicable net reserves additions before changes in Future Development Capital

 

“High price” royalty

 

An additional royalty incurred in Colombia when each oil field exceeds 5 mmbbl of cumulative production and is determined by a combination of API gravity and WTI oil prices

 

Mboe

Thousand barrels of oil equivalent

 

Mmbo

Million barrels of oil

 

Mmboe

Million barrels of oil equivalent

 

Mcfpd

Thousand cubic feet per day

 

Mmcfpd

Million cubic feet per day

 

Mm3/day

Thousand cubic meters per day

 

NPV10

Present value of estimated future oil and gas revenues, net of estimated direct expenses, discounted at an annual rate of 10%

 

Operating netback

Revenue, less production and operating costs (net of depreciation charges and accrual of stock options and stock awards, the effect of IFRS 16), selling expenses, and realized results on commodity risk management contracts and other non-recurring events. Operating Netback is equivalent to Adjusted EBITDA net of cash expenses included in Administrative, Geological and Geophysical and Other operating costs

 

PRMS

Petroleum Resources Management System

 

SPE

Society of Petroleum Engineers

 

NOTICE

Additional information about GeoPark can be found in the “Investor Support” section on the website at www.geo-park.com.

Rounding amounts and percentages: Certain amounts and percentages included in this press release have been rounded for ease of presentation. Percentage figures included in this press release have not in all cases been calculated on the basis of such rounded figures, but on the basis of such amounts prior to rounding. For this reason, certain percentage amounts in this press release may vary from those obtained by performing the same calculations using the figures in the financial statements. In addition, certain other amounts that appear in this press release may not sum due to rounding.

CAUTIONARY STATEMENTS RELEVANT TO FORWARD-LOOKING INFORMATION

This press release contains statements that constitute forward-looking statements. Many of the forward-looking statements contained in this press release can be identified by the use of forward-looking words such as ‘‘anticipate,’’ ‘‘believe,’’ ‘‘could,’’ ‘‘expect,’’ ‘‘should,’’ ‘‘plan,’’ ‘‘intend,’’ ‘‘will,’’ ‘‘estimate’’ and ‘‘potential,’’ among others.

Forward-looking statements that appear in a number of places in this press release include, but are not limited to, statements regarding the intent, belief or current expectations, regarding various matters, including expected 2019 and/or 2020 production growth and capital expenditures plan. Forward-looking statements are based on management’s beliefs and assumptions, and on information currently available to the management. Such statements are subject to risks and uncertainties, and actual results may differ materially from those expressed or implied in the forward-looking statements due to various factors.

Forward-looking statements speak only as of the date they are made, and the Company does not undertake any obligation to update them in light of new information or future developments or to release publicly any revisions to these statements in order to reflect later events or circumstances, or to reflect the occurrence of unanticipated events. For a discussion of the risks facing the Company which could affect whether these forward-looking statements are realized, see filings with the U.S. Securities and Exchange Commission.

Oil and gas production figures included in this release are stated before the effect of royalties paid in kind, consumption and losses.

INVESTORS:

Stacy Steimel – Shareholder Value Director

Santiago, Chile

T: +562 2242 9600

ssteimel@geo-park.com

Miguel Bello – Market Access Director

Santiago, Chile

T: +562 2242 9600

mbello@geo-park.com

MEDIA:

Jared Levy – Sard Verbinnen & Co

New York, USA

T: +1 (212) 687-8080

jlevy@sardverb.com

Kelsey Markovich – Sard Verbinnen & Co

New York, USA

T: +1 (212) 687-8080

kmarkovich@sardverb.com

KEYWORDS: Florida United States South America Colombia North America

INDUSTRY KEYWORDS: Oil/Gas Energy

MEDIA:

Logo
Logo

Rent-A-Center, Inc. Reports Strong Third Quarter 2019 Results – Reiterates and Narrows Guidance Range

Rent-A-Center, Inc. Reports Strong Third Quarter 2019 Results – Reiterates and Narrows Guidance Range

Same Store Sales of 4.5%, Two Year Same Store Sales of 10.2%

Diluted EPS $0.56; Non-GAAP Diluted EPS $0.47, up 48.7%

Merchants Preferred Integration Exceeding Expectations

PLANO, Texas–(BUSINESS WIRE)–
Rent-A-Center, Inc. (the “Company” or “Rent-A-Center”) (NASDAQ/NGS: RCII) today announced results for the quarter ended September 30, 2019.

“I’m pleased to report strong third quarter results, which met our expectations. Consolidated same store sales increased 4.5 percent and the continued execution of our strategic plan drove adjusted EBITDA growth of 14.8 percent versus the third quarter of last year. As a result we are reiterating and narrowing our annual guidance,” stated Mitch Fadel, Chief Executive Officer of Rent-A-Center.

Mr. Fadel continued, “The integration with Merchants Preferred is progressing ahead of our expectations and we continue to believe our differentiated platform of offering both staffed and virtual options for our retail partners positions us for significant growth, including growth in national accounts and e-commerce retailers. Our focus is to serve lease-to-own customers across multiple channels by enhancing the customer experience through enabling technologies. In addition, we maintain a conservative balance sheet with ample capital to fund our growth initiatives and return capital to shareholders,” concluded Mr. Fadel.

Consolidated Overview

Results for the third quarter of 2019 are Non-GAAP excluding special items and compared to the third quarter of last year unless otherwise noted.

On a consolidated basis, total revenues of $649.4 million increased 0.7 percent driven by a consolidated same store sales increase of 4.5 percent offset by refranchising over 100 locations in the past twelve months and the closures of certain Core U.S. stores. Excluding effects on revenues resulting from the refranchising efforts, revenues increased 2.7 percent. Net earnings and diluted earnings per share, on a GAAP basis, were $31.3 million and $0.56 compared to net earnings and diluted earnings per share of $12.9 million and $0.24 in the third quarter of 2018.

Special items in the third quarter of $(5.0) million were primarily driven by a tax benefit related to the reversal of previously recorded reserves for uncertain tax positions, partially offset by debt refinancing charges, closure of certain Core U.S. stores and transaction costs associated with the acquisition of Merchants Preferred.

The Company’s Non-GAAP diluted earnings per share were $0.47 compared to $0.32 in the third quarter of 2018, an increase of 48.7 percent. The Company generated $41.7 million in operating profit in the third quarter compared to $32.4 million in the third quarter of 2018, an increase of 28.9 percent. Adjusted EBITDA in the third quarter was $56.6 million compared to $49.3 million in the third quarter of 2018, an increase of 14.8 percent.

For the nine months ended September 30, 2019, the Company generated $228.1 million of cash from operations. The Company ended the third quarter with $73.7 million of cash and cash equivalents compared to $111.0 million as of the end of the third quarter of 2018. At the end of the third quarter outstanding indebtedness was $260 million, down $20 million from the close of the refinancing completed on August 5, 2019. The Company’s net debt to adjusted EBITDA ratio ended the third quarter at 0.8 times compared to 3.4 times as of the end of the third quarter of 2018.

The Rent-A-Center Board of Directors declared a cash dividend of $0.25 per share in the third quarter which was subsequently paid out on October 9, 2019.

Segment Operating Performance

CORE U.S. third quarter revenues of $436.5 million decreased 3.3 percent driven by the refranchising of over 100 locations in the past 12 months and rationalization of the Core U.S. store base partially offset by a same store sales increase of 3.7 percent. Excluding effects on revenues resulting from the refranchising efforts, revenues increased 1.1 percent. As a percent of revenue, skip/stolen losses were 4.1 percent, 60 basis points higher versus the prior year. Operating profit was $54.2 million, which increased 240 basis points versus the prior year, was driven by lower labor and other store expenses as a result of lower store count and our cost savings initiatives. Adjusted EBITDA was $59.3 million, as a percent of total revenue increased 220 basis points versus the prior year.

ACCEPTANCE NOW third quarter revenues of $184.5 million increased 6.4 percent driven by the acquisition of Merchants Preferred and a same store sales increase of 6.2 percent. As a percent of revenue, skip/stolen losses were 8.9 percent, 60 basis points higher versus the prior year. Operating profit was $21.9 million, as a percent of total revenue decreased 350 basis points versus the prior year, driven by lower gross profit and higher skip/stolen losses. Adjusted EBITDA was $22.3 million, as a percent of revenue decreased 350 basis points versus the prior year.

MEXICO third quarter revenues increased 6.9 percent on a constant currency basis. Operating profit was $1.2 million, as a percent of total revenue increased 190 basis points versus the prior year.

FRANCHISING third quarter revenues of $15.0 million increased due to higher store count with over 100 locations refranchised in the past 12 months and higher inventory purchases by our franchisees. Operating profit was $1.1 million, as a percent of total revenue increased 50 basis points versus the prior year.

CORPORATE third quarter expense decreased $4.2 million compared to the prior year primarily due to the realization of our cost savings initiatives.

SAME STORE SALES

(Unaudited)

Table 1

 

 

Period

 

Core U.S.

 

Acceptance Now (2)

 

Mexico

 

Total

Three Months Ended September 30, 2019 (1)

 

3.7

%

 

6.2

%

 

8.1

%

 

4.5

%

Three Months Ended June 30, 2019 (1)

 

5.6

%

 

6.0

%

 

10.2

%

 

5.8

%

Three Months Ended September 30, 2018 (1)

 

5.2

%

 

6.7

%

 

12.8

%

 

5.7

%

Note: Same store sale methodology – Same store sales generally represents revenue earned in stores that were operated by us for 13 months or more and are reported on a constant currency basis. The Company excludes from the same store sales base any store that receives a certain level of customer accounts from closed stores or acquisitions. The receiving store will be eligible for inclusion in the same store sales base in the 24th full month following account transfer.

(1) Given the severity of the 2017 hurricanes, the Company instituted a change to the same store sales store selection starting in the month of September 2017, excluding geographically impacted regions for 18 months.

(2) Acceptance Now segment does not include Merchants Preferred locations acquired in August 2019.

Sale/Partial Leaseback of Corporate Headquarters

The company recently completed a competitive bidding process and reached an agreement in principle to sell its corporate headquarters. Due to the Company’s successful restructuring efforts over the past two years, a significant portion of the building was not being utilized, presenting the Company with an opportunity to realize material value by selling the building and leasing back a smaller footprint. Net proceeds from the sale are expected to be approximately $35 million, after taxes and fees, and will be utilized to advance the Company’s stated capital allocation priorities of funding growth initiatives in the retail partner business and returning capital to shareholders. The transaction is expected to close in late 2019 or early 2020 and therefore has not been reflected in current fiscal 2019 guidance.

2019 Guidance (1)

The Company is providing the following narrowed guidance for its 2019 fiscal year, reflecting the ongoing execution of our strategic plan.

  • Consolidated revenues of $2.635 billion to $2.670 billion

    • Core U.S. revenues of $1.800 billion to $1.820 billion
    • Acceptance NOW revenues of $735 million to $750 million
  • Consolidated Same Store Sales increases in the mid-single digits
  • Adjusted EBITDA of $245 million to $260 million
  • Non-GAAP diluted earnings per share of $2.10 to $2.35
  • Free cash flow of $205 million to $220 million (2)
  • Net debt of $200 million to $185 million
  • Net debt to adjusted EBITDA ratio of 0.80x to 0.70x (3)

(1) Guidance does not include the impact of new franchising transactions beyond the transaction completed in October 2019 or other asset sales.

(2) Free cash flow defined as net cash provided by operating activities less purchase of property assets (reference table 3). Free cash flow range includes approximately $80 million in pre-tax proceeds, or approximately $60 million in after-tax proceeds, relating to the merger termination settlement.

(3) Net debt to adjusted EBITDA ratio defined as outstanding debt less cash divided by trailing twelve months adjusted EBITDA.

Non-GAAP Reconciliation

To supplement the Company’s financial results presented on a GAAP basis, Rent-A-Center uses the non-GAAP measures (“special items”) indicated in Table 2 below, which primarily excludes financial impacts in the third quarter of 2019 related to debt refinancing charges, store closures, incremental legal and advisory fees, and cost savings initiatives and discreet income tax items, including the reversal of a previously recorded reserve for uncertain tax positions. Gains or charges related to store closures will generally recur with the occurrence of these events in the future. The presentation of these financial measures is not in accordance with, or an alternative for, accounting principles generally accepted in the United States and should be read in conjunction with the Company’s consolidated financial statements prepared in accordance with GAAP. Rent-A-Center management believes that excluding special items from the GAAP financial results provides investors a clearer perspective of the Company’s ongoing operating performance and a more relevant comparison to prior period results. This press release also refers to the non-GAAP measures adjusted EBITDA (earnings before interest, taxes, depreciation and amortization) and Free Cash Flow (net cash provided by operating activities less purchase of property assets). Reconciliation of adjusted EBITDA and Free Cash Flow to the most comparable GAAP measures are provided in Tables 3 and 4, below.

The Company believes that presentation of adjusted EBITDA is useful to investors as, among other things, this information impacts certain financial covenants under the Company’s credit agreements. The Company believes that presentation of Free Cash Flow provides investors with meaningful additional information regarding the Company’s liquidity. While management believes these non-GAAP financial measures are useful in evaluating the Company, this information should be considered as supplemental in nature and not as a substitute for or superior to the related financial information prepared in accordance with GAAP. Further, these non-GAAP financial measures may differ from similar measures presented by other companies.

Reconciliation of net earnings to net earnings excluding special items:

Table 2

Three Months Ended September 30,

 

2019

 

2018

(in thousands, except per share data)

Amount

 

Per Share

 

Amount

 

Per Share

Net earnings

$

31,277

 

 

$

0.56

 

 

$

12,918

 

 

$

0.24

 

Special items, net of taxes:

 

 

 

 

 

 

 

Other charges (1)

1,939

 

 

0.03

 

 

4,762

 

 

0.09

 

Debt refinancing charges

1,470

 

 

0.03

 

 

 

 

 

Discrete income tax items (2)

(8,385

)

 

(0.15

)

 

(357

)

 

(0.01

)

Net earnings excluding special items

$

26,301

 

 

$

0.47

 

 

$

17,323

 

 

$

0.32

 

(1) Other charges for the three months ended September 30, 2019 primarily includes financial impacts, net of tax, related to store closures, incremental legal and advisory fees related to the Merchants Preferred acquisition, and cost savings initiatives. Other charges for the three months ended September 30, 2018 primarily includes financial impacts, net of tax, related to incremental legal and advisory fees for the Vintage merger, store closures, cost savings initiatives, including reductions in overhead and supply chain, and hurricane damage. Charges related to store closures are primarily comprised of losses on leased merchandise, lease impairments, employee severance, asset disposals, and miscellaneous costs incurred as a result of the closures.

(2) Includes the reversal of previously recorded reserves for uncertain tax positions due to the lapse of the statute of limitations for certain years in certain jurisdictions.

Reconciliation of net cash provided by operations to free cash flow:

Table 3

Nine Months Ended September 30,

(In thousands)

2019

 

2018

Net cash provided by operating activities

$

228,129

 

 

$

183,855

 

Purchase of property assets

(12,010

)

 

(22,491

)

Hurricane insurance recovery proceeds

995

 

 

 

Free cash flow

$

217,114

 

 

$

161,364

 

 

 

 

 

Proceeds from sale of stores

$

16,922

 

 

$

16,474

 

Acquisitions of businesses

(28,722

)

 

(2,049

)

Free cash flow including acquisitions and divestitures

$

205,314

 

$

175,789

Webcast Information

Rent-A-Center, Inc. will host a conference call to discuss the third quarter results, guidance and other operational matters on Thursday morning, November 7, 2019, at 8:30 a.m. ET. For a live webcast of the call, visit https://investor.rentacenter.com. Certain financial and other statistical information that will be discussed during the conference call will also be provided on the same website. Residents of the United States and Canada can listen to the call by dialing (800) 399-0012. International participants can access the call by dialing (404) 665-9632.

About Rent-A-Center, Inc.

A lease-to-own industry leader, Plano, Texas-based, Rent-A-Center, Inc., is focused on improving the quality of life for its customers by providing them the opportunity to obtain ownership of high-quality, durable products such as consumer electronics, appliances, computers, furniture and accessories, under flexible lease purchase agreements with no long-term obligation. The Company owns and operates approximately 2,100 stores in the United States, Mexico, and Puerto Rico, approximately 1,100 Acceptance Now kiosk locations in the United States and Puerto Rico, and Merchants Preferred, a virtual lease-to-own provider in the United States. Rent-A-Center Franchising International, Inc., a wholly owned subsidiary of the Company, is a national franchiser of approximately 340 lease-to-own stores operating under the trade names of “Rent-A-Center”, “ColorTyme”, and “RimTyme”. For additional information about the Company, please visit our website at www.rentacenter.com.

Forward Looking Statements

This press release and the guidance above contain forward-looking statements that involve risks and uncertainties. Such forward-looking statements generally can be identified by the use of forward-looking terminology such as “may,” “will,” “expect,” “intend,” “could,” “estimate,” “predict,” “continue,” “should,” “anticipate,” “believe,” or “confident,” or the negative thereof or variations thereon or similar terminology. The Company believes that the expectations reflected in such forward-looking statements are accurate. However, there can be no assurance that such expectations will occur. The Company’s actual future performance could differ materially from such statements. Factors that could cause or contribute to such differences include, but are not limited to: the general strength of the economy and other economic conditions affecting consumer preferences and spending; factors affecting the disposable income available to the Company’s current and potential customers; changes in the unemployment rate; difficulties encountered in improving the financial and operational performance of the Company’s business segments, including its ability to execute its franchise strategy; risks associated with pricing changes and strategies being deployed in the Company’s businesses; the Company’s ability to continue to realize benefits from its initiatives regarding cost-savings and other EBITDA enhancements, efficiencies and working capital improvements; the Company’s ability to continue to effectively operate and execute its strategic initiatives; failure to manage the Company’s store labor and other store expenses; disruptions caused by the operation of the Company’s store information management system; the Company’s ability to realize the strategic benefits from the acquisition of substantially all the assets and assumption of certain liabilities of C/C Financial Corp., a Delaware Corporation d/b/a Merchants Preferred (“Merchants Preferred” and the acquisition thereof, the “Merchants Preferred Acquisition”), including achieving expected growth rates, synergies and operating efficiencies from the acquisition; the Company’s ability to successfully integrate Merchants Preferred’s operations which may be more difficult, time-consuming or costly than expected; operating costs, loss of retail partners and business disruption arising from the Merchants Preferred Acquisition; the ability to retain certain key employees at Merchants Preferred; risks related to Merchants Preferred’s virtual lease-to-own business; the Company’s transition to more-readily scalable, “cloud-based” solutions; the Company’s ability to develop and successfully implement digital or E-commerce capabilities, including mobile applications; disruptions in the Company’s supply chain; limitations of, or disruptions in, the Company’s distribution network; rapid inflation or deflation in the prices of the Company’s products; the Company’s ability to execute and the effectiveness of a store consolidation, including the Company’s ability to retain the revenue from customer accounts merged into another store location as a result of a store consolidation; the Company’s available cash flow and its ability to generate sufficient cash flow to pay dividends; the Company’s ability to identify and successfully market products and services that appeal to its customer demographic; consumer preferences and perceptions of the Company’s brand; the Company’s ability to retain the revenue associated with acquired customer accounts and enhance the performance of acquired stores; the Company’s ability to enter into new and collect on its lease purchase agreements; the passage of legislation adversely affecting the Lease-to-Own industry; the Company’s compliance with applicable statutes or regulations governing its transactions; changes in interest rates; capital market conditions, including availability of funding sources for the Company; changes in the Company’s credit ratings; changes in tariff policies; adverse changes in the economic conditions of the industries, countries or markets that the Company serves; information technology and data security costs; the impact of any breaches in data security or other disturbances to the Company’s information technology and other networks and the Company’s ability to protect the integrity and security of individually identifiable data of its customers and employees; changes in estimates relating to self-insurance liabilities and income tax and litigation reserves; changes in the Company’s effective tax rate; fluctuations in foreign currency exchange rates; the Company’s ability to maintain an effective system of internal controls; litigation or administrative proceedings to which the Company is or may be a party to from time to time; and the other risks detailed from time to time in the Company’s SEC reports, including but not limited to, its Annual Report on Form 10-K for the year ended December 31, 2018, and its Quarterly Reports on Form 10-Q for the quarters ended March 31, 2019, and June 30, 2019. You are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date of this press release. Except as required by law, the Company is not obligated to publicly release any revisions to these forward-looking statements to reflect the events or circumstances after the date hereof or to reflect the occurrence of unanticipated events.

Rent-A-Center, Inc. and Subsidiaries

STATEMENT OF EARNINGS HIGHLIGHTS – UNAUDITED

Table 4

Three Months Ended September 30,

 

2019

 

 

2019

 

 

2018

 

 

2018

 

Before

 

 

After

 

 

Before

 

 

After

 

Special Items

 

 

Special Items

 

 

Special Items

 

 

Special Items

 

(Non-GAAP

 

 

(GAAP

 

 

(Non-GAAP

 

 

(GAAP

(In thousands, except per share data)

Earnings)

 

 

Earnings)

 

 

Earnings)

 

 

Earnings)

Total revenues

$

649,371

 

 

$

649,371

 

 

$

644,942

 

 

$

644,942

 

Operating profit

41,706

 

(1)

38,847

 

 

32,353

 

(3)

25,632

 

Net earnings

26,301

 

(1)(2)

31,277

 

 

17,323

 

(3)(4)

12,918

 

Diluted earnings per common share

$

0.47

 

(1)(2)

$

0.56

 

 

$

0.32

 

(3)(4)

$

0.24

 

Adjusted EBITDA

$

56,600

 

 

$

56,600

 

 

$

49,299

 

 

$

49,299

 

Reconciliation to Adjusted EBITDA:

 

 

 

 

 

 

 

Earnings before income taxes

$

35,058

 

(1)

$

30,031

 

 

$

22,202

 

(3)

$

15,481

 

Add back:

 

 

 

 

 

 

 

Other charges

 

 

2,859

 

 

 

 

6,721

 

Debt refinancing charges

 

 

2,168

 

 

 

 

 

Interest expense, net

6,648

 

 

6,648

 

 

10,151

 

 

10,151

 

Depreciation, amortization and impairment of intangibles

14,894

 

 

14,894

 

 

16,946

 

 

16,946

 

Adjusted EBITDA

$

56,600

 

 

$

56,600

 

 

$

49,299

 

 

$

49,299

 

(1) Excludes the effects of approximately $2.9 million of pre-tax charges including $1.9 million related to store closure costs, $0.7 million in transaction fees for the Merchants Preferred acquisition, and $0.3 million related to cost savings initiatives. These charges increased net earnings and net earnings per diluted share for the three months ended September 30, 2019, by approximately $1.9 million and $0.03, respectively.

(2) Excludes the effects of $(8.4) million of discrete income tax adjustments and $2.2 million of pre-tax debt refinancing charges that decreased net earnings per diluted share for the three months ended September 30, 2019, by approximately $6.9 million and $0.12, respectively.

(3) Excludes the effects of approximately $6.7 million of pre-tax charges including $3.8 million in incremental legal and advisory fees for the Vintage merger, $1.9 million related to store closure costs, $0.9 million related to cost savings initiatives, and $0.1 million in hurricane damage. These charges increased net earnings and net earnings per diluted share for the three months ended September 30, 2018, by approximately $4.8 million and $0.09, respectively.

(4) Excludes the effects of $0.4 million of discrete income tax adjustments.

SELECTED BALANCE SHEET HIGHLIGHTS – UNAUDITED

Table 5

September 30,

(In thousands)

2019

 

2018

Cash and cash equivalents

$

73,682

 

 

$

111,008

 

Receivables, net

70,762

 

 

65,197

 

Prepaid expenses and other assets

39,120

 

 

67,148

 

Leased merchandise, net

 

 

 

On lease

633,740

 

 

634,918

 

Held for lease

109,931

 

 

141,379

 

Operating lease right-of-use assets

268,101

 

 

 

Goodwill

71,749

 

 

56,845

 

Total assets

1,497,932

 

 

1,352,093

 

 

 

 

 

Operating lease liabilities

$

272,515

 

 

$

 

Senior debt, net

251,001

 

 

 

Senior notes, net

 

 

539,719

 

Total liabilities

1,066,192

 

 

1,068,347

 

Stockholders’ equity

431,740

 

 

283,746

 

Rent-A-Center, Inc. and Subsidiaries

CONSOLIDATED STATEMENTS OF EARNINGS – UNAUDITED

Table 6

Three Months Ended September 30,

 

(In thousands, except per share data)

2019

 

 

2018

 

Revenues

 

 

 

 

Store

 

 

 

 

Rentals and fees

$

550,795

 

 

$

552,580

 

 

Merchandise sales

65,552

 

 

67,141

 

 

Installment sales

16,952

 

 

15,681

 

 

Other

1,054

 

 

2,140

 

 

Total store revenues

634,353

 

 

637,542

 

 

Franchise

 

 

 

 

Merchandise sales

11,178

 

 

4,135

 

 

Royalty income and fees

3,840

 

 

3,265

 

 

Total revenues

649,371

 

 

644,942

 

 

Cost of revenues

 

 

 

 

Store

 

 

 

 

Cost of rentals and fees

161,971

 

 

153,716

 

 

Cost of merchandise sold

70,575

 

 

74,340

 

 

Cost of installment sales

5,527

 

 

5,244

 

 

Total cost of store revenues

238,073

 

 

233,300

 

 

Franchise cost of merchandise sold

11,302

 

 

3,902

 

 

Total cost of revenues

249,375

 

 

237,202

 

 

Gross profit

399,996

 

 

407,740

 

 

Operating expenses

 

 

 

 

Store expenses

 

 

 

 

Labor

158,666

 

 

168,297

 

 

Other store expenses

150,366

 

 

149,326

 

 

General and administrative expenses

34,364

 

 

40,818

 

 

Depreciation and amortization

14,894

 

 

16,946

 

 

Other charges

2,859

 

(1)

6,721

 

(3)

Total operating expenses

361,149

 

 

382,108

 

 

Operating profit

38,847

 

 

25,632

 

 

Debt refinancing charges

2,168

 

 

 

 

Interest expense

6,733

 

 

10,496

 

 

Interest income

(85

)

 

(345

)

 

Earnings before income taxes

30,031

 

 

15,481

 

 

Income tax (benefit) expense

(1,246

)

(2)

2,563

 

(4)

Net earnings

$

31,277

 

 

$

12,918

 

 

Basic weighted average shares

54,487

 

 

53,508

 

 

Basic earnings per common share

$

0.57

 

 

$

0.24

 

 

Diluted weighted average shares

56,058

 

 

54,912

 

 

Diluted earnings per common share

$

0.56

 

 

$

0.24

 

 

(1) Includes pre-tax charges of approximately $1.9 million related to store closure costs, $0.7 million in transaction fees for the Merchants Preferred acquisition, and $0.3 million related to cost savings initiatives.

(2) Includes $8.4 million of discrete income tax adjustments.

(3) Includes pre-tax charges of $3.8 million in incremental legal and advisory fees for the Vintage merger, $1.9 million related to store closure costs, $0.9 million related to cost savings initiatives, and $0.1 million in hurricane damage.

(4) Includes $0.4 million of discrete income tax adjustments.

Rent-A-Center, Inc. and Subsidiaries

SEGMENT INFORMATION HIGHLIGHTS – UNAUDITED

Table 7

Three Months Ended September 30,

 

(In thousands)

2019

 

2018

 

Revenues

 

 

 

 

Core U.S.

$

436,497

 

 

$

451,320

 

 

Acceptance Now

184,486

 

 

173,438

 

 

Mexico

13,370

 

 

12,784

 

 

Franchising

15,018

 

 

7,400

 

 

Total revenues

$

649,371

 

 

$

644,942

 

 

Table 8

Three Months Ended September 30,

 

(In thousands)

2019

 

2018

 

Gross profit

 

 

 

 

Core U.S.

$

306,881

 

 

$

313,771

 

 

Acceptance Now

80,113

 

 

81,586

 

 

Mexico

9,286

 

 

8,885

 

 

Franchising

3,716

 

 

3,498

 

 

Total gross profit

$

399,996

 

 

$

407,740

 

 

Table 9

Three Months Ended September 30,

 

(In thousands)

2019

 

 

2018

 

Operating profit

 

 

 

 

Core U.S.

$

52,175

 

(1)

$

43,221

 

(4)

Acceptance Now

21,830

 

(2)

26,278

 

(5)

Mexico

1,213

 

 

922

 

 

Franchising

1,135

 

 

522

 

 

Total segments

76,353

 

 

70,943

 

 

Corporate

(37,506

)

(3)

(45,311

)

(6)

Total operating profit

$

38,847

 

 

$

25,632

 

 

(1) Includes approximately $2.1 million of pre-tax charges primarily related to $1.8 million for store closure costs and $0.3 million related to cost savings initiatives.

(2) Includes approximately $0.1 million of pre-tax charges primarily related to store closure costs.

(3) Includes approximately $0.7 million of pre-tax charges primarily related to $0.7 million in transaction fees for the Merchants Preferred acquisition.

(4) Includes approximately $2.0 million of pre-tax charges primarily related to $1.9 million for store closure costs and $0.1 million in hurricane damage.

(5) Includes approximately $0.4 million of pre-tax charges primarily related to cost savings initiatives.

(6) Includes approximately $4.3 million of pre-tax charges primarily related to $3.8 million in incremental legal and advisory fees for the Vintage merger, and $0.5 million related to cost savings initiatives.

Table 10

Three Months Ended September 30,

 

(In thousands)

2019

 

2018

 

Depreciation and amortization

 

 

 

 

Core U.S.

$

5,037

 

 

$

6,216

 

 

Acceptance Now

379

 

 

421

 

 

Mexico

82

 

 

222

 

 

Franchising

3

 

 

45

 

 

Total segments

5,501

 

 

6,904

 

 

Corporate

9,393

 

 

10,042

 

 

Total depreciation and amortization

$

14,894

 

 

$

16,946

 

 

Table 11

Three Months Ended September 30,

 

(In thousands)

2019

 

2018

 

Capital expenditures

 

 

 

 

Core U.S.

$

4,129

 

 

$

3,586

 

 

Acceptance Now

24

 

 

76

 

 

Mexico

35

 

 

113

 

 

Total segments

4,188

 

 

3,775

 

 

Corporate

2,734

 

 

3,021

 

 

Total capital expenditures

$

6,922

 

 

$

6,796

 

 

Table 12

On Lease at September 30,

 

Held for Lease at September 30,

 

(In thousands)

2019

 

2018

 

2019

 

2018

 

Lease merchandise, net

 

 

 

 

 

 

 

 

Core U.S.

$

377,101

 

 

$

378,221

 

 

$

104,341

 

 

$

134,759

 

 

Acceptance Now

241,591

 

 

241,044

 

 

1,151

 

 

1,290

 

 

Mexico

15,048

 

 

15,653

 

 

4,439

 

 

5,330

 

 

Total lease merchandise, net

$

633,740

 

 

$

634,918

 

 

$

109,931

 

 

$

141,379

 

 

Table 13

September 30,

 

(In thousands)

2019

 

2018

 

Assets

 

 

 

 

Core U.S.

$

887,795

 

 

$

709,074

 

 

Acceptance Now (1)

330,727

 

 

306,553

 

 

Mexico

30,616

 

 

30,747

 

 

Franchising

8,412

 

 

3,899

 

 

Total segments

1,257,550

 

 

1,050,273

 

 

Corporate

240,382

 

 

301,820

 

 

Total assets

$

1,497,932

 

$

1,352,093

 

(1) Includes $14.9 million of goodwill recorded in the third quarter of 2019 related to the acquisition of Merchants Preferred.

Rent-A-Center, Inc. and Subsidiaries

LOCATION ACTIVITY – UNAUDITED

Table 14

Three Months Ended September 30, 2019

 

Core U.S.

 

Acceptance Now

Staffed

 

Acceptance Now

Virtual (1)

 

Mexico

 

Franchising

 

Total

Locations at beginning of period

2,035

 

 

1,031

 

 

112

 

 

122

 

 

334

 

 

3,634

 

New location openings

 

 

14

 

 

2

 

 

 

 

1

 

 

17

 

Conversions and refranchising

(7

)

 

(19

)

 

19

 

 

 

 

7

 

 

 

Closed locations

 

 

 

 

 

 

 

 

 

 

 

Merged with existing locations

(17

)

 

(17

)

 

(5

)

 

 

 

 

 

(39

)

Sold or closed with no surviving location

 

 

 

 

 

 

 

 

(3

)

 

(3

)

Locations at end of period

2,011

 

 

1,009

 

 

128

 

 

122

 

 

339

 

 

3,609

 

(1) Does not include Merchants Preferred locations acquired in August 2019 or newly opened in the third quarter of 2019.

Table 15

Three Months Ended September 30, 2018

 

Core U.S.

 

Acceptance Now

Staffed

 

Acceptance Now

Virtual

 

Mexico

 

Franchising

 

Total

Locations at beginning of period

2,233

 

 

1,124

 

 

119

 

 

123

 

 

248

 

 

3,847

 

New location openings

 

 

19

 

 

1

 

 

 

 

 

 

20

 

Conversions and refranchising

(1

)

 

 

 

 

 

 

 

1

 

 

 

Closed locations

 

 

 

 

 

 

 

 

 

 

 

Merged with existing locations

(23

)

 

(36

)

 

(1

)

 

 

 

 

 

(60

)

Sold or closed with no surviving location

(4

)

 

 

 

 

 

(1

)

 

(4

)

 

(9

)

Locations at end of period

2,205

 

 

1,107

 

 

119

 

 

122

 

 

245

 

 

3,798

 

 

Investors:

Rent-A-Center, Inc.

Maureen Short

EVP, Chief Financial Officer

972-801-1899

maureen.short@rentacenter.com

KEYWORDS: Texas United States North America

INDUSTRY KEYWORDS: Home Goods Retail Discount/Variety

MEDIA:

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