Author: Newsdesk

(all amounts in US dollars, unless otherwise noted)

VANCOUVER, British Columbia, May 04, 2021 (GLOBE NEWSWIRE) — Ero Copper Corp. (TSX: ERO) (“Ero” or the “Company”) today is pleased to announce its financial results for the three months ended March 31, 2021. Management will host a conference call tomorrow, Wednesday, May 5, 2021, at 11:30 a.m. Eastern time to discuss the results. Dial-in details for the call can be found near the end of this press release.

HIGHLIGHTS

• Record quarterly copper production of 12,638 tonnes and record quarterly C1 cash costs^(*) of $0.49 per pound of copper produced driven by strong operational performance including higher grade versus budget at both Pilar and Vermelhos underground mine;
• Strong quarterly gold production of 9,451 ounces from the Santo Antonio Vein at the NX Gold mine at C1 cash costs^(*) of $487 per ounce of gold produced and All-in Sustaining Costs^(*) of $643 per ounce of gold produced;
• Record quarterly adjusted EBITDA^(*) and cash flow from operations of $86.7 million and $62.1 million, respectively;
• Adjusted net income attributable to owners of the Company^(*) of $56.3 million ($0.61 per share on a diluted basis);
• Total cash and cash equivalents of $84.6 million, a $22.1 million quarter-on-quarter improvement, and;
• Reiterating full-year production, operating cost and capital expenditure guidance for 2021.

Commenting on the results, David Strang, CEO, stated, “We have started the year off with considerable momentum, achieving record quarterly copper production and financial performance, a notable accomplishment considering the challenging operating environment our Brazilian colleagues continue to face in mitigating the impacts of COVID-19. As a Company, we are proud of the efforts our team is making to provide critical support to our local communities, and this will remain a top priority this year. At the same time, we are successfully advancing all of our growth initiatives, which, upon completion, will serve to contribute to the long-term and sustainable future of our mines and the regions in which we operate.

“As evidenced by our most recent exploration release, we are making strides in further showcasing the potential and optionality of the Curaçá Valley. So far in 2021, our teams have identified one new discovery beneath the Vermelhos Mine and two new mineralized systems in the Curaçá Valley that have the potential to both extend mine life and support higher mill throughput rates in the future. The discovery beneath the Vermelhos Mine, known as the ‘Novo Zone’, is a high-grade lens that has the potential to improve life-of-mine grades in the near-term and increase overall mine life of the Vermelhos Mine.  

“We have also made significant progress around the ongoing optimization initiatives of our Boa Esperanҫa Project and expect to provide an update on what this opportunity looks like during the third quarter. As a reminder, the 2017 feasibility study outlined a low-capital project producing an average of approximately 21,000 tonnes of payable copper per year over a 7.5 year mine life, resulting in a 32.7% internal rate of return. We expect to improve upon this significantly in our 2021 update.

“Other growth projects, including exploration at our NX Gold Mine, with ten drill rigs in operation, and our Platinum Group Metals study, continue to progress despite extended backlogs of assay results at third-party assay labs associated with the COVID-19 pandemic. With strong tailwinds building around a de-carbonized future, which is heavily dependent on copper, we are well positioned as a Company to drive incremental shareholder value through low capital-intensity growth projects across our portfolio.”

*Earnings before interest, taxes, depreciation and amortization (“EBITDA”), Adjusted EBITDA, Adjusted net income attributable to owners of the Company, Adjusted net income per share attributable to owners of the Company, C1 Cash Costs per pound of copper produced, C1 Cash Costs per ounce of gold produced and All-in Sustaining Costs (“AISC”) per ounce of gold produced are non-IFRS measures – see the Notes section of this press release for additional information. C1 Cash Costs per pound of copper produced are net of by-product credits from metal produced at the MCSA Mining Complex. AISC per ounce of gold produced are net of by-product credits from metal produced at the NX Gold Mine.

OPERATIONS & EXPLORATION HIGHLIGHTS

• Mining & Milling Operations – record operating performance driven by high copper grades
  • The MCSA Mining Complex processed 597,594 tonnes of ore grading 2.30% copper, producing record quarterly 12,638 tonnes of copper in concentrate after metallurgical recoveries of 92.0%.

• The NX Gold Mine processed 37,613 tonnes grading 8.26 grams per tonne, producing 9,451 ounces of gold and 5,794 ounces of silver as a by-product after metallurgical recoveries of 94.7%.

• Exploration Activities at the MCSA Mining Complex – aggressive exploration program generating promising results
  • Regional Exploration Program
    • Two new mineralized systems identified, each measuring between 800 meters and 2.2 kilometers in strike length.
    • Six geochemistry teams, four ground gravity teams and three ground induced polarization teams dedicated to refining drill locations within these new systems.
    • Additional exploration activity throughout the Curaçá Valley on other untested high-priority target areas remains ongoing.
  • In-Mine and Near Mine Exploration Programs
    • Drilling below the Deepening Extension Zone of the Pilar Mine has identified high-grade extensions, including the deepest intercept drilled to date, located approximately 150 meters below the limit of the 2020 inferred mineral resource shell.
    • A newly discovered high-grade lens, known as the “Novo Zone”, has been identified approximately 200 meters beneath the main Vermelhos orebodies.
    • A near-development, high-grade structure located 15 meters south of existing development within the Toboggan orebody of the Vermelhos Mine was also identified by recent exploration activity.
  • Past Producing Mine Re-Evaluation
    • Focused on evaluating potential for development of high-grade targets within fully permitted, past producing mines in the Curaçá Valley.
    • Drilling underway at Lagoa da Mina, the northern portion of the Angicos Mine (within the Surubim District) and at Suçuarana North (within the Pilar District).
    • Additional exploration activities targeting high-grade mineralization beneath the Surubim Mine is expected to commence in Q2 2021.
• Corporate Highlights – strong balance sheet supportive of organic growth initiatives
  • Conclusion of ongoing studies on the potential optimization of the Boa Esperança Project is expected in early Q3. The 2017 feasibility study outlined a low-capital intensity project producing an average of approximately 21,000 tonnes of payable copper per year over a 7.5-year mine life, resulting in a 32.7% internal rate of return. The Company expects to improve upon this in the 2021 update.
  • As previously disclosed, the Company amended its US$75 million senior secured amortizing non-revolving credit facility and US$75 million senior secured revolving credit facility (collectively the “Prior Facilities”) with a US$150 million senior secured revolving credit facility payable in a bullet at maturity, on March 31, 2025 (the “Revolving Credit Facility”). The amendment reduces the Company’s cost of borrowing depending on the Company’s consolidated leverage ratio, and eliminates principal payments previously due in 2022, 2023 and 2024 under the Prior Facilities. Additional detail is provided later in this press release.
  • The Company continues to have no material disruption to operations, supply chains or sales channels as a result of the COVID-19 pandemic. The Company has taken extraordinary measures to mitigate the possible impact of COVID-19 on its workforce and operations and to provide critical support to local communities in Brazil ranging from the donation of medical supplies and COVID-19 test kits to food assistance for families impacted by the pandemic.

OPERATING AND FINANCIAL HIGHLIGHTS

Footnotes


<sup>(


1


)
 EBITDA, Adjusted EBITDA, Adjusted net income (loss) attributable to owners of the Company, Adjusted net income (loss) per share attributable to owners of the Company, Net Debt, Working Capital (Deficit), C1 cash cost of copper produced (per lb), C1 cash cost of gold produced (per ounce) and AISC of gold produced (per ounce) are non-IFRS measures – see the Notes section of this press release for a discussion on non-IFRS Measures.</sup>

ADJUSTED EBITDA & NET INCOME (LOSS) RECONCILIATION

CREDIT FACILITIES AMENDMENT DETAILS

As previously disclosed, the Company amended its Credit Agreement with The Bank of Nova Scotia (“Scotiabank”) and Bank of Montreal (“BMO”) on March 16, 2021 to amend the Prior Facilities with the Revolving Credit Facility, payable in a bullet at maturity on March 31, 2025. Benefits of the amendment include a reduction of up to 25 basis points in the Company’s cost of borrowing, depending on the Company’s consolidated leverage ratio.

The Revolving Credit Facility will bear interest on a sliding scale at a rate of LIBOR plus 2.25% to 4.25% based on the Company’s consolidated leverage ratio at the time. Commitment fees for any undrawn portion of the Revolving Credit Facility will also be on a sliding scale between 0.56% to 1.06%.

The Revolving Credit Facility includes standard and customary terms and conditions with respect to fees, representations, warranties, and financial covenants that remain unchanged from prior amendments. Scotiabank is Joint Lead Arranger, Sole Bookrunner and Administrative Agent and BMO is Joint Lead Arranger and Syndication Agent.

A copy of the amendment to the Credit Agreement has been filed on SEDAR (www.sedar.com).

2021 PRODUCTION OUTLOOK

The Company is reaffirming its 2021 production guidance. Copper production for 2021 is expected to be equally weighted between the first and second halves of the year with lower Q2 and Q3 copper production due to preventative mill maintenance scheduled during those periods as the Company prepares for expanded operations, including the restart of the Surubim open pit mine in H2 2021. Gold production from NX Gold for 2021 is expected to come from ore mined from the Santo Antonio Vein.

^{(
1
) Guidance is based on certain estimates and assumptions, including but not limited to, mineral reserve estimates, grade and continuity of interpreted geological formations and metallurgical performance. Please refer to the Company’s SEDAR filings, including the Annual Information Form for the year ended December 31, 2020 and dated March 16, 2021 (the “AIF”), for complete risk factors.}

2021 CASH COST GUIDANCE

The Company is reaffirming its 2021 cash cost guidance, which assumes a USD:BRL foreign exchange rate of 5.00, gold price of $1,750 per ounce and silver price of $20.00 per ounce.

^{(
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C1 Cash Costs and AISC are a non-IFRS measures – see the Notes section of this press release for additional information.}

2021 CAPITAL EXPENDITURE GUIDANCE

The Company is reiterating its 2021 capital expenditure guidance, which assumes a USD:BRL foreign exchange rate of 5.00 and has been presented below in USD millions.

^{(
1
)
Vermelhos District includes open pit mining infrastructure expenditures of approximately US$6.0 million in 2021.}

CONFERENCE CALL DETAILS

The Company will hold a conference call on Wednesday, May 5, 2021 at 11:30 am Eastern time (8:30 am Pacific time) to discuss these results.

NOTES

Non-IFRS measures

Financial results of the Company are prepared in accordance with IFRS. The Company utilizes certain non-IFRS measures, including C1 cash cost of copper produced (per lb), C1 cash costs of gold produced (per ounce), AISC of gold produced (per ounce), EBITDA, Adjusted EBITDA, Adjusted net income attributable to owners of the Company, Adjusted net income per share, net debt and working capital, which are not measures recognized under IFRS. The Company believes that these measures, together with measures determined in accordance with IFRS, provide investors with an improved ability to evaluate the underlying performance of the Company. Non-IFRS measures do not have any standardized meaning prescribed under IFRS, and therefore they may not be comparable to similar measures employed by other companies. The data is intended to provide additional information and should not be considered in isolation or as a substitute for measures of performance prepared in accordance with IFRS.

C1 Cash Cost of copper produced (per lb.)

C1 cash cost of copper produced (per lb) is the sum of production costs, net of capital expenditure development costs and by-product credits, divided by the copper pounds produced. C1 cash costs reported by the Company include treatment, refining charges, offsite costs, and certain tax credits relating to sales invoiced to the Company’s Brazilian customer on sales. By-product credits are calculated based on actual precious metal sales (net of treatment costs) during the period divided by the total pounds of copper produced during the period. C1 cash cost of copper produced per pound is a non-IFRS measure used by the Company to manage and evaluate operating performance of the Company’s operating mining unit, and is widely reported in the mining industry as benchmarks for performance, but does not have a standardized meaning and is disclosed in addition to IFRS measures.

C1 Cash Cost of gold produced (per ounce)

C1 cash cost of gold produced (per ounce) is the sum of production costs, net of capital expenditure development costs and silver by-product credits, divided by the gold ounces produced. By-product credits are calculated based on actual precious metal sales during the period divided by the total ounces of gold produced during the period. C1 cash cost of gold produced per ounce is a non-IFRS measure used by the Company to manage and evaluate operating performance of the Company’s operating mining unit and is widely reported in the mining industry as benchmarks for performance but does not have a standardized meaning and is disclosed in addition to IFRS measures.

All-in Sustaining Cost of gold produced (per ounce)

All-in sustaining cost of gold produced (per ounce) is the sum of production costs, site general and administrative costs, accretion of mine closure and rehabilitation provision, sustaining capital expenditures, sustaining leases, and royalties and production taxes, net of silver by-product credits, divided by the gold ounces produced. By-product credits are calculated based on actual precious metal sales during the period divided by the total ounces of gold produced during the period. All-in sustaining cost of gold produced per ounce is a non-IFRS measure used by the Company to manage and evaluate operating performance of the Company’s operating mining unit and is widely reported in the mining industry as benchmarks for performance but does not have a standardized meaning and is disclosed in addition to IFRS measures.  

Earnings before interest, taxes, depreciation and amortization (EBITDA) and Adjusted EBITDA

EBITDA represents earnings before interest expense, income taxes, depreciation, and amortization. Adjusted EBITDA includes further adjustments for non-recurring items and items not indicative to the future operating performance of the Company. The Company believes EBITDA and adjusted EBITDA are appropriate supplemental measures of debt service capacity and performance of its operations.

Adjusted EBITDA is calculated by removing the following income statement items:

• Foreign exchange loss (gain)
• Share based compensation
• Incremental costs in response to COVID-19 pandemic

Adjusted net income attributable to owners of the Company and Adjusted net income per share attributable to owners of the Company

The Company uses the financial measure “Adjusted net income attributable to owners of the Company” and “Adjusted net income per share attributable to owners of the Company” to supplement information in its consolidated financial statements. The Company believes that, in addition to conventional measures prepared in accordance with IFRS, the Company and certain investors and analysts use this information to evaluate the Company’s performance. The Company excludes non-cash and unusual items from net earnings to provide a measure which allows the Company and investors to evaluate the operating results of the underlying core operations.

During the period, the following non-cash or unusual adjustments to calculated adjusted net income (loss):

• Share based compensation
• Unrealized foreign exchange loss (gain) on USD denominated debt in MCSA
• Unrealized loss (gain) on foreign exchange derivative contracts, net of tax
• Incremental costs in response to COVID-19 pandemic
• Unrealized loss (gain) on interest rate derivative contracts

Net Debt

Net debt is determined based on cash and cash equivalents, restricted cash and loans and borrowings as reported in the Company’s consolidated financial statements. The Company uses net debt as a measure of the Company’s ability to pay down its debt.

Working capital

Working capital is determined based on current assets and current liabilities as reported in the Company’s consolidated financial statements. The Company uses working capital as a measure of the Company’s short-term financial health and operating efficiency.

ABOUT ERO COPPER CORP

Ero Copper Corp, headquartered in Vancouver, B.C., is focused on copper production growth from the MCSA Mining Complex located in Bahia State, Brazil, with over 40 years of operating history in the region. The Company’s primary asset is a 99.6% interest in the Brazilian copper mining company, MCSA, 100% owner of the MCSA Mining Complex, which is comprised of operations located in the Curaçá Valley, Bahia State, Brazil, wherein the Company currently mines copper ore from the Pilar and Vermelhos underground mines, and the Boa Esperança development project, an IOCG-type copper project located in Pará, Brazil. The Company also owns 97.6% of the NX Gold Mine, an operating gold and silver mine located in Mato Grosso, Brazil. Additional information on the Company and its operations, including technical reports on the MCSA Mining Complex, Boa Esperança and NX Gold properties, can be found on the Company’s website (www.erocopper.com) and on SEDAR (www.sedar.com).

CAUTION REGARDING FORWARD LOOKING INFORMATION AND STATEMENTS This press release contains “forward-looking information” within the meaning of applicable Canadian securities laws. Forward-looking information includes statements that use forward-looking terminology such as “may”, “could”, “would”, “will”, “should”, “intend”, “target”, “plan”, “expect”, “budget”, “estimate”, “forecast”, “schedule”, “anticipate”, “believe”, “continue”, “potential”, “view” or the negative or grammatical variation thereof or other variations thereof or comparable terminology. Such forward-looking information includes, without limitation, statements with respect to the Company’s expectations, strategies and plans for the MCSA Mining Complex, the NX Gold Property and the Boa Esperança Property, including the Company’s planned exploration, development and production activities; the significance and timing of any particular exploration program or result and the Company’s expectations for current and future exploration plans including, but not limited to, planned areas of additional exploration, the significance of any drill results or new discoveries and targets, including without limitation, extensions of defined mineralized zones, possibilities for mine life extensions or continuity of high-grade mineralization, further extensions and expansion of mineralization near the Company’s existing operations and throughout the Curaçá Valley or the NX Gold Mine, statements with respect to the importance of any new discoveries including newly identified mineral systems, the significance of re-evaluation of the Company’s past producing open pit mines, the timing and advancement of ongoing projects including the Deepening Extension Project and the re-start of the Surubim open pit mine; estimated completion dates for certain milestones; the significance of any potential optimization initiatives in connection with the Boa Esperança Property; the impact of the COVID-19 pandemic on the Company’s planned drill programs; the timing and amount of future production at the MCSA Mining Complex and the NX Gold Property; the Company’s ability to service its ongoing obligations; the Company’s future production outlook, cash costs, capital resources, expenditures, and current global macroeconomic uncertainty stemming from the COVID-19 pandemic and its impact on the Company’s business, financial condition, results of operations, cash flows and prospects.

Forward-looking information is not a guarantee of future performance and is based upon a number of estimates and assumptions of management in light of management’s experience and perception of trends, current conditions and expected developments, as well as other factors that management believes to be relevant and reasonable in the circumstances, as of the date of this Press Release including, without limitation, assumptions about: favourable equity and debt capital markets; the ability to raise any necessary additional capital on reasonable terms to advance the production, development and exploration of the Company’s properties and assets; future prices of copper and other metal prices; the timing and results of exploration and drilling programs; the accuracy of any mineral reserve and mineral resource estimates; the geology of the MCSA Mining Complex, NX Gold Mine and the Boa Esperança Property being as described in the technical reports for these properties; production costs; the accuracy of budgeted exploration and development costs and expenditures; the price of other commodities such as fuel; future currency exchange rates and interest rates; operating conditions being favourable such that the Company is able to operate in a safe, efficient and effective manner; work force continues to remain healthy in the face of prevailing epidemics, pandemics or other health risks, political and regulatory stability; the receipt of governmental, regulatory and third party approvals, licenses and permits on favourable terms; obtaining required renewals for existing approvals, licenses and permits on favourable terms; requirements under applicable laws; sustained labour stability; stability in financial and capital goods markets; availability of equipment and critical supplies, spare parts and consumables; positive relations with local groups and the Company’s ability to meet its obligations under its agreements with such groups; and satisfying the terms and conditions of the Company’s current loan arrangements. While the Company considers these assumptions to be reasonable, the assumptions are inherently subject to significant business, social, economic, political, regulatory, competitive and other risks and uncertainties, contingencies and other factors that could cause actual actions, events, conditions, results, performance or achievements to be materially different from those projected in the forward-looking information. Many assumptions are based on factors and events that are not within the control of the Company and there is no assurance they will prove to be correct.

Furthermore, such forward-looking information involves a variety of known and unknown risks, uncertainties and other factors which may cause the actual plans, intentions, activities, results, performance or achievements of the Company to be materially different from any future plans, intentions, activities, results, performance or achievements expressed or implied by such forward-looking information. Such risks include, without limitation the risk factors listed under the heading “Risk Factors” in the AIF.

Although the Company has attempted to identify important factors that could cause actual actions, events, conditions, results, performance or achievements to differ materially from those described in forward-looking information, there may be other factors that cause actions, events, conditions, results, performance or achievements to differ from those anticipated, estimated or intended.

The Company cautions that the foregoing lists of important assumptions and factors are not exhaustive. Other events or circumstances could cause actual results to differ materially from those estimated or projected and expressed in, or implied by, the forward-looking information contained herein. There can be no assurance that forward-looking information will prove to be accurate, as actual results and future events could differ materially from those anticipated in such information. Accordingly, readers should not place undue reliance on forward-looking information.

Forward-looking information contained herein is made as of the date of this press release and the Company disclaims any obligation to update or revise any forward-looking information, whether as a result of new information, future events or results or otherwise, except as and to the extent required by applicable securities laws.

Cautionary Notes Regarding Mineral Resource and Reserve Estimates In accordance with applicable Canadian securities regulatory requirements, all mineral reserve and mineral resource estimates of the Company disclosed or incorporated by reference in this press release have been prepared in accordance with NI 43-101 and are classified in accordance with the CIM Standards.

Mineral resources which are not mineral reserves do not have demonstrated economic viability. Pursuant to the CIM Standards, mineral resources have a higher degree of uncertainty than mineral reserves as to their existence as well as their economic and legal feasibility. Inferred mineral resources, when compared with Measured or Indicated mineral resources, have the least certainty as to their existence, and it cannot be assumed that all or any part of an Inferred mineral resource will be upgraded to an Indicated or Measured mineral resource as a result of continued exploration. Pursuant to NI 43-101, Inferred mineral resources may not form the basis of any economic analysis. Accordingly, readers are cautioned not to assume that all or any part of a mineral resource exists, will ever be converted into a mineral reserve, or is or will ever be economically or legally mineable or recovered.

Chicago, Illinois, May 04, 2021 (GLOBE NEWSWIRE) — Attorney S.L. Owens has joined the Community Enterprise & Solidarity Economy Clinic at UIC John Marshall Law School as its newest staff attorney. Owens will lead the Social Equity Cannabis Initiative, designed by the CESEC in partnership with the Illinois Department of Commerce and Economic Opportunity. The goal of the Initiative is to reduce the legal barriers of entry into the emerging Illinois cannabis market for communities harmed by the war on drugs.

The CESEC is a legal clinic located within UIC Law, which represents worker-owned cooperative businesses, non-profits and small businesses that operate for the benefit of an underserved community. Clients promote equity, practice democratic decision-making and build sustainability in their neighborhoods. 

Owens is a first-generation attorney, and Chicago native, who brings a wealth of knowledge about cannabis law to the CESEC from her previous practice experience in Colorado and her recent community-based work on Chicago’s Westside. She is a skilled business and regulatory attorney with experience representing small startups and nonprofits in addition to complex franchise, distribution and supply chain systems.

Owens is committed to economic justice and inspiring law students. While in law school at the University of Wisconsin, Owens used her executive service positions to increase diversity on the Wisconsin Law Review and the Wisconsin Moot Court Board by implementing inaugural diversity boards and policies.

After law school, Owens represented multinational corporations inside big law firms. Before joining the CESEC, she operated a family-owned law firm engaged in economic justice work across Illinois, Wisconsin and Colorado. In addition to her J.D., Owens holds a B.A. from the University of Wisconsin-Madison, where she received a U.S. Fulbright Fellowship.

Under the Social Equity Cannabis Initiative, the CESEC provides the following services to help Social Equity Applicants understand the Illinois Cannabis Regulation and Tax Act and other cannabis-related laws: legal representation; brief advising; and legal technical assistance workshops. The Initiative hosted multiple presentations this Spring to help Social Equity Applicants navigate the delayed Illinois licensing process, including: Understanding Illinois Cannabis Business Licensing Delays; Top Tips: Responding to Deficiency Notices; and Legislative Advocacy: Changing Illinois Cannabis Laws.

“We are thrilled to welcome S.L. Owens to the Clinic,” said Professor Renee Hatcher, Director of the CESEC. “S.L.’s knowledge, cannabis law experience and life-long connection to social equity communities here in Chicago are an invaluable asset to the growth and success of the Initiative and UIC Law students.”

To learn more about the Social Equity Cannabis Initiative visit – https://jmls.uic.edu/experiential-education/clinics/community-enterprise/special-projects/illinois-social-equity-cannabis-initiative/

About UIC John Marshall Law School

UIC Law is the 16th college at the University of Illinois at Chicago—Chicago’s largest university and its only public Carnegie Research 1 institution. Located in the heart of the City’s legal, financial and commercial districts, UIC Law is recognized as one of the most diverse law schools in the nation and is a leader in providing access to underrepresented students.

Dallas and San Antonio, May 04, 2021 (GLOBE NEWSWIRE) — Global law firm Norton Rose Fulbright today announced that Texas-based litigators and former federal prosecutors Jay Dewald and Julie Searle have joined its Regulations, Investigations, Securities and Compliance practice as partners.

Dewald joins the firm’s Dallas and San Antonio offices from Jackson Walker, where he led its Investigations and White Collar Defense practice. Searle comes to the Austin office after holding the in-house position of Senior Director of Ethics & Compliance with Walmart. Both Dewald and Searle are former Assistant US Attorneys, with Dewald serving in this role in the Northern District of Texas from 2007-2015 and Searle doing so in the Southern District of Texas from 2009-2019.

A seasoned trial lawyer and former management level federal prosecutor, Dewald has more than 20 years of experience in white collar criminal defense, crisis management, regulatory enforcement and internal investigations. With more than 100 jury trials in both federal and state court, Dewald focuses his practice on fraud, organized crime, money laundering and corruption investigations. Healthcare fraud is a particular focus for Dewald, as he oversaw all healthcare fraud prosecutions in his role as an Assistant US Attorney. Possessing significant experience related to the False Claims Act (including qui tam whistleblower cases), Dewald will serve as the firm’s Head of Healthcare Investigations, United States.

Searle’s nearly two decades of experience spans from in-house to government to private practice. At Walmart, Searle led the retail giant’s US Ethics team, which oversaw the disposition of corporate ethics and compliance issues. As an Assistant US Attorney, Searle was a member of both the Civil and Criminal Divisions, where she first-chaired multiple federal trials, mediations and arbitrations. Additionally, she conducted hundreds of national and cross-border grand jury investigations on matters ranging from complex fraud, bribery, money laundering, worksite enforcement, human trafficking and public corruption.

Jeff Cody, Norton Rose Fulbright’s US Managing Partner, said:

“Jay and Julie are both tremendous lawyers whose valuable experience as former federal prosecutors will benefit our clients with regulatory and investigations needs. We look forward to incorporating them into our Dallas, San Antonio and Austin offices, where we have been serving clients and a part of these communities for the past 40 years.”

Richard Krumholz, Norton Rose Fulbright’s Global Head of Litigation and Disputes, said:

“Both Jay and Julie will add incredible value to our regulatory, investigations and white collar practices, which we have identified as strategic growth areas both in the US and globally. Our clients value our expanding team of former government lawyers, as they provide unique perspectives and insight into government investigations and enforcement.”

Dewald, recognized as a leading lawyer in Litigation: White-Collar Crime & Government Investigations-Texas by Chambers USA, said:

“The pandemic and the change in administration present new challenges to, and increased government scrutiny on, the healthcare industry. I look forward to using my trial skills and experience with fraud investigations to help clients during these interesting times. I am thrilled to join Norton Rose Fulbright’s global regulatory and investigations group, as I know their dedication to client service matches my own.”

Searle, who started her career as a Law Clerk to the Honorable Melinda Harmon, said:

“Norton Rose Fulbright is a global leader in litigation and investigations with deep roots in Texas, making it an extremely attractive destination. I look forward to advising its impressive roster clients on complex investigations and compliance issues.”

The arrival of Dewald and Searle comes just one month after the addition of partners Celia Cohen and Brian Sun, who joined the firm’s global investigations team in New York and Los Angeles, respectively.

Dewald and Searle are both licensed to practice in Texas. Dewald received his law degree from the University of Texas School of Law and his BA from Southern Methodist University. Searle earned her law degree from Duke University School of Law and her BA from Claremont McKenna College.

For further information, please contact:

Dan McKenna, US Director and Global Head of PR and Communications
Tel: +1 713 651 3576
[email protected]

Notes for editors:

Norton Rose Fulbright

Norton Rose Fulbright is a global law firm providing the world’s preeminent corporations and financial institutions with a full business law service. The firm has more than 4,000 lawyers and other legal staff based in Europe, the United States, Canada, Latin America, Asia, Australia, Africa and the Middle East.

Recognized for its industry focus, Norton Rose Fulbright is strong across all the key industry sectors: financial institutions; energy; infrastructure, mining and commodities; transport; technology and innovation; and life sciences and healthcare. Through its global risk advisory group, the firm leverages its industry experience with its knowledge of legal, regulatory, compliance and governance issues to provide clients with practical solutions to the legal and regulatory risks facing their businesses.

Norton Rose Fulbright operates in accordance with its global business principles of quality, unity and integrity, aiming to provide the highest possible standard of legal service in each of its offices and to maintain that level of quality at every point of contact.

 Norton Rose Fulbright Verein, a Swiss verein, helps coordinate the activities of Norton Rose Fulbright members but does not itself provide legal services to clients. Norton Rose Fulbright has offices in more than 50 cities worldwide, including London, Houston, New York, Toronto, Mexico City, Hong Kong, Sydney and Johannesburg. For more information, see nortonrosefulbright.com/legal-notices.

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MINNEAPOLIS, May 04, 2021 (GLOBE NEWSWIRE) — Inspire Medical Systems, Inc. (NYSE: INSP) (“Inspire”), a medical technology company focused on the development and commercialization of innovative and minimally invasive solutions for patients with obstructive sleep apnea, today reported financial results for the quarter ended March 31, 2021.

Recent Business Highlights

• Generated revenue of $40.4 million in the first quarter of 2021, an 89% increase over the same quarter last year
• Reported gross margin of 85.2% in the first quarter of 2021, an increase over the 84.6% reported in the same quarter last year
• Activated 47 new centers in the U.S. in the first quarter of 2021, bringing the total to 472 U.S. medical centers implanting Inspire therapy
• Created 10 new U.S. sales territories in the first quarter of 2021, bringing the total to 117 U.S. sales territories
• Received U.S. Food and Drug Administration (“FDA”) approval for the Inspire two-incision implant procedure, which significantly reduces the surgical procedure time and announces CE Mark approval for Europe of the two-incision implant procedure today
• Received FDA approval of new physician programmer platform and commenced commercial launch
• Entered into exclusive distribution agreement with Japan Lifeline Co., Ltd (“JLL”) to commercialize Inspire therapy in Japan, following successful completion of reimbursement review of Inspire therapy by the Minister of Health Labour and Welfare (“MHLW”)

“We continued to execute on our key commercial initiatives during the first quarter,” said Tim Herbert, President and Chief Executive Officer of Inspire Medical Systems. “We did experience the expected seasonality early in the first quarter of 2021 due to high deductible insurance plans resetting as well as the resurgence of COVID-19 in certain geographies, but the team performed extremely well to overcome these challenges. Our growth in the quarter was primarily driven by the increased number of procedures occurring at existing centers, as well as the continued addition of new implanting centers and territory managers. Based on our strong performance in the first quarter and the anticipated continuation of positive implant growth trends in 2021, we are raising our full year 2021 revenue guidance to between $192 million to $196 million, an increase from our prior guidance of $183 million to $188 million.”

“The 47 new U.S. implanting centers we added in the first quarter was well above our guidance of 34 to 38 new centers per quarter in 2021. Further, we created 10 new sales territories in the first quarter in the U.S., also well above our guidance of seven to eight new territories,” continued Mr. Herbert. “We expect that these new centers and territories will have a beneficial impact on our long-term growth. In addition, the FDA approval of our two-incision implant procedure has already had a positive impact on our U.S. business. Further, our recent distribution agreement with JLL in Japan, following successful completion of reimbursement review of Inspire therapy by the MHLW, is expected to be an important future growth driver for Inspire therapy.”

First Quarter 2021 Financial Results

Revenue was $40.4 million for the three months ended March 31, 2021, an 89% increase from $21.3 million in the corresponding period in the prior year. U.S. revenue for the quarter was $37.8 million, an increase of 96% as compared to the prior year quarter. First quarter European revenue was $2.6 million, an increase of 25% as compared to the first quarter of 2020.

Gross margin increased to 85.2% for the three months ended March 31, 2021, compared to 84.6% for the corresponding prior year period, with the improvement primarily due to manufacturing efficiencies and higher sales volume.

Operating expense increased to $50.1 million for the first quarter of 2021, as compared to $34.5 million in the corresponding prior year period, an increase of 45%. This planned increase primarily reflected ongoing investments in the expansion of the U.S. and European sales organizations, direct-to-patient marketing programs, and continued product development efforts, as well as increased general corporate costs.

Net loss was $16.2 million for the first quarter of 2021, consistent with the corresponding prior year period. The diluted net loss per share for the first quarter of 2021 was $0.60 per share, as compared to $0.67 in the prior year period.

As of March 31, 2021, cash, cash equivalents and investments were $226.1 million, compared to $234.4 million at December 31, 2020.

Full Year 2021 Guidance

Given the positive trends during the first quarter, Inspire is increasing its full year 2021 revenue guidance to between $192 million to $196 million, which would represent growth of approximately 66% to 70% over full year 2020 revenue of $115.4 million. Gross margin for full year 2021 is now anticipated to be in the range of 84% to 85%. This compares to the prior revenue guidance of $183 million to $188 million and gross margin guidance of 83% to 85%.

In addition, Inspire is increasing its guidance around the opening of new U.S. medical centers to a range of 36 to 40 per quarter for the remainder of the year, as compared to the prior guidance of 34 to 38 centers. The Company is maintaining its guidance of adding eight to nine new territories per quarter in 2021.

Webcast and Conference Call

Inspire’s management will host a conference call after market close today, Tuesday, May 4, 2021, at 5:00 p.m. Eastern Time to discuss these results and answer questions.

To listen to a live webcast, please visit the Investors section of the Inspire website at www.inspiresleep.com. The webcast replay will be available on the Inspire website for two weeks following the completion of the call.

About Inspire Medical Systems

Inspire is a medical technology company focused on the development and commercialization of innovative and minimally invasive solutions for patients with obstructive sleep apnea. Inspire’s proprietary Inspire therapy is the first and only FDA-approved neurostimulation technology that provides a safe and effective treatment for moderate to severe obstructive sleep apnea.

For additional information about Inspire, please visit www.inspiresleep.com.

Forward Looking Statements

This press release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. All statements other than statements of historical facts are forward-looking statements, including, without limitation, statements regarding full year 2021 financial outlook, our expectations to activate new U.S. medical centers and add new territories per quarter in 2021 and the impact of such additions, our strategy to grow and scale our business, statements regarding the expected timing of the formal listing of Inspire therapy in the Japan National Health Insurance Payment Listing and the first implants of the Inspire therapy in Japan, and our ability to realize the anticipated benefits of the planned commercialization of Inspire therapy in Japan. In some cases, you can identify forward-looking statements by terms such as “may,” “will,” “should,” “expect,” “plan,” “anticipate,” “could,” “future,” “outlook,” “guidance,” “intend,” “target,” “project,” “contemplate,” “believe,” “estimate,” “predict,” “potential,” “continue,” or the negative of these terms or other similar expressions, although not all forward-looking statements contain these words.

These forward-looking statements are based on management’s current expectations and involve known and unknown risks and uncertainties that may cause our actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by the forward-looking statements. Such risks and uncertainties include, among others, estimates regarding the annual total addressable market for our Inspire therapy in the U.S. and our market opportunity outside the U.S.; future results of operations, financial position, research and development costs, capital requirements and our needs for additional financing; commercial success and market acceptance of our Inspire therapy; the impact of the ongoing and global COVID-19 pandemic; general and international economic, political, and other risks, including currency and stock market fluctuations and the uncertain economic environment; our ability to achieve and maintain adequate levels of coverage or reimbursement for our Inspire system or any future products we may seek to commercialize; competitive companies and technologies in our industry; our ability to enhance our Inspire system, expand our indications and develop and commercialize additional products; our business model and strategic plans for our products, technologies and business, including our implementation thereof; our ability to accurately forecast customer demand for our Inspire system and manage our inventory; our dependence on third-party suppliers, contract manufacturers and shipping carriers; consolidation in the healthcare industry; our ability to expand, manage and maintain our direct sales and marketing organization, and to market and sell our Inspire system in markets outside of the U.S.; risks associated with international operations; our ability to manage our growth; our ability to increase the number of active medical centers implanting Inspire therapy; our ability to hire and retain our senior management and other highly qualified personnel; risk of product liability claims; risks related to information technology and cybersecurity; risk of damage to or interruptions at our facilities; our ability to commercialize or obtain regulatory approvals for our Inspire therapy and system, or the effect of delays in commercializing or obtaining regulatory approvals; FDA or other U.S. or foreign regulatory actions affecting us or the healthcare industry generally, including healthcare reform measures in the U.S. and international markets; the timing or likelihood of regulatory filings and approvals; risks related to our debt and capital structure; our ability to establish and maintain intellectual property protection for our Inspire therapy and system or avoid claims of infringement; tax risks; risks that we may be deemed an investment company under the Investment Company Act of 1940; regulatory risks; risks related to our ceasing to qualify as a smaller reporting company or an emerging growth company; the volatility of the trading price of our common stock; and our expectations about market trends. Other important factors that could cause actual results, performance or achievements to differ materially from those contemplated in this press release can be found under the captions “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in our Annual Report on Form 10-K for the fiscal year ended December 31, 2020, as updated in our Quarterly Report on Form 10-Q for the quarter ended March 31, 2021 to be filed with the SEC, and as such factors may be updated from time to time in our other filings with the SEC, which are accessible on the SEC’s website at www.sec.gov and the Investors page of our website at www.inspiresleep.com. These and other important factors could cause actual results to differ materially from those indicated by the forward-looking statements made in this press release. Any such forward-looking statements represent management’s estimates as of the date of this press release. While we may elect to update such forward-looking statements at some point in the future, unless required by applicable law, we disclaim any obligation to do so, even if subsequent events cause our views to change. Thus, one should not assume that our silence over time means that actual events are bearing out as expressed or implied in such forward-looking statements. These forward-looking statements should not be relied upon as representing our views as of any date subsequent to the date of this press release.

Investor & Media Contact:

Bob Yedid
LifeSci Advisors
646-597-6989
[email protected]

INSPIRE MEDICAL SYSTEMS, INC.

STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS (Unaudited)

(in thousands, except share and per share amounts)

INSPIRE MEDICAL SYSTEMS, INC.

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