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Cohu to Present at Upcoming Investor Conferences

POWAY, Calif.–(BUSINESS WIRE)–
Cohu, Inc. (NASDAQ: COHU), a global leader in back-end semiconductor equipment and services, today announced that management will participate at the following investor conferences:

D.A. Davidson Big Sky Tech Conference

Location: Big Sky, MT

August 22-23, 2022

3rd Annual Needham Virtual Semiconductor and SemiCap 1×1 Conference

Location: Virtual

August 24, 2022

Citi’s 2022 Global Technology Conference

Location: New York Hilton Midtown, NY

September 9, 2022

Goldman Sachs Communacopia + Technology Conference

Location: Palace Hotel, San Francisco, CA

September 14, 2022

Portfolio managers and analysts should contact their respective banking representative to schedule a meeting at these conferences.

Presentation materials will be made concurrently available on the Investor Relations section of the Company’s website, www.cohu.com.

About Cohu:

Cohu (NASDAQ: COHU) is a global leader in back-end semiconductor equipment and services, delivering leading-edge solutions for the manufacturing of semiconductors. Additional information can be found at www.cohu.com.

For press releases and other information of interest to investors, please visit Cohu’s website at www.cohu.com.

View source version on businesswire.com: https://www.businesswire.com/news/home/20220811005762/en/

Cohu, Inc.

Jeffrey D. Jones – Investor Relations

858-848-8106

KEYWORDS: United States North America California

INDUSTRY KEYWORDS: Networks Internet Hardware Electronic Design Automation Consumer Electronics Technology Other Manufacturing Semiconductor Automotive Manufacturing Other Technology Aerospace Telecommunications Manufacturing

MEDIA:

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Vasta Announces Second Quarter 2022 Results

SÃO PAULO–(BUSINESS WIRE)–Vasta Platform Limited (NASDAQ: VSTA) – “Vasta” or the “Company” announces today its financial and operating results for the second quarter of 2022 (2Q22) ended June 30, 2022. Financial results are expressed in Brazilian Reais and are presented in accordance with International Financial Reporting Standards (IFRS).

HIGHLIGHTS

• In the second quarter, net revenue increased 35% compared to the same quarter of 2021, mostly due to the recognition of 17.4% of 2022 ACV, within the expected recognition range of 16% to 18%.
• Subscription revenue grew 48% in 2Q22, primarily from traditional learning systems, as complementary solutions and textbook subscription products (“PAR”) are mostly delivered in the first two quarters of the cycle. The 2022 ACV revenue has been comprised of higher quality sources, as Vasta managed to increase growth in its premium brands and to initiate the migration from PAR to digital subscription products (Textbook as a Service Platform), aligned with the company’s strategy.
• In the 2022 cycle to date (4Q21 to 2Q22), subscription revenue grew 33% (42%, excluding PAR). As we approach the end of the 2022 cycle (3Q22), we see subscription revenue growth converging to the 35% implied by our 2022 ACV, which we expect to be fully converted into revenue by the 3Q22.
• Adjusted EBITDA totaled R$ 11 million, a relevant increase versus 2Q21, when adjusted EBITDA was negative R$ 17 million. This improvement was mainly driven by operating leverage gains, cost savings and an improved sales mix with the growth of subscription products and the contribution of Eleva. In the 2022 cycle to date, Adjusted EBITDA has grown 59%, to R$313 million, with a margin increase of 660 bps, to 32.3%.
• Operating cash flow (OCF) totaled R$103 million in 2Q22, a significant improvement from a negative R$61 million in 2Q21. In the 2022 cycle to date, OCF totaled R$38 million (or R$58 million on a normalized basis), also an improvement compared to previous cycle, which had a consumption of R$113 million.
• On July 19, 2022, Vasta announced the acquisition of the minority interest in Educbank, the first financial ecosystem dedicated to K-12 schools. This investment will enable Vasta to benefit from great potential in the following years, by entering the K-12 tuition payment market, which total payment volume (TPV) surpasses R$70 billion per year. The agreement provides for Educbank to have access to Vasta’s more than 5,300 partner schools, enabling Educbank to accelerate its revenue ramp-up.

MESSAGE FROM MANAGEMENT

As we approach the end of the present cycle, subscription net revenue growth (+33% in the cycle to date) has converged to the 35% growth implied by our 2022 ACV of R$1 billion, and we reiterate our expectation of a full conversion of this ACV into subscription revenue, as anticipated in previous quarters. More than merely demonstrating the return to normal business following a 2021 cycle severely hit by the Covid-19 pandemic, it shows that Vasta has become a true platform with predictable and recurrent revenue, with subscription products representing 88% of the total revenue of the company.

Moreover, we see the normalization of the company’s profitability and cash flow generation as the main highlight of the quarter. Adjusted EBITDA was R$11 million in 2Q22, recovering from a negative R$17 million in the same quarter of the previous year. In the 2022 cycle to date, adjusted EBITDA increased 59%, to R$313 million, with an expansion of 660 bps in margin (from 25.7% to 32.3%). We attribute this increase not only to the normalization of the business and a higher quality sales mix, but also to the efforts such as workforce optimization and our budgetary discipline. Vasta’s operating cash flow totaled R$103 million in 2Q22, a significant improvement from negative R$61 million in 2Q21, bringing the net debt/adjusted EBITDA ratio to just under 3x when considering Eleva’s last-twelve-month EBITDA.

In July, we announced the acquisition of a relevant minority interest in Educbank, the first financial ecosystem dedicated to K-12 schools, delivering to educational institutions services such as management and financial support by providing payment guaranty for tuitions. With this investment, Vasta also gains exposure to the K-12 payment systems – a still unexplored segment with total payment volume (TPV) surpassing R$70 billion per year – and adding another arm in the development of its digital services platform. The combination of Educbank with Phidelis, our academic and financial ERP acquired at the beginning of the year, is a powerful way to provide schools all the information they need to be more efficient. While Educbank will continue to be managed independently by its founders, the agreement foresees that Educbank will have access to Vasta’s more than 5,300 partner schools, enabling Educbank to accelerate its revenue ramp-up.

Finally, commencing on this quarter, we will dedicate a section of our earnings release for Environmental, Social and Governance (ESG) matters, including a panel of key indicators that will be updated on a quarterly basis, reinforcing our commitment to the highest ESG standards.

OPERATING PERFORMANCE

Student base – subscription models

		2022		2021		% Y/Y
Partner schools – Core content		5,351		4,508		18.7	%
Partner schools – Complementary solutions		1,301		1,114		16.8	%
Students – Core content		1,540,391		1,335,152		15.4	%
Students – Complementary content		400,192		307,941		30.0	%
Note: Students enrolled in partner schools.

In the 2022 cycle, Vasta added 843 new partner schools compared to the 2021 cycle, serving nearly 1.5 million students with core content solutions. The partner school base of complementary solutions increased by 187 new schools, growing 30% in the number of students served compared to the previous cycle.

FINANCIAL PERFORMANCE

Net revenue

Values in R$ ‘000		2Q22		2Q21		% Y/Y		2022 Cycle		2021 Cycle		% Y/Y
Subscription		173,818		117,280		48.2%		854,442		644,501		32.6%
Subscription ex-PAR		166,815		111,908		49.1%		744,412		522,436		42.5%
Traditional learning systems		164,075		108,623		51.1%		638,374		459,085		39.1%
Complementary solutions		2,740		3,285		-16.6%		106,038		63,350		67.4%
PAR		7,003		5,372		30.4%		110,030		122,065		-9.9%
Non-subscription		16,137		23,856		-32.4%		114,354		121,028		-5.5%
Total net revenue		189,956		141,136		34.6%		968,796		765,529		26.6%
% ACV		17.4%		15.8%		1.6		85.4%		87.0%		(1.5)
% Subscription		91.5%		83.1%		8.4		88.2%		84.2%		4.0

In the second quarter, net revenue increased 35% year-on-year, to R$190 million. Subscription revenue grew 48%, driven by the recognition of 17.4% of 2022 ACV (within the range of 16% to 18% expected for the quarter), and primarily composed from traditional learning systems, as complementary solutions and textbook subscription products (“PAR”) are mostly delivered in the first two quarters of the cycle. The 2022 ACV revenue has been comprised of higher quality sources, as Vasta managed to increase growth in its premium brands and to initiate the migration from PAR to digital subscription products (Textbook as a Service Platform), aligned with the company’s strategy.

In the cycle to date (4Q21 to 2Q22), subscription revenue grew 33%, or 42% excluding PAR. In the period, it represented 85.4% of 2022 ACV, versus 87% in the same period of the 2021 cycle. Variations in the seasonality of new brands (Eleva and Mackenzie) have led to a less concentrated distribution of subscription revenue along the 2022 cycle when compared to previous cycles. In 3Q22, we expect ACV recognition of 14.6%, completing the delivery of 100% of the 2022 ACV.

EBITDA

Values in R$ ‘000		2Q22		2Q21		% Y/Y		2022 Cycle		2021 Cycle		% Y/Y
Net revenue		189,956		141,135		34.6%		968,797		765,529		26.6%
Cost of goods sold and services		(79,966)		(67,547)		18.4%		(345,121)		(281,547)		22.6%
General and administrative expenses		(127,139)		(97,930)		29.8%		(379,298)		(348,405)		8.9%
Commercial expenses		(46,988)		(35,584)		32.0%		(140,321)		(133,825)		4.9%
Other operating income, net		707		(963)		-173.4%		4,993		2,850		75.2%
Impairment on trade receivables		(3,543)		(15,599)		-77.3%		(23,167)		(30,519)		-24.1%
Profit before financial income and taxes		(66,973)		(76,488)		-12.4%		85,883		(25,917)		-431.4%
(+) Depreciation and amortization		67,606		50,314		34.4%		193,557		143,853		34.6%
EBITDA		633		(26,174)		-102.4%		279,440		117,936		136.9%
EBITDA margin		0.3%		-18.5%		18.9		28,8%		15.4%		13.4
(+) Layoffs related to internal restructuring		387		785		-50.7%		11,257		5,721		96.8%
(+) IPO-related expenses		–		–		0.0%		–		50,580		-100.0%
(+) Share-based compensation plan		10,181		8,182		24.4%		22.204		22,629		-1.9%
Adjusted EBITDA		11,201		(17,207)		-165.1%		312,901		196,866		58.9%
Adjusted EBITDA margin		5.9%		-12.2%		18.1		32.3%		25.7%		6.6
Note: n.m.: not meaningful

Adjusted EBITDA totaled R$11 million, a relevant increase from negative R$17 million in 2Q21. This improvement was mainly driven by operating leverage gains, cost savings and a better sales mix with the growth of subscription products and the contribution of Eleva. In the 2022 cycle to date, Adjusted EBITDA has grown 59%, with a margin increase of 660 bps.

In proportion with net revenue, gross margin grew 580 bps in the quarter (from 52.1% to 57.9%), while adjusted cash G&A expenses and commercial expenses were down 270 bps and 50 bps, respectively. The impairment on trade receivables decreased 920 bps in the quarter, reflecting the hike in the provision for doubtful accounts executed in 2Q21 to face the increased delinquency caused by the pandemic. As a result, adjusted EBITDA margin reached 5.9% in 2Q22, versus a negative margin of 12.2% in 2Q21.

(%) Net Revenue		2Q22		2Q21		Y/Y (p.p.)		2022 Cycle		2021 Cycle		Y/Y (p.p.)
Gross margin		57.9%		52.1%		5.8		64.4%		63.2%		1.2
Adjusted cash G&A expenses(1)		-25.4%		-28.1%		2.7		-15.2%		-16.0%		0.8
Commercial expenses		-24.7%		-25.2%		0.5		-14.5%		-17.5%		3.0
Impairment on trade receivables		-1.9%		-11.1%		9.2		-2.4%		-4.0%		1.6
Adjusted EBITDA margin		5.9%		-12.2%		18.1		32.3%		25.7%		6.6
(1) Sum of general and administrative expenses and other operating income, less: depreciation and amortization, non-recurring expenses, IPO-related expenses, and share-based compensation plan.

Net profit (loss)

Values in R$ ‘000		2Q22		2Q21		% Y/Y		2022 Cycle		2021 Cycle		% Y/Y
Net profit (loss)		(74,661)		(62,197)		20.0%		(34,690)		(45,465)		-23.7%
(+) Layoffs related to internal restructuring		387		785		-50.7%		11,257		5,721		96.8%
(+) Share-based compensation plan		10,181		8,182		24.4%		22,204		22,629		-1.9%
(+) IPO-related expenses		–		–		0.0%		–		50,580		-100.0%
(+) Amortization of intangible assets(1)		38,778		29,216		32.7%		113,427		85,807		32.2%
(-) Tax shield(2)		(16,778)		(12,982)		29.2%		(49,942)		(56,010)		-10.8%
Adjusted net profit (loss)		(42,093)		(36,996)		13.8%		62,256		63,261		-1.6%
Adjusted net margin		-22.2%		-26.2%		4.0		6.4%		8.3%		(1.8)
(1) From business combinations. (2) Tax shield (34%) generated by the expenses that are being deducted as net (loss) profit adjustments. Note: n.m.: not meaningful

In the second quarter, despite the growth in operating profit, adjusted net loss totaled R$42 million, impacted by higher financial leverage and interest rates. In the 2022 cycle to date, adjusted net profit totaled R$62 million, slightly lower than in the 2021 cycle.

Accounts receivable and PDA

Values in R$ ‘000		2Q22		2Q21		% Y/Y		4Q21		% Q/Q
Gross accounts receivable		477,282		336,958		41.6%		628,771		-24.1%
Provision for doubtful accounts (PDA)		(50,098)		(37,898)		32.2%		(52,383)		-4.4%
Coverage index		10.5%		11.2%		(0.8)		8.3%		2.2
Net accounts receivable		427,184		299,060		42.8%		576,388		-25.9%
Average days of accounts receivable(1)		140		119		22		198		(58)
(1) Balance of net accounts receivable divided by the last-twelve-month net revenue, multiplied by 360.

During the pandemic, the credit issues faced by our partner schools pressured our receivable collection and impacted our operating results by requiring a higher level of provisions for doubtful accounts. We have seen a gradual normalization in payments during 2022, aligned with the restoration of partner schools’ regular activities, although this is still ongoing. The average payment term of Vasta’s accounts receivable portfolio was 140 days in the 2Q22, 22 days in excess of same quarter of the previous year. By adding Eleva’s last-twelve-month (“LTM”) net revenue, the average term decreased to 133 days.

Operating cash flow

Values in R$ ‘000		2Q22		2Q21		% Y/Y		2022 Cycle		2021 Cycle		% Y/Y
Cash from operating activities(1)		146,464		(35,994)		-506.9%		185,948		(51,656)		-460.0%
(-) Income tax and social contribution paid		(966)		(1,167)		-17.2%		(1,489)		(1,167)		27.6%
(-) Payment of provision for tax, civil and labor losses		(1,180)		(67)		1649.9%		(1,473)		(76)		1826.7%
(-) Interest lease liabilities paid		(3,408)		(4,001)		-14.8%		(10,286)		(11,797)		-12.8%
(-) Acquisition of property, plant, and equipment		(13,793)		(3,863)		257.0%		(59,686)		(4,256)		1302.3%
(-) Additions of intangible assets		(16,211)		(10,361)		56.5%		(55,042)		(30,035)		83.3%
(-) Lease liabilities paid		(8,073)		(5,382)		50.0%		(20,417)		(13,987)		46.0%
Operating cash flow (OCF)		102,833		(60,835)		-269.0%		37,557		(112,974)		-133.2%
OCF/Adjusted EBITDA		918.1%		353.5%		564.5		12.0%		-57.4%		69.4
(1) Net (loss) profit less non-cash items less and changes in working capital. Note: n.m.: not meaningful

In 2Q22, operating cash flow (OCF) totaled R$103 million, a significant improvement when compared to 2Q21, in which there was a consumption of R$61 million (impacted by the early receipt of accounts receivable amounting to R$52 million in 1Q21). In the cycle to date, OCF totaled R$38 million, or R$58 million when excluding the early payment of royalties (R$20 million) to content providers, up from a negative R$113 million in the same period of 2021.

Financial leverage

Values in R$ ‘000		2Q22		1Q21		4Q21		2Q21		1Q21
Financial debt		844,778		817,517		831,226		812,016		505,951
Accounts payable from business combinations		585,503		570,660		532,313		73,713		65,201
Total debt		1,430,281		1,388,177		1,363,539		885,729		571,152
Cash and cash equivalents		147,762		145,998		309,893		377,862		335,098
Marketable securities		417,770		303,675		166,349		317,178		81,090
Net debt		864,749		938,504		887,297		190,689		154,964
Net debt/LTM adjusted EBITDA		3.04		3.67		4.87		1.13		0.63
(1) LTM adjusted EBITDA includes Eleva. Eleva’s LTM adjusted EBITDA prior to November 2021 may not reflect Vasta’s accounting standards.

Vasta ended the quarter with a net debt position of R$865 million, mainly due to the incorporation of Eleva in late October, leading to a net debt/LTM adjusted EBITDA of 3.04x. By adding Eleva’s LTM EBITDA, this indicator stood at 2.98x.

ESG

From this quarter on, Vasta will report quarterly updates about its ESG standards, including a panel of key ESG indicators, in line with the topics identified in the materiality process. Information about 2021 can be found in Vasta’s Sustainability Report, which can be found here.

Vasta launches its GHG emissions inventory

Committed to accountability and transparency, Vasta launched the first Greenhouse Gas (GHG) Emissions Inventory for its operations. This inventory is aligned with international guidelines from the GHG Protocol methodology and measures the atmospheric emissions from its corporate office, its three distribution centers and its vehicle fleet.

The inventory covers direct emissions from the operations (Scope 1) and indirect emissions (Scope 2) from the consumption of electricity. Regarding electricity, the inventory included the impact according to two methods: location and market-based. The second method considers the purchase of renewable energy certificates (REC) or free market purchases, in which the renewable origin of the energy consumed by the company is proven, in turn reducing the organization’s carbon footprint. The purchase of renewable energy reduced the company’s total emissions by 14%. According to the inventory, Vasta’s direct emissions (Scope 1) totaled 1,133 tCO2e in 2021, corresponding to 97.6% of the total. Indirect emissions (Scope 2) totaled 27.54 tCO2e. If the location-based approach is applied without deducting emissions from renewable sources, Scope 2 would represent 16.4% of the company’s emissions.

Afro Internship Program

In July, Vasta launched the Afro Internship Program, which will create exclusive intern positions for African-Brazilian youth. With salaries of R$ 2,000 monthly, the vacancies are for young people enrolled in undergraduate or technical courses in areas such as technology, human resources, data engineering, editorial, finance, production planning and customer experience, among others. The positions include hybrid and remote work and provide benefits such as transportation vouchers, food or meal vouchers, life insurance, tuition grants, psychological counseling, and a day off in the month of intern’s birthday.

Key Indicators

Environment

SDGs	GRI	Water withdrawn by source2 (m³)	Unit	1Q22	2Q22
6	303-3	Ground water	m³	3,572	2,674
		Utility supply	m³	840	187
		Total	m³	4,412	2,861
SDGs	GRI	Internal energy consumption	Unit	1Q22	2Q22
12 e 13	302-1	Total energy consumed	GJ	1,569	1,348
		Percentage of energy from renewable sources3	%	92%	97%

Social

SDGs	GRI	Diversity in the work force by functional category	Unit	1Q22	2Q22
5	405-1	C-level – Women	% of people	20%	20%
		C-level – Men	% of people	80%	80%
		Total – C-level4	No. of people	5	5
		Leaders – Women (above management level)	% of people	45%	47%
		Leaders – Men (above management level)	% of people	55%	53%
		Total – Leaders (above management level)5	No. of people	130	131
		Academic faculty – Women	% of people	14%	31%
		Academic faculty – Men	% of people	86%	69%
		Total – Academic faculty6	No. of people	71	100
		Coordinators and Administrative – Women	% of people	56%	57%
		Coordinators and Administrative – Men	% of people	44%	43%
		Total – Coordinators and Administrative7	No. of people	1,576	1,521
		Total – Women	% of people	53%	54%
		Total – Men	% of people	47%	46%
		Total – Employees	No. of people	1,782	1,757
SDGs	GRI	Indirect economic impact	Unit	1Q22	2Q22
11	–	Scholarship holders in SOMOS Futuro program	No.	373	371
SDGs	GRI	Occupational Health and Safety	Unit	1Q22	2Q22
3	403-5, 403-9	% of units covered by the Environmental Risk Prevention Program	%	100%	100%
		Total employees trained in health and safety8	No. of people	90	110
		Total number of hours training in health and safety	No.	491	2,871
		Average number of hours training in health and safety per participant9	No.	5.5	4.4
		Total number of hours of on-site training for fire brigade	No.	248	408
		Average number of hours of on-site training for fire brigade per participant9	No.	7.7	8.0
		Employees – Injury frequency rate10	rate	0.92	3.75
		Employees – High-consequence injuries rate11	rate	0.00	0.00
		Employees – Recordable injuries rate12	rate	0.92	0.94
		Employees – Fatality rate13	rate	0.00	0.00

Governance

SDGs	GRI	Ethical behavior	Unit	1Q22	2Q22
8, 16	205-1, 205-2, 205-3	Employees trained in anti-corruption policies and procedures	% of people	100%	100%
		Operations submitted to corruption-related risk assessment	% of operations	100%	100%
		Number of confirmed cases of corruption	No. of cases	0	0
SDGs	GRI	Data privacy and infrastructure	Unit	1Q22	2Q22
16	418-1	Substantiated complaints received from outside parties	No.	6	28
		Substantiated complaints received from regulatory bodies	No.	0	0
		Identified leaks, thefts, or losses of customer data	No.	0	0
SDGs	GRI	Diversity in the Board of Directors	Unit	1Q22	2Q22
5	405-1	Women	% of people	29%	14%
		Men	% of people	71%	86%
		Total	No. of people	7	7

FOOTNOTES:
SDG	Sustainable Development Goal. Indicates goal to which the actions monitored contribute.
GRI	Global Reporting Initiative. Lists the GRI standard indicators related to the data monitored.
NA	Indicator discontinued or not measured in the quarter.
1	Quarterly monitoring of a selection of material indicators. For further information, consult our Sustainability Report, available here.
2	Based on invoices from sanitation concessionaires.
3	Acquired from the free energy market.
4	CEO, vice presidents reporting directly to the CEO and all directors.
5	Management, senior management and leadership positions not reporting directly to the CEO (regional directors, unit directors and vice presidents).
6	Course coordinators, teachers and tutors.
7	Corporate coordination, academic coordination, specialists, adjuncts, assistants and analysts.
8	All the employees undergoing training in the period.
9	Total hours of training/employees trained.
10	Total accidents (with and without leave)/ Total man/hours worked (MHW) x 1,000,000.
11	Work-related injury (excluding fatalities) from which the worker cannot recover fully to pre-injury health status within 6 months. Formula: Number of injuries/MHW x 1.000.000.
12	(Accidents with leave + Fatalities)/ MHT x 1,000,000.
13	Fatalities/ MHW x 1,000,000.

CONFERENCE CALL INFORMATION

Vasta will discuss its second quarter 2022 results on Aug 11, 2022, via a conference call at 5:00 p.m. Eastern Time. To access the call (ID: 3871721), please dial: +1 (888) 660-6819 or +1 (929) 203-1989. A live and archived webcast of the call will be available on the Investor Relations section of the Company’s website at https://ir.vastaplatform.com.

ABOUT VASTA

Vasta is a leading, high-growth education company in Brazil powered by technology, providing end-to-end educational and digital solutions that cater to all needs of private schools operating in the K-12 educational segment, ultimately benefiting all of Vasta’s stakeholders, including students, parents, educators, administrators and private school owners. Vasta’s mission is to help private K-12 schools to be better and more profitable, supporting their digital transformation. Vasta believes it is uniquely positioned to help schools in Brazil undergo the process of digital transformation and bring their education skill-set to the 21st century. Vasta promotes the unified use of technology in K-12 education with enhanced data and actionable insight for educators, increased collaboration among support staff and improvements in production, efficiency and quality. For more information, please visit ir.vastaplatform.com.

FORWARD-LOOKING STATEMENTS

This press release contains forward-looking statements that can be identified by the use of forward-looking words such as “anticipate,” “believe,” “could,” “expect,” “should,” “plan,” “intend,” “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 our intent, belief or current expectations. Forward-looking statements are based on our management’s beliefs and assumptions and on information currently available to our 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 of various factors, including (i) general economic, financial, political, demographic and business conditions in Brazil, as well as any other countries we may serve in the future and their impact on our business; (ii) fluctuations in interest, inflation and exchange rates in Brazil and any other countries we may serve in the future; (iii) our ability to implement our business strategy and expand our portfolio of products and services; (iv) our ability to adapt to technological changes in the educational sector; (v) the availability of government authorizations on terms and conditions and within periods acceptable to us; (vi) our ability to continue attracting and retaining new partner schools and students; (vii) our ability to maintain the academic quality of our programs; (viii) the availability of qualified personnel and the ability to retain such personnel; (ix) changes in the financial condition of the students enrolling in our programs in general and in the competitive conditions in the education industry; (x) our capitalization and level of indebtedness; (xi) the interests of our controlling shareholder; (xii) changes in government regulations applicable to the education industry in Brazil; (xiii) government interventions in education industry programs, that affect the economic or tax regime, the collection of tuition fees or the regulatory framework applicable to educational institutions; (xiv) cancellations of contracts within the solutions we characterize as subscription arrangements or limitations on our ability to increase the rates we charge for the services we characterize as subscription arrangements; (xv) our ability to compete and conduct our business in the future; (xvi) our ability to anticipate changes in the business, changes in regulation or the materialization of existing and potential new risks; (xvii) the success of operating initiatives, including advertising and promotional efforts and new product, service and concept development by us and our competitors; (xviii) changes in consumer demands and preferences and technological advances, and our ability to innovate to respond to such changes; (xix) changes in labor, distribution and other operating costs; our compliance with, and changes to, government laws, regulations and tax matters that currently apply to us; (xx) the effectiveness of our risk management policies and procedures, including our internal control over financial reporting; (xxi) health crises, including due to pandemics such as the COVID-19 pandemic and government measures taken in response thereto; (xxii) other factors that may affect our financial condition, liquidity and results of operations; and (xxiii) other risk factors discussed under “Risk Factors.” Forward-looking statements speak only as of the date they are made, and we do 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.

NON-GAAP FINANCIAL MEASURES

This press release presents our EBITDA, Adjusted EBITDA and Adjusted net (loss) profit and Operating cash flow (OCF), which is information provided for the convenience of investors. EBITDA and Adjusted EBITDA are among the key performance indicators used by us to measure financial operating performance. Our management believes that these Non-GAAP financial measures provide useful information to investors and shareholders. We also use these measures internally to establish budgets and operational goals to manage and monitor our business, evaluate our underlying historical performance and business strategies and to report our results to the board of directors.

We calculate EBITDA as net (loss) profit for the period/year plus income taxes and social contribution plus/minus net finance result plus depreciation and amortization. The EBITDA measure provides useful information to assess our operational performance.

We calculate Adjusted EBITDA as EBITDA plus/minus: (a) income tax and social contribution; (b) net finance result; (c) depreciation and amortization; (d) share-based compensation expenses, mainly due to the grant of additional shares to Somos’ employees in connection with the change of control of Somos to Cogna (for further information refer to note 23 to the audited consolidated financial statements); (e) provision for risks of tax, civil and labor losses regarding penalties, related to income tax positions taken by the Predecessor Somos – Anglo and Vasta in connection with a corporate reorganization carried out by the Predecessor Somos – Anglo; (f) Bonus IPO, which refers to bonus paid to certain executives and employees based on restricted share units; and (g) expenses with contractual termination of employees due to organizational restructuring. We understand that such adjustments are relevant and should be considered when calculating our Adjusted EBITDA, which is a practical measure to assess our operational performance that allows us to compare it with other companies that operates in the same segment.

We calculate Adjusted net (loss) profit as the (loss) profit for the period/year as presented in Statement of Profit or Loss and Other Comprehensive Income adjusted by the same Adjusted EBITDA items, however, added by (a) Amortization of intangible assets from Business Combination and (b) Tax shield of 34% generated by the aforementioned adjustments.

We calculate Operating cash flow (OCF) as the cash from operating activities as presented in the Statement of Cash Flows less (a) income tax and social contribution paid; (b) tax, civil and labor proceedings paid; (c) interest lease liabilities paid; (d) acquisition of property, plant and equipment; (e) additions to intangible assets; and (f) lease liabilities paid.

We understand that, although Adjusted net (loss) profit, EBITDA, Adjusted EBITDA and Operating cash flow (OCF) are used by investors and securities analysts in their evaluation of companies, these measures have limitations as analytical tools, and you should not consider them in isolation or as substitutes for analysis of our results of operations as reported under IFRS. Additionally, our calculations of Adjusted net (loss) profit, Adjusted EBITDA and Operating cash flow (OCF) may be different from the calculation used by other companies, including our competitors in the education services industry, and therefore, our measures may not be comparable to those of other companies.

REVENUE RECOGNITION AND SEASONALITY

Our main deliveries of printed and digital materials to our customers occur in the last quarter of each year (typically in November and December), and in the first quarter of each subsequent year (typically in February and March), and revenue is recognized when the customers obtain control over the materials. In addition, the printed and digital materials we provide in the fourth quarter are used by our customers in the following school year and, therefore, our fourth quarter results reflect the growth in the number of our students from one school year to the next, leading to higher revenue in general in our fourth quarter compared with the preceding quarters in each year. Consequently, in aggregate, the seasonality of our revenues generally produces higher revenues in the first and fourth quarters of our fiscal year. Thus, the numbers for the second quarter and third quarter are usually less relevant. In addition, we generally bill our customers during the first half of each school year (which starts in January), which generally results in a higher cash position in the first half of each year compared to the second half.

A significant part of our expenses is also seasonal. Due to the nature of our business cycle, we need significant working capital, typically in September or October of each year, to cover costs related to production and inventory accumulation, selling and marketing expenses, and delivery of our teaching materials at the end of each year in preparation for the beginning of each school year. As a result, these operating expenses are generally incurred between September and December of each year.

Purchases through our Livro Fácil e-commerce platform are also very intense during the back-to-school period, between November, when school enrollment takes place and families plan to anticipate the purchase of products and services, and February of the following year, when classes are about to start. Thus, e-commerce revenue is mainly concentrated in the first and fourth quarters of the year.

KEY BUSINESS METRICS

ACV Bookings is a non-accounting managerial metric and represents our partner schools’ commitment to pay for our solutions offerings. We believe it is a meaningful indicator of demand for our solutions. We consider ACV Bookings is a helpful metric because it is designed to show amounts that we expect to be recognized as revenue from subscription services for the 12-month period between October 1 of one fiscal year through September 30 of the following fiscal year. We define ACV Bookings as the revenue we would expect to recognize from a partner school in each school year, based on the number of students who have contracted our services, or “enrolled students,” that will access our content at such partner school in such school year. We calculate ACV Bookings by multiplying the number of enrolled students at each school with the average ticket per student per year; the related number of enrolled students and average ticket per student per year are each calculated in accordance with the terms of each contract with the related school. Although our contracts with our schools are typically for 4-year terms, we record one year of revenue under such contracts as ACV Bookings. ACV Bookings are calculated based on the sum of actual contracts signed during the sales period and assumes the historical rates of returned goods from customers for the preceding 24-month period. Since the actual rates of returned goods from sales during the period may be different from the historical average rates and the actual volume of merchandise ordered by our customers may be different from the contracted amount, the actual revenue recognized during each period of a sales cycle may be different from the ACV Bookings for the respective sales cycle. Our reported ACV Bookings are subject to risks associated with, among other things, economic conditions and the markets in which we operate, including risks that our contracts may be canceled or adjusted (including as a result of the COVID-19 pandemic).

FINANCIAL STATEMENTS

Consolidated Statements of Financial Position
Assets		June 30, 2022		December 31, 2021
Current assets
Cash and cash equivalents		147,762		309,893
Marketable securities		417,770		166,349
Trade receivables		427,184		505,514
Inventories		225,916		242,363
Taxes recoverable		31,355		24,564
Income tax and social contribution recoverable		9,891		8,771
Prepayments		61,087		40,069
Other receivables		5,385		2,105
Related parties – other receivables		1,101		501
Total current assets		1,327,451		1,300,129
Non-current assets
Judicial deposits and escrow accounts		181,381		178,824
Deferred income tax and social contribution		177,890		130,405
Property, Plant and equipment		224,784		185,682
Intangible assets and goodwill		5,506,471		5,538,367
Total non-current assets		6,090,526		6,033,278
Total assets		7,417,977		7,333,407

Consolidated Statements of Financial Position (continued)
Liabilities		June 30, 2022		December 31, 2021
Current liabilities
Bonds and financing		295,185		281,491
Lease liabilities		32,016		26,636
Suppliers		263,893		264,787
Income tax and social contribution payable		21,090		16,666
Salaries and social contributions		90,166		62,829
Contractual obligations and deferred income		61,471		46,037
Accounts payable for business combination		75,587		20,502
Other liabilities		18,685		20,033
Other liabilities – related parties		30,050		39,271
Total current liabilities		888,143		778,252
Non-current liabilities
Bonds and financing		549,593		549,735
Lease liabilities		133,389		133,906
Accounts payable for business combination		509,916		511,811
Provision for tax, civil and labor losses		664,186		646,850
Contractual obligations and deferred income		4,317		128
Other liabilities		47,082		47,516
Total non-current liabilities		1,908,483		1,889,946
Shareholder’s equity
Share capital		4,820,815		4,820,815
Capital reserve		72,101		61,488
Treasury shares		(23,880)		(23,880)
Accumulated losses		(247,685)		(193,214)
Total shareholder’s equity		4,621,351		4,665,209
Total liabilities and shareholder’s equity		7,417,977		7,333,407

Consolidated Income Statement
		Apr 01, to Jun 30, 2022	Jan 01, to Jun 30, 2022		Apr 01, to Jun 30, 2021	Jan 01, to Jun 30, 2021
Net revenue from sales and services		189,956	570,537		141,135	421,967
Sales		180,339	552,225		127,688	402,572
Services		9,617	18,312		13,447	19,395
Cost of goods sold and services		(79,966)	(209,203)		(67,547)	(181,529)
Gross profit		109,990	361,334		73,588	240,438
Operating income (expenses)
General and administrative expenses		(127,139)	(253,227)		(97,930)	(207,806)
Commercial expenses		(46,988)	(94,921)		(35,584)	(85,093)
Other operating income (expenses)		707	1,640		(963)	1,504
Impairment losses on trade receivables		(3,543)	(12,439)		(15,599)	(18,208)
Profit (loss) before finance result and taxes		(66,973)	2,387		(76,488)	(69,165)
Finance income		21,896	37,165		5,798	11,261
Finance costs		(69,902)	(127,865)		(20,773)	(40,488)
Finance result		(48,006)	(90,700)		(14,975)	(29,227)
Profit (loss) before income tax and social contribution		(114,979)	(88,313)		(91,463)	(98,392)
Income tax and social contribution		40,318	33,842		29,266	30,678
Net profit (loss) for the period		(74,661)	(54,471)		(62,197)	(67,714)
Net profit (loss) per share
Basic		(0.89)	(0.65)		(0.75)	(0.82)
Diluted		(0.89)	(0.65)		(0.75)	(0.82)

Consolidated Statement of Cash Flows
		For the six months ended June
		2022		2021
CASH FLOWS FROM OPERATING ACTIVITIES
Profit (Loss) before income tax and social contribution		(88,313)		(98,392)
Adjustments for:
Depreciation and amortization		131,892		98,899
Impairment losses on trade receivables		12,439		18,208
Reversal (provision) for tax, civil and labor losses, net		(6,860)		(849)
Interest on provision for tax, civil and labor losses		25,556		10,275
Provision for obsolete inventories		6,110		8,647
Interest on bonds and financing		52,089		12,940
Contractual obligations and right to returned goods		2,687		3,802
Interest on accounts payable for business combination		29,791		(623)
Imputed interest on suppliers		8,402		2,783
Other financial expenses and net interest		(5,624)		–
Share-based payment expense		10,613		12,221
Interest on lease liabilities		7,290		8,060
Interest on marketable securities incurred		(26,804)		(8,077)
Cancellations of right-of-use contracts		904		–
Residual value of disposals of property and equipment and intangible assets		–		76
Changes in
Trade receivables		66,087		176,293
Inventories		8,155		(10,831)
Prepayments		(21,018)		(1,610)
Taxes recoverable		(7,905)		(2,690)
Judicial deposits and escrow accounts		(2,557)		(629)
Other receivables		(3,281)		(918)
Suppliers		(9,296)		(87,072)
Salaries and social charges		27,367		7,418
Tax payable		5,071		2,064
Contract liabilities and deferred income		12,120		(19,239)
Related parties – other receivables		(600)		(94,125)
Other liabilities		(1,772)		(722)
Other liabilities – related parties		(9,222)		–
Cash from operating activities		223,321		35,589
Interest lease liabilities paid		(7,158)		(8,022)
Payment of interest on bonds and financing		(37,778)		(12,243)
Income tax and social contribution paid		(1,489)		(1,167)
		(1,360)		(76)
Payment of provision for tax, civil and labor losses		(1,360)		(76)
Net cash from operating activities		175,536		14,351
CASH FLOWS FROM INVESTING ACTIVITIES
Acquisition of property, plant, and equipment		(48,228)		(6,344)
Additions of intangible assets		(35,927)		(19,468)
Acquisition of subsidiaries net of cash acquired		(8,475)		(40,231)
Proceeds from (purchase of) investment in marketable securities		(224,617)		418,089
Net cash (applied in) from investing activities		(317,247)		352,046
CASH FLOWS FROM FINANCING ACTIVITIES
Suppliers – related parties		–		(6,368)
Payments of loans from related parties		–		(20,884)
Lease liabilities paid		(13,727)		(10,359)
Payments of bonds and financing		(759)		(288,087)
Payments of accounts payable for business combination		(5,934)		(16,757)
Net cash applied in financing activities		(20,420)		(342,455)
NET (DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS		(162,131)		23,942
Cash and cash equivalents at beginning of period		309,893		311,156
Cash and cash equivalents at end of period		147,762		335,098

 

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Investor Relations

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KEYWORDS: South America Brazil

INDUSTRY KEYWORDS: Technology Other Technology Audio/Video Software Other Education Continuing Training Primary/Secondary Education

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Williams Reports Second Quarter 2022 Financial Results

Performance Reflects Delayed Awards, Non-recurring Margin Pressure

ATLANTA–(BUSINESS WIRE)–
Williams Industrial Services Group Inc. (NYSE American: WLMS) (“Williams” or the “Company”), an energy and industrial infrastructure services company, today reported its financial results for the fiscal second quarter ended June 30, 2022.

Recent Highlights

• Williams posted revenue of $56.1 million in the second quarter of 2022 compared with $91.6 million in the prior-year period
• The Company reported a net loss from continuing operations of $5.3 million, or $(0.20) per diluted share, in the second quarter of 2022 compared with net income from continuing operations of $2.6 million, or $0.10 per diluted share, in the second quarter of 2021
• Adjusted EBITDA¹ was negative $3.2 million for the second quarter of 2022 compared with $4.9 million in the prior-year period
• As of June 30, 2022 the Company’s backlog was $234.3 million compared to $257.0 million as of March 31, 2022; approximately $144.6 million of the June 30, 2022 backlog is expected to be converted to revenue over the following twelve months
• As previously announced, the Company has updated its guidance to reflect delayed awards and certain non-recurring costs

“Although Williams’ future remains promising, we were disappointed in how the second quarter played out, causing us to reduce guidance on August 4, 2022,” said Tracy Pagliara, President and CEO of Williams. “Our second quarter revenues were lower than expected as nuclear work was pushed out to the second half of 2022. In addition, several non-recurring items, including start-up costs in our transmission and distribution business, margin pressure from certain Florida water projects, and litigation expenses relating to a competitor and former employee, also negatively impacted bottom line results.

“Looking ahead, with bid activity accelerating, we’re optimistic about revenue and backlog growth and better operating performance in the quarters to come. We remain focused on new business development, expense controls and working capital management. We’re confident in our ability to position Williams for expansion and increased shareholder returns going forward.”

1 See NOTE 1 — Non-GAAP Financial Measures in the attached tables for important disclosures regarding Williams’ use of Adjusted EBITDA, as well as a reconciliation of income (loss) from continuing operations to Adjusted EBITDA.

Second Quarter 2022 Financial Results Compared to Second Quarter 2021

Revenue in the second quarter was $56.1 million compared with $91.6 million in the second quarter of 2021, largely reflecting reduced nuclear business – due to the timing of a nuclear outage which occurs every other year accounting for $17.6 million of the decline – fewer decommissioning contracts accounting for $11.5 million of decline, and the exit of the Canadian nuclear market accounting for a $9.9 million reduction in revenue. Gross profit was $2.3 million, or 4.1% of revenue, compared with $9.4 million, or 10.2% of revenue, in the prior-year period, with the lower margin primarily due to changes in project mix, including the ongoing impact of certain contracts in Florida, as previously announced, and start-up costs tied to the Company’s further expansion into the energy delivery market. Excluding the aforementioned gross margin compression associated with Williams’ entry into the transmission and distribution business of $1.6 million and the negative gross margin impact of $1.2 million from the Company’s Florida water projects, adjusted gross margin would have been 10.0% of revenue.

Operating expenses were $6.7 million in the 2022 second quarter, inclusive of $0.3 million in professional fees relating to an ongoing legal matter, compared with $6.6 million in the prior-year period. The Company reported an operating loss of $4.5 million for the second quarter of 2022 versus operating profit of $2.7 million in the same period of 2021. Interest expense was $1.3 million in the second quarter of 2022 versus $1.2 million in 2021.

The Company reported a net loss from continuing operations of $5.3 million, or $(0.20) per diluted share, in the second quarter of 2022 compared with net income from continuing operations of $2.6 million, or $0.10 per diluted share, in the second quarter of 2021.

Balance Sheet

The Company’s total liquidity (the sum of unrestricted cash and availability under the Company’s revolving credit facility) was $6.5 million as of June 30, 2022 versus $27.7 million at the beginning of 2022. As of June 30, 2022, the Company had $0.7 million of unrestricted cash and cash equivalents, $0.5 million of restricted cash, and $41.4 million of bank debt compared with $2.5 million of unrestricted cash and cash equivalents, $0.5 million of restricted cash, and $32.1 million of bank debt as of December 31, 2021.

Backlog

Total backlog as of June 30, 2022 was $234.3 million compared with $257.0 million on March 31, 2022. During the second quarter of 2022 the Company recognized revenue of $56.1 million, booked new awards of $17.2 million, and saw net adjustments and cancellations of $16.2 million.

		Three Months Ended June 30, 2022				Six Months Ended June 30, 2022
Backlog – beginning of period		$	256,956			$	631,693
New awards			17,227				55,520
Adjustments and cancellations, net			16,179				(327,292	)
Revenue recognized			(56,059	)			(125,618	)
Backlog – end of period		$	234,303			$	234,303

Williams estimates that approximately $144.6 million of its current backlog will be converted to revenue within the next twelve months compared with $139.0 million of backlog as of March 31, 2022 that the Company anticipated would be converted to revenue over the succeeding twelve-month period. Additionally, the Company saw an increase in its pipeline to approximately $400 million as of June 30, 2022 compared with approximately $360 million as of March 31, 2022.

Outlook

The Company adjusted guidance on August 4, 2022 from that previously provided January 28, 2022 for the current fiscal year, as follows:

2022 Guidance
Revenue:	$275 to $295 million (previously, $305 – $325 million)
Gross margin:	9.0% to 9.5% (previously, 10.5% to 11.0%)
SG&A:	8.25% to 8.75% of revenue; 8.00% to 8.50% excluding investments in upgrading systems (previously, 8.75% to 9.25%; 8.25% to 8.75% excluding investments)
Adjusted EBITDA*:	$5.0 to $7.5 million (previously, $10.0 to $12.5 million)
*See Note 1 — Non-GAAP Financial Measures for information regarding the use of Adjusted EBITDA and forward-looking non-GAAP financial measures.

Webcast and Teleconference

The Company will host a conference call tomorrow, August 12, 2022, at 10:00 a.m. Eastern time. A webcast of the call and an accompanying slide presentation will be available at www.wisgrp.com. To access the conference call by telephone, listeners should dial 201-493-6780.

An audio replay of the call will be available later that day by dialing 412-317-6671 and entering conference ID number 13731982; alternatively, a webcast replay can be found at http://ir.wisgrp.com/, where a transcript will be posted once available.

About Williams

Williams Industrial Services Group has been safely helping plant owners and operators enhance asset value for more than 50 years. The Company is a leading provider of infrastructure related services to blue-chip customers in energy and industrial end markets, including a broad range of construction maintenance, modification, and support services. Williams’ mission is to be the preferred provider of construction, maintenance, and specialty services through commitment to superior safety performance, focus on innovation, and dedication to delivering unsurpassed value to its customers.

Additional information about Williams can be found on its website: www.wisgrp.com.

Forward-looking Statement Disclaimer

This press release contains “forward-looking statements” within the meaning of the term set forth in the Private Securities Litigation Reform Act of 1995. The forward-looking statements include statements or expectations regarding the Company’s ability to perform in accordance with guidance, build and diversify its backlog and convert backlog to revenue, realize opportunities, including receiving contract awards on outstanding bids and successfully pursuing future opportunities, benefit from potential growth in the Company’s end markets, including from increased infrastructure spending by the U.S. federal government, and successfully achieve its growth, strategic and business development initiatives, including decreasing the Company’s outstanding indebtedness, increasing shareholder returns, and managing working capital, future demand for the Company’s services, and expectations regarding future revenues, cash flow, and other related matters. These statements reflect the Company’s current views of future events and financial performance and are subject to a number of risks and uncertainties, including the Company’s level of indebtedness and ability to make payments on, and satisfy the financial and other covenants contained in, its amended debt facilities, as well as its ability to engage in certain transactions and activities due to limitations and covenants contained in such facilities; its ability to generate sufficient cash resources to continue funding operations, including investments in working capital required to support growth-related commitments that it makes to customers, and the possibility that it may be unable to obtain any additional funding as needed or incur losses from operations in the future; exposure to market risks from changes in interest rates; the Company’s ability to obtain adequate surety bonding and letters of credit; the Company’s ability to maintain effective internal control over financial reporting and disclosure controls and procedures; the Company’s ability to attract and retain qualified personnel, skilled workers, and key officers; failure to successfully implement or realize its business strategies, plans and objectives of management, and liquidity, operating and growth initiatives and opportunities, including any expansion into new markets and its ability to identify potential candidates for, and consummate, acquisition, disposition, or investment transactions; the loss of one or more of its significant customers; its competitive position; market outlook and trends in the Company’s industry, including the possibility of reduced investment in, or increased regulation of, nuclear power plants, declines in public infrastructure construction, and reductions in government funding; costs exceeding estimates the Company uses to set fixed-price contracts; harm to the Company’s reputation or profitability due to, among other things, internal operational issues, poor subcontractor performances or subcontractor insolvency; potential insolvency or financial distress of third parties, including customers and suppliers; the Company’s contract backlog and related amounts to be recognized as revenue; its ability to maintain its safety record, the risks of potential liability and adequacy of insurance; adverse changes in the Company’s relationships with suppliers, vendors, and subcontractors, including increases in cost, disruption of supply or shortage of labor, freight, equipment or supplies, including as a result of the COVID-19 pandemic; compliance with environmental, health, safety and other related laws and regulations, including those related to climate change; limitations or modifications to indemnification regulations of the U.S.; the Company’s expected financial condition, future cash flows, results of operations and future capital and other expenditures; the impact of unstable market and economic conditions on our business, financial condition and stock price, including inflationary cost pressures, supply chain disruptions and constraints, labor shortages, the effects of the Ukraine-Russia conflict and ongoing impact of COVID-19, and a possible recession; our ability to meet publicly announced guidance or other expectations about our business, key metrics and future operating results; the impact of the COVID-19 pandemic on the Company’s business, results of operations, financial condition, and cash flows, including global supply chain disruptions and the potential for additional COVID-19 cases to occur at the Company’s active or future job sites, which potentially could impact cost and labor availability; information technology vulnerabilities and cyberattacks on the Company’s networks; the Company’s failure to comply with applicable laws and regulations, including, but not limited to, those relating to privacy and anti-bribery; the Company’s ability to successfully implement its new enterprise resource planning (ERP) system; the Company’s participation in multiemployer pension plans; the impact of any disruptions resulting from the expiration of collective bargaining agreements; the impact of natural disasters, which may worsen or increase due to the effects of climate change, and other severe catastrophic events (such as the ongoing COVID-19 pandemic); the impact of corporate citizenship and environmental, social and governance matters; the impact of changes in tax regulations and laws, including future income tax payments and utilization of net operating loss and foreign tax credit carryforwards; volatility of the market price for the Company’s common stock; the Company’s ability to maintain its stock exchange listing; the effects of anti-takeover provisions in the Company’s organizational documents and Delaware law; the impact of future offerings or sales of the Company’s common stock on the market price of such stock; expected outcomes of legal or regulatory proceedings (whether claims made by or against the Company) and their anticipated effects on the Company’s results of operations; and any other statements regarding future growth, future cash needs, future operations, business plans and future financial results.

Other important factors that may cause actual results to differ materially from those expressed in the forward-looking statements are discussed in the Company’s filings with the U.S. Securities and Exchange Commission, including the section of the Annual Report on Form 10-K for its 2021 fiscal year titled “Risk Factors.” Any forward-looking statement speaks only as of the date of this press release. Except as may be required by applicable law, the Company undertakes no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, and you are cautioned not to rely upon them unduly.

Financial Tables Follow

WILLIAMS INDUSTRIAL SERVICES GROUP INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
		Three Months Ended June 30,								Six Months Ended June 30,
($ in thousands, except share and per share amounts)		2022				2021				2022				2021
Revenue		$	56,059			$	91,571			$	125,618			$	152,422
Cost of revenue			53,778				82,218				117,628				136,971
Gross profit			2,281				9,353				7,990				15,451
Gross margin			4.1	%			10.2	%			6.4	%			10.1	%
Selling and marketing expenses			402				231				732				442
General and administrative expenses			6,294				6,372				12,365				12,683
Depreciation and amortization expense			46				46				112				87
Total operating expenses			6,742				6,649				13,209				13,212
Operating income (loss)			(4,461	)			2,704				(5,219	)			2,239
Operating margin			(8.0	)%			3.0	%			(4.2	)%			1.5	%
Interest expense, net			1,261				1,213				2,480				2,506
Other income, net			(240	)			(1,232	)			(419	)			(1,592	)
Total other (income) expense, net			1,021				(19	)			2,061				914
Income (loss) from continuing operations before income tax			(5,482	)			2,723				(7,280	)			1,325
Income tax expense (benefit)			(171	)			77				58				262
Income (loss) from continuing operations			(5,311	)			2,646				(7,338	)			1,063
Income (loss) from discontinued operations before income tax			(47	)			243				(47	)			164
Income tax expense (benefit)			(640	)			18				(623	)			37
Income from discontinued operations			593				225				576				127
Net income (loss)		$	(4,718	)		$	2,871			$	(6,762	)		$	1,190
Basic income (loss) per common share
Income (loss) from continuing operations		$	(0.20	)		$	0.10			$	(0.28	)		$	0.04
Income from discontinued operations			0.02				0.01				0.02				0.01
Basic income (loss) per common share		$	(0.18	)		$	0.11			$	(0.26	)		$	0.05
Diluted income (loss) per common share
Income (loss) from continuing operations		$	(0.20	)		$	0.10			$	(0.28	)		$	0.04
Income from discontinued operations			0.02				0.01				0.02				0.01
Diluted income (loss) per common share		$	(0.18	)		$	0.11			$	(0.26	)		$	0.05
Weighted average common shares outstanding (basic)			26,106,493				25,683,258				26,034,907				25,306,130
Weighted average common shares outstanding (diluted)			26,106,493				26,436,505				26,034,907				26,069,091

WILLIAMS INDUSTRIAL SERVICES GROUP INC. AND SUBSIDIARIES REVENUE BRIDGE ANALYSIS*
Second Quarter 2022 Revenue Bridge
(in millions)		$ Change
Second quarter 2021 revenue		$	91.6
U.S. Nuclear			(20.2	)
Decommissioning			(11.5	)
Canada Nuclear			(9.9	)
Water			4.0
Transmission and Distribution			1.6
Other			0.5
Total change			(35.5	)
Second quarter 2022 revenue*		$	56.1
*Numbers may not sum due to rounding

WILLIAMS INDUSTRIAL SERVICES GROUP INC. AND SUBSIDIARIES GROSS MARGIN RECONCILIATION NON-GAAP FINANCIAL MEASURE (UNAUDITED)
The following table reconciles our adjusted gross margin to our actual gross margin by deducting the energy transmission and distribution projects that are incurring start-up costs and lump sum projects in the water markets that are generating a loss. We believe this information is meaningful as it isolates the impact that our start-up costs and the non-profitable lump sum projects have on our gross margin. Because adjusted gross margin is not calculated in accordance with GAAP, it may not be comparable to other similarly titled measures of other companies and should not be considered in isolation or as substitute for, or superior to, financial measures prepared in accordance with GAAP.
(in thousands)		Three Months Ended June 30, 2022				Six Months Ended June 30, 2022
Revenue		$	56,059			$	125,618
Cost of revenue			53,778				117,628
Gross profit			2,281				7,990
Gross margin			4.1	%			6.4	%
Minus: revenue from transmission and distribution start-up business			(1,597	)			(2,540	)
Minus: revenue from Florida lump sum water projects			(3,687	)			(9,928	)
Minus: total revenue deducted			(5,284	)			(12,468	)
Minus: cost of revenue from transmission and distribution start-up business			(3,228	)			(5,325	)
Minus: cost of revenue from the Florida lump sum water projects			(4,861	)			(11,868	)
Minus: total cost of revenue deducted			(8,089	)			(17,193	)
Adjusted revenue			50,775				113,150
Adjusted cost of revenue			45,689				100,435
Adjusted gross profit		$	5,086			$	12,715
Adjusted gross profit margin			10.0	%			11.2	%

WILLIAMS INDUSTRIAL SERVICES GROUP INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED)
		June 30,				December 31,
($ in thousands, except per share amounts)		2022				2021
ASSETS
Current assets:
Cash and cash equivalents		$	656			$	2,482
Restricted cash			468				468
Accounts receivable, net of allowance of $327 and $427, respectively			33,267				35,204
Contract assets			13,483				12,683
Other current assets			10,812				11,049
Total current assets			58,686				61,886
Property, plant and equipment, net			977				653
Goodwill			35,400				35,400
Intangible assets, net			12,500				12,500
Other long-term assets			7,640				5,712
Total assets		$	115,203			$	116,151
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable		$	10,939			$	12,168
Accrued compensation and benefits			9,182				12,388
Contract liabilities			2,289				3,412
Short-term borrowings			10,223				676
Current portion of long-term debt			1,050				1,050
Other current liabilities			10,226				11,017
Current liabilities of discontinued operations			104				316
Total current liabilities			44,013				41,027
Long-term debt, net			30,128				30,328
Deferred tax liabilities			2,445				2,442
Other long-term liabilities			4,443				1,647
Long-term liabilities of discontinued operations			3,523				4,250
Total liabilities			84,552				79,694
Commitments and contingencies
Stockholders’ equity:
Common stock, $0.01 par value, 170,000,000 shares authorized and 26,869,938 and 26,408,789 shares issued, respectively, and 26,427,635 and 25,939,621 shares outstanding, respectively			263				261
Paid-in capital			93,208				92,227
Accumulated other comprehensive loss			(122	)			(95	)
Accumulated deficit			(62,692	)			(55,930	)
Treasury stock, at par (442,303 and 469,168 common shares, respectively)			(6	)			(6	)
Total stockholders’ equity			30,651				36,457
Total liabilities and stockholders’ equity		$	115,203			$	116,151

WILLIAMS INDUSTRIAL SERVICES GROUP INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
		Six Months Ended June 30,
(in thousands)		2022				2021
Operating activities:
Net income (loss)		$	(6,762	)		$	1,190
Adjustments to reconcile net loss to net cash provided by (used in) operating activities:
Net income from discontinued operations			(576	)			(127	)
Deferred income tax provision (benefit)			3				(25	)
Depreciation and amortization on plant, property, and equipment			112				87
Amortization of deferred financing costs			415				415
Amortization of debt discount			100				100
Bad debt expense			(101	)			(51	)
Stock-based compensation			577				1,460
Changes in operating assets and liabilities:
Accounts receivable			2,137				(3,040	)
Contract assets			(787	)			(4,268	)
Other current assets			177				(1,561	)
Other assets			(2,219	)			(175	)
Accounts payable			(1,251	)			1,546
Accrued and other liabilities			(601	)			4,432
Contract liabilities			(1,122	)			(1,246	)
Net cash used in operating activities, continuing operations			(9,898	)			(1,263	)
Net cash used in operating activities, discontinued operations			(365	)			(139	)
Net cash used in operating activities			(10,263	)			(1,402	)
Investing activities:
Purchase of property, plant and equipment			(438	)			(418	)
Net cash used in investing activities			(438	)			(418	)
Financing activities:
Repurchase of stock-based awards for payment of statutory taxes due on stock-based compensation			(163	)			(501	)
Proceeds from short-term borrowings			144,220				140,194
Repayments of short-term borrowings			(134,673	)			(138,482	)
Repayments of long-term debt			(525	)			(525	)
Net cash provided by financing activities			8,859				686
Effect of exchange rate change on cash, continuing operations			16				128
Net change in cash, cash equivalents and restricted cash			(1,826	)			(1,006	)
Cash, cash equivalents and restricted cash, beginning of period			2,950				9,184
Cash, cash equivalents and restricted cash, end of period		$	1,124			$	8,178
Supplemental Disclosures:
Cash paid for interest		$	2,292			$	1,887
Cash paid for income taxes, net of refunds		$	—			$	1,553

WILLIAMS INDUSTRIAL SERVICES GROUP INC. AND SUBSIDIARIES NON-GAAP FINANCIAL MEASURE (UNAUDITED)
This press release contains financial measures not derived in accordance with accounting principles generally accepted in the United States (“GAAP”). A reconciliation to the most comparable GAAP measure is provided below.
ADJUSTED EBITDA – CONTINUING OPERATIONS
		Three Months Ended June 30,								Six Months Ended June 30,
(in thousands)		2022				2021				2022				2021
Income (loss) from continuing operations		$	(5,311	)		$	2,646			$	(7,338	)		$	1,063
Add back:
Interest expense, net			1,261				1,213				2,480				2,506
Income tax expense (benefit)			(171	)			77				58				262
Depreciation and amortization expense			46				46				112				87
Stock-based compensation			608				745				577				1,460
Severance costs			—				—				43				—
Other professional fees			260				—				974				—
Franchise taxes			65				62				129				122
Foreign currency (gain) loss			12				86				(123	)			(4	)
Adjusted EBITDA – continuing operations		$	(3,230	)		$	4,875			$	(3,088	)		$	5,496

NOTE 1 — Non-GAAP Financial Measures

Adjusted EBITDA-Continuing Operations

Adjusted EBITDA is not calculated through the application of GAAP and is not the required form of disclosure by the U.S. Securities and Exchange Commission. Adjusted EBITDA is the sum of the Company’s income (loss) from continuing operations before interest expense, net, and income tax (benefit) expense and unusual gains or charges. It also excludes non-cash charges such as depreciation and amortization and stock-based compensation. The Company’s management believes adjusted EBITDA is an important measure of operating performance because it allows management, investors and others to evaluate and compare the performance of its core operations from period to period by removing the impact of the capital structure (interest), tangible and intangible asset base (depreciation and amortization), taxes and certain non-cash expenses and unusual gains or charges (such as stock-based compensation, severance costs, other professional fees, and foreign currency (gain) loss) which are not always commensurate with the reporting period in which such items are included. Williams’ credit facilities also contain ratios based on EBITDA. Adjusted EBITDA should not be considered an alternative to net income or income from continuing operations or as a better measure of liquidity than net cash flows from operating activities, as determined by GAAP, and, therefore, should not be used in isolation from, but in conjunction with, the GAAP measures. The use of any non-GAAP measure may produce results that vary from the GAAP measure and may not be comparable to a similarly defined non-GAAP measure used by other companies.

Note Regarding Forward-Looking Non-GAAP Financial Measures

The Company does not provide a reconciliation of forward-looking non-GAAP financial measures to their comparable GAAP financial measures because it could not do so without unreasonable effort due to the unavailability of the information needed to calculate reconciling items and due to the variability, complexity and limited visibility of the adjusting items that would be excluded from the non-GAAP financial measures in future periods. When planning, forecasting and analyzing future periods, the Company does so primarily on a non-GAAP basis without preparing a GAAP analysis.

View source version on businesswire.com: https://www.businesswire.com/news/home/20220811005726/en/

Chris Witty

Darrow Associates

646-345-0998

[email protected]

KEYWORDS: Georgia United States North America

INDUSTRY KEYWORDS: Nuclear Energy Other Energy Oil/Gas

MEDIA:

Posted on August 11, 2022 7:05 pm

Markforged Announces Second Quarter 2022 Results

Markforged Announces Second Quarter 2022 Results

WATERTOWN, Mass.–(BUSINESS WIRE)–
Markforged Holding Corporation (NYSE: MKFG) (the “Company”), creator of the integrated metal and carbon fiber additive manufacturing platform, The Digital Forge, today announced its results from the second quarter ended June 30, 2022.

Financial Highlights

• Revenue increased by 19%, to $24.2 million, in the second quarter of 2022 from $20.4 million in the second quarter of 2021.
• Gross margin was 53% in the second quarter of 2022 compared to 58% in the second quarter of 2021.
• Non-GAAP gross margin was 54% in the second quarter of 2022 compared to 59% in the second quarter of 2021.
• Net profit (loss) was a profit of $4.1 million in the second quarter of 2022, compared to a net loss of $11.1 million in the second quarter of 2021.
• Non-GAAP net profit (loss) was a loss of $16.8 million in the second quarter of 2022, compared to a net loss of $8.1 million in the second quarter of 2021.
• GAAP earnings per share was a profit of $0.02 for the second quarter of 2022, compared to a loss of $0.28 in the second quarter of 2021.
• Non-GAAP earnings per share was a loss of $0.09 for the second quarter of 2022, compared to a loss of $0.20 in the second quarter of 2021.
• Cash and cash equivalents were $243.2 million as of June 30, 2022.

Reconciliations of the non-GAAP financial measures provided in this press release to their most directly comparable GAAP financial measures are provided in the financial tables included at the end of this press release. An explanation of these measures and how they are calculated is also included under the heading “Non-GAAP Financial Measures.”

“Demand for The Digital Forge continues to grow. Our customers realize the value of our additive solutions as they solve for a growing number of applications with high-quality parts right at the point of need, especially in the current global environment racked with supply chain challenges,” said Shai Terem, President and CEO of Markforged. “We continue to make great strides in executing on our strategy thanks to great efforts from our talented team. We feel very confident in our long-term opportunity to extend our leadership position in distributed manufacturing as our product portfolio grows and evolves. The pending acquisition of Digital Metal, coupled with our organic product innovation engine, will continue to expand our addressable market and help our customers solve even more industrial manufacturing challenges.”

Business Highlights

The pipeline for The Digital Forge remained strong across products and continued to grow for Markforged’s newest printer, the FX20. Global orders for the FX20 in particular exceed Markforged’s expectations.

Markforged expanded its addressable market by entering into a definitive agreement with Höganäs AB to acquire Digital Metal, the creator of a leading binder jetting solution known to be precise and reliable for mass production of metal parts. Expected to close in the third quarter, this acquisition will extend Markforged’s capabilities into high-throughput production of metal additive parts and open the door for new applications in industries such as automotive, medical, luxury goods and countless others.

The Company is committed to its long-term strategy, and has made calculated investments in both organic and inorganic growth over the last quarter. The Company’s product innovation pipeline continues to mature with multiple programs in development. The Markforged team also grew during the last quarter to approximately 450 employees.

2022 Guidance

“Our customers realize the value of The Digital Forge and while our pipeline continues to grow, we have started to see the impact of the uncertainty created by global macroeconomic conditions,” said Mark Schwartz, Chief Financial Officer of Markforged. “Our sales cycles are growing longer due to customers’ hesitation to commit to capital expenses in this current environment. We are therefore adjusting our guidance accordingly. Our confidence in our medium- to long-term outlook has not changed.”

Markforged has updated its full-year 2022 guidance. Revenue is expected to be within the range of $100-115 million, and non-GAAP gross margins are expected to be within the range of 52%-54%. Non-GAAP operating loss for the full year is expected to be within the range of $54-$59 million, resulting in an expected EPS loss in the range of $0.29-$0.32 per share, based on an outstanding share count of approximately 192 million shares.

Conference Call and Webcast Information

The Company will host a webcast and conference call at 5:00 PM ET today, Thursday, August 11, to discuss the results.

Participants may access the earnings press release, related materials and the audio webcast by visiting the investors section of the Company’s website at https://investors.markforged.com/.

To participate in the call, please dial 1-855-327-6837, or 1-631-891-4304 for international participants, ten minutes before the scheduled start.

For those unable to listen to the live conference call, a replay will be available on the Company’s website and telephonically through Thursday, August 25, 2022 by dialing 1-844-512-2921 (U.S. domestic) or 1-412-317-6671 (International), passcode 10019757.

About Markforged

Markforged (NYSE: MKFG) is reimagining how humans build everything by leading a technology-driven transformation of manufacturing with solutions for enterprises and societies throughout the world. The Markforged Digital Forge brings the power and speed of agile software development to industrial manufacturing, combining hardware, software, and materials to solve supply chain problems right at the point of need. Engineers, designers, and manufacturing professionals all over the world rely on Markforged metal and composite printers for tooling, fixtures, functional prototyping, and high-value end-use production. Markforged is headquartered in Watertown, Mass., where it designs its products with approximately 450 employees worldwide. To learn more, visit www.markforged.com.

Non-GAAP Financial Measures

In addition to our financial results determined in accordance with U.S. generally accepted accounting principles (“GAAP”), we believe that non-GAAP gross margin, non-GAAP operating profit (loss), and non-GAAP earnings per share, each a non-GAAP financial measure, is useful in evaluating the performance of our business.

These non-GAAP measures have limitations as an analytical tool. We do not, nor do we suggest that investors should, consider such non-GAAP financial measures in isolation from, or as a substitute for, financial information prepared in accordance with GAAP. Investors should also note that the non-GAAP financial measures we use may not be the same non-GAAP financial measures, and may not be calculated in the same manner, as that of other companies, including other companies in our industry.

We recommend that you review the reconciliation of these non-GAAP measures to the most directly comparable GAAP financial measures provided in the financial statement tables included below in this press release, and that you not rely on any single financial measure to evaluate our business. Additionally, to the extent that forward-looking non-GAAP financial measures are provided, they are presented on a non-GAAP basis without reconciliations of such forward-looking non-GAAP measures due to the inherent difficulty in forecasting and quantifying certain amounts that are necessary for such reconciliations.

Investors should note that beginning with the second quarter of 2022, we have modified the presentation of “non-recurring costs” included in non-GAAP gross margin, non-GAAP operating profit (loss), non-GAAP net profit (loss) and non-GAAP earnings per share metrics to include certain non-recurring litigation costs. We use these metrics to provide an understanding of the results of its core business performance and believe these non-recurring litigation costs are reflective of one-time expenses that are not indicative of the performance of our core business’ operations. This change increases “non-recurring costs” by $0.6 million and $1.0 million in the first and second quarters of 2022, respectively, and by $3.7 million and $0.9 million in the first and second quarters of 2021, respectively. To conform to the current period’s presentation, we have included non-recurring litigation costs as “non-recurring costs” when presenting the foregoing non-GAAP figures for the year to date period and periods presented for 2021.

The following are the non-GAAP financial measures referenced in this press release and presented in the tables below:

• Non-GAAP gross margin is defined as GAAP operating profit (loss), less stock-based compensation expense and certain non-recurring costs, divided by revenue.
• Non-GAAP operating profit (loss) is defined as GAAP operating profit (loss) less stock-based compensation expense and certain non-recurring costs.
• Non-GAAP net profit (loss) is defined as GAAP net profit (loss) and comprehensive income (loss) less stock-based compensation expense, net change in fair value of warrant liabilities and contingent earnout liabilities, and certain non-recurring costs.
• Non-GAAP earnings per share is defined as GAAP net profit (loss) and comprehensive income (loss) less stock-based compensation expense, net change in fair value of warrant liabilities and contingent earnout liabilities, and certain non-recurring costs, divided by diluted weighted average shares outstanding for the period.

Special Note Regarding Forward-Looking Statements

This press release contains forward-looking statements that are based on beliefs and assumptions and on information currently available. In some cases, you can identify forward-looking statements by the following words: “may,” “will,” “could,” “would,” “should,” “expect,” “intend,” “plan,” “strategy,” “anticipate,” “believe,” “estimate,” “predict,” “project,” “potential,” “continue,” “ongoing,” “opportunity” or the negative of these terms or other comparable terminology, although not all forward-looking statements contain these words. These statements involve risks, uncertainties and other factors that may cause actual results, levels of activity, performance or achievements to be materially different from the information expressed or implied by these forward-looking statements. Although Markforged believes that it has a reasonable basis for each forward-looking statement contained in this press release, Markforged cautions you that these statements are based on a combination of facts and factors currently known by it and its projections of the future, about which it cannot be certain. Forward-looking statements in this press release include, but are not limited to, future growth rate, revenue, gross profit margin and earnings guidance; expected growth, the size of and opportunity to increase our addressable market; the anticipated benefits of the acquisition of Digital Metal, the rate and extent of adoption of our products, including, but not limited to, our most recently introduced products; the effects of macroeconomic factors; and the benefits to consumers, functionality and applications of Markforged’s products. Markforged cannot assure you that the forward-looking statements in this press release will prove to be accurate. These forward looking statements are subject to a number of risks and uncertainties, including, among others, general economic, political and business conditions; the ability of Markforged to maintain its listing on the New York Stock Exchange; the effect of COVID-19 on Markforged’s business and financial results; the outcome of any legal proceedings against Markforged; and those factors discussed under the header “Risk Factors” in Markforged’s most recent periodic and other filings with the SEC. Furthermore, if the forward-looking statements prove to be inaccurate, the inaccuracy may be material. In light of the significant uncertainties in these forward-looking statements, you should not regard these statements as a representation or warranty by us or any other person that Markforged will achieve its objectives and plans in any specified time frame, or at all. The forward-looking statements in this press release represent Markforged’s views as of the date of this press release. Markforged anticipates that subsequent events and developments will cause its views to change. However, while Markforged may elect to update these forward-looking statements at some point in the future, Markforged has no current intention of doing so except to the extent required by applicable law. You should, therefore, not rely on these forward-looking statements as representing Markforged’s views as of any date subsequent to the date of this press release.

MARKFORGED HOLDING CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
As of June 30, 2022 and December 31, 2021
(In thousands, except share data and par value amounts) (Unaudited)
		June 30, 2022				December 31, 2021
Assets
Current assets
Cash and cash equivalents		$	243,216			$	288,603
Accounts receivable, net			26,570				26,777
Inventory			19,321				10,377
Prepaid expenses			1,338				3,921
Other current assets			2,517				511
Total current assets			292,962				330,189
Property and equipment, net			6,939				6,349
Goodwill			4,475				—
Intangible assets			2,215				—
Right-of-use assets			46,689				—
Other assets			2,858				776
Total assets		$	356,138			$	337,314
Liabilities and Stockholders’ Equity
Current liabilities
Accounts payable		$	10,518			$	11,403
Accrued expenses			9,525				7,411
Deferred revenue			5,780				6,288
Operating lease liabilities			7,667				—
Other current liabilities			53				310
Total current liabilities			33,543				25,412
Long-term deferred revenue			4,083				3,742
Deferred rent			—				1,623
Contingent earnout liability			8,084				59,722
Long-term operating lease liabilities			41,497				—
Other liabilities			2,579				2,646
Total liabilities			89,786				93,145
Commitments and contingencies
Stockholders’ equity
Common stock, $0.0001 par value; 1,000,000,000 shares authorized at June 30, 2022 and December 31, 2021; 188,482,934 and 185,993,058 shares issued at June 30, 2022 and December 31, 2021, respectively			19				19
Additional paid-in capital			333,728				319,859
Accumulated deficit			(67,395	)			(75,709	)
Total stockholders’ equity			266,352				244,169
Total liabilities and stockholders’ equity		$	356,138			$	337,314

MARKFORGED HOLDING CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND
COMPREHENSIVE INCOME (LOSS)
For the Three and Six Months Ended June 30, 2022 and 2021
(In thousands, except share data and per share data) (Unaudited)
	Three Months Ended June 30,								Six Months Ended June 30,
	2022				2021				2022				2021
Revenue	$	24,227			$	20,419			$	46,086			$	40,539
Cost of revenue		11,302				8,496				21,555				16,435
Gross profit		12,925				11,923				24,531				24,104
Operating expenses
Sales and marketing		12,873				8,255				23,321				15,312
Research and development		10,387				6,444				20,954				11,703
General and administrative		13,478				7,959				25,221				16,822
Total operating expenses		36,738				22,658				69,496				43,837
Loss from operations		(23,813	)			(10,735	)			(44,965	)			(19,733	)
Change in fair value of warrant liabilities		976				(241	)			1,669				(1,251	)
Change in fair value of contingent earnout liability		26,742				—				51,638				—
Other expense		(171	)			(104	)			(390	)			(117	)
Interest expense		(9	)			(5	)			(9	)			(9	)
Interest income		354				1				374				3
Profit (loss) before income taxes		4,079				(11,084	)			8,317				(21,107	)
Income tax benefit		4				6				3				2
Net profit (loss) and comprehensive income (loss)	$	4,075			$	(11,090	)		$	8,314			$	(21,109	)
Weighted average shares outstanding – basic		188,102,342				39,855,379				187,247,566				39,649,848
Weighted average shares outstanding – diluted		188,876,763				39,855,379				188,329,331				39,649,848
Net profit (loss) per share – basic	$	0.02			$	(0.28	)		$	0.04			$	(0.53	)
Net profit (loss) per share – diluted		0.02				(0.28	)			0.04				(0.53	)

MARKFORGED HOLDING CORPORATION
RECONCILIATION OF GAAP TO NON-GAAP MEASURES
For the Three and Six Months Ended June 30, 2022 and 2021
(In thousands) (Unaudited)
	​	Three Months Ended June 30,							​	For the Six Months Ended June 30,
	​	2022				2021			​	2022				2021
Net profit (loss) and comprehensive income (loss)	​	$	4,075			$	(11,090	)	​	$	8,314			$	(21,109	)
Stock compensation expense	​		4,912				1,777		​		10,334				2,971
Change in fair value of warrant liabilities			(976	)			241				(1,669	)			1,251
Change in fair value of contingent earnout liability			(26,742	)			—				(51,638	)			—
Non-recurring costs1			1,937				930		​		2,984				4,633
Non-GAAP net loss 2	​	$	(16,794	)		$	(8,142	)	​	$	(31,675	)		$	(12,254	)

—————————————————————————————————————————

1		Non-recurring costs primarily relate to transaction and litigation expenses. Expenses for the six months ended June 30, 2022, includes $1,047 of non-recurring litigation and transaction costs incurred in the first quarter of 2022.
2		Stock-based compensation expense and non-recurring costs were included in the following GAAP consolidated statement of operations categories:

		Three Months Ended June 30,					​	Six Months Ended June 30,
		2022			2021		​	2022			2021
Cost of revenue		$	102		$	62		$	217		$	89
Sales and marketing			775			237			1,624			320
Research and development			1,572			394			2,991			725
General and administrative			4,400			2,014			8,486			6,470
Total operating expense			6,747			2,645			13,101			7,515
Total adjustments		$	6,849		$	2,707		$	13,318		$	7,604

MARKFORGED HOLDING CORPORATION
NON-GAAP RECONCILIATION
THREE MONTHS ENDED JUNE 30, 2022 AND 2021
(In thousands, except share data and per share data) (Unaudited)
	Three Months Ended June 30, 2022											Three Months Ended June 30, 2021
	GAAP				Adjustments			Non-GAAP*				GAAP				Adjustments			Non-GAAP*
Revenue	$	24,227			—			$	24,227			$	20,419			—			$	20,419
Cost of revenue		11,302			(102	)			11,200				8,496			(62	)			8,434
Gross profit		12,925			102				13,027				11,923			62				11,985
Operating expenses
Sales and marketing		12,873			(775	)			12,098				8,255			(237	)			8,018
Research and development		10,387			(1,572	)			8,815				6,444			(394	)			6,050
General and administrative		13,478			(4,400	)			9,078				7,959			(2,014	)			5,945
Total operating expenses		36,738			(6,747	)			29,991				22,658			(2,645	)			20,013
Loss from operations		(23,813	)		6,849				(16,964	)			(10,735	)		2,707				(8,028	)
Change in fair value of warrant liabilities		976			(976	)			—				(241	)		241				—
Change in fair value of contingent earnout liability		26,742			(26,742	)			—				—			—				—
Other expense		(171	)		—				(171	)			(104	)		—				(104	)
Interest expense		(9	)		—				(9	)			(5	)		—				(5	)
Interest income		354			—				354				1			—				1
Profit (loss) before income taxes		4,079			(20,869	)			(16,790	)			(11,084	)		2,948				(8,136	)
Income tax (benefit) expense		4							4				6							6
Net profit (loss) and comprehensive income (loss)	$	4,075			(20,869	)		$	(16,794	)		$	(11,090	)		2,948			$	(8,142	)
Weighted average shares outstanding – basic		188,102,342							188,102,342				39,855,379							39,855,379
Weighted average shares outstanding – diluted		188,876,763							188,876,763				39,855,379							39,855,379
Net profit (loss) per share – basic	$	0.02						$	(0.09	)		$	(0.28	)					$	(0.20	)
Net profit (loss) per share – diluted		0.02							(0.09	)			(0.28	)						(0.20	)

MARKFORGED HOLDING CORPORATION
NON-GAAP RECONCILIATION
SIX MONTHS ENDED JUNE 30, 2022 AND 2021
(In thousands, except share data and per share data) (Unaudited)
	Six Months Ended June 30, 2022											Six Months Ended June 30, 2021
	GAAP				Adjustments			Non-GAAP*				GAAP				Adjustments			Non-GAAP*
Revenue	$	46,086			—			$	46,086			$	40,539			—			$	40,539
Cost of revenue		21,555			(217	)			21,338				16,435			(89	)			16,346
Gross profit		24,531			217				24,748				24,104			89				24,193
Operating expenses
Sales and marketing		23,321			(1,624	)			21,697				15,312			(320	)			14,992
Research and development		20,954			(2,991	)			17,963				11,703			(725	)			10,978
General and administrative		25,221			(8,486	)			16,735				16,822			(6,470	)			10,352
Total operating expenses		69,496			(13,101	)			56,395				43,837			(7,515	)			36,322
Loss from operations		(44,965	)		13,318				(31,647	)			(19,733	)		7,604				(12,129	)
Change in fair value of warrant liabilities		1,669			(1,669	)			—				(1,251	)		1,251				—
Change in fair value of contingent earnout liability		51,638			(51,638	)			—				—			—				—
Other expense		(390	)		—				(390	)			(117	)		—				(117	)
Interest expense		(9	)		—				(9	)			(9	)		—				(9	)
Interest income		374			—				374				3			—				3
Profit (loss) before income taxes		8,317			(39,989	)			(31,672	)			(21,107	)		8,855				(12,252	)
Income tax (benefit) expense		3			—				3				2			—				2
Net profit (loss) and comprehensive income (loss)	$	8,314			(39,989	)		$	(31,675	)		$	(21,109	)		8,855			$	(12,254	)
Weighted average shares outstanding – basic		187,247,566							187,247,566				39,649,848							39,649,848
Weighted average shares outstanding – diluted		188,329,331							188,329,331				39,649,848							39,649,848
Net profit (loss) per share – basic	$	0.04						$	(0.17	)		$	(0.53	)					$	(0.31	)
Net profit (loss) per share – diluted		0.04							(0.17	)			(0.53	)						(0.31	)

MARKFORGED HOLDING CORPORATION
DISAGGREGATED REVENUE BY NATURE OF PRODUCTS AND SERVICES
(In thousands) (Unaudited)
		Three Months Ended June 30,						Six Months Ended June 30,
(in thousands)		2022			2021			2022			2021
Hardware		$	16,011		$	14,331		$	30,527		$	28,569
Consumables			5,889			4,780			11,345			9,397
Services			2,327			1,308			4,214			2,573
Total Revenue		$	24,227		$	20,419		$	46,086		$	40,539

 

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Paulina Bucko, Head of Communications

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Austin Bohlig, Director of Investor Relations

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KEYWORDS: Massachusetts United States North America

INDUSTRY KEYWORDS: Machine Tools, Metalworking & Metallurgy Engineering Chemicals/Plastics Manufacturing Machinery Steel

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