Market Newsdesk

August 2, 2022 6:20 am

FranklinCovey Launches New Module: Fundamental Beliefs of Trust & Inspire Leaders

FranklinCovey Launches New Module: Fundamental Beliefs of Trust & Inspire Leaders

Content from Stephen M. R. Covey’s Wall Street Journal Bestseller, Trust & Inspire, Offers New Framework of Beliefs to Transform the Leadership Style of Leaders at All Levels in Every Organization

SALT LAKE CITY–(BUSINESS WIRE)–FranklinCovey (NYSE: FC), the most trusted leadership company in the world, today announced the launch of its newest module, Fundamental Beliefs of Trust & Inspire Leaders. It offers leaders at all levels a framework of beliefs to transform their leadership style from “Command & Control” to “Trust & Inspire.” People with this kind of leader are inspired to become the best version of themselves and to produce their best work (WATCH VIDEO).

Available through the FranklinCovey All Access Pass®, the module is based on content from the newly released Wall Street Journal bestseller, Trust & Inspire: How Truly Great Leaders Unleash Greatness in Others,authored by Stephen M. R. Covey, FranklinCovey Trust Practice CEO, with David Kasperson, McKinlee Covey, and Gary T. Judd. Covey has made it his life’s work to understand trust in leadership and organizations, and has previously authored The New York Times and #1 Wall Street Journal bestseller,The Speed of Trust: The One Thing That Changes Everything, which has sold over two million copies in 22 languages.

With sweeping changes in the world that are radically altering the nature of work and the workforce, organizations are being forced to confront the urgent need for their leaders to acquire a new leadership style. Most still operate from a model rooted in Command and Control which focuses on hierarchies and compliance from people. This traditional leadership style prevails globally in 92 percent of organizations today, but it doesn’t inspire the level of belonging, commitment, motivation, collaboration, innovation, and performance that’s so vital today.

“The world has changed, but our style of leadership has not,” said Stephen M.R. Covey. “No leader or organization can win in the workplace or in the marketplace by continuing to rely on outdated, short-term ‘carrot and stick’ methods of driving performance. People don’t want to be managed; they want to be led. They don’t just want to be motivated; they want to be trusted and inspired. Inspired employees are 56 percent more productive than engaged employees. And contrary to what most people believe, inspiring others is a learnable skill. Anyone can be this kind of leader, and everyone needs and deserves this kind of leadership.”

Trust & Inspire leadership is the solution to the future of work. It represents a radical shift in the way leaders see and lead others. It’s more accurate, complete, and relevant, because its focus is on releasing, rather than containing the potential in each person.

“This module offers a powerful learning experience for anyone who directly or indirectly leads someone and is the first step to becoming a Trust & Inspire leader,” said Covey. “Trust & Inspire leaders behave differently because they think differently. They have an expansive view of people and leadership and understand and are guided by five fundamental beliefs about human effectiveness that transform how they live and work. As they internalize and act in accordance with these beliefs, they create the conditions whereby individuals and organizations flourish and perform at even greater levels of performance.”

The cumulative effect of these fundamental beliefs creates a Trust & Inspire leadership mindset, which allows leaders to get phenomenal results in ways that grow people:

People have greatness inside them, so my job as a leader is to unleash their potential, not control them.

Enduring influence is created from the inside out, so my job as a leader is to go first.

There is enough for everyone, so my job as a leader is to elevate caring above competing.

People are whole people, so my job as a leader is to inspire, not merely motivate.

Leadership is stewardship, so my job as a leader is to put service above self-interest.

Fundamental Beliefs of Trust & Inspire Leaders focuses on the following objectives and outcomes:

OBJECTIVE

Discover the extraordinary potential and performance unleashed by Trust & Inspire leaders

OUTCOME

Leaders with increased confidence about the new way to lead: Trust & Inspire. They choose to extend smart trust and inspire people to deliver their best results.

Identify barriers to becoming a Trust & Inspire leader and explore solutions for each.

Leaders break with self-limiting beliefs. They prioritize creating conditions where people collaborate and innovate successfully.

Understand and apply the fundamental beliefs of Trust & Inspire leaders

Leaders adopt expansive beliefs about people and leadership. These beliefs guide leaders to think and act in ways that elevate others’ growth to the level of delivering results.

Paul Walker, FranklinCovey CEO said, “Fundamental Beliefs of Trust & Inspire Leaders helps participants to see, communicate, develop, and unleash the greatness in everyone they lead. They learn how to recognize and act on the inherent desire within all people to make meaningful contributions and they ignite individual and organizational performance to the highest level, which is so critical today.”

Availability

FranklinCovey’s Fundamental Beliefs of Trust & Inspire Leaders is available to clients through the FranklinCovey All Access Pass in multiple learning modalities: Live-Online, Live-in-Person, and On Demand, The Live-Online format is 90 minutes. The Live-in-Person experience is 2 hours. On Demand is designed as a 30-minute module. The module is offered in English-only at launch.

Trust & Inspire Reinforcement Coaching provides the full experience of Trust & Inspire. FranklinCovey consultants lead a series of virtual coaching sessions in 1-on-1 or group format with 6 x 50-minute sessions, typically every week or every other week.

Clients may also request a Trust & Inspire keynote to be delivered by Stephen M. R. Covey or other certified Trust & Inspire keynote speakers. For more information, contact David Kasperson ([email protected]).

The FranklinCovey All Access Pass allows clients to expand their reach, achieve the business objectives, and sustainably impact performance. It provides access to a vast library of FranklinCovey content, including assessments, training courses, tools, and resources. For more information, call 888-868-1776.

About FranklinCovey

FranklinCovey (NYSE: FC) is the most trusted leadership company in the world with operations in over 160 countries. We transform organizations by partnering with our clients to build leaders, teams, and cultures that get breakthrough results through collective action, which leads to a more engaging work experience for their people. Available through the FranklinCovey All Access Pass, our best-in-class content and solutions, experts, technology, and metrics seamlessly integrate together to ensure lasting behavior change at scale. This approach to leadership and organizational change has been tested and refined by working with tens of thousands of teams and organizations over the past 30 years. To learn more, visit www.franklincovey.com and enjoy exclusive content across FranklinCovey’s social media channels: LinkedIn, Facebook, Twitter, Instagram, and YouTube.

View source version on businesswire.com: https://www.businesswire.com/news/home/20220802005430/en/

Debra Lund: FranklinCovey

[email protected]

801-244-4474

KEYWORDS: Utah United States North America

INDUSTRY KEYWORDS: Professional Services Other Professional Services Thought Leadership Environment Sustainability Human Resources Consulting

MEDIA:

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Posted on August 2, 2022 6:20 am
Syneos Health Reports Second Quarter 2022 Results

Revenue for the second quarter of $1,360.7 million increased 6.1% on a reported basis and 8.3% on a constant currency basis year-over-year.

Clinical Solutions net new business awards and book-to-bill ratios:

Including reimbursable out-of-pocket expenses, $947.4 million for the second quarter, a year-over-year decline of 34.2% and a book-to-bill ratio of 0.92x, and $3,901.5 million for the trailing twelve months, a year-over-year decline of 21.7% and a book-to-bill ratio of 0.94x.

Excluding reimbursable out-of-pocket expenses, $758.5 million for the second quarter, a year-over-year decline of 15.1% and a book-to-bill ratio of 1.06x, and $3,608.6 million for the trailing twelve months, year-over-year growth of 10.5% and a book-to-bill ratio of 1.29x.

Commercial Solutions net new business awards and book-to-bill ratios:

Including reimbursable out-of-pocket expenses, $271.7 million for the second quarter, year-over-year growth of 0.3% and a book-to-bill ratio of 0.81x, and $1,400.3 million for the trailing twelve months, year-over-year growth of 12.4% and a book-to-bill ratio of 1.09x.

Excluding reimbursable out-of-pocket expenses, $238.1 million for the second quarter, year-over-year growth of 2.5% and a book-to-bill ratio of 0.83x, and $1,234.9 million for the trailing twelve months, year-over-year growth of 14.2% and a book-to-bill ratio of 1.11x.

Year-over-year ending backlog:

Including reimbursable out-of-pocket expenses, a year-over-year decline of 3.1% in Clinical Solutions and year-over-year growth of 14.4% in Deployment Solutions as of June 30, 2022.

Excluding reimbursable out-of-pocket expenses, year-over-year growth of 12.1% in Clinical Solutions and year-over-year growth of 19.6% in Deployment Solutions as of June 30, 2022.

GAAP net income of $77.7 million increased 85.5% from $41.9 million in the second quarter of 2021.

Adjusted EBITDA of $208.1 million increased 19.2% year-over-year.

GAAP diluted earnings per share of $0.75 increased 87.5% year-over-year.

Adjusted diluted earnings per share of $1.25 increased 28.9% year-over-year.

Updated full year 2022 guidance.

MORRISVILLE, N.C., Aug. 02, 2022 (GLOBE NEWSWIRE) — Syneos Health (Nasdaq:SYNH), the only fully integrated biopharmaceutical solutions organization, today reported financial results for the three and six months ended June 30, 2022.

“Our second quarter revenue and profitability reflect the strength of our strategy and our people’s skill in leading with a product development mindset to accelerate customer success in bringing critical therapies to patients,” said Michelle Keefe, CEO, Syneos Health. “As we enter the next chapter of growth for Syneos Health, we will focus our investments on the integration of clinical, medical affairs and commercial across complex therapeutic areas for customers, the streamlining of operations to drive innovation and simplification, and the further digitalization of our capabilities using AI, data and insights to unlock additional value within the business for all of our stakeholders.”

Please refer to the “Use of Non-GAAP Financial Measures” and “Reconciliation of GAAP to Non-GAAP Measures” included in this press release and accompanying tables for important disclosures about non-GAAP measures and a reconciliation of these measures to the nearest GAAP measures.

Second Quarter 2022 Results

Revenue of $1,360.7 million increased 6.1% on a reported basis and 8.3% on a constant currency basis for the three months ended June 30, 2022, compared to the same period in the prior year, driven by growth in both the Clinical Solutions and Commercial Solutions segments. Revenue was below the midpoint of the Company’s guidance due to lower reimbursable expenses in Clinical Solutions and the impacts of foreign exchange. Clinical Solutions revenue increased 3.3% on a reported basis and 5.6% on a constant currency basis to $1,025.7 million. Acquisitions contributed approximately 90 basis points to Clinical Solutions reported revenue growth. Commercial Solutions revenue increased 15.7% on a reported basis and 17.5% on a constant currency basis to $335.0 million. Prior period segment results have been recast to conform to insignificant changes to management reporting in 2022.

GAAP net income for the three months ended June 30, 2022 increased 85.5% to $77.7 million, resulting in diluted earnings per share of $0.75, compared to GAAP net income of $41.9 million, or diluted earnings per share of $0.40, for the three months ended June 30, 2021. Adjusted net income for the three months ended June 30, 2022 increased 26.9% to $129.1 million, resulting in adjusted diluted earnings per share of $1.25, compared to adjusted net income of $101.7 million, or adjusted diluted earnings per share of $0.97, for the three months ended June 30, 2021.

Adjusted EBITDA for the three months ended June 30, 2022, increased 19.2% to $208.1 million from the prior year.

First Half 2022 Results

Revenue of $2,697.0 million increased 8.3% on a reported basis and 9.9% on a constant currency basis for the six months ended June 30, 2022, compared to the same period in the prior year. Clinical Solutions revenue increased 5.8% on a reported basis and 7.6% on a constant currency basis to $2,044.1 million. Acquisitions contributed approximately 95 basis points to Clinical Solutions reported revenue growth. Commercial Solutions revenue increased 16.8% on a reported basis and 18.2% on a constant currency basis to $652.9 million.

GAAP net income for the six months ended June 30, 2022, increased 53.7% to $123.9 million, resulting in diluted earnings per share of $1.19, compared to GAAP net income of $80.6 million, or diluted earnings per share of $0.77, for the six months ended June 30, 2021. Adjusted net income for the six months ended June 30, 2022 increased 26.6% to $234.2 million, resulting in adjusted diluted earnings per share of $2.26, compared to adjusted net income of $184.9 million, or adjusted diluted EPS of $1.76, for the six months ended June 30, 2021.

Adjusted EBITDA for the six months ended June 30, 2022 increased 17.2% to $381.7 million from the prior year.

Net New Business Awards and Backlog

Net new business awards and book-to-bill ratios for the three and twelve months ended June 30, 2022 were as follows (dollars in millions):

Three Months Ended

June 30, 2022 Twelve Months Ended

June 30, 2022

Net new business awards Book-to-bill

ratio Net new business awards Book-to-bill

ratio

Including reimbursable out-of-pocket expenses (a):

Clinical Solutions $ 947.4 0.92 x $ 3,901.5 0.94 x

Commercial Solutions 271.7 0.81 x 1,400.3 1.09 x

Total $ 1,219.1 0.90 x $ 5,301.8 0.98 x

Excluding reimbursable out-of-pocket expenses:

Clinical Solutions $ 758.5 1.06 x $ 3,608.6 1.29 x

Commercial Solutions 238.1 0.83 x 1,234.9 1.11 x

Total $ 996.6 0.99 x $ 4,843.5 1.24 x

Our backlog as of June 30, 2022, was as follows (dollars in millions):

Including reimbursable out-of-pocket expenses (a): 2022 2021 Change

Clinical Solutions $ 10,634.4 $ 10,972.6 (3.1 )%

Commercial Solutions – Deployment Solutions 821.6 718.4 14.4 %

Total backlog $ 11,456.0 $ 11,691.0 (2.0 )%

Excluding reimbursable out-of-pocket expenses:

Clinical Solutions $ 6,980.2 $ 6,227.6 12.1 %

Commercial Solutions – Deployment Solutions 658.3 550.6 19.6 %

Total backlog $ 7,638.5 $ 6,778.2 12.7 %

(a) Net new business awards and book-to-bill ratios including reimbursable out-of-pocket expenses for the trailing twelve months were impacted by the adjustment made to Clinical Solutions backlog in the fourth quarter of 2021 to reflect the Company’s expectation of reduced reimbursable expenses going forward.

Liquidity and Capital Management Update

Cash flows provided by operating activities were $99.9 million and $170.8 million during the three and six months ended June 30, 2022, respectively.

During the three months ended June 30, 2022, the Company repaid $95.0 million on its revolving credit facility, leaving remaining capacity of $550.9 million as of June 30, 2022. The Company’s Net Leverage Ratio was 3.4x trailing twelve months Adjusted EBITDA.

During the three months ended June 30, 2022, the Company did not repurchase any common stock. During the six months ended June 30, 2022, the Company repurchased $150.0 million of common stock and has $350.0 million of remaining share repurchase authorization available through December 31, 2024.

Full Year 2022 Business Outlook

The Company updated its full year 2022 guidance for revenue to reflect lower expected reimbursable expenses in its Clinical Solutions segment and the increased impact of foreign currency exchange rate fluctuations. The Company’s underlying expectations for constant currency revenue growth, excluding reimbursable expenses, remain unchanged from its prior guidance. The Company updated its full-year 2022 guidance for GAAP Net Income, GAAP diluted EPS, Adjusted EBITDA and Adjusted Diluted EPS to reflect accelerated investments in its operations during the second half of 2022 to drive future growth and margin expansion.

The Company’s guidance takes into account a number of factors, including existing backlog, current sales pipeline, trends in cancellations and delays, trends in reimbursable out-of-pocket expenses, and the Company’s ForwardBound initiative, which includes expansion of the Syneos Operations Network, process optimization, and automation initiatives. In addition, the guidance presented below represents the Company’s best efforts to estimate economic trends, including inflation, expected interest rates, the impact of COVID-19 and the war in Ukraine on its business. Furthermore, the guidance presented below is based on foreign currency exchange rates as of July 15, 2022, expected interest rates, and the Company’s expected non-GAAP effective tax rate of approximately 23.5% for the year ending December 31, 2022. The guidance is based upon the Company’s estimated number of weighted average diluted shares outstanding and does not take into account any share repurchases beyond the second quarter of 2022. The Company’s full year 2022 guidance is outlined below:

Updated Guidance Issued

August 2, 2022 Previous Guidance Issued

April 29, 2022

FY 2022 FY 2022

Low High Low High

(in millions, except per share data) (in millions, except per share data)

Revenue $ 5,440.0 $ 5,540.0 $ 5,600.0 $ 5,750.0

GAAP Net Income 281.8 289.6 283.9 300.5

GAAP Diluted EPS 2.72 2.79 2.73 2.89

Adjusted EBITDA 835.0 865.0 845.0 885.0

Adjusted Diluted EPS $ 4.97 $ 5.11 $ 5.05 $ 5.25

Webcast and Conference Call Details

Syneos Health will host a conference call at 9:00 a.m. ET on August 2, 2022, to discuss its second quarter 2022 financial results. The live webcast will be available in listen-only mode in the Events section of the Company’s Investor Relations website at investor.syneoshealth.com. To participate in conference, please register in advance at this link. Upon registration, all participants will receive a confirmation email detailing how to join the conference call, including the dial-in number along with a unique passcode and registrant ID that can be used to access the call.

A webcast replay will be available on the Investor Relations section of the Syneos Health website at investor.syneoshealth.com after 1:00 p.m. on August 2, 2022.

About Syneos Health

Syneos Health^® (Nasdaq:SYNH) is the only fully integrated biopharmaceutical solutions organization purpose-built to accelerate customer success. We lead with a product development mindset, strategically blending clinical development, medical affairs and commercial capabilities to address modern market realities.

We bring together more than 29,000 minds, across more than 110 countries, with a deep understanding of patient and physician behaviors and market dynamics. Together we share insights, use the latest technologies and apply advanced business practices to speed our customers’ delivery of important therapies to patients.

Syneos Health supports a diverse, equitable and inclusive culture that cares for colleagues, customers, patients, communities and the environment.

To learn more about how we are Shortening the distance from lab to life^®, visit syneoshealth.com or subscribe to our podcast.

Forward-Looking Statements

Except for historical information, all of the statements, expectations, and assumptions contained in this press release are forward-looking statements as that term is defined in the Private Securities Litigation Reform Act of 1995, including the future impact of the COVID-19 pandemic, inflation, and the war between Russia and Ukraine on our business, financial results and financial condition, expected interest rates, anticipated financial results for the full year 2022, our sales pipeline, existing backlog and expectations of net awards, expected non-GAAP tax rate, trends in reimbursable out-of-pocket expenses, benefits of recent acquisitions, and plans for capital deployment. Actual results might differ materially from those explicit or implicit in the forward-looking statements. Important factors that could cause actual results to differ materially include, but are not limited to: risks associated with the COVID-19 pandemic; the Company’s potential failure to generate a large number of new business awards and the risk of delay, termination, reduction in scope, or failure to go to contract of our business awards; the Company’s potential failure to convert backlog to revenue; fluctuations in the Company’s operating results and effective income tax rate; the impact of potentially underpricing the Company’s contracts, overrunning our cost estimates, or failing to receive approval for or experiencing delays with documentation of change orders; cyber-security and other risks associated with the Company’s information systems infrastructure; changes and costs of compliance with regulations related to data privacy; concentration of the Company’s customers or therapeutic areas; the risks associated with doing business internationally, including risks related to the war in Ukraine; challenges by tax authorities of the Company’s intercompany transfer pricing policies; the Company’s potential failure to successfully increase its market share, grow its business, and execute its growth strategies; the Company’s ability to effectively upgrade its information systems; the Company’s failure to perform its services in accordance with contractual requirements, regulatory standards, and ethical considerations; risks related to the management of clinical trials; the need to hire, develop, and retain key personnel; the impact of unfavorable economic conditions, including the uncertain international economic environment, changes in foreign currency exchange rates; effective income tax rate fluctuations; the Company’s ability to protect its intellectual property; risks related to the Company’s acquisition strategy, including its ability to realize synergies; the Company’s relationships with customers who are in competition with each other; any failure to realize the full value of the Company’s goodwill and intangible assets; risks related to restructuring; the Company’s compliance with anti-corruption and anti-bribery laws; the Company’s dependence on third parties; potential employment liability; impacts from increasing focus on environmental sustainability and social initiatives; the Company’s ability to utilize net operating loss carryforwards and other tax attributes; downgrades of the Company’s credit ratings; competition in the biopharmaceutical services industry; outsourcing trends and changes in aggregate spending and research and development budgets; the impact of, including changes in, government regulations and healthcare reform; intense competition faced by our customers from lower cost generic products and other competing products; the Company’s ability to keep pace with rapid technological change; the cost of and the Company’s ability to service its substantial indebtedness; other risks related to ownership of the Company’s common stock; and other risk factors set forth in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2021 as updated by the Company’s other SEC filings, copies of which are available free of charge on the Company’s website at investor.syneoshealth.com. The Company assumes no obligation and does not intend to update these forward-looking statements, except as required by law.

Use of Non-GAAP Financial Measures and Operating Metrics

In addition to the financial measures prepared in accordance with U.S. Generally Accepted Accounting Principles (“GAAP”), this press release contains certain non-GAAP financial measures, including adjusted net income (including adjusted diluted earnings per share), EBITDA, adjusted EBITDA, and non-GAAP effective income tax rate. We also present revenue growth in constant currency. Constant currency revenue growth is defined as revenues for a given period restated at the comparative period’s foreign currency exchange rates measured against the comparative period’s revenues. Constant currency segment revenue growth is defined as revenue for a given period restated at the comparative period’s foreign currency exchange rates measured against the comparative period’s revenues.

A “non-GAAP financial measure” is generally defined as a numerical measure of a company’s financial performance that excludes or includes amounts from the most directly comparable measure calculated and presented in accordance with GAAP in the statements of operations, balance sheets, or statements of cash flows of the Company.

The Company defines adjusted net income (including adjusted diluted earnings per share) as net income (including diluted earnings per share) excluding acquisition-related amortization; restructuring and other costs; transaction, integration-related and other expenses; share-based compensation expense; gain or loss on extinguishment of debt; other income (expense), net; and the income tax effect of the above adjustments.

EBITDA represents earnings before interest, taxes, depreciation and amortization. The Company defines adjusted EBITDA as EBITDA, further adjusted to exclude expenses and transactions that the Company believes are not representative of its core operations, namely: restructuring and other costs; transaction, integration-related and other expenses; share-based compensation expense; other income (expense), net; and gain or loss on extinguishment of debt. The Company presents EBITDA and adjusted EBITDA because it believes they are useful metrics for investors as they are commonly used by investors, analysts and debt holders to measure the Company’s ability to fund capital expenditures and meet working capital requirements.

Net Leverage represents total debt less cash and cash equivalents divided by trailing twelve month Adjusted EBITDA.

Each of the non-GAAP measures noted above are used by management and the Board to evaluate the Company’s core operating results because they exclude certain items whose fluctuations from period-to-period do not necessarily correspond to changes in the core operations of the business. Adjusted net income (including adjusted diluted earnings per share) and adjusted EBITDA are used by management and the Board to assess the performance of the Company’s business.

Non-GAAP measures have limitations in that they do not reflect all of the amounts associated with the Company’s results of operations as determined in accordance with GAAP. Also, other companies might calculate these measures differently. Investors are encouraged to review the reconciliations of the non-GAAP financial measures to their most directly comparable GAAP measures included in this press release and the accompanying tables.

We also present certain key operating metrics, including a new operating metric, segment book-to-bill ratio excluding reimbursable out-of-pocket expenses, due to our expectations that reimbursable out-of-pocket expenses as a percentage of revenue will remain lower relative to pre-pandemic levels as discussed above. Specifically, Clinical Solutions book-to-bill ratio excluding reimbursable out-of-pocket expenses, represents Clinical Solutions net new business awards, excluding reimbursable out-of-pocket expenses, divided by Clinical Solutions revenue, excluding reimbursable out-of-pocket expenses, in each case for the respective period. Commercial Solutions book-to-bill ratio excluding reimbursable out-of-pocket expenses, represents Commercial Solutions net new business awards, excluding reimbursable out-of-pocket expenses, divided by Commercial Solutions revenue, excluding reimbursable out-of-pocket expenses, in each case for the respective period.

Investor Relations Contact:

Ronnie Speight
Senior Vice President, Investor Relations
Phone: +1 919 745 2745
Email: [email protected]
Press/Media Contact:

Gary Gatyas
Executive Director, External Communications
Phone: +1 908 763 3428
Email: [email protected]

Syneos Health, Inc. and Subsidiaries

Consolidated Statements of Operations

(in thousands, except per share data)
(unaudited)

Three Months Ended June 30, Six Months Ended June 30,

2022 2021 2022 2021

Revenue $ 1,360,739 $ 1,282,611 $ 2,696,992 $ 2,491,356

Costs and operating expenses:

Direct costs (exclusive of depreciation and amortization) 1,034,897 992,581 2,079,329 1,937,831

Selling, general, and administrative expenses 139,040 144,669 279,206 281,983

Restructuring and other costs 8,983 3,966 24,540 11,194

Depreciation 21,241 18,158 41,820 36,605

Amortization 39,980 39,553 81,603 79,044

Total operating expenses 1,244,141 1,198,927 2,506,498 2,346,657

Income from operations 116,598 83,684 190,494 144,699

Total other expense, net:

Interest expense, net 18,066 22,619 33,828 45,876

Loss on extinguishment of debt — 2,199 — 2,802

Other (income) expense, net (5,152 ) 7,827 (510 ) (2,029 )

Total other expense, net 12,914 32,645 33,318 46,649

Income before provision for income taxes 103,684 51,039 157,176 98,050

Income tax expense 25,940 9,134 33,256 17,421

Net income $ 77,744 $ 41,905 $ 123,920 $ 80,629

Earnings per share:

Basic $ 0.76 $ 0.40 $ 1.20 $ 0.77

Diluted $ 0.75 $ 0.40 $ 1.19 $ 0.77

Weighted average common shares outstanding:

Basic 102,596 103,937 103,130 104,105

Diluted 103,072 105,019 103,741 105,238

Syneos Health, Inc. and Subsidiaries

Consolidated Balance Sheets

(in thousands, except par value)
(unaudited)

June 30, 2022 December 31, 2021

ASSETS

Current assets:

Cash, cash equivalents, and restricted cash $ 105,988 $ 106,475

Accounts receivable and unbilled services, net 1,606,951 1,524,890

Prepaid expenses and other current assets 168,932 135,091

Total current assets 1,881,871 1,766,456

Property and equipment, net 254,891 222,657

Operating lease right-of-use assets 185,031 209,408

Goodwill 4,898,050 4,956,015

Intangible assets, net 759,436 854,067

Deferred income tax assets 33,670 35,387

Other long-term assets 203,723 193,103

Total assets $ 8,216,672 $ 8,237,093

LIABILITIES AND SHAREHOLDERS’ EQUITY

Current liabilities:

Accounts payable $ 99,319 $ 107,535

Accrued expenses 656,874 614,441

Deferred revenue 887,180 868,455

Current portion of operating lease obligations 40,408 43,058

Current portion of finance lease obligations 23,678 20,627

Total current liabilities 1,707,459 1,654,116

Long-term debt 2,811,831 2,775,721

Operating lease long-term obligations 181,994 205,798

Finance lease long-term obligations 49,389 34,181

Deferred income tax liabilities 82,519 78,062

Other long-term liabilities 54,415 76,660

Total liabilities 4,887,607 4,824,538

Commitments and contingencies

Shareholders’ equity:

Preferred stock, $0.01 par value; 30,000 shares authorized, 0 shares issued and outstanding as of June 30, 2022 and December 31, 2021 — —

Common stock, $0.01 par value; 600,000 shares authorized, 102,647 and 103,764 shares issued and outstanding as of June 30, 2022 and December 31, 2021, respectively 1,026 1,038

Additional paid-in capital 3,425,584 3,474,088

Accumulated other comprehensive loss, net of taxes (122,662 ) (49,618 )

Retained earnings (accumulated deficit) 25,117 (12,953 )

Total shareholders’ equity 3,329,065 3,412,555

Total liabilities and shareholders’ equity $ 8,216,672 $ 8,237,093

Syneos Health, Inc. and Subsidiaries

Consolidated Statements of Cash Flows

(in thousands)
(unaudited)

Six Months Ended June 30,

2022 2021

Cash flows from operating activities:

Net income $ 123,920 $ 80,629

Adjustments to reconcile net income to net cash provided by operating activities:

Depreciation and amortization 123,423 115,649

Share-based compensation 33,524 33,792

Recovery from doubtful accounts (426 ) (473 )

Provision for (benefit from) deferred income taxes 4,206 (13,024 )

Foreign currency transaction adjustments (9,069 ) (3,563 )

Fair value adjustment of contingent obligations — (597 )

Loss on extinguishment of debt — 2,802

Other non-cash items (5,636 ) 5,007

Changes in operating assets and liabilities, net of effect of acquisitions:

Accounts receivable, unbilled services, and deferred revenue (77,602 ) (8,269 )

Accounts payable and accrued expenses 40,772 30,117

Other assets and liabilities (62,323 ) (26,275 )

Net cash provided by operating activities 170,789 215,795

Cash flows from investing activities:

Payments related to acquisitions of businesses, net of cash acquired (1,574 ) (14,635 )

Proceeds from notes receivable from divestiture — 5,000

Purchases of property and equipment (47,912 ) (22,337 )

(Investments in) proceeds from unconsolidated affiliates (1,577 ) 692

Net cash used in investing activities (51,063 ) (31,280 )

Cash flows from financing activities:

Proceeds from issuance of long-term debt, net of discount — 494,505

Payments of debt financing costs — (544 )

Repayments of long-term debt — (602,277 )

Proceeds from accounts receivable financing agreement — 65,000

Proceeds from revolving line of credit 130,000 —

Repayments of revolving line of credit (95,000 ) —

Payments of contingent consideration related to acquisitions — (6,196 )

Payments of finance leases (1,886 ) (8,380 )

Payments for repurchases of common stock (149,961 ) (117,521 )

Proceeds from exercises of stock options 12,390 14,482

Payments related to tax withholdings for share-based compensation (30,062 ) (29,892 )

Net cash used in financing activities (134,519 ) (190,823 )

Effect of exchange rate changes on cash, cash equivalents, and restricted cash 14,306 (4,730 )

Net change in cash, cash equivalents, and restricted cash (487 ) (11,038 )

Cash, cash equivalents, and restricted cash – beginning of period 106,475 272,173

Cash, cash equivalents, and restricted cash – end of period $ 105,988 $ 261,135

Syneos Health, Inc. and Subsidiaries

Reconciliation of GAAP to Non-GAAP Measures

(in thousands)
(unaudited)

Three Months Ended

June 30, Six Months Ended June 30,

2022 2021 2022 2021

EBITDA and adjusted EBITDA:

Net income, as reported $ 77,744 $ 41,905 $ 123,920 $ 80,629

Interest expense, net 18,066 22,619 33,828 45,876

Income tax expense 25,940 9,134 33,256 17,421

Depreciation 21,241 18,158 41,820 36,605

Amortization (a) 39,980 39,553 81,603 79,044

EBITDA 182,971 131,369 314,427 259,575

Restructuring and other costs (b) 8,983 3,966 24,540 11,194

Transaction, integration-related and other expenses (c) 5,114 12,847 9,753 20,420

Share-based compensation (d) 16,191 16,439 33,524 33,792

Other (income) expense, net (e) (5,152 ) 7,827 (510 ) (2,029 )

Loss on extinguishment of debt (f) — 2,199 — 2,802

Adjusted EBITDA $ 208,107 $ 174,647 $ 381,734 $ 325,754

Syneos Health, Inc. and Subsidiaries

Reconciliation of GAAP to Non-GAAP Measures

(in thousands, except per share data)
(unaudited)

Three Months Ended

June 30, Six Months Ended June 30,

2022 2021 2022 2021

Adjusted net income:

Net income, as reported $ 77,744 $ 41,905 $ 123,920 $ 80,629

Amortization (a) 39,980 39,553 81,603 79,044

Restructuring and other costs (b) 8,983 3,966 24,540 11,194

Transaction, integration-related, and other expenses (c) 5,114 12,847 9,753 20,420

Share-based compensation (d) 16,191 16,439 33,524 33,792

Other (income) expense, net (e) (5,152 ) 7,827 (510 ) (2,029 )

Loss on extinguishment of debt (f) — 2,199 — 2,802

Income tax adjustment to normalized rate (g) (13,728 ) (22,995 ) (38,674 ) (40,965 )

Adjusted net income $ 129,132 $ 101,741 $ 234,156 $ 184,887

Diluted weighted average common shares outstanding 103,072 105,019 103,741 105,238

Adjusted diluted earnings per share $ 1.25 $ 0.97 $ 2.26 $ 1.76

Represents the amortization of intangible assets associated with acquired backlog, customer relationships, trade names and trademarks, intellectual property, patient communities, and acquired technologies.

Restructuring and other costs consist primarily of severance costs associated with a reduction/optimization of our workforce in line with our expectations of future business operations and termination costs in connection with abandonment and closure of redundant facilities and other lease-related charges.

Represents fees associated with acquisitions, stock repurchases and secondary stock offerings, debt placement and refinancings, and other corporate transactions costs. Other expenses for the three and six months ended June 30, 2022 include costs resulting from the war in Ukraine, including costs related to impacted employees and ongoing assessment of imposed sanctions.

Represents non-cash share-based compensation expense related to awards granted under equity incentive plans.

Other (income) expense is comprised primarily of foreign currency exchange gains and losses, other gains and losses related to investments, and contingent consideration related to divested businesses.

Loss on extinguishment of debt is associated with debt prepayments and refinancing activities.

Represents the income tax effect of the non-GAAP adjustments made to arrive at adjusted net income using an estimated effective tax rate of approximately 23.5% for the three and six months ended June 30, 2022, and 24.0% for the three and six months ended June 30, 2021. These rates have been adjusted to exclude tax impacts related to valuation allowances recorded against deferred tax assets.

Syneos Health, Inc. and Subsidiaries

Reconciliation of GAAP to Non-GAAP

Full Year 2022 Guidance

(in millions, except per share data)
(unaudited)

Updated Guidance Issued

August 2, 2022 Previous Guidance Issued

April 29, 2022

Low High Low High

EBITDA and Adjusted EBITDA:

GAAP net income $ 281.8 $ 289.6 $ 283.9 $ 300.5

Adjustments (a):

Interest expense, net 76.5 85.5 76.0 86.0

Income tax expense 106.9 109.9 110.4 116.9

Depreciation 85.0 87.0 83.6 85.6

Amortization 162.0 162.0 162.0 162.0

EBITDA 712.2 734.0 715.9 750.9

Restructuring and other costs 37.0 39.0 30.0 32.0

Transaction, integration-related and other expenses 23.7 26.3 28.5 29.5

Share-based compensation 62.2 65.8 66.0 68.0

Other (income) expense, net (0.1 ) (0.1 ) 4.6 4.6

Adjusted EBITDA $ 835.0 $ 865.0 $ 845.0 $ 885.0

Updated Guidance Issued

August 2, 2022 Previous Guidance Issued

April 29, 2022

Adjusted

Net Income Adjusted Diluted

Earnings Per Share Adjusted

Net Income Adjusted Diluted

Earnings Per Share

Low High Low High Low High Low High

Adjusted net income and adjusted diluted earnings per share:

GAAP net income and diluted earnings per share $ 281.8 $ 289.6 $ 2.72 $ 2.79 $ 283.9 $ 300.5 $ 2.73 $ 2.89

Adjustments:

Amortization (a) 162.0 162.0 1.56 1.56 162.0 162.0 1.56 1.56

Restructuring and other costs (a) 37.0 39.0 0.36 0.38 30.0 32.0 0.29 0.31

Transaction, integration-related and other expenses (a) 23.7 26.3 0.23 0.25 28.5 29.5 0.27 0.28

Share-based compensation (a) 62.2 65.8 0.60 0.63 66.0 68.0 0.64 0.65

Other (income) expense, net (a) (0.1 ) (0.1 ) – – 4.6 4.6 0.04 0.04

Income tax adjustment to normalized rate (b) (51.4 ) (52.9 ) (0.50 ) (0.51 ) (50.7 ) (50.8 ) (0.49 ) (0.49 )

Adjusted net income and adjusted diluted earnings per share (c) $ 515.2 $ 529.7 $ 4.97 $ 5.11 $ 524.3 $ 545.8 $ 5.05 $ 5.25

Amounts are estimates with an estimated range of +/- 5% and are presented gross without the benefit of associated income tax deduction.

Income tax expense is calculated and the adjustments are tax-affected at an approximate effective rate of 23.5%, which represents the Company’s estimated full year non-GAAP effective tax rate.

Guidance for Adjusted Diluted EPS is based on an expectation of a fully diluted weighted average share count for the year ending December 31, 2022 of approximately 103.6 million shares, which will vary by quarter.

Posted on August 2, 2022 6:20 am
Real Good Foods Announces Launch of High Protein, Low Carb, Grain Free, Nutritious Chicken Nuggets & Strips

PR Newswire

CHERRY HILL, N.J.
, Aug. 2, 2022 /PRNewswire/ — The Real Good Food Company, Inc. (Nasdaq: RGF) (“Real Good Foods” or the “Company”), an innovative, high-growth, branded, health- and wellness-focused frozen food company, today announced the launch of its most anticipated platform ever, nutritious Chicken Nuggets and Strips.

Real Good Foods Launches New Chicken Nuggets & Strips

Real Good Foods is expanding into the largest frozen food category, Frozen Meat & Poultry, with a nutritious twist on one of US consumers’ favorite foods. The Frozen Meat & Poultry category, an $8.9B category according to SPINS L52 weeks, is ripe for real innovation, as most breaded chicken options today offer the same nutritional profile – 20 to 30g of carbs, and breading made from processed flours and grains.

Real Good Foods’ Breaded Chicken is made from nutritious ingredients, 100% Grain-Free and Gluten-Free, with only 3g-4g net carbs and packed with 23g protein per serving. Real Good Foods’ Breaded Poultry lineup consists of four offerings: original lightly breaded nuggets, lightly breaded strips, buffalo nuggets and buffalo strips.

Real Good Foods’ Breaded Chicken is currently available at Walmart, Stop & Shop, Giant Eagle, Safeway Albertsons, as well as available direct to customers on realgoodfoods.com.

“These craveable nuggets and strips are a result of our mission to make our favorite comfort foods more nutritious and improve human health. Our delicious chicken nuggets and strips are made without all the added sugar, carbohydrates, and processed grains found in other food options, and are instead packed with protein and have a limited amount of carbs,” said Bryan Freeman, Executive Chairman of The Real Good Food Company. “After seeing strong and enthusiastic approval from our social community, we’re thrilled to finally introduce these grain-free, low carb, and low sodium offerings to the world.”

To learn more about Real Good Foods and to find a store near you, please visit www.realgoodfoods.com.

Source: Frozen SPINS L52 Weeks all Frozen Food Sub_Categories.

About The Real Good Food Company

Founded in 2016, Real Good Foods believes there is a better way to enjoy our favorite foods. Its brand commitment, “Real Food You Feel Good About Eating,” represents the Company’s strong belief that, by eating its food, consumers can enjoy more of their favorite foods and, by doing so, live better lives as part of a healthier lifestyle. Its mission is to make nutritious comfort foods that are low in carbohydrates, high in protein, and made from gluten and grain free real ingredients more accessible to everyone, improve human health, and, in turn, improve the lives of millions of people. Real Good Foods offers delicious options across breakfast, lunch, dinner, and snacking occasions available, in over 16,000 stores nationwide, including Walmart, Costco, Kroger, and Target, and directly from its website at www.realgoodfoods.com. Learn more about Real Good Foods by visiting its website or on Instagram at @realgoodfoods, where it has one of the largest social media followings of any brand within the frozen food industry today with more than420,000 followers. For interviews with Bryan Freeman, Executive Chairman, email [email protected].

Media Contact

[email protected]

Investor Contact

Chris Bevenour

[email protected]

View original content to download multimedia:https://www.prnewswire.com/news-releases/real-good-foods-announces-launch-of-high-protein-low-carb-grain-free-nutritious-chicken-nuggets–strips-301597657.html

SOURCE Real Good Foods

Posted on August 2, 2022 6:20 am
Momentus First Demonstration Mission Status Update #4

Momentus First Demonstration Mission Status Update #4

SAN JOSE, Calif.–(BUSINESS WIRE)–
Momentus Inc. (NASDAQ: MNTS) (“Momentus” or the “Company”), a U.S. commercial space company that plans to offer transportation and other in-space infrastructure services, today provided its fourth Mission Update on its inaugural Vigoride mission that launched on May 25.

Since the Company’s last update on June 29, Momentus has successfully deployed four additional customer satellites.

Momentus initially deployed two customer satellites from its Vigoride-3 Orbital Transfer Vehicle on May 28. The most recent deployments of four additional customer satellites occurred in July. The Company also deployed one customer satellite on May 25 from a third-party deployer that flew on a second port of the launch vehicle. A total of seven Momentus customer satellites have now been deployed in low Earth orbit, and three yet-to-be-deployed satellites remain on Vigoride.

As stated in past updates on the initial Vigoride mission, after experiencing anomalies on the spacecraft, the Company has continued efforts to deploy additional customer satellites. The Company continues to monitor the Vigoride-3 vehicle’s status and will continue efforts to deploy the remaining three customer satellites onboard.

Momentus’ plans for additional launches of the Vigoride vehicle later this year and in 2023 remain as stated in the Q1 earnings call on May 10, 2022, with agreements signed with SpaceX for launches on upcoming Transporter missions in 2022 and 2023, including Transporter-6 currently targeted for November 2022.

Momentus has identified the root cause of the anomalies experienced during the initial Vigoride demonstration mission. The Company convened an Independent Review Team of highly experienced space experts who reviewed the root cause findings of Momentus engineers and concurred with their findings. Momentus has made good progress in implementing corrective actions on the Vigoride-5 vehicle that the Company plans to fly on the SpaceX Transporter-6 mission.

“We have completed our own internal reviews and welcomed an independent review team that conducted a comprehensive assessment of our first mission,” said Momentus Chief Executive Officer John Rood. “We learned a lot from our first Vigoride demonstration mission already and intend to learn everything we can before the mission is over. Albert Einstein famously remarked, ‘The only source of knowledge is experience,’ and we are intently focused on implementing the knowledge and lessons learned from the experience of our first demonstration mission on our second Vigoride demonstration flight this fall.”

About Momentus

Momentus is a U.S. commercial space company that plans to offer in-space infrastructure services, including in-space transportation, hosted payloads and in-orbit services. Momentus believes it can make new ways of operating in space possible with its planned in-space transfer and service vehicles that will be powered by an innovative water plasma-based propulsion system that is under development.

Forward-Looking Statements

This press release contains certain statements which may constitute “forward-looking statements” for purposes of the federal securities laws. Forward-looking statements include, but are not limited to, statements regarding Momentus or its management team’s expectations, hopes, beliefs, intentions or strategies regarding the future, projections, forecasts or other characterizations of future events or circumstances, including any underlying assumptions, and are not guarantees of future performance. Because forward-looking statements relate to the future, they are subject to inherent uncertainties, risks and changes in circumstances that are difficult to predict and many of which are outside of Momentus’ control. Many factors could cause actual future events to differ materially from the forward-looking statements in this press release, including but not limited to risks and uncertainties included under the heading “Risk Factors” in the Annual Report on Form 10-K filed by the Company on March 9, 2022, as such factors may be updated from time to time in our other filings with the Securities and Exchange Commission (the “SEC”), accessible on the SEC’s website at www.sec.gov and the Investor Relations section of our website at investors.momentus.space. Forward-looking statements speak only as of the date they are made. Readers are cautioned not to put undue reliance on forward-looking statements, and, except as required by law, the Company assumes no obligation and does not intend to update or revise these forward-looking statements, whether as a result of new information, future events, or otherwise.

View source version on businesswire.com: https://www.businesswire.com/news/home/20220801005903/en/

Investors

Darryl Genovesi at [email protected]

Media

Jessica Pieczonka at [email protected]

KEYWORDS: United States North America California

INDUSTRY KEYWORDS: Aerospace Manufacturing Satellite Other Technology Technology

MEDIA:

Logo

Posted on August 2, 2022 6:20 am
CareTrust REIT Provides Secured Loan on California Skilled Nursing Facilities

CareTrust REIT Provides Secured Loan on California Skilled Nursing Facilities

SAN CLEMENTE, Calif.–(BUSINESS WIRE)–
CareTrust REIT, Inc. (NYSE:CTRE) announced today that it has extended a $22,250,000 “B” piece secured loan in connection with the acquisition of a 5-asset skilled nursing portfolio in California. The portfolio includes approximately 600 skilled nursing beds.

The “B” piece of the secured term loan carries a three-year maturity with two, 1-year extensions and an annual SOFR-based interest rate with a minimum floor of approximately 8.5%.

“On the heels of our recent loan funding in the Mid-Atlantic last month, we are excited to support the acquisition of this five facility California skilled nursing portfolio where both the borrower and operator groups have long-established relationships with CareTrust,” said Dave Sedgwick, CareTrust’s President and Chief Executive Officer. Mr. Sedgwick went on to state that: “The portfolio lies within some of the best markets in California and we are excited to see the operators execute on their business plan of providing excellent care and support to the staff and residents of these communities.”

CareTrust REIT, Inc. is a self-administered, publicly-traded real estate investment trust engaged in the ownership, acquisition, development and leasing of skilled nursing, seniors housing and other healthcare-related properties. With a nationwide portfolio of long-term net-leased properties, and a growing portfolio of quality operators leasing them, CareTrust REIT is pursuing both external and organic growth opportunities across the United States. More information about CareTrust REIT is available at www.caretrustreit.com.

View source version on businesswire.com: https://www.businesswire.com/news/home/20220802005487/en/

CareTrust REIT, Inc.

(949) 542-3130

[email protected]

KEYWORDS: California United States North America

INDUSTRY KEYWORDS: Commercial Building & Real Estate Nursing Construction & Property Finance REIT Professional Services Managed Care Health Other Construction & Property

MEDIA:

Posted on August 2, 2022 6:20 am
Apollo Investment Corporation Reports Financial Results for the Quarter Ended June 30, 2022, Makes Strategic Announcements, and Increases Quarterly Base Distribution

Strategic Announcements Reinforce Position as a Pure Play Senior Secured Middle Market BDC
⁽¹⁾

Established New Industry-Leading Fee Structure to Support Senior Secured Investment Strategy
⁽²⁾

MidCap Financial,
⁽³⁾
one of the World’s Leading Middle Market Origination Businesses, Makes Aligning Primary Equity Investment in BDC at NAV

BDC to Rebrand as ‘MidCap Financial Investment Corporation’
⁽⁴⁾

Senior Leadership Promotions to Align with Enhanced Strategy
⁽⁵⁾

Fiscal First Quarter and Other Recent Highlights:

Net investment income per share for the quarter was $0.37 compared to $0.42 for the quarter ended March 31, 2022

Net asset value per share as of the end of the quarter was $15.52 compared to $15.79 as of March 31, 2022, a decrease of 1.7%

New investment commitments made during the quarter totaled $195 million
⁽⁶⁾

Gross fundings during the quarter totaled $227 million
⁽⁷⁾
consisting of $165 million of term loans and $62 million of revolvers

Gross exits during the quarter totaled $184 million primarily consisting of $112 million of term loan repayments, $10 million of equity positions and $62 million of gross revolver

Net fundings during the quarter totaled $43 million primarily consisting of $44 million of net term loan fundings and $1 million of net revolver repayments

Net leverage
⁽⁸⁾
as of June 30, 2022 was 1.58x, compared to 1.51x as of March 31, 2022; adjusting for net paydowns post quarter-end and including the impact from the $30 million equity investment from MidCap Financial, net leverage is currently approximately 1.45x

Repurchased $1.6 million
⁽⁹⁾
of common stock

Increased base distribution to $0.32 per share for the quarter ending June 30, 2022
⁽¹⁰⁾

Kroll Bond Rating Agency (KBRA) affirmed the BBB- issuer and senior unsecured debt ratings for the Company in July

NEW YORK, Aug. 02, 2022 (GLOBE NEWSWIRE) — Apollo Investment Corporation (NASDAQ: AINV) or the “Company,” or “Apollo Investment,” today announced financial results for its first fiscal quarter ended June 30, 2022. The Company’s net investment income was $0.37 per share for the quarter ended June 30, 2022, compared to $0.42 per share for the quarter ended March 31, 2022. The Company’s net asset value (“NAV”) was $15.52 per share as of June 30, 2022, compared to $15.79 as of March 31, 2022.

On August 1, 2022, the Board of Directors declared a distribution of $0.32 per share payable on October 11, 2022 to shareholders of record as of September 20, 2022.

Mr. Howard Widra, the Company’s Executive Chairman, commented, “In conjunction with the release of earnings for the quarter, we are announcing several transformative changes which reinforce our position as a pure play senior secured middle market BDC creating an institutional-quality offering available to a broad universe of investors. To support our senior secured assets, our Board and Investment adviser have established a new industry-leading fee structure among listed BDCs. In addition, MidCap Financial, one of the world’s leading middle market lenders and an affiliate of Apollo, has made a $30 million primary equity investment at NAV in the BDC. In connection with today’s announcements, we have elected to change the Company’s name to MidCap Financial Investment Corporation which reflects our investment strategy of primarily investing in loans originated by MidCap Financial. We are also pleased to announce that we are increasing our quarterly base dividend from 31 cents per share to 32 cents per share.”

Mr. Tanner Powell, the Company’s Chief Executive Officer, commented, “Results for the June quarter reflect strong earnings given the increase in base rates. We believe that the credit fundamentals of our corporate lending portfolio remain strong and our portfolio is well-positioned for the current and evolving economic environment.”

___________________

⁽¹⁾ ^{The Company has issued a separate press release and posted a presentation on its website which provide additional detail on the strategic announcements.}

⁽²⁾ ^{The changes to the fee structure will be effective for the period beginning January 1, 2023.}

⁽³⁾ ^{MidCap Financial refers to MidCap FinCo Designated Activity Company, a designated activity company limited by shares incorporated under the laws of Ireland, and its subsidiaries, including MidCap Financial Services, LLC. MidCap Financial is managed by Apollo Capital Management, L.P., a subsidiary of Apollo Global Management, Inc., pursuant to an investment management agreement between Apollo Capital Management, L.P. and MidCap FinCo Designated Activity Company. MidCap Financial is not an investment adviser, subadviser or fiduciary to the Company or to the Company’s Investment Adviser. MidCap Financial is not obligated to take into account the Company’s interests (or those of other potential participants in its originations) when originating loans across its platform.}

⁽⁴⁾ ^{The Company will change its name from Apollo Investment Corporation to MidCap Financial Investment Corporation effective on or around August 12, 2022. The Company’s common stock will begin to trade under the ticker “MFIC” on the NASDAQ Global Select Market on or around August 12, 2022. The Company will be changing its website to www.midcapfinancialic.com on or around August 12, 2022.}

⁽⁵⁾ ^{The senior leadership promotions are effective immediately.}

⁽⁶⁾ ^{Commitments made for the corporate lending portfolio.}

⁽⁷⁾ ^{Gross fundings include $0.08 million of equity.}

⁽⁸⁾ ^{The Company’s net leverage ratio is defined as debt outstanding plus payable for investments purchased, less receivable for investments sold, less cash and cash equivalents, less foreign currencies, divided by net assets.}

⁽⁹⁾ ^{From April 1, 2022 through Aug 1, 2022.}

⁽¹⁰⁾ ^{The distribution is payable on October 11, 2022 to stockholders of record on September 20, 2022.}

FINANCIAL HIGHLIGHTS

($ in billions, except per share data) June 30,

2022 March 31,

2022 December 31,

2021 September 30,

2021 June 30,

2021

Total assets $ 2.64 $ 2.60 $ 2.67 $ 2.69 $ 2.59

Investment portfolio (fair value) $ 2.55 $ 2.52 $ 2.59 $ 2.61 $ 2.49

Debt outstanding $ 1.60 $ 1.55 $ 1.59 $ 1.60 $ 1.49

Net assets $ 0.99 $ 1.00 $ 1.02 $ 1.04 $ 1.04

Net asset value per share $ 15.52 $ 15.79 $ 16.08 $ 16.07 $ 16.02

Debt-to-equity ratio 1.62 x 1.54 x 1.55 x 1.54 x 1.43 x

Net leverage ratio (1) 1.58 x 1.51 x 1.52 x 1.51 x 1.39 x

___________________

⁽¹⁾ ^{The Company’s net leverage ratio is defined as debt outstanding plus payable for investments purchased, less receivable for investments sold, less cash and cash equivalents, less foreign currencies, divided by net assets.}

PORTFOLIO AND INVESTMENT ACTIVITY

Three Months Ended June 30,

(in millions)* 2022 2021

Investments made in portfolio companies $ 227.4 $ 295.2

Investments sold — —

Net activity before repaid investments 227.4 295.2

Investments repaid (184.0 ) (266.1 )

Net investment activity $ 43.4 $ 29.1

Portfolio companies at beginning of period 139 135

Number of new portfolio companies 7 11

Number of exited portfolio companies (6 ) (6 )

Portfolio companies at end of period 140 140

Number of investments made in existing portfolio companies 53 37

____________________

^{* Totals may not foot due to rounding.}

OPERATING RESULTS

Three Months Ended June 30,

(in millions)* 2022 2021

Net investment income $ 23.5 $ 25.3

Net realized and change in unrealized gains (losses) (17.8 ) 6.8

Net increase in net assets resulting from operations $ 5.7 $ 32.1

(per share)* (1)

Net investment income on per average share basis $ 0.37 $ 0.39

Net realized and change in unrealized gain (loss) per share (0.28 ) 0.10

Earnings per share — basic $ 0.09 $ 0.49

____________________

^{* Totals may not foot due to rounding.}

^{(1) Based on the weighted average number of shares outstanding for the period presented.}

SHARE REPURCHASE PROGRAM *

During the three months ended June 30, 2022, the Company repurchased 128,522 shares at a weighted average price per share of $12.74, inclusive of commissions, for a total cost of $1.6 million. This represents a discount of approximately 18.60% of the average net asset value per share for the three months ended June 30,2022.

Since the inception of the share repurchase program and through August 1, 2022, the Company repurchased 15,395,036 shares at a weighted average price per share of $15.97, inclusive of commissions, for a total cost of $245.8 million, leaving a maximum of $29.2 million available for future purchases under the current Board authorization of $275 million.

^{* Share figures have been adjusted for the 1-for-3 reverse stock split which was completed after market close on November 30, 2018.}

LIQUIDITY

As of June 30, 2022, the Company’s outstanding debt obligations, excluding deferred financing cost and debt discount of $4.6 million, totaled $1.602 billion which was comprised of $350 million of Senior Unsecured Notes (the “2025 Notes”) which will mature on March 3, 2025, $125 million of Unsecured Notes (the “2026 Notes”) which will mature on July 16, 2026 and $1.127 billion outstanding under the multi-currency revolving credit facility (the “Facility”). As of June 30, 2022, $27.0 million in standby letters of credit were issued through the Facility. The available remaining capacity under the Facility was $656 million as of June 30, 2022, which is subject to compliance with a borrowing base that applies different advance rates to different types of assets in the Company’s portfolio.

CONFERENCE CALL / WEBCAST AT 8:00 AM EDT ON AUGUST 2, 2022

The Company will host a conference call on Tuesday, August 2, 2022 at 8:00 a.m. Eastern Time. All interested parties are welcome to participate in the conference call by dialing (866) 342-8591 approximately 5-10 minutes prior to the call; international callers should dial (203) 518-9713. Participants should reference either Apollo Investment Corporation Q1 2023 Earnings or Conference ID: AINVQ123 when prompted. A simultaneous webcast of the conference call will be available to the public on a listen-only basis and can be accessed through the Events Calendar in the Shareholders section of our website at www.apolloic.com. Following the call, you may access a replay of the event either telephonically or via audio webcast. The telephonic replay will be available approximately two hours after the live call and through August 23, 2022, by dialing (800) 839-8292; international callers should dial (402) 220-6069. A replay of the audio webcast will also be available later that same day. To access the audio webcast please visit the Events Calendar in the Shareholders section of our website at www.apolloic.com.

SUPPLEMENTAL INFORMATION

The Company provides a supplemental information package to offer more transparency into its financial results and make its reporting more informative and easier to follow. The supplemental package is available in the Shareholders section of the Company’s website under Presentations at www.apolloic.com.

Our portfolio composition and weighted average yields as of June 30, 2022, March 31, 2022, December 31, 2021, September 30, 2021, and June 30, 2021 were as follows:

June 30,

2022 March 31,

2022 December 31,

2021 September 30,

2021 June 30,

2021

Portfolio composition, at fair value:

First lien secured debt 91% 90% 87% 85% 81%

Second lien secured debt 4% 4% 4% 6% 7%

Total secured debt 95% 94% 91% 91% 88%

Unsecured debt —% —% 1% 1% 1%

Structured products and other 0% 0% 0% 0% 0%

Preferred equity 1% 1% 1% 1% 1%

Common equity/interests and warrants 4% 5% 6% 7% 10%

Weighted average yields, at amortized cost (1):

First lien secured debt (2) 8.4% 8.0% 7.9% 7.9% 7.7%

Second lien secured debt (2) 11.7% 9.6% 9.6% 9.5% 10.0%

Total secured debt (2) 8.6% 8.1% 8.0% 7.9% 7.9%

Unsecured debt portfolio (2) —% —% 5.3% 5.2% 5.2%

Total debt portfolio (2) 8.6% 8.1% 7.9% 7.9% 7.9%

Total portfolio (3) 7.5% 7.1% 6.9% 6.9% 6.4%

Interest rate type, at fair value (4):

Fixed rate amount $0.0 billion $0.0 billion $0.0 billion — —

Floating rate amount $2.1 billion $2.0 billion $2.0 billion $2.1 billion $1.9 billion

Fixed rate, as percentage of total 1% 1% 1% — —

Floating rate, as percentage of total 99% 99% 99% 100% 100%

Interest rate type, at amortized cost (4):

Fixed rate amount $0.0 billion $0.0 billion $0.0 billion — —

Floating rate amount $2.1 billion $2.0 billion $2.0 billion $2.1 billion $1.9 billion

Fixed rate, as percentage of total 1% 1% 1% —% —%

Floating rate, as percentage of total 99% 99% 99% 100% 100%

⁽¹⁾ ^{An investor’s yield may be lower than the portfolio yield due to sales loads and other expenses.}

⁽²⁾ ^{Exclusive of investments on non-accrual status.}

⁽³⁾ ^{Inclusive of all income generating investments, non-income generating investments and investments on non-accrual status.}

⁽⁴⁾ ^{The interest rate type information is calculated using the Company’s corporate debt portfolio and excludes aviation, oil and gas, structured credit, renewables, shipping, commodities and investments on non-accrual status.}

APOLLO INVESTMENT CORPORATION

STATEMENTS OF ASSETS AND LIABILITIES

(In thousands, except share and per share data)

June 30, 2022 March 31, 2022

(Unaudited)

Assets

Investments at fair value:

Non-controlled/non-affiliated investments (cost — $2,060,771 and $2,001,907, respectively) $ 2,025,196 $ 1,977,647

Non-controlled/affiliated investments (cost — $130,855 and $130,866, respectively) 60,208 63,709

Controlled investments (cost — $602,913 and $613,056, respectively) 464,100 481,817

Cash and cash equivalents 34,512 30,033

Foreign currencies (cost — $1,027 and $601, respectively) 950 565

Receivable for investments sold 8,244 7,989

Interest receivable 18,842 15,554

Dividends receivable 5,393 5,083

Deferred financing costs 15,811 17,005

Prepaid expenses and other assets 1,825 719

Total Assets $ 2,635,081 $ 2,600,121

Liabilities

Debt $ 1,597,563 $ 1,550,608

Payable for investments purchased 206 —

Distributions payable 22,867 22,913

Management and performance-based incentive fees payable 10,270 9,912

Interest payable 9,341 3,335

Accrued administrative services expense 1,290 897

Other liabilities and accrued expenses 7,557 7,624

Total Liabilities $ 1,649,094 $ 1,595,289

Commitments and contingencies

Net Assets $ 985,987 $ 1,004,832

Net Assets

Common stock, $0.001 par value (130,000,000 shares authorized; 63,518,718

and 63,647,240 shares issued and outstanding, respectively) $ 62 $ 62

Capital in excess of par value 2,077,124 2,078,760

Accumulated under-distributed (over-distributed) earnings (1,091,199 ) (1,073,990 )

Net Assets $ 985,987 $ 1,004,832

Net Asset Value Per Share $ 15.52 $ 15.79

APOLLO INVESTMENT CORPORATION

STATEMENTS OF OPERATIONS (Unaudited)

(In thousands, except per share data)

Three Months Ended June 30,

2022 2021

Investment Income

Non-controlled/non-affiliated investments:

Interest income (excluding Payment-in-kind (“PIK”) interest income) $ 42,448 $ 40,244

Dividend income 25 72

PIK interest income 414 1,201

Other income 276 1,187

Non-controlled/affiliated investments:

Interest income (excluding PIK interest income) 48 45

Dividend income 311 312

PIK interest income 19 16

Other income — —

Controlled investments:

Interest income (excluding PIK interest income) 9,101 7,157

Dividend income — —

PIK interest income 522 319

Other income 240 —

Total Investment Income $ 53,404 $ 50,553

Expenses

Management fees $ 8,949 $ 8,813

Performance-based incentive fees 1,396 —

Interest and other debt expenses 16,377 12,662

Administrative services expense 1,286 1,271

Other general and administrative expenses 2,206 2,538

Total expenses $ 30,214 $ 25,284

Management fee offset rebate $ (75 ) $ —

Expense reimbursements (228 ) (76 )

Net Expenses $ 29,911 $ 25,208

Net Investment Income $ 23,493 $ 25,345

Net Realized and Change in Unrealized Gains (Losses)

Net realized gains (losses):

Non-controlled/non-affiliated investments $ 314 $ 279

Non-controlled/affiliated investments — —

Controlled investments — —

Foreign currency transactions (22 ) (184 )

Net realized gains (losses) $ 292 $ 95

Net change in unrealized gains (losses):

Non-controlled/non-affiliated investments $ (11,315 ) $ 6,826

Non-controlled/affiliated investments (3,490 ) 9,998

Controlled investments (7,575 ) (10,026 )

Foreign currency translations 4,254 (94 )

Net change in unrealized gains (losses) $ (18,126 ) $ 6,704

Net Realized and Change in Unrealized Gains (Losses) $ (17,834 ) $ 6,799

Net Increase (Decrease) in Net Assets Resulting from Operations $ 5,659 $ 32,144

Earnings (Loss) Per Share — Basic $ 0.09 $ 0.49

Important Information

Investors are advised to carefully consider the investment objective, risks, charges and expenses of the Company before investing.
The preliminary prospectus dated July 14, 2020, which has been filed with the Securities and Exchange Commission (“SEC”), contains this and other information about the Company and should be read carefully before investing. A shelf registration statement relating to certain securities of the Company is on file with and has been declared effective by the SEC. Any offering may be made only by means of a prospectus and any accompanying prospectus supplement. Before you invest, you should read the base prospectus in that registration statement, the preliminary prospectus and any documents incorporated by reference therein, which the issuer has filed with the SEC, for more complete information about the Company and an offering. You may obtain these documents for free by visiting EDGAR on the SEC Web site at www.sec.gov.

The information in the preliminary prospectus and in this announcement is not complete and may be changed. This communication shall not constitute an offer to sell or the solicitation of an offer to buy nor shall there be any sale of these securities in any state or other jurisdiction in which such offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of any such state or other jurisdiction.

Past performance is not indicative of, or a guarantee of, future performance. The performance and certain other portfolio information quoted herein represents information as of dates noted herein. Nothing herein shall be relied upon as a representation as to the future performance or portfolio holdings of the Company. Investment return and principal value of an investment will fluctuate, and shares, when sold, may be worth more or less than their original cost. The Company’s performance is subject to change since the end of the period noted in this report and may be lower or higher than the performance data shown herein.

About Apollo Investment Corporation

Apollo Investment Corporation (NASDAQ: AINV) is a closed-end investment company that has elected to be treated as a business development company under the Investment Company Act of 1940. The Company invests primarily in directly originated first lien senior secured loans in private middle-market companies. To a lesser extent, the Company may invest in other types of securities including second lien senior secured loans, unitranche loans, unsecured loans, and equities in both private middle market companies and public companies. Apollo Investment Corporation is managed by Apollo Investment Management, L.P., an affiliate of Apollo Global Management, Inc., a leading global alternative investment manager. For more information, please visit www.apolloic.com.

Forward-Looking Statements

This press release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements involve risks and uncertainties, including, but not limited to, statements as to our future operating results; our business prospects and the prospects of our portfolio companies; the impact of investments that we expect to make; our contractual arrangements and relationships with third parties; the dependence of our future success on the general economy and its impact on the industries in which we invest; the ability of our portfolio companies to achieve their objectives; our expected financings and investments; the adequacy of our cash resources and working capital; and the timing of cash flows, if any, from the operations of our portfolio companies.

We may use words such as “anticipates,” “believes,” “expects,” “intends,” “will,” “should,” “may” and similar expressions to identify forward-looking statements. Such statements are based on currently available operating, financial and competitive information and are subject to various risks and uncertainties that could cause actual results to differ materially from our historical experience and our present expectations. Statements regarding the following subjects, among others, may be forward-looking: the continuing effects of the COVID-19 pandemic; and steps taken by governmental and other authorities to contain, mitigate, and combat the pandemic or treat its impact on our financial condition, results of operations, liquidity, and capital resources; changes in general economic conditions, including the impact of supply chain disruptions, or changes in financial markets, and the risk of recession; changes in the interest rate environment and levels of general interest rates and the impact of inflation; the return on equity; the yield on investments; the ability to borrow to finance assets; new strategic initiatives; the ability to reposition the investment portfolio; the market outlook; future investment activity; and risks associated with changes in business conditions and the general economy. Undue reliance should not be placed on such forward-looking statements as such statements speak only as of the date on which they are made. We do not undertake to update our forward-looking statements unless required by law.

Contact

Elizabeth Besen
Investor Relations Manager
Apollo Investment Corporation
212.822.0625
[email protected]

Posted on August 2, 2022 6:20 am
Apollo Investment Corporation Announces Transformative Changes to Reinforce Position as a Pure Play Senior Secured Middle Market BDC Providing Public Shareholder Access to Institutional-Quality Private Credit

New Industry-Leading Fee Structure Supports Senior Secured Investment Strategy

MidCap Financial

¹

, one of the World’s Leading Middle Market Origination Businesses,

Makes Aligning Primary Equity Investment in BDC at NAV


BDC to Rebrand as ‘MidCap Financial Investment Corporation’

Increases Quarterly Base Distribution from $0.31 to $0.32 Per Share

²

Senior Leadership Promotions to Align with Enhanced Strategy

NEW YORK, Aug. 02, 2022 (GLOBE NEWSWIRE) — Apollo Investment Corporation (NASDAQ: AINV), (the “Company” or the “BDC”) today announced several transformative changes which reinforce the Company’s position as a senior secured middle market business development company creating an institutional-quality offering with an attractive dividend yield available to a broad universe of investors. These announcements illustrate the broader strategic commitment of Apollo Global Management (“Apollo”) (NYSE: APO) to investor alignment, product innovation, and playing a leading role in the democratization of finance.

To support the BDC’s senior secured investment strategy and allow participation in more senior secured assets that are expected to produce attractive risk-adjusted returns for shareholders, the Company established a new industry-leading fee structure among listed BDCs, with substantial permanent reductions to management and incentive fees.   MidCap Financial originates a significant amount of lower yielding senior secured loans that previously have been accessible largely only to institutional investors. Historically, MidCap Financial¹ and Apollo as its manager³ have predominantly originated assets on behalf of U.S. pensions and other global institutional investors. With the reduced fee structure, the BDC will be able to participate in a broader universe of MidCap Financial-originated senior secured loans, while producing similar to enhanced expected shareholder economics.

MidCap Financial has made a $30 million primary equity investment in the BDC at net asset value, representing a significant premium to the current market price. This investment serves to i) validate the value of the BDC’s senior investment strategy, ii) provide the BDC with dry powder to invest in loans originated by MidCap Financial, and iii) create a strong alignment of interests with the BDC’s performance.

MidCap Financial, which is managed by Apollo, is one of the world’s leading middle market origination businesses, with over $21 billion of annual originations.⁴ The business is led by an experienced management team that has worked together over 20 years and has, what the Company considers to be, an exceptionally strong track record.

Rebrands to MidCap Financial Investment Corporation reflecting the BDC’s investment strategy of primarily investing in loans originated by MidCap Financial; ticker will change to “MFIC”.⁵

Appointed Howard T. Widra, Apollo’s Head of Direct Origination, to Executive Chairman of the Board of Directors.

Promoted Tanner Powell to Chief Executive Officer, Ted McNulty to President, and Kristin Hester to Chief Legal Officer.

Mr. Howard Widra, the Company’s Executive Chairman commented, “Over the last several years, we have repositioned the BDC’s portfolio to have a senior secured orientation. Today’s announcements reinforce and support the BDC’s position as a pure play senior secured middle market BDC. The new fee structure significantly reduces our cost of capital which will allow us to invest across a larger universe of MidCap Financial-originated loans, which are available to us through Apollo’s management of MidCap Financial, while delivering an attractive dividend yield to our shareholders. MidCap Financial is also making an aligning primary equity investment in the BDC at NAV.   We believe today’s announcements have all the hallmarks of what we consider to be best-in-class investor alignment and illustrate how Apollo is positioning itself at the forefront of the democratization of finance, allowing greater individual access to alternatives.”

Mr. Howard Widra continued, “Today’s promotions are well-deserved and a recognition of the contributions that Tanner, Ted, and Kristin have each made to the BDC over the years. Tanner and Ted are both proven leaders with considerable expertise and experience in private credit investing and have been integral to the BDC’s repositioning efforts. Kristin has been a senior member of our legal team since 2015 and has provided valuable legal support for the Company’s strategic initiatives and operations over the years. I’d also like to thank Joe Glatt for his great work on behalf the Company over the years and congratulate him on his own promotion. As Executive Chairman, I look forward to continuing to work closely with Tanner, Ted, and Kristin as the BDC takes this next step.”

Mr. Tanner Powell, the Company’s Chief Executive Officer, commented, “Apollo’s unique relationship with MidCap Financial enables the BDC to have access to MidCap Financial’s high-quality origination volume, which we believe is a distinct competitive advantage over many other BDCs. MidCap Financial is a well-established provider of senior debt solutions to middle market companies and has what we believe to be an exceptionally strong track record. The change in the company name reflects our go forward strategy.” Mr. Tanner Powell continued, “We are pleased to increase our quarterly base distribution to $0.32 per share which reflects what we believe is a conservative estimate of the earnings power of the portfolio once fully deployed in our go forward strategy.”

Public Shareholder Access to Institutional-Quality Private Credit at New Industry-Leading Fee Structure

The Board of Directors (the “Board”) and the Company’s investment adviser have established a new industry-leading fee structure among listed BDCs to support the Company’s senior secured investment strategy and make institutional-quality senior secured assets available to public shareholders. MidCap Financial originates a significant amount of senior secured first lien loans that were previously below the BDC’s target asset spread. With a reduced fee structure, the BDC will be able to participate in a broader universe of MidCap Financial-originated senior secured loans. Apollo⁶ will continue to serve as the investment adviser of the BDC and will select and underwrite investments on behalf of the Company under the same investment process and standards.

The Company’s base management fee has been permanently reduced to 1.75% on net assets (i.e., equity) from the equivalent of approximately 3.4% on net assets. In other words, the base management fee rate, expressed in terms of gross assets, has been reduced from approximately 1.40% on gross assets, to the equivalent of approximately 0.75% on gross assets.⁷ Beyond the nearly halving of management fees in the aggregate, the shift to basing management fees on net assets, rather than gross assets, provides greater alignment and focus on net asset value versus leverage.

The incentive fee on income has also been permanently reduced from 20% to 17.5%. The performance threshold remains 7% and there is no change to the total return requirement or catch-up provision. The changes to the fee structure will be effective for the period beginning January 1, 2023.

MidCap Financial Makes Aligning Primary Equity Investment in the BDC at Net Asset Value

MidCap Financial has invested $30 million in equity in the BDC at net asset value, representing a significant premium to the current market price. The Company’s net asset value per share was $15.52⁸ as of June 30, 2022. Accordingly, the Company will issue approximately 1.93 million new shares in connection with this transaction which is expected to close in the next week. Pro forma for this investment, MidCap Financial will own approximately 3.0% of the BDC’s common stock. All shares issued in connection with this transaction will be subject to a minimum two-year hold period.

MidCap Financial is One of the World’s Leading Middle Market Origination Businesses

Founded in 2008, MidCap Financial is an established leader in middle market lending. MidCap Financial is a privately held leading middle market-focused specialty finance firm that provides senior debt solutions to companies across all industries through first lien secured loans and asset-based loans. Over the last twelve months through June 30, 2022, MidCap Financial has originated over $21 billion of commitments. MidCap Financial has, what we believe to be an exceptionally strong track record and has successfully managed through multiple economic cycles. MidCap Financial’s years of experience, strong balance sheet, and flexibility make it the lender of choice for companies across all stages of growth and complexity. An affiliate of Apollo serves as discretionary investment manager of MidCap Financial.⁹

Company Will Trade as ‘MidCap Financial Investment Corporation’

The Company has announced that it will change its name from Apollo Investment Corporation to MidCap Financial Investment Corporation effective on or around August 12, 2022. The new name reflects the Company’s investment strategy of primarily investing in loans originated by MidCap Financial, as well as MidCap Financial’s prominent role in Apollo’s Direct Origination and broader Yield businesses. Apollo will continue to serve as the investment adviser of the Company. The Company’s common stock will begin to trade under the ticker “MFIC” on the NASDAQ Global Select Market on or around August 12, 2022. In connection with the name change, the Company will be changing its website to www.midcapfinancialic.com on or around August 12, 2022.

Senior Leadership Promotions to Align with Enhanced Strategy

The Company has also announced the following senior management promotions and Board changes which are effective immediately.

Howard T. Widra, who served as Chief Executive Officer since May 2018 and as President from June 2016 to May 2018, has been named Executive Chairman of the Board. Mr. Widra will continue to serve as Apollo’s Head of Direct Origination.

Tanner Powell, who served as President of the Company since May 2018 and Chief Investment Officer for Apollo Investment Management, L.P. (“AIM”), the Company’s investment adviser since June 2016, has been promoted to Chief Executive Officer of the Company.

Ted McNulty, who is a Managing Director in Apollo’s Direct Origination business, has been promoted to President of the Company and Chief Investment Officer for AIM.

Kristin Hester, who has served as the General Counsel of the Company since May 2020, has been promoted to Chief Legal Officer and Secretary of the Company. Joseph Glatt, who served as the Company’s Chief Legal Officer and Secretary since 2011, was promoted to a new role as Partner in Apollo’s U.S. Financial Institutions Group.

John Hannan, who has served as Chairman of the Board since 2006, will now serve as Vice Chairman of the Board.

Howard T. Widra

Mr. Widra has been with Apollo and/or its affiliates since 2013 and serves as Apollo’s Head of Direct Origination. He was appointed Executive Chairman in August 2022. He served as the Company’s Chief Executive Officer from May 2018 to August 2022 and as President from June 2016 to May 2018. He has also been a Director since May 2018. Mr. Widra was a co-founder of MidCap Financial, a middle-market specialty finance firm with $21.4 billion of annual originations¹⁰ and was formerly its Chief Executive Officer. Prior to MidCap Financial, Mr. Widra was the founder and President of Merrill Lynch Capital Healthcare Finance. Prior to Merrill Lynch, Mr. Widra was President of GE Capital Healthcare Commercial Finance and held senior roles in its predecessor entities including President of Heller Healthcare Finance, and COO of Healthcare Financial Partners. Mr. Widra holds a J.D., Cum Laude, from the Harvard Law School and a BA from the University of Michigan.

Tanner Powell

Mr. Powell joined Apollo in 2006. Mr. Powell was appointed Chief Executive Officer of the Company in August 2022. He served as President of the Company from May 2018 to August 2022 and served as Chief Investment Officer for the Company’s investment adviser from June 2016 to August 2022. Mr. Powell is a Partner and Portfolio Manager in Apollo’s Direct Origination business. He holds leadership roles in Apollo’s Credit Business, including its aircraft leasing and lending businesses. From 2004 to 2006, he served as an analyst in Goldman Sachs’ Principal Investment Area (PIA). From 2002 to 2004, Mr. Powell was an Analyst in the Industrials group at Deutsche Bank. He graduated from Princeton University with a BA in political economy.

Ted McNulty

Mr. McNulty joined Apollo in 2014. He is a is Managing Director in Apollo’s Credit business. He was appointed President of the Company and Chief Investment Officer for the Company’s investment adviser in August 2022. Prior to joining Apollo, Mr. McNulty ran the mezzanine and later merchant banking business for a subsidiary of Mitsubishi UFJ and was a director at Haland before that. Previously, he held various roles at JPMorgan and its predecessor institutions, primarily in leveraged finance. Mr. McNulty received an MBA from the Kellogg School of Management and a BA in Government from Harvard University.

Kristin Hester

Ms. Hester joined Apollo in 2015 and currently serves as Senior Counsel for Apollo. She was promoted to Chief Legal Officer for the Company in August 2022 and served as General Counsel for the Company from May 2020 to August 2022. Ms. Hester also serves as General Counsel for Apollo Debt Solutions BDC, Apollo Senior Floating Rate Fund Inc., and Apollo Tactical Income Fund Inc. Prior to joining Apollo, Ms. Hester was associated with the law firms of Dechert LLP from 2009-2015 and Clifford Chance US LLP from 2006-2009. In each case she primarily advised U.S. registered investment companies, their investment advisers, and boards of directors on various matters under the Investment Company Act of 1940. Ms. Hester received her JD from Duke University School of Law and graduated cum laude from Bucknell University with a BS in Business Administration.

CONFERENCE CALL / WEBCAST AT 8:00 AM EDT ON AUGUST 2, 2022

The Company will host a conference call on Tuesday, August 2, 2022, at 8:00 a.m. Eastern Time. All interested parties are welcome to participate in the conference call by dialing (866) 342-8591 approximately 5-10 minutes prior to the call; international callers should dial (203) 518-9713. Participants should reference either Apollo Investment Corporation Q1 2023 Earnings or Conference ID: AINVQ123 when prompted. A simultaneous webcast of the conference call will be available to the public on a listen-only basis and can be accessed through the Events Calendar in the Shareholders section of our website at www.apolloic.com. Following the call, you may access a replay of the event either telephonically or via audio webcast. The telephonic replay will be available approximately two hours after the live call and through August 23, 2022, by dialing (800) 839-8292; international callers should dial (402) 220-6069. A replay of the audio webcast will also be available later that same day. To access the audio webcast please visit the Events Calendar in the Shareholders section of our website at www.apolloic.com.

_________________________________

¹ MidCap Financial refers to MidCap FinCo Designated Activity Company, a designated activity company limited by shares incorporated under the laws of Ireland, and its subsidiaries, including MidCap Financial Services, LLC. MidCap Financial is not an investment adviser, subadviser or fiduciary to the Company or to the Company’s Investment Adviser. MidCap Financial is not obligated to take into account the Company’s interests (or those of other potential participants in its originations) when originating loans across its platform.
² On August 1, 2022, the Company’s Board of Directors increased the base distribution to $0.32 per share for the quarter ending June 30, 2022. The distribution is payable on October 11, 2022 to stockholders of record as of September 20, 2022. There can be no assurances that the Board will continue to declare a base distribution of $0.32 per share.
³ MidCap Financial is managed by Apollo Capital Management, L.P., a subsidiary of Apollo Global Management, Inc., pursuant to an investment management agreement between Apollo Capital Management, L.P. and MidCap FinCo Designated Activity Company.
⁴ Based on last twelve months as of June 30, 2022.
⁵ Name and ticker change will be effective on or around August 12, 2022.
⁶ Apollo Investment Management, L.P., an affiliate of Apollo will continue to serve as the Company’s investment adviser.
⁷ Prior to this reduction, the base management fee was 1.5% on gross assets financed using leverage up to 1.0x debt-to-equity and 1.0% on gross assets financed using leverage over 1.0x debt-to-equity. For the comparisons presented, a debt-to-equity ratio of 1.40x is assumed.
⁸ The NAV per share figure is rounded for presentation purposes.
⁹ MidCap Financial is managed by Apollo Capital Management, L.P., a subsidiary of Apollo Global Management, Inc., pursuant to an investment management agreement between Apollo Capital Management, L.P. and MidCap FinCo Designated Activity Company.
¹⁰ Based on the last twelve months as of June 30, 2022.

Important Information

Investors are advised to carefully consider the investment objective, risks, charges and expenses of the Company before investing. The preliminary prospectus dated July 14, 2020, which has been filed with the Securities and Exchange Commission (“SEC”), contains this and other information about the Company and should be read carefully before investing. A shelf registration statement relating to certain securities of the Company is on file with and has been declared effective by the SEC. Any offering may be made only by means of a prospectus and any accompanying prospectus supplement. Before you invest, you should read the base prospectus in that registration statement, the preliminary prospectus and any documents incorporated by reference therein, which the issuer has filed with the SEC, for more complete information about the Company and an offering. You may obtain these documents for free by visiting EDGAR on the SEC Web site at www.sec.gov.

The information in the preliminary prospectus and in this announcement is not complete and may be changed. This communication shall not constitute an offer to sell or the solicitation of an offer to buy nor shall there be any sale of these securities in any state or other jurisdiction in which such offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of any such state or other jurisdiction.

Past performance is not indicative of, or a guarantee of, future performance. The performance and certain other portfolio information quoted herein represents information as of dates noted herein. Nothing herein shall be relied upon as a representation as to the future performance or portfolio holdings of the Company. Investment return and principal value of an investment will fluctuate, and shares, when sold, may be worth more or less than their original cost. The Company’s performance is subject to change since the end of the period noted in this report and may be lower or higher than the performance data shown herein.

About Apollo Investment Corporation

Apollo Investment Corporation is a closed-end investment company incorporated in Maryland. The Company has elected to be regulated as a business development company (“BDC”) under the Investment Company Act of 1940, as amended (the “1940 Act”). The Company is externally managed by Apollo Investment Management, L.P. The investment adviser is an affiliate of Apollo Global Management, Inc., and its consolidated subsidiaries. The Company has elected to be treated as a regulated investment company (“RIC”) under the Internal Revenue Code of 1986, as amended.

The Company’s investment objective is to generate current income and capital appreciation. The Company invests primarily in directly originated first lien senior secured loans in private middle-market companies. To a lesser extent, the Company may invest in other types of securities including second lien senior secured loans, unitranche loans, unsecured loans, and equities in both private middle market companies and public companies.

For more information, please visit www.apolloic.com. The Company will be changing its website to www.midcapfinancialic.com on or around August 12, 2022.

Forward-Looking Statements

This press release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements involve risks and uncertainties, including, but not limited to, statements as to our future operating results; our business prospects and the prospects of our portfolio companies; the impact of investments that we expect to make; our contractual arrangements and relationships with third parties; the dependence of our future success on the general economy and its impact on the industries in which we invest; the ability of our portfolio companies to achieve their objectives; our expected financings and investments; the adequacy of our cash resources and working capital; and the timing of cash flows, if any, from the operations of our portfolio companies.

We may use words such as “anticipates,” “believes,” “expects,” “intends,” “will,” “should,” “may” and similar expressions to identify forward-looking statements. Such statements are based on currently available operating, financial and competitive information and are subject to various risks and uncertainties that could cause actual results to differ materially from our historical experience and our present expectations. Statements regarding the following subjects, among others, may be forward-looking: the continuing effects of the COVID-19 pandemic; and steps taken by governmental and other authorities to contain, mitigate, and combat the pandemic or treat its impact on our financial condition, results of operations, liquidity, and capital resources; changes in general economic conditions, including the impact of supply chain disruptions, or changes in financial markets, and the risk of recession; changes in the interest rate environment and levels of general interest rates and the impact of inflation; the return on equity; the yield on investments; the ability to borrow to finance assets; new strategic initiatives; the ability to reposition the investment portfolio; the market outlook; future investment activity; and risks associated with changes in business conditions and the general economy. Undue reliance should not be placed on such forward-looking statements as such statements speak only as of the date on which they are made. We do not undertake to update our forward-looking statements unless required by law.

Media Contact

Joanna Rose
Global Head of Corporate Communications
Apollo Global Management, Inc.
(212) 822-0491
[email protected]

Investor Contact

Elizabeth Besen
Investor Relations Manager
Apollo Investment Corporation
(212) 822-0625
[email protected]

Posted on August 2, 2022 6:20 am
DuPont Reports Second Quarter 2022 Results

PR Newswire

2Q22 Net Sales of $3.3 billion, increased 7%; organic sales increased 9% versus year-ago period

2Q22 GAAP Income from continuing operations of $365 million; operating EBITDA of $829 million increased 6% versus year-ago period; consistent operating EBITDA margin on year-over-year and sequential basis

2Q22 GAAP EPS from continuing operations of $0.71; adjusted EPS of $0.88 increased 11% versus year-ago period

~$665 million of capital returned to shareholders during the quarter through $500 million in share repurchases and ~$165 million in dividends

Pricing actions continue to fully offset higher inflationary costs from raw materials, logistics and energy

WILMINGTON, Del.
, Aug. 2, 2022 /PRNewswire/ — – DuPont (NYSE: DD) today announced financial results⁽¹⁾ for the second quarter of 2022.

“We delivered second quarter financial results ahead of expectations by maintaining a disciplined focus on pricing actions and operational excellence in the face of continued global supply chain and logistics challenges and ongoing inflationary pressure,” said Ed Breen, DuPont Executive Chairman and Chief Executive Officer. “Underlying demand during the quarter in our key end-markets remained strong. Year-over-year and sequential sales and earnings growth in a volatile macro environment demonstrated the strength of our portfolio, our deep customer relationships and the leading market positions we hold globally.”

“We continue to advance our previously announced portfolio actions of acquiring Rogers Corporation and divesting a substantial portion of the former Mobility & Materials segment,” Breen continued. “Regarding Rogers, we expect to close the acquisition during the third quarter of 2022, with China being the last remaining jurisdiction requiring regulatory approval. For the M&M transactions, we continue to expect the completion of the sale of portions of this business to Celanese to close around year-end.”

“As DuPont drives innovation investment to support long-term growth, we continue to introduce new products across our key growth pillars,” Breen said. “We are excited to have won four 2022 Edison Awards highlighting innovative technologies, while also progressing well with our broader new product pipeline to support growth over the coming years.”

Second Quarter 2022 Results⁽¹⁾

Dollars in millions, unless noted

2Q’22

2Q’21

Change

vs. 2Q’21

Organic Sales ⁽²⁾

vs. 2Q’21

Net sales

$3,322

$3,104

7 %

9 %

GAAP Income from continuing operations

$365

$395

(8) %

Operating EBITDA⁽²⁾

$829

$780

6 %

Operating EBITDA⁽²⁾ margin %

25.0 %

25.1 %

(10) bps

GAAP EPS from continuing operations

$0.71

$0.73

(3) %

Adjusted EPS⁽²⁾

$0.88

$0.79

11 %

Net sales

Net sales increased 7% on organic sales⁽²⁾ growth of 9%; portfolio benefit of 1% was more than offset by a 3% currency headwind.

Organic sales⁽²⁾ growth of 9% consisted of an 8% increase in price and 1% increase in volume.

Price increase reflects actions taken to offset continued broad-based cost inflation.

Volume increase reflects continued strong demand in semiconductor, general industrial, water and construction end-markets, muted primarily by lower volumes from protective garments within Safety Solutions.

9% organic sales⁽²⁾ growth in Water & Protection; 8% organic sales⁽²⁾growth in Electronics & Industrial; 15% organic sales⁽²⁾ growth in retained businesses reported in Corporate & Other, which predominantly consists of our auto adhesives portfolio.

Organic sales⁽²⁾ growth in all regions globally, including 13% in U.S & Canada, 8% in EMEA and 6% in Asia Pacific.

GAAP Income/GAAP EPS from continuing operations

GAAP income/GAAP EPS from continuing operations declined as higher segment earnings and a lower share count were more than offset by lower gains on business divestitures and a higher tax rate compared to the year-ago period.

Operating EBITDA
⁽²⁾

Operating EBITDA⁽²⁾ increased as pricing actions, earnings associated with Laird Performance Materials and volume gains more than offset higher inflationary costs from raw materials, logistics and energy.

Adjusted EPS
⁽²⁾

Adjusted EPS⁽²⁾ increased due to higher segment earnings and a lower share count partially offset by a higher tax rate compared to the year-ago period.

Operating cash flow

Operating cash flow in the quarter of $86 million and capital expenditures of $135 million resulted in free cash flow⁽²⁾ of $(49) million.

Second Quarter 2022 Segment Highlights

Electronics & Industrial

Dollars in millions, unless noted

2Q’22

2Q’21

Change

vs. 2Q’21

Organic Sales⁽²⁾

vs. 2Q’21

Net sales

$1,527

$1,320

16 %

8 %

Operating EBITDA

$480

$424

13 %

Operating EBITDA margin %

31.4 %

32.1 %

(70) bps

Net sales

Net sales increased 16% on organic sales⁽²⁾ growth of 8%; a portfolio benefit of 11%, reflecting the acquisition of Laird Performance Materials in the prior year, was slightly offset by a 3% currency headwind.

Organic sales⁽²⁾ growth of 8% driven by a 6% increase in volume and a 2% increase in price.

Semiconductor Technologies sales up mid-teens on an organic⁽²⁾ basis as strong demand continued, led by the on-going transition to more advanced node technologies and strong fab utilization, along with growth in 5G communications and data centers.

Industrial Solutions sales up high single-digits on an organic⁽²⁾ basis, reflecting ongoing demand strength for OLED materials, Kalrez® and Vespel® products, and for applications in healthcare markets such as biopharma tubing.

Interconnect Solutions sales down low single-digits on an organic⁽²⁾ basis due to volume declines. Volume gains in industrial end-markets were more than offset by the anticipated return to more normal seasonal order patterns in smartphones compared to last year, along with softness in China smartphones, as well as personal computing and in automotive end-markets.

Operating EBITDA

Increase in operating EBITDA driven by earnings associated with Laird Performance Materials, volume gains and higher pricing which was partially offset by higher raw material and logistics costs.

Water & Protection

Dollars in millions, unless noted

2Q’22

2Q’21

Change

vs. 2Q’21

Organic Sales⁽²⁾

vs. 2Q’21

Net sales

$1,497

$1,412

6 %

9 %

Operating EBITDA

348

352

(1) %

Operating EBITDA margin %

23.2 %

24.9 %

(170) bps

Net sales

Net sales increased 6% as organic sales⁽²⁾ growth of 9% was partially offset by a 3% currency headwind.

Organic sales⁽²⁾ growth of 9% reflects a 12% increase in price and a 3% decline in volume. The increase in price reflects broad-based actions taken across the segment to offset continued cost inflation.

Shelter Solutions sales up high-teens on an organic⁽²⁾ basis driven by pricing gains and continued demand strength in North America residential construction, as well as ongoing growth in commercial construction.

Safety Solutions sales up mid-single-digits on an organic⁽²⁾ basis as pricing actions were partially offset by lower volumes, primarily Tyvek® garments.

Water Solutions sales up mid-single-digits on an organic⁽²⁾ basis on pricing gains, as well as steady demand for water technologies.

Operating EBITDA

Operating EBITDA was down slightly as pricing actions taken to offset higher raw material, logistics and energy costs were more than offset by volume declines.

Outlook

Dollars in millions, unless noted

3Q’22E

Full Year 2022E

Net sales

$3,170 – $3,370

$13,000 – $13,400

Operating EBITDA⁽²⁾

Approx. $810

$3,250 – $3,350

Adjusted EPS⁽²⁾

Approx. $0.81

$3.27 – $3.43

“Our strong first half 2022 results reflect positively on the secular end-markets in which we operate and highlight our team’s focus on execution,” said Lori Koch, Chief Financial Officer of DuPont. “As we look towards the second half, demand and overall order trends in our key end-markets remain solid, however, future uncertainties continue to exist including continued inflationary pressure, challenging supply chains, and U.S. dollar strength against global currencies.”

“We are narrowing our full year 2022 adjusted EPS guidance from $3.20–$3.50 to $3.27–$3.43 while maintaining the mid-point of our previous range.” Koch continued. “Our updated full year 2022 guidance ranges for net sales and operating EBITDA reflect incremental foreign currency headwinds and the removal of contribution from the Biomaterials business, which was divested on May 31, 2022.”

“We expect third quarter 2022 net sales and operating EBITDA to be slightly weaker than second quarter 2022 as sequential volume increases are expected to be offset by foreign currency headwinds and the absence of the Biomaterials net sales contribution,” Koch said. “We are also expecting a negative impact during the third quarter on operating EBITDA of approximately $15 million from unplanned downtime at our Spruance site in Virginia within the W&P segment resulting from an unforeseen utility disruption with a third-party supplier. On a year-over-year basis, we expect third quarter net sales to be up 2 percent at the mid-point of the range, or up high single-digits on an organic basis.”

Conference Call

The Company will host a live webcast of its second quarter earnings conference call with investors to discuss its results and business outlook beginning today at 8:00 a.m. ET. The slide presentation that accompanies the conference call will be posted on the DuPont’s Investor Relations Events and Presentations page. A replay of the webcast also will be available on the DuPont’s Investor Relations Events and Presentations page following the live event.

About DuPont

DuPont (NYSE: DD) is a global innovation leader with technology-based materials and solutions that help transform industries and everyday life. Our employees apply diverse science and expertise to help customers advance their best ideas and deliver essential innovations in key markets including electronics, transportation, construction, water, healthcare and worker safety. More information about the company, its businesses and solutions can be found at www.dupont.com. Investors can access information included on the Investor Relations section of the website at investors.dupont.com.

DuPont™ and all products, unless otherwise noted, denoted with ™, ^SMor ® are trademarks, service marks or registered trademarks of affiliates of DuPont de Nemours, Inc.

Overview

On November 2, 2021, DuPont announced it has entered definitive agreements to acquire Rogers Corporation (“Rogers”), (the “Intended Rogers Acquisition”). On January 25, 2022, Rogers’s shareholders approved the transaction. Closing is expected in the third quarter 2022, subject to regulatory approvals and customary closing conditions.

On February 18, 2022, DuPont announced that it has entered into definitive agreements to divest a majority of its historic Mobility & Materials segment, excluding certain Advanced Solutions and Performance Resins businesses, to Celanese Corporation (“Celanese”), (the “M&M Divestiture”). Closing is expected around the end of 2022, subject to regulatory approvals and customary closing conditions. The Company also announced on February 18, 2022, that its Board of Directors has approved the divestiture of the Delrin^® acetal homopolymer (H-POM) business. In addition to the entry into definitive agreements, the Company anticipates that the closing of the sale of Delrin^® would be subject to regulatory approvals and other customary closing conditions, (the “Delrin® Divestiture” and together with the M&M Divestiture, the “M&M Divestitures”).

As of March 31, 2022, the results of operations and the assets and liabilities of the businesses in scope for the M&M Divestitures are presented as discontinued operations for all periods presented. The cash flows of these businesses have not been segregated and are included in the interim Consolidated Statement of Cash Flows. Unless otherwise indicated, the discussion of results, including the financial measures further discussed below, refer only to DuPont’s Continuing Operations and do not include discussion of balances or activity of the businesses in scope for the M&M Divestitures. The Auto Adhesives & Fluids, Multibase™ and Tedlar^® product lines previously within the historic Mobility & Materials segment (the “Retained Businesses”) are not included in the scope of the intended divestitures. The Retained Businesses are reported in Corporate & Other. The reporting changes have been retrospectively applied for all periods presented.

Cautionary Statement about Forward-looking Statements

This communication contains “forward-looking statements” within the meaning of the federal securities laws, including Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. In this context, forward-looking statements often address expected future business and financial performance and financial condition, and often contain words such as “expect,” “anticipate,” “intend,” “plan,” “believe,” “seek,” “see,” “will,” “would,” “target,” and similar expressions and variations or negatives of these words.

Forward-looking statements address matters that are, to varying degrees, uncertain and subject to risks, uncertainties, and assumptions, many of which that are beyond DuPont’s control, that could cause actual results to differ materially from those expressed in any forward-looking statements. Forward-looking statements are not guarantees of future results. Some of the important factors that could cause DuPont’s actual results to differ materially from those projected in any such forward-looking statements include, but are not limited to: (i) the parties’ ability to meet expectations regarding the timing, completion and accounting and tax treatments of the M&M Divestiture to Celanese, including (x) any failure to obtain necessary regulatory approvals, anticipated tax treatment or to satisfy any of the other conditions to the proposed transaction, (y) the possibility that unforeseen liabilities, future capital expenditures, revenues, expenses, earnings, synergies, economic performance, indebtedness, financial condition, losses, future prospects, business and management strategies could impact the value, timing or pursuit of the proposed transaction, and (z) risks and costs and pursuit and/or implementation, timing and impacts to business operations of the separation of business lines in scope for the M&M Divestiture to Celanese, (ii) the timing and outcome of the Delrin® Business Divestiture, including entry into definitive agreements, and the risks, costs and ability to realize benefits from the pursuit of the Delrin^® Business Divestiture; (iii) ability to achieve anticipated tax treatments in connection with mergers, acquisitions, divestitures and other portfolio changes actions and impact of changes in relevant tax and other laws; (iv) indemnification of certain legacy liabilities; (v) risks and costs related to each of the parties respective performance under and the impact of the arrangement to share future eligible PFAS costs by and between DuPont, Corteva and Chemours; (vi) failure to timely close on anticipated terms (or at all), realize expected benefits and effectively manage and achieve anticipated synergies and operational efficiencies in connection with mergers, acquisitions, divestitures and other portfolio changes including the Intended Rogers Acquisition and the M&M Divestitures; (vii) risks and uncertainties, including increased costs and the ability to obtain raw materials and meet customer needs, related to operational and supply chain impacts or disruptions, which may result from, among other events, the COVID-19 pandemic and actions in response to it, and geo-political and weather related events; (viii) ability to offset increases in cost of inputs, including raw materials, energy and logistics; (ix) risks, including ability to achieve, and costs associated with DuPont’s sustainability strategy including the actual conduct of the company’s activities and results thereof, and the development, implementation, achievement or continuation of any goal, program, policy or initiative discussed or expected; and (x) other risks to DuPont’s business, operations; each as further discussed in DuPont’s most recent annual report and subsequent current and periodic reports filed with the U.S. Securities and Exchange Commission. Unlisted factors may present significant additional obstacles to the realization of forward-looking statements. Consequences of material differences in results as compared with those anticipated in the forward-looking statements could include, among other things, business or supply chain disruption, operational problems, financial loss, legal liability to third parties and similar risks, any of which could have a material adverse effect on DuPont’s consolidated financial condition, results of operations, credit rating or liquidity. You should not place undue reliance on forward-looking statements, which speak only as of the date they are made. DuPont assumes no obligation to publicly provide revisions or updates to any forward-looking statements whether as a result of new information, future developments or otherwise, should circumstances change, except as otherwise required by securities and other applicable laws.

Non-GAAP Financial Measures

This earnings release includes information that does not conform to accounting principles generally accepted in the United States of America (“U.S. GAAP”) and are considered non-GAAP measures. Management uses these measures internally for planning, forecasting and evaluating the performance of the Company, including allocating resources. DuPont’s management believes these non-GAAP financial measures are useful to investors because they provide additional information related to the ongoing performance of DuPont to offer a more meaningful comparison related to future results of operations. These non-GAAP financial measures supplement disclosures prepared in accordance with U.S. GAAP, and should not be viewed as an alternative to U.S. GAAP. Furthermore, such non-GAAP measures may not be consistent with similar measures provided or used by other companies. Reconciliations for these non-GAAP measures to U.S. GAAP are provided in the Selected Financial Information and Non-GAAP Measures starting on page 11 and in the Reconciliation to Non-GAAP Measures on the Investors section of the Company’s website. Non-GAAP measures included in this release are defined below. The Company has not provided forward-looking U.S. GAAP financial measures or a reconciliation of forward-looking non-GAAP financial measures to the most comparable U.S. GAAP financial measures on a forward-looking basis because the Company is unable to predict with reasonable certainty the ultimate outcome of certain future events. These events include, among others, the impact of portfolio changes, including asset sales, mergers, acquisitions, and divestitures; contingent liabilities related to litigation, environmental and indemnifications matters; impairments and discrete tax items. These items are uncertain, depend on various factors, and could have a material impact on U.S. GAAP results for the guidance period.

The historic Mobility & Material segment costs that are classified as discontinued operations include only direct operating expenses incurred by the M&M Businesses which the Company will cease to incur upon the close of the M&M Divestitures. Indirect costs, such as those related to corporate and shared service functions previously allocated to the M&M Businesses, do not meet the criteria for discontinued operations and remain reported within continuing operations. A portion of these indirect costs include costs related to activities the Company will continue to undertake post-closing of the M&M Divestiture, and for which it will be reimbursed (“Future Reimbursable Indirect Costs”). Future Reimbursable Indirect Costs are reported within continuing operations but are excluded from operating EBITDA as defined below. The remaining portion of these indirect costs is not subject to future reimbursement (“Stranded Costs”). Stranded Costs are reported within continuing operations in Corporate & Other and are included within Operating EBITDA.

Adjusted earnings per common share from continuing operations – diluted (“Adjusted EPS”), is defined as earnings per common share from continuing operations – diluted, excluding the after-tax impact of significant items, after-tax impact of amortization expense of intangibles, the after-tax impact of non-operating pension / other post employment benefits (“OPEB”) credits / costs and Future Reimbursable Indirect Costs. Management estimates amortization expense in 2022 associated with intangibles to be approximately $600 million on a pre-tax basis, or approximately $0.93 per share.

The Company’s measure of profit/loss for segment reporting purposes is Operating EBITDA as this is the manner in which the Company’s chief operating decision maker (“CODM”) assesses performance and allocates resources. The Company defines Operating EBITDA as earnings (i.e., “Income from continuing operations before income taxes”) before interest, depreciation, amortization, non-operating pension / OPEB benefits / charges, and foreign exchange gains / losses, excluding Future Reimbursable Indirect Costs, and adjusted for significant items. Reconciliations of these measures are provided on the following pages.

Significant items are items that arise outside the ordinary course of the Company’s business that management believes may cause misinterpretation of underlying business performance, both historical and future, based on a combination of some or all of the item’s size, unusual nature and infrequent occurrence. Management classifies as significant items certain costs and expenses associated with integration and separation activities related to transformational acquisitions and divestitures as they are considered unrelated to ongoing business performance.

Organic Sales is defined as net sales excluding the impacts of currency and portfolio.

Free cash flow is defined as cash provided by/used for operating activities less capital expenditures. As a result, free cash flow represents cash that is available to the Company, after investing in its asset base, to fund obligations using the Company’s primary source of liquidity, cash provided by operating activities. Management believes free cash flow, even though it may be defined differently from other companies, is useful to investors, analysts and others to evaluate the Company’s cash flow and financial performance, and it is an integral measure used in the Company’s financial planning process. Free cash flow conversion is defined as free cash flow divided by net income adjusted to exclude the after-tax impact of non-cash impairment charges, gains or losses on divestitures, and amortization expense of intangibles.

(1)

During the first quarter of 2022, a substantial portion of the Company’s historic Mobility & Materials segment met the criteria to be classified as discontinued operations for current and historical periods. See page 5 for further information, including the basis of presentation included in this release.

(2)

Adjusted EPS, operating EBITDA, organic sales and free cash flow are non-GAAP measures. See page 6 for further discussion, including a definition of significant items. Reconciliation to the most directly comparable GAAP measure, including details of significant items begins on page 11 of this communication.

DuPont de Nemours, Inc.

Consolidated Statements of Operations

In millions, except per share amounts (Unaudited)

Three Months Ended June 30,

Six Months Ended June 30,

2022

2021

2022

2021

Net sales

$       3,322

$       3,104

$       6,596

$       6,121

Cost of sales

2,149

1,959

4,259

3,820

Research and development expenses

141

133

284

272

Selling, general and administrative expenses

385

395

774

790

Amortization of intangibles

148

127

301

252

Restructuring and asset related charges – net

—

5

101

7

Acquisition, integration and separation costs

13

23

21

29

Equity in earnings of nonconsolidated affiliates

20

20

46

43

Sundry income (expense) – net

94

135

97

154

Interest expense

122

129

242

275

Income from continuing operations before income taxes

478

488

757

873

Provision for income taxes on continuing operations

113

93

160

92

Income from continuing operations, net of tax

365

395

597

781

Income from discontinued operations, net of tax

430

92

706

5,104

Net income

795

487

1,303

5,885

Net income attributable to noncontrolling interests

8

9

28

13

Net income available for DuPont common stockholders

$          787

$          478

$       1,275

$       5,872

Per common share data:

Earnings per common share from continuing operations – basic

$         0.71

$         0.74

$         1.12

$         1.37

Earnings per common share from discontinued operations – basic

0.85

0.17

1.38

8.98

Earnings per common share – basic

$         1.56

$         0.91

$         2.51

$       10.35

Earnings per common share from continuing operations – diluted

$         0.71

$         0.73

$         1.12

$         1.37

Earnings per common share from discontinued operations – diluted

0.85

0.17

1.38

8.96

Earnings per common share – diluted

$         1.55

$         0.90

$         2.50

$       10.33

Weighted-average common shares outstanding – basic

505.4

529.6

508.7

567.0

Weighted-average common shares outstanding – diluted

506.3

531.2

510.2

568.5

DuPont de Nemours, Inc.

Consolidated Balance Sheets

In millions, except share amounts (Unaudited)

June 30, 2022

December 31, 2021

Assets

Current Assets

Cash and cash equivalents

$                               1,439

$                               1,972

Accounts and notes receivable – net

2,267

2,159

Inventories

2,356

2,086

Prepaid and other current assets

187

177

Assets held for sale

—

245

Assets of discontinued operations

7,757

7,664

Total current assets

14,006

14,303

Property, plant and equipment – net of accumulated depreciation (June 30, 2022 –
$4,253; December 31, 2021 – $4,142)

5,564

5,753

Other Assets

Goodwill

16,610

16,981

Other intangible assets

5,805

6,222

Restricted cash and cash equivalents

53

53

Investments and noncurrent receivables

836

919

Deferred income tax assets

137

116

Deferred charges and other assets

1,429

1,360

Total other assets

24,870

25,651

Total Assets

$                             44,440

$                             45,707

Liabilities and Equity

Current Liabilities

Short-term borrowings

$                                  661

$                                  150

Accounts payable

2,135

2,102

Income taxes payable

352

201

Accrued and other current liabilities

1,004

1,040

Liabilities related to assets held for sale

—

25

Liabilities of discontinued operations

1,342

1,413

Total current liabilities

5,494

4,931

Long-Term Debt

10,625

10,632

Other Noncurrent Liabilities

Deferred income tax liabilities

590

1,459

Pension and other post-employment benefits – noncurrent

694

762

Other noncurrent obligations

900

873

Total other noncurrent liabilities

2,184

3,094

Total Liabilities

18,303

18,657

Commitments and contingent liabilities

Stockholders’ Equity

Common stock (authorized 1,666,666,667 shares of $0.01 par value each;

issued 2022: 500,896,434 shares; 2021: 511,792,785 shares)

5

5

Additional paid-in capital

49,176

49,574

Accumulated deficit

(22,808)

(23,187)

Accumulated other comprehensive (loss) income

(845)

41

Total DuPont stockholders’ equity

25,528

26,433

Noncontrolling interests

609

617

Total equity

26,137

27,050

Total Liabilities and Equity

$                             44,440

$                             45,707

DuPont de Nemours, Inc.

Consolidated Statement of Cash Flows

In millions (Unaudited)

Six Months Ended June 30,

2022

2021

Operating Activities

Net income

$                      1,303

$                      5,885

Adjustments to reconcile net income to net cash provided by operating activities:

Depreciation and amortization

623

724

Credit for deferred income tax and other tax related items

(922)

(157)

Earnings of nonconsolidated affiliates less than (in excess of) dividends received

6

(38)

Net periodic benefit (credit) cost

(3)

4

Periodic benefit plan contributions

(39)

(46)

Net gain on sales and split-offs of assets, businesses and investments

(67)

(5,118)

Restructuring and asset related charges – net

101

14

Other net loss

37

92

Changes in assets and liabilities, net of effects of acquired and divested companies:

Accounts and notes receivable

(283)

(346)

Inventories

(537)

(337)

Accounts payable

217

232

Other assets and liabilities, net

(141)

(91)

Cash provided by operating activities

295

818

Investing Activities

Capital expenditures

(386)

(499)

Proceeds from sales of property and businesses, net of cash divested

300

172

Acquisitions of property and businesses, net of cash acquired

5

(11)

Purchases of investments

(15)

(2,001)

Proceeds from sales and maturities of investments

—

2,001

Other investing activities, net

6

9

Cash used for investing activities

(90)

(329)

Financing Activities

Changes in short-term notes borrowings

511

—

Proceeds from issuance of long-term debt transferred to IFF at split-off

—

1,250

Payments on long-term debt

—

(5,000)

Purchases of common stock

(875)

(1,143)

Proceeds from issuance of Company stock

83

108

Employee taxes paid for share-based payment arrangements

(23)

(25)

Distributions to noncontrolling interests

(20)

(24)

Dividends paid to stockholders

(335)

(319)

Cash transferred to IFF and subsequent adjustments

(11)

(100)

Other financing activities, net

(4)

(3)

Cash used for financing activities

(674)

(5,256)

Effect of exchange rate changes on cash, cash equivalents and restricted cash

(78)

(28)

Decrease in cash, cash equivalents and restricted cash

(547)

(4,795)

Cash, cash equivalents and restricted cash from continuing operations, beginning of period

2,037

8,733

Cash, cash equivalents and restricted cash from discontinued operations, beginning of period

39

42

Cash, cash equivalents and restricted cash at beginning of period

2,076

8,775

Cash, cash equivalents and restricted cash from continuing operations, end of period

1,500

3,942

Cash, cash equivalents and restricted cash from discontinued operations, end of period

29

38

Cash, cash equivalents and restricted cash at end of period

$                      1,529

$                      3,980

DuPont de Nemours, Inc.

Net Sales by Segment and Geographic Region

Net Sales by Segment and Geographic Region

Three Months Ended

Six Months Ended

In millions (Unaudited)

Jun 30, 2022

Jun 30, 2021

Jun 30, 2022

Jun 30, 2021

Electronics & Industrial

$             1,527

$             1,320

$             3,063

$             2,620

Water & Protection

1,497

1,412

2,926

2,740

Corporate & Other ¹

298

372

607

761

Total

$             3,322

$             3,104

$             6,596

$             6,121

U.S. & Canada

$             1,095

$                972

$             2,144

$             1,864

EMEA ²

565

552

1,142

1,110

Asia Pacific

1,553

1,486

3,098

2,961

Latin America

109

94

212

186

Total

$             3,322

$             3,104

$             6,596

$             6,121

Net Sales Variance by Segment and Geographic Region

Three Months Ended June 30, 2022

Local Price &
Product Mix

Volume

Total

Organic

Currency

Portfolio & Other

Total

Percent change from prior year (Unaudited)

Electronics & Industrial

2 %

6 %

8 %

(3) %

11 %

16 %

Water & Protection

12

(3)

9

(3)

—

6

Corporate & Other ¹

12

(3)

9

(2)

(27)

(20)

Total

8 %

1 %

9 %

(3) %

1 %

7 %

U.S. & Canada

12 %

1 %

13 %

— %

— %

13 %

EMEA²

9

(1)

8

(8)

2

2

Asia Pacific

4

2

6

(3)

2

5

Latin America

10

4

14

1

1

16

Total

8 %

1 %

9 %

(3) %

1 %

7 %

Net Sales Variance by Segment and Geographic Region

Six Months Ended June 30, 2022

Local Price &
Product Mix

Volume

Total

Organic

Currency

Portfolio & Other

Total

Percent change from prior year (Unaudited)

Electronics & Industrial

1 %

7 %

8 %

(2) %

11 %

17 %

Water & Protection

11

(1)

10

(3)

—

7

Corporate & Other ¹

11

(4)

7

(2)

(25)

(20)

Total

7 %

2 %

9 %

(2) %

1 %

8 %

U.S. & Canada

11 %

4 %

15 %

— %

— %

15 %

EMEA²

9

—

9

(7)

1

3

Asia Pacific

3

2

5

(2)

2

5

Latin America

8

4

12

—

2

14

Total

7 %

2 %

9 %

(2) %

1 %

8 %

1.

Corporate & Other includes activities of the Retained Businesses and previously divested businesses.

2.

Europe, Middle East and Africa.

DuPont de Nemours, Inc.

Selected Financial Information and Non-GAAP Measures

Operating EBITDA by Segment

Three Months Ended

Six Months Ended

In millions (Unaudited)

Jun 30, 2022

Jun 30, 2021

Jun 30, 2022

Jun 30, 2021

Electronics & Industrial

$               480

$               424

$               956

$               860

Water & Protection

348

352

689

707

Corporate & Other¹

1

4

2

16

Total

$               829

$               780

$            1,647

$            1,583

1. In addition to corporate expenses, Corporate & Other includes activities of the Retained Businesses and previously divested businesses.

Equity in Earnings of Nonconsolidated Affiliates by Segment

Three Months Ended

Six Months Ended

In millions (Unaudited)

Jun 30, 2022

Jun 30, 2021

Jun 30, 2022

Jun 30, 2021

Electronics & Industrial

$                   9

$                 10

$                 19

$                 19

Water & Protection

8

8

22

20

Corporate & Other¹

3

2

5

4

Total equity earnings included in operating EBITDA (GAAP)

$                 20

$                 20

$                 46

$                 43

1. Corporate & Other includes activities of the Retained Businesses and previously divested businesses.

Reconciliation of “Income (Loss) from continuing operations, net of tax” to “Operating EBITDA”

Three Months Ended

Six Months Ended

In millions (Unaudited)

Jun 30, 2022

Jun 30, 2021

Jun 30, 2022

Jun 30, 2021

Income from continuing operations, net of tax (GAAP)

$               365

$               395

$               597

$               781

+ Provision for income taxes on continuing operations

113

93

160

92

Income from continuing operations before income taxes

$               478

$               488

$               757

$               873

+ Depreciation and amortization

281

262

578

517

– Interest income ¹

2

5

3

9

+ Interest expense

120

129

238

275

– Non-operating pension/OPEB benefit ¹

6

7

13

13

– Foreign exchange (gains) losses, net ¹

9

(10)

4

(16)

+ Future reimbursable indirect costs

15

15

31

31

– Significant items

48

112

(63)

107

Operating EBITDA (non-GAAP)

$               829

$               780

$            1,647

$            1,583

1.

Included in “Sundry income (expense) – net.”

Reconciliation of “Cash provided by operating activities” to Free Cash Flow

Three Months Ended

Six Months Ended

In millions (Unaudited)

Jun 30, 2022

Jun 30, 2021

Jun 30, 2022

Jun 30, 2021

Cash provided by operating activities (GAAP)¹

$                 86

$               440

$               295

$               818

Capital expenditures

$              (135)

$              (216)

(386)

(499)

Free cash flow (non-GAAP)

$                (49)

$               224

$                (91)

$               319

1.

Refer to the Consolidated Statement of Cash Flows included in the schedules above for major GAAP cash flow categories as well as further detail relating to the changes in “Cash provided by operating activities” for the six month periods noted. In addition, includes cash activity related to the M&M Businesses and in the comparative period, the former Nutrition & Biosciences business segment prior to separation.

DuPont de Nemours, Inc.

Selected Financial Information and Non-GAAP Measures

Significant Items Impacting Results for the Three Months Ended June 30, 2022

In millions, except per share amounts (Unaudited)

Pretax ¹

Net Income ²

EPS ³

Income Statement Classification

Reported results (GAAP)

$       478

$       357

$      0.71

Less: Significant items

Acquisition, integration and separation costs ⁴

(13)

(11)

(0.02)

Acquisition, integration and separation costs

Gain on divestiture ⁵

63

57

0.11

Sundry income (expense) – net

Intended Rogers Acquisition financing fees⁶

(2)

(2)

—

Interest expense

Income tax related item

—

(11)

(0.02)

Provision for income taxes on continuing operation

Total significant items

$         48

$         33

$      0.07

Less: Amortization of intangibles

(148)

(115)

(0.23)

Amortization of intangibles

Less: Non-op pension / OPEB benefit

6

5

0.01

Sundry income (expense) – net

Less: Future reimbursable indirect costs

(15)

(12)

(0.02)

Cost of sales; Research and development expenses; Selling, general and administrative expenses

Adjusted results (non-GAAP)

$       587

$       446

$      0.88

Significant Items Impacting Results for the Three Months Ended June 30, 2021

In millions, except per share amounts (Unaudited)

Pretax ¹

Net Income ²

EPS ³

Income Statement Classification

Reported results (GAAP)

$       488

$       390

$      0.73

Less: Significant items

Acquisition, integration and separation costs ⁷

(23)

(21)

(0.04)

Acquisition, integration and separation costs

Restructuring and asset related charges – net ⁸

(5)

(3)

(0.01)

Restructuring and asset related charges – net

Gain on divestiture ⁹

140

105

0.20

Sundry income (expense) – net

Income tax related item

—

(2)

—

Provision for income taxes on continuing operation

Total significant items

$       112

$         79

$      0.15

Less: Amortization of intangibles

(127)

(100)

(0.20)

Amortization of intangibles

Less: Non-op pension / OPEB benefit

7

4

0.01

Sundry income (expense) – net

Less: Future reimbursable indirect costs

(15)

(12)

(0.02)

Cost of sales; Research and development expenses; Selling, general and administrative expenses

Adjusted results (non-GAAP)

$       511

$       419

$      0.79

1.

Income from continuing operations before income taxes.

2.

Net income from continuing operations available for DuPont common stockholders. The income tax effect on significant items was calculated based upon the enacted tax laws and statutory income tax rates applicable in the tax jurisdiction(s) of the underlying non-GAAP adjustment.

3.

Earnings per common share from continuing operations – diluted.

4.

Acquisition, integration and separation costs related to strategic initiatives including the sale of the Biomaterials business unit, the acquisition of Laird PM and the Intended Rogers Acquisition.

5.

Reflects the gains on sale of the Biomaterials business unit within Corporate & Other and the sale of a land use right within the Water & Protection segment.

6.

Reflects structuring fees and the amortization of the commitment fees related to the financing agreements entered into in preparation for the Intended Rogers Acquisition.

7.

Acquisition, integration and separation costs related to strategic initiatives, which primarily includes the sale of the Solamet®, Biomaterials, and Clean Technologies business units.

8.

Includes Board approved restructuring plans and asset related charges.

9.

Reflects the gain from the sale of the Solamet® business within Corporate & Other and post-closing adjustments related previously divested businesses.

DuPont de Nemours, Inc.

Selected Financial Information and Non-GAAP Measures

Significant Items Impacting Results for the Six Months Ended June 30, 2022

In millions, except per share amounts (Unaudited)

Pretax ¹

Net Income ²

EPS ³

Income Statement Classification

Reported results (GAAP)

$       757

$       571

$      1.12

Less: Significant items

Acquisition, integration and separation costs ⁴

(21)

(17)

(0.03)

Acquisition, integration and separation costs

Restructuring and asset related charges – net ⁵

(7)

(5)

(0.01)

Restructuring and asset related charges – net

Asset impairment charges⁶

(94)

(65)

(0.12)

Restructuring and asset related charges – net

Gain on divestiture⁷

63

57

0.11

Sundry income (expense) – net

Intended Rogers Acquisition financing fees ⁸

(4)

(3)

(0.01)

Interest expense

Income tax related item

—

(14)

(0.03)

Provision for income taxes on continuing operations

Total significant items

$       (63)

$       (47)

$    (0.09)

Less: Amortization of intangibles

(301)

(234)

(0.46)

Amortization of intangibles

Less: Non-op pension / OPEB benefit

13

10

0.02

Sundry income (expense) – net

Less: Future reimbursable indirect costs

(31)

(24)

(0.05)

Cost of sales; Research and development expenses; Selling, general and administrative expenses

Adjusted results (non-GAAP)

$   1,139

$       866

$      1.70

Significant Items Impacting Results for the Six Months Ended June 30, 2021

In millions, except per share amounts (Unaudited)

Pretax ¹

Net Income ²

EPS ³

Income Statement Classification

Reported results (GAAP)

$       873

$       778

$      1.37

Less: Significant items

Acquisition, integration and separation costs ⁹

(29)

(26)

(0.04)

Acquisition, integration and separation costs

Restructuring and asset related charges – net ⁵

(7)

(5)

(0.01)

Restructuring and asset related charges – net

Gain on divestitures ¹⁰

143

108

0.19

Sundry income (expense) – net

Income tax related item ¹¹

—

75

0.13

Provision for income taxes on continuing operations

Total significant items

$       107

$       152

$      0.27

Less: Amortization of intangibles

(252)

(197)

(0.35)

Amortization of intangibles

Less: Non-op pension / OPEB benefit

13

7

0.01

Sundry income (expense) – net

Less: Future reimbursable indirect costs

(31)

(24)

(0.04)

Cost of sales; Research and development expenses; Selling, general and administrative expenses

Adjusted results (non-GAAP)

$   1,036

$       840

$      1.48

1.

Income from continuing operations before income taxes.

2.

Net income from continuing operations available for DuPont common stockholders. The income tax effect on significant items was calculated based upon the enacted tax laws and statutory income tax rates applicable in the tax jurisdiction(s) of the underlying non-GAAP adjustment.

3.

Earnings per common share from continuing operations – diluted.

4.

Acquisition, integration and separation costs related to strategic initiatives including the sale of the Biomaterials business unit, the acquisition of Laird PM and the Intended Rogers Acquisition.

5.

Includes Board approved restructuring plans and asset related charges.

6.

Reflects a pre-tax impairment charge related to an equity method investment.

7.

Reflects the gains on sale of the Biomaterials business unit within Corporate & Other and the sale of land use right within the Water & Protection segment.

8.

Reflects structuring fees and the amortization of the commitment fees related to the financing agreements entered into in preparation for the Intended Rogers Acquisition.

9.

Acquisition, integration and separation costs related to strategic initiatives, which primarily includes the acquisition of Laird PM and the sale of the Solamet®, Biomaterials, and Clean Technologies business units.

10.

Reflects the gain from the sale of the Solamet® business within Corporate & Other and post-closing adjustments related to previously divested businesses.

11.

Includes a net $77 million tax benefit primarily related to the impact of tax reform in Switzerland.

View original content to download multimedia:https://www.prnewswire.com/news-releases/dupont-reports-second-quarter-2022-results-301597364.html

SOURCE DuPont

Posted on August 2, 2022 6:20 am
TOWNSQUARE’S SECOND QUARTER NET REVENUE AND ADJUSTED EBITDA REACH ALL-TIME HIGH WITH NET REVENUE +14% AND ADJUSTED EBITDA +7% YEAR-OVER-YEAR

PR Newswire

June YTD 2022 Digital Revenue and Adjusted Operating Income 50% of Total

Net Leverage Declines to 4.65x

Raising 2022 Guidance

PURCHASE, N.Y.
, Aug. 2, 2022 /PRNewswire/ — Townsquare Media, Inc. (NYSE: TSQ) (“Townsquare”, the “Company,” “we,” “us,” or “our”) announced today its financial results for the second quarter ended June 30, 2022.

“I am proud to share that the Townsquare Team delivered another quarter of strong revenue and profit growth, and in doing so, we achieved all-time record highs for both net revenue and Adjusted EBITDA. Our performance clearly demonstrates the strength and differentiation of our digital businesses and our legacy broadcast business. Townsquare’s second quarter net revenue increased year-over-year by +14%, exceeding our guidance range, and Adjusted EBITDA increased +7% year-over-year, meeting our guidance range. In addition, our digital revenue growth accelerated from the first quarter (Q1 +16% year-over-year), with second quarter total digital revenue increasing +21% year-over-year. Our strong top-line growth, margin profile, and cash generation characteristics have contributed to the reduction of our net leverage, now at a historical low of 4.65x as of June 30^th, including the repurchase and retirement of $19 million of our Senior Secured Notes at or below par in Q2,” commented Bill Wilson, Chief Executive Officer of Townsquare Media, Inc. “We are also pleased to announce that we are raising our FY 2022 guidance following the close of the Cherry Creek acquisition on June 17^th. Our updated full year guidance reflects the ongoing momentum of our business and the strength of our performance to date, fueled by our differentiated digital platform. As a Digital First Local Media Company focused principally on markets outside of the Top 50 in the United States, we have a resilient digital growth engine supported by subscription digital marketing solutions, with a large addressable market and limited competition. As we move forward, we expect double-digit digital net revenue growth to continue at strong margins, reaching our digital revenue target of at least $275 million in 2024. With half of our total revenue and profit coming from digital today, it is our belief that over time as digital continues to meaningfully grow, Townsquare should and will be afforded a sum-of the-parts valuation that our digital assets deserve.”

Segment Reporting

We have three reportable operating segments, Subscription Digital Marketing Solutions, Digital Advertising and Broadcast Advertising. The Subscription Digital Marketing Solutions segment includes our subscription digital marketing solutions business, Townsquare Interactive. The Digital Advertising segment, marketed externally as Townsquare Ignite, includes digital advertising on our owned and operated digital properties and our digital programmatic advertising platform. The Broadcast Advertising segment includes our local, regional, and national advertising products and solutions delivered via terrestrial radio broadcast, and other miscellaneous revenue that is associated with our broadcast advertising platform. The remainder of our business is reported in the Other category, which includes our live events business. The Company has presented segment information for the three and six months ended June 30, 2021 in conformity with the current period’s segment information.

Second Quarter Highlights*

As compared to the second quarter of 2021:

Net revenue increased 13.6%

Net income decreased $5.2 million

Adjusted EBITDA increased 6.8%

Total Digital net revenue increased 20.7%

Subscription Digital Marketing Solutions (“Townsquare Interactive”) net revenue increased 13.7%

Digital Advertising net revenue increased 25.4%

Total Digital Adjusted Operating Income increased 11.0%

Subscription Digital Marketing Solutions Adjusted Operating Income increased 9.8%

Digital Advertising Adjusted Operating Income increased 11.8%

Broadcast Advertising net revenue increased 1.0%

Diluted income per share was $0.24, and Adjusted Net Income per diluted share was $0.71

Townsquare Interactive added approximately 1,150 net subscribers

Repurchased aggregate $19.2 million of our 2026 Secured Senior Notes at or below par

Completed the acquisition of Cherry Creek Broadcasting LLC (“Cherry Creek“) for $18.4 million, net of closing adjustments

Year to Date Highlights*

As compared to the six months ended June 30, 2021:

Net revenue increased 13.3%

Net income increased $3.7 million

Adjusted EBITDA increased 8.0%

Total Digital net revenue increased 18.4%

Subscription Digital Marketing Solutions net revenue increased 14.3%

Digital Advertising net revenue increased 21.4%

Total Digital Adjusted Operating Income increased 10.9%

Subscription Digital Marketing Solutions Adjusted Operating Income increased 8.6%

Digital Advertising Adjusted Operating Income increased 12.4%

Broadcast Advertising net revenue increased 4.0%

Townsquare Interactive added approximately 2,200 net subscribers

*See below for discussion of non-GAAP measures.

Guidance

For the third quarter of 2022, net revenue is expected to be between $120 million and $127 million and Adjusted EBITDA is expected to be between $30 million and $32 million.

For the full year 2022, net revenue guidance is raised to be between $465 million and $480 million and Adjusted EBITDA guidance is raised to be between $116 million and $121 million.

Quarter Ended June 30, 2022 Compared to the Quarter Ended June 30, 2021

Net Revenue

Net revenue for the three months ended June 30, 2022 increased $14.6 million, or 13.6%, as compared to the same period in 2021. Our Digital Advertising net revenue increased $7.5 million, or 25.4%, and our Subscription Digital Marketing Solutions net revenue increased $2.8 million, or 13.7%, as compared to the same period in 2021 due in part to the addition of approximately 1,150 additional net subscribers during the second quarter of 2022.

Our Other net revenue increased $3.7 million due to an increase in the number of live events held in the current period and our Broadcast Advertising net revenue increased $0.6 million, or 1.0%, as compared to the same period in 2021, due to increases in the purchase of new advertising by our clients.

Adjusted EBITDA

Adjusted EBITDA for the quarter ended June 30, 2022, increased $2.1 million, or 6.8%, to $32.4 million, as compared to $30.3 million in the same period last year. Adjusted EBITDA (Excluding Political) increased $1.4 million, or 4.8%, to $31.1 million, as compared to $29.6 million in the same period last year.

Net Income

Net income for the quarter ended June 30, 2022, decreased $5.2 million to $4.9 million, as compared to $10.1 million in the same period last year.

Six Months Ended June 30, 2022 Compared to the Six Months Ended June 30, 2021

Net Revenue

Net revenue for the six months ended June 30, 2022, increased $26.1 million, or 13.3%, as compared to the same period in 2021. Our Digital Advertising net revenue increased $11.7 million, or 21.4% and our Subscription Digital Marketing Solutions net revenue increased $5.6 million, or 14.3% as compared to the same period in 2021 due in part to the addition of approximately 2,200 additional net subscribers during the six months ended June 30, 2022.

Our Other net revenue increased $4.7 million due to the increase in live events held during the period, as compared to the same period a year ago. Our Broadcast Advertising net revenue increased $4.1 million, or 4.0%, due to increases in the purchase of new advertising by our clients.

Adjusted EBITDA

Adjusted EBITDA for the six months ended June 30, 2022 increased $4.0 million, or 8.0% to $54.4 million, as compared to $50.4 million in the same period last year. Adjusted EBITDA (Excluding Political) increased $3.4 million, or 6.9%, to $52.8 million, as compared to $49.4 million in the same period last year.

Net Income

Net income for the six months ended June 30, 2022 increased $3.7 million, or 93.2%, to $7.7 million, as compared to $4.0 million in the same period last year.

Liquidity and Capital Resources

As of June 30, 2022, we had a total of $22.8 million of cash and cash equivalents and $530.8 million of outstanding indebtedness, representing 4.86x and 4.65x gross and net leverage, respectively, based on Adjusted EBITDA for the twelve months ended June 30, 2022, of $109.1 million.

The table below presents a summary, as of July 29, 2022, of our outstanding common stock.

Security

Number
Outstanding

Description

Class A common stock

12,876,711

One vote per share.

Class B common stock

815,296

10 votes per share.¹

Class C common stock

3,461,341

No votes.¹

Total

17,153,348

¹ Each share converts into one share of Class A common stock upon transfer or at the option of the holder, subject to certain
conditions, including compliance with FCC rules.

Conference Call

Townsquare Media, Inc. will host a conference call to discuss certain second quarter 2022 financial results and 2022 guidance on Tuesday, August 2, 2022 at 8:00 a.m. Eastern Time. The conference call dial-in number is 1-877-407-0784 (U.S. & Canada) or 1-201-689-8560 (International) and the confirmation code is 13731436. A live webcast of the conference call will also be available on the investor relations page of the Company’s website at www.townsquaremedia.com.

A replay of the conference call will be available through August 9, 2022. To access the replay, please dial 1-844-512-2921 (U.S. and Canada) or 1-412-317-6671 (International) and enter confirmation code 13731436. A web-based archive of the conference call will also be available at the above website.

About Townsquare Media, Inc.

Townsquare is a community-focused digital media and digital marketing solutions company with market leading local radio stations, principally focused outside the top 50 markets in the U.S. Our assets include a subscription digital marketing services business, Townsquare Interactive, providing website design, creation and hosting, search engine optimization, social media and online reputation management as well as other digital monthly services for approximately 29,000 SMBs; a robust digital advertising division, Townsquare Ignite, a powerful combination of a) an owned and operated portfolio of more than 400 local news and entertainment websites and mobile apps along with a network of leading national music and entertainment brands, collecting valuable first party data and b) a proprietary digital programmatic advertising technology stack with an in-house demand and data management platform; and a portfolio of 357 local terrestrial radio stations in 74 U.S. markets strategically situated outside the Top 50 markets in the United States. Our portfolio includes local media brands such as WYRK.com, WJON.com and NJ101.5.com, and premier national music brands such as XXLmag.com, TasteofCountry.com, UltimateClassicRock.com, and Loudwire.com. For more information, please visit www.townsquaremedia.com, www.townsquareinteractive.com and www.townsquareignite.com.

Forward-Looking Statements

Except for the historical information contained in this press release, the matters addressed are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements often discuss our current expectations and projections relating to our financial condition, results of operations, plans, objectives, future performance and business. You can identify forward-looking statements by the fact that they do not relate strictly to historical or current facts. These statements may include words such as “aim,” “anticipate,” “estimate,” “expect,” “forecast,” “outlook,” “potential,” “project,” “projection,” “plan,” “intend,” “seek,” “believe,” “may,” “could,” “would,” “will,” “should,” “can,” “can have,” “likely,” the negatives thereof and other words and terms. Actual events or results may differ materially from the results anticipated in these forward-looking statements as a result of a variety of factors. While it is impossible to identify all such factors, factors that could cause actual results to differ materially from those estimated by us include the impact of general economic conditions in the United States, or in the specific markets in which we currently do business including supply chain disruptions, inflation, labor shortages and the effect on advertising activity, industry conditions, including existing competition and future competitive technologies, the popularity of radio as a broadcasting and advertising medium, cancellations, disruptions or postponements of advertising schedules in response to national or world events, including the COVID-19 pandemic, our ability to develop and maintain digital technologies and hire and retain technical and sales talent, our dependence on key personnel, our capital expenditure requirements, our continued ability to identify suitable acquisition targets, and consummate and integrate any future acquisitions, legislative or regulatory requirements, risks and uncertainties relating to our leverage and changes in interest rates, our ability to obtain financing at times, in amounts and at rates considered appropriate by us, our ability to access the capital markets as and when needed and on terms that we consider favorable to us and other factors discussed in this section entitled “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in this report and under “Risk Factors” in our 2021 Annual Report on Form 10-K for the year ended December 31, 2021, filed with the SEC on March 16, 2022, as well as other risks discussed from time to time in our filings with the SEC. Many of these factors are beyond our ability to predict or control. In addition, as a result of these and other factors, our past financial performance should not be relied on as an indication of future performance. The cautionary statements referred to in this section also should be considered in connection with any subsequent written or oral forward-looking statements that may be issued by us or persons acting on our behalf. The forward-looking statements included in this report are made only as of the date hereof or as of the date specified herein. We undertake no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by law.

Non-GAAP Financial Measures and Definitions

In this press release, we refer to Adjusted Operating Income, Adjusted EBITDA, Adjusted EBITDA (Excluding Political), Adjusted Net Income and Adjusted Net Income Per Share which are financial measures that have not been prepared in accordance with generally accepted accounting principles in the United States (“GAAP”).

We define Adjusted Operating Income as operating income before the deduction of depreciation and amortization, stock-based compensation, corporate expenses, transaction costs, business realignment costs, impairment of goodwill, long-lived and intangible assets and net loss (gain) on sale and retirement of assets. We define Adjusted EBITDA as net income (loss) before the deduction of income taxes, interest expense, net, loss (gain) on extinguishment and modification of debt, transaction costs, depreciation and amortization, stock-based compensation, business realignment costs, impairment of long-lived assets, intangible assets and investments, change in fair value of investment, net (loss) gain on sale and retirement of assets and other expense (income) net. We define Adjusted EBITDA (Excluding Political) as Adjusted EBITDA less political net revenue, net of a fifteen percent deduction to account for estimated national representative firm fees, music licensing fees and sales commissions expense. Adjusted Net Income is defined as net income (loss) before the deduction of transaction costs, business realignment costs, impairment of long-lived assets, intangible assets and investments, change in fair value of investment, net loss (gain) on sale and retirement of assets, loss (gain) on extinguishment and modification of debt, gain on insurance recoveries and net income attributable to non-controlling interest, net of income taxes. Adjusted Net Income Per Share is defined as Adjusted Net Income divided by the weighted average shares outstanding. We define Net Leverage as our total outstanding indebtedness, net of our total cash balance as of June 30, 2022, divided by our Adjusted EBITDA for the twelve months ended June 30, 2022. These measures do not represent, and should not be considered as alternatives to or superior to, financial results and measures determined or calculated in accordance with GAAP. In addition, these non-GAAP measures are not based on any comprehensive set of accounting rules or principles. You should be aware that in the future we may incur expenses or charges that are the same as or similar to some of the adjustments in the presentation, and we do not infer that our future results will be unaffected by unusual or non-recurring items. In addition, these non-GAAP measures may not be comparable to similarly-named measures reported by other companies.

We use Adjusted Operating Income to evaluate the operating performance of our business segments. We use Adjusted EBITDA and Adjusted EBITDA (Excluding Political) to facilitate company-to-company operating performance comparisons by backing out potential differences caused by variations in capital structures (affecting interest expense), taxation and the age and book depreciation of facilities and equipment (affecting relative depreciation expense), which may vary for different companies for reasons unrelated to operating performance, and to facilitate year over year comparisons, by backing out the impact of political revenue which varies depending on the election cycle and may be unrelated to operating performance. We use Adjusted Net Income and Adjusted Net Income Per Share to assess total company operating performance on a consistent basis. We use Net Leverage to measure the Company’s ability to handle its debt burden. We believe that these measures, when considered together with our GAAP financial results, provide management and investors with a more complete understanding of our business operating results, including underlying trends, by excluding the effects of transaction costs, net loss (gain) on sale and retirement of assets, business realignment costs and certain impairments. Further, while discretionary bonuses for members of management are not determined with reference to specific targets, our board of directors may consider Adjusted Operating Income, Adjusted EBITDA, Adjusted EBITDA (Excluding Political), Adjusted Net Income, Adjusted Net Income Per Share and Net Leverage when determining discretionary bonuses.

Investor Relations

Claire Yenicay
(203) 900-5555
[email protected]

TOWNSQUARE MEDIA, INC.

CONSOLIDATED BALANCE SHEETS

(in Thousands, Except Share and Per Share Data)

(unaudited)

June 30,

2022

December 31,

2021

ASSETS

Current assets:

   Cash and cash equivalents

$              22,825

$              50,505

Accounts receivable, net of allowance of $5,561 and $6,743, respectively

63,458

57,647

   Prepaid expenses and other current assets

12,205

12,086

Total current assets

98,488

120,238

Property and equipment, net

109,944

106,717

Intangible assets, net

300,935

278,265

Goodwill

166,324

157,947

Investments

16,445

18,217

Operating lease right-of-use-assets

49,910

42,996

Other assets

2,067

1,437

Restricted cash

494

494

Total assets

$            744,607

$            726,311

LIABILITIES AND STOCKHOLDERS’ EQUITY

Current liabilities:

Accounts payable

$                8,783

$                5,676

Deferred revenue

10,435

10,208

Accrued compensation and benefits

9,453

14,411

Accrued expenses and other current liabilities

25,684

22,512

Operating lease liabilities, current

8,651

7,396

Accrued interest

15,197

15,754

Total current liabilities

78,203

75,957

Long-term debt, net of deferred finance costs of $7,348 and $8,479, respectively

523,418

541,521

Deferred tax liability

22,395

20,081

Operating lease liability, net of current portion

44,151

38,743

Other long-term liabilities

16,965

425

Total liabilities

685,132

676,727

Stockholders’ equity:

Class A common stock, par value $0.01 per share; 300,000,000 shares authorized; 12,876,711 and
12,573,654 shares issued and outstanding, respectively

129

126

Class B common stock, par value $0.01 per share; 50,000,000 shares authorized; 815,296 and
815,296 shares issued and outstanding, respectively

8

8

Class C common stock, par value $0.01 per share; 50,000,000 shares authorized; 3,461,341 and
3,461,341 shares issued and outstanding, respectively

35

35

   Total common stock

172

169

   Treasury stock, at cost; 25,623 and zero shares of Class A common stock, respectively

(225)

—

   Additional paid-in capital

306,997

302,724

   Accumulated deficit

(250,017)

(256,635)

   Non-controlling interest

2,548

3,326

Total stockholders’ equity

59,475

49,584

Total liabilities and stockholders’ equity

$            744,607

$            726,311

TOWNSQUARE MEDIA, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS

(in Thousands, Except Per Share Data)

(unaudited)

Three Months Ended

June 30,

Six Months Ended

June 30,

2022

2021

2022

2021

Net revenue

$       121,924

$         107,338

$      222,166

$         196,099

Operating costs and expenses:

Direct operating expenses, excluding depreciation, amortization, and stock-based
compensation

83,833

71,591

157,596

136,118

Depreciation and amortization

4,314

4,996

9,079

9,725

Corporate expenses

5,739

5,452

10,148

9,586

Stock-based compensation

839

894

1,708

1,956

Transaction and business realignment costs

824

456

1,276

5,361

Impairment of long-lived assets, intangible assets and investments

9,419

95

9,897

95

Net loss (gain) on sale and retirement of assets

89

34

(219)

627

    Total operating costs and expenses

105,057

83,518

189,485

163,468

    Operating income

16,867

23,820

32,681

32,631

Other expense (income):

Interest expense, net

10,044

9,809

20,071

19,964

(Gain) loss on repurchases, extinguishment and modification of debt

(108)

—

(108)

5,997

Other expense (income), net

806

(40)

2,394

(377)

    Income from operations before tax

6,125

14,051

10,324

7,047

Income tax provision

1,206

3,977

2,664

3,082

Net income

$           4,919

$           10,074

$          7,660

$             3,965

Net income attributable to:

     Controlling interests

$           4,394

$             9,432

$          6,618

$             2,883

     Non-controlling interests

$              525

$               642

$          1,042

$             1,082

Basic income per share:

    Attributable to common shares

$             0.26

$              0.58

$            0.39

$              0.14

    Attributable to participating shares

$               —

$              0.58

$              —

$              0.14

Diluted income per share

$             0.24

$              0.50

$            0.35

$              0.13

Weighted average shares outstanding:

     Basic attributable to common shares

16,986

16,087

16,891

17,187

     Basic attributable to participating shares

—

163

—

3,474

     Diluted

18,695

18,837

19,177

22,730

TOWNSQUARE MEDIA, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(in Thousands)

(unaudited)

Six Months Ended June 30,

2022

2021

Cash flows from operating activities:

Net income

$                 7,660

$                 3,965

Adjustments to reconcile net income to net cash provided by operating activities:

     Depreciation and amortization

9,079

9,725

     Amortization of deferred financing costs

855

674

     Non-cash lease income

(251)

(261)

     Net deferred taxes and other

2,314

2,841

     Provision for doubtful accounts

494

901

     Stock-based compensation expense

1,708

1,956

    (Gain) loss on repurchases, extinguishment and modification of debt

(108)

5,997

     Trade activity, net

(1,773)

(7,876)

     Impairment of long-lived assets, intangible assets and investments

9,897

95

     Unrealized loss on investment

2,172

—

     Content rights acquired

(19,320)

—

     Amortization of content rights

1,952

—

     Change in content rights liabilities

18,278

—

     Other

(283)

(147)

Changes in assets and liabilities, net of acquisitions:

Accounts receivable

(5,984)

2,799

Prepaid expenses and other assets

(507)

2,309

Accounts payable

1,401

88

Accrued expenses

(3,917)

(3,301)

Accrued interest

(556)

12,135

Other long-term liabilities

(106)

(729)

Net cash provided by operating activities – continuing operations

23,005

31,171

Net cash used in operating activities – discontinued operations

—

(33)

Net cash provided by operating activities

23,005

31,138

Cash flows from investing activities:

Payment for acquisition

(18,419)

—

Purchase of property and equipment

(7,627)

(4,839)

Purchase of investments

(100)

(278)

Purchase of digital assets

(4,997)

—

Proceeds from insurance recoveries

11

225

Proceeds from sale of assets and investment related transactions

639

839

Net cash used in investing activities

(30,493)

(4,053)

Cash flows from financing activities:

Repurchase of 2026 Notes

(18,850)

—

Repayment of term loans

—

(272,381)

Repurchase of 2023 Notes

—

(273,416)

Proceeds from the issuance of 2026 Notes

—

550,000

Prepayment fee on 2023 Notes

—

(4,443)

Deferred financing costs

—

(9,027)

Repurchase of Oaktree securities

—

(80,394)

Transaction costs related to Oaktree securities repurchase

—

(1,556)

Proceeds from stock options exercised

759

9,702

Repurchase of stock

(225)

(1,400)

Cash distribution to non-controlling interests

(1,820)

(2,216)

Repayments of capitalized obligations

(56)

(37)

      Net cash used in financing activities

(20,192)

(85,168)

Cash and cash equivalents and restricted cash:

      Net decrease in cash, cash equivalents and restricted cash

(27,680)

(58,083)

      Beginning of period

50,999

83,723

      End of period

$               23,319

$               25,640

TOWNSQUARE MEDIA, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS (continued)

(in Thousands)

(unaudited)

Six Months Ended

June 30,

2022

2021

Supplemental Disclosure of Cash Flow Information:

Cash payments:

Interest

$           19,508

$             7,151

Income taxes

859

484

Supplemental Disclosure of Non-cash Activities:

   Investments acquired in exchange for advertising⁽¹⁾

$             1,500

$             6,100

   Property and equipment acquired in exchange for advertising⁽¹⁾

519

1,642

   Accrued capital expenditures

1,517

183

   Accrued financing fees

—

150

Supplemental Disclosure of Cash Flow Information relating to Leases:

Cash paid for amounts included in the measurement of operating lease liabilities, included in
operating cash flows

$             5,036

$             5,243

Right-of-use assets obtained in exchange for operating lease obligations

5,211

1,662

Reconciliation of cash, cash equivalents and restricted cash

Cash and cash equivalents

$           22,825

$           25,146

Restricted cash

494

494

$           23,319

$           25,640

⁽¹⁾Represents total advertising services provided by the Company in exchange for equity interests and property and equipment acquired during each of the six months ended June 30, 2022 and 2021, respectively.

TOWNSQUARE MEDIA, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS BY SEGMENT

(in Thousands)

(unaudited)

Three Months Ended

June 30,

Six Months Ended

June 30,

2022

2021

% Change

2022

2021

% Change

Subscription Digital Marketing Solutions

$        22,983

$       20,220

13.7 %

$        44,833

$        39,217

14.3 %

Digital Advertising

37,198

29,655

25.4 %

66,437

54,731

21.4 %

Broadcast Advertising

56,975

56,422

1.0 %

105,180

101,108

4.0 %

Other

4,768

1,041

358.0 %

5,716

1,043

448.0 %

Net revenue

121,924

107,338

13.6 %

222,166

196,099

13.3 %

Subscription Digital Marketing Solutions Expenses

16,293

14,125

15.3 %

$        31,769

$        27,190

16.8 %

Digital Advertising expenses

26,104

19,731

32.3 %

47,115

37,543

25.5 %

Broadcast Advertising expenses

37,542

37,045

1.3 %

73,980

70,627

4.7 %

Other expenses

3,894

690

464.3 %

4,732

758

524.3 %

Direct operating expenses

83,833

71,591

17.1 %

157,596

136,118

15.8 %

Depreciation and amortization

4,314

4,996

(13.7) %

9,079

9,725

(6.6) %

Corporate expenses

5,739

5,452

5.3 %

10,148

9,586

5.9 %

Stock-based compensation

839

894

(6.2) %

1,708

1,956

(12.7) %

Transaction and business realignment costs

824

456

80.7 %

1,276

5,361

(76.2) %

Impairment of long-lived assets, intangible
assets and investments

9,419

95

**

9,897

95

**

Net loss (gain) on sale and retirement of assets

89

34

161.8 %

(219)

627

**

    Total operating costs and expenses

105,057

83,518

25.8 %

189,485

163,468

15.9 %

    Operating income

16,867

23,820

(29.2) %

32,681

32,631

0.2 %

Other expense (income):

Interest expense, net

10,044

9,809

2.4 %

20,071

19,964

0.5 %

(Gain) loss on repurchases, extinguishment
and modification of debt

(108)

—

**

(108)

5,997

**

Other expense (income), net

806

(40)

**

2,394

(377)

**

    Income from operations before tax

6,125

14,051

(56.4) %

10,324

7,047

46.5 %

Income tax provision

1,206

3,977

(69.7) %

2,664

3,082

(13.6) %

Net income

$          4,919

$       10,074

(51.2) %

$          7,660

$          3,965

93.2 %

** not meaningful

The following table presents Net revenue and Adjusted Operating Income by segment, for the three and six months ended June 30, 2022, and 2021, respectively (in thousands):

Three Months Ended

June 30,

Six Months Ended

June 30,

(Unaudited)

(Unaudited)

2022

2021

% Change

2022

2021

% Change

Subscription Digital Marketing Solutions

$       22,983

$       20,220

13.7 %

$       44,833

$       39,217

14.3 %

Digital Advertising

37,198

29,655

25.4 %

66,437

54,731

21.4 %

Digital

60,181

49,875

20.7 %

111,270

93,948

18.4 %

Broadcast Advertising

56,975

56,422

1.0 %

105,180

101,108

4.0 %

Other

4,768

1,041

358.0 %

5,716

1,043

448.0 %

Net revenue

$     121,924

$     107,338

13.6 %

$     222,166

$     196,099

13.3 %

Subscription Digital Marketing Solutions

$         6,690

$         6,095

9.8 %

$       13,064

$       12,027

8.6 %

Digital Advertising

11,094

9,924

11.8 %

19,322

17,188

12.4 %

Digital

17,784

16,019

11.0 %

32,386

29,215

10.9 %

Broadcast Advertising

19,433

19,377

0.3 %

31,200

30,481

2.4 %

Other

874

351

149.0 %

984

285

245.3 %

Adjusted Operating Income

$       38,091

$       35,747

6.6 %

$       64,570

$       59,981

7.7 %

** not meaningful

The following table reconciles Net revenue to Net revenue, excluding political revenue on a GAAP basis by segment for the three and six months ended June 30, 2022, and 2021, respectively (in thousands):

Three Months Ended

June 30,

Six Months Ended

June 30,

(Unaudited)

(Unaudited)

2022

2021

% Change

2022

2021

% Change

Subscription Digital Marketing Solutions

$       22,983

$       20,220

13.7 %

$       44,833

$       39,217

14.3 %

Digital Advertising

37,198

29,655

25.4 %

66,437

54,731

21.4 %

Digital

60,181

49,875

20.7 %

111,270

93,948

18.4 %

Broadcast Advertising

56,975

56,422

1.0 %

105,180

101,108

4.0 %

Other

4,768

1,041

358.0 %

5,716

1,043

448.0 %

Net revenue

$     121,924

$     107,338

13.6 %

$     222,166

$     196,099

13.3 %

Subscription Digital Marketing Solutions
political revenue

—

—

**

—

—

**

Digital Advertising political revenue

151

—

**

197

—

**

Broadcast Advertising political revenue

1,365

764

78.7 %

1,751

1,203

45.6 %

Other political revenue

—

—

**

—

—

**

Political revenue

$         1,516

$            764

98.4 %

$         1,948

$         1,203

61.9 %

Subscription Digital Marketing Solutions net
revenue (ex. political)

$       22,983

$       20,220

13.7 %

$       44,833

$       39,217

14.3 %

Digital Advertising net revenue (ex. political)

37,047

29,655

24.9 %

66,240

54,731

21.0 %

Digital net revenue (ex. political)

60,030

49,875

20.4 %

111,073

93,948

18.2 %

Broadcast Advertising political net revenue (ex.
political)

55,610

55,658

(0.1) %

103,429

99,905

3.5 %

Other net revenue (ex. political)

4,768

1,041

358.0 %

5,716

1,043

448.0 %

Net revenue (ex. political)

$     120,408

$     106,574

13.0 %

$     220,218

$     194,896

13.0 %

** not meaningful

The following table reconciles on a GAAP basis net income (loss), the most directly comparable financial measure calculated and presented in accordance with GAAP, to Adjusted Net Income for the three and six months ended June 30, 2022, and 2021, respectively (in thousands, except per share data):

Three Months Ended

June 30,

Six Months Ended

June 30,

(Unaudited)

2022

2021

2022

2021

Net income

$         4,919

$       10,074

$         7,660

$         3,965

Income tax provision

1,206

3,977

2,664

3,082

Income from operations before income taxes

6,125

14,051

10,324

7,047

Transaction and business realignment costs

824

456

1,276

5,361

Impairment of long-lived assets, intangible assets and investments

9,419

95

9,897

95

Net loss (gain) on sale and retirement of assets

89

34

(219)

627

(Gain) loss on repurchases, extinguishment and modification of debt

(108)

—

(108)

5,997

Change in fair value of investment

664

—

2,172

—

Gain on insurance recoveries

—

—

(11)

(225)

Net income attributable to non-controlling interest, net of income taxes

(525)

(642)

(1,042)

(1,082)

Adjusted net income before income taxes

16,488

13,994

22,289

17,820

   Income tax provision

3,246

3,961

5,751

7,794

Adjusted Net Income

$       13,242

$       10,033

$       16,538

$       10,026

Adjusted Net Income Per Share:

   Basic

$           0.78

$           0.62

$           0.98

$           0.58

   Diluted

$           0.71

$           0.53

$           0.86

$           0.44

Weighted average shares outstanding:

     Basic

16,986

16,087

16,891

17,187

     Diluted

18,695

18,837

19,177

22,730

The following table reconciles on a GAAP basis net income (loss), the most directly comparable financial measure calculated and presented in accordance with GAAP, to Adjusted EBITDA, Adjusted EBITDA (Excluding Political), and Adjusted EBITDA Less Interest, Capex and Taxes for the three and six months ended June 30, 2022, and 2021, respectively (dollars in thousands):

Three Months Ended

June 30,

Six Months Ended

June 30,

(Unaudited)

2022

2021

2022

2021

Net income

$         4,919

$       10,074

$         7,660

$         3,965

Income tax provision

1,206

3,977

2,664

3,082

Interest expense, net

10,044

9,809

20,071

19,964

(Gain) loss on repurchases, extinguishment and modification of debt

(108)

—

(108)

5,997

Depreciation and amortization

4,314

4,996

9,079

9,725

Stock-based compensation

839

894

1,708

1,956

Transaction and business realignment costs

824

456

1,276

5,361

Impairment of long-lived assets, intangible assets and investments

9,419

95

9,897

95

Change in fair value of investment

664

—

2,172

—

Other ^(a)

231

(6)

3

250

Adjusted EBITDA

$       32,352

$       30,295

$       54,422

$       50,395

Political Adjusted EBITDA

(1,289)

(649)

(1,656)

(1,023)

Adjusted EBITDA (Excluding Political)

$       31,063

$       29,646

$       52,766

$       49,372

Political Adjusted EBITDA

1,289

649

1,656

1,023

Net cash paid for interest

(599)

(1)

(19,508)

(7,151)

Capital expenditures

(4,862)

(2,979)

(7,627)

(4,839)

Cash paid for taxes

(811)

(414)

(859)

(484)

Adjusted EBITDA Less Interest, Capex and Taxes

$       26,080

$       26,901

$       26,428

$       37,921

(a) Other includes net loss (gain) on sale and retirement of assets and other expense (income), net.

The following table reconciles net income, the most directly comparable financial measure calculated and presented in accordance with GAAP, to Adjusted EBITDA on a quarterly basis for the twelve months ended June 30, 2022 (dollars in thousands):

Three Months Ended

Twelve
Months
Ended

(Unaudited)

September 30,
2021

December 31,
2021

March 31,
2022

June 30,
2022

June 30,
2022

Net income

$         12,894

$            1,925

$             2,741

$             4,919

$           22,479

Income tax provision

3,349

3,920

1,458

1,206

9,933

Interest expense, net

9,816

10,066

10,027

10,044

39,953

Gain on repurchases, extinguishment and
modification of debt

—

—

—

(108)

(108)

Depreciation and amortization

4,821

4,552

4,765

4,314

18,452

Stock-based compensation

877

885

869

839

3,470

Transaction and business realignment costs

486

(542)

452

824

1,220

Impairment of long-lived assets, intangible assets
and investments

—

1,818

478

9,419

11,715

Change in fair value of investment

(2,924)

2,792

1,508

664

2,040

Other ^(a)

(168)

151

(228)

$                231

(14)

Adjusted EBITDA

$         29,151

$          25,567

$           22,070

$           32,352

$         109,140

(a) Other includes net loss (gain) on sale and retirement of assets and other expense (income), net.

The following tables reconcile Operating income (loss), the most directly comparable financial measure calculated and presented in accordance with GAAP, to Adjusted Operating Income by segment for the three months ended June 30, 2022, and 2021 (in thousands):

Three Months Ended June 30, 2022

(Unaudited)

Subscription
Digital
Marketing
Solutions

Digital
Advertising

Broadcast
Advertising

Other

Corporate
and Other
Reconciling
Items

Total

Operating income (loss)

$             6,244

$           10,934

$           10,152

$                816

$          (11,279)

$           16,867

Depreciation and amortization

313

145

3,157

49

650

4,314

Corporate expenses

—

—

—

—

5,739

5,739

Stock-based compensation

133

15

84

3

604

839

Transaction and business
realignment costs

—

—

—

6

818

824

Impairment of long-lived assets,
intangible assets and
investments

—

—

5,951

—

3,468

9,419

Net loss on sale and retirement
of assets

—

—

89

—

—

89

Adjusted Operating Income

$             6,690

$           11,094

$           19,433

$                874

$                  —

$           38,091

Three Months Ended June 30, 2021

(Unaudited)

Subscription
Digital
Marketing
Solutions

Digital
Advertising

Broadcast
Advertising

Other

Corporate
and Other
Reconciling
Items

Total

Operating income (loss)

$             5,686

$             9,801

$           16,056

$                303

$            (8,026)

$           23,820

Depreciation and amortization

281

112

3,258

41

1,304

4,996

Corporate expenses

—

—

—

—

5,452

5,452

Stock-based compensation

128

11

63

3

689

894

Transaction and business
realignment costs

—

—

—

4

452

456

Impairment of long-lived and
intangible assets

—

—

—

—

95

95

Net loss on sale and retirement
of assets

—

—

—

—

34

34

Adjusted Operating Income

$             6,095

$             9,924

$           19,377

$                351

$                  —

$           35,747

The following tables reconcile Operating income (loss), the most directly comparable financial measure calculated and presented in accordance with GAAP, to Adjusted Operating Income by segment for the six months ended June 30, 2022, and 2021 (in thousands):

Six Months Ended June 30, 2022

(Unaudited)

Subscription
Digital
Marketing
Solutions

Digital
Advertising

Broadcast
Advertising

Other

Corporate
and Other
Reconciling
Items

Total

Operating income (loss)

$           12,209

$           19,082

$           18,952

$                759

$          (18,321)

$           32,681

Depreciation and amortization

590

210

6,302

87

1,890

9,079

Corporate expenses

—

—

—

—

10,148

10,148

Stock-based compensation

265

30

171

6

1,236

1,708

Transaction and business
realignment costs

—

—

—

12

1,264

1,276

Impairment of long-lived assets,
intangible assets and
investments

—

—

5,958

120

3,819

9,897

Net gain on sale and retirement
of assets

—

—

(183)

—

(36)

(219)

Adjusted Operating Income

$           13,064

$           19,322

$           31,200

$                984

$                  —

$           64,570

Six Months Ended June 30, 2021

(Unaudited)

Subscription
Digital
Marketing
Solutions

Digital
Advertising

Broadcast Advertising

Other

Corporate
and Other
Reconciling
Items

Total

Operating income (loss)

$           11,047

$           16,821

$           23,762

$                172

$          (19,171)

$           32,631

Depreciation and amortization

697

335

6,529

86

2,078

9,725

Corporate expenses

—

—

—

—

9,586

9,586

Stock-based compensation

283

32

190

9

1,442

1,956

Transaction and business
realignment costs

—

—

—

18

5,343

5,361

Impairment of long-lived and
intangible assets

—

—

—

—

95

95

Net loss on sale and retirement
of assets

—

—

—

—

627

627

Adjusted Operating Income

$           12,027

$           17,188

$           30,481

$                285

$                  —

$           59,981

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SOURCE Townsquare Media, Inc.

Posted on August 2, 2022 6:20 am
Ucommune Announces Extraordinary General Meeting

PR Newswire

BEIJING
, Aug. 2, 2022 /PRNewswire/ — Ucommune International Ltd (NASDAQ: UK) (“Ucommune” or the “Company”), a leading agile office space manager and provider in China, today announced an extraordinary general meeting of the Company (the “Meeting”) will be held at 10 A.M. on August 19, 2022, Beijing time (10 P.M. on August 18, 2022, U.S. Eastern time) at Floor 8, No.2 Guanghua Road, Chaoyang District, Beijing, China. The purpose of the Meeting is to amend the Company’s Amended and Restated Memorandum and Articles of Association currently in effect (the “Current M&A”) to change the voting power of the Class B ordinary shares of par value of US$0.002 each (the “Class B Ordinary Shares”) from fifteen (15) votes for each Class B Ordinary Share to thirty-five (35) votes for each Class B Ordinary Share. Pursuant to the Current M&A, Company obtained the ordinary resolutions of the holders of Class B Ordinary Shares to approve the proposed variation of rights of Class B Ordinary Shares set forth in the notice of the Meeting on August 2, 2022. The Company has established the close of business on August 2, 2022, Eastern time (the “Record Date”), as the record date for determining shareholders entitled to notice of, and to vote at, the Meeting and any adjournments or postponements thereof.

Copies of the notice of the Meeting and the form of proxy are available on the Company’s corporate investor relations website at https://ir.ucommune.com.

About Ucommune International Ltd

Ucommune is China’s leading agile office space manager and provider. Founded in 2015, Ucommune has created a large-scale intelligent agile office ecosystem covering economically vibrant regions throughout China to empower its members with flexible and cost-efficient office space solutions. Ucommune’s various offline agile office space services include self-operated models, such as U Space, U Studio, and U Design, as well as asset-light models, such as U Brand and U Partner. By utilizing its expertise in the real estate and retail industries, Ucommune operates its agile office spaces with high efficiency and engages in the urban transformation of older and under-utilized buildings to redefine commercial real estate in China.

Safe Harbor Statements

This press release contains forward-looking statements within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended. These forward-looking statements are made under the “safe harbor” provisions of the U.S. Private Securities Litigation Reform Act of 1995. These statements can be identified by terminology such as “will,” “expects,” “anticipates,” “future,” “intends,” “plans,” “believes,” “estimates,” “potential,” “continue,” “ongoing,” “targets,” “guidance” and similar statements. The Company may also make written or oral forward-looking statements in its periodic reports to the U.S. Securities and Exchange Commission (the “SEC”), in its annual report to shareholders, in press releases and other written materials and in oral statements made by its officers, directors or employees to third parties. Any statements that are not historical facts, including statements about the Company’s beliefs and expectations, are forward-looking statements. Forward-looking statements involve inherent risks and uncertainties. A number of factors could cause actual results to differ materially from those contained in any forward-looking statement, including but not limited to the following: the Company’s growth strategies; its future business development, results of operations and financial condition; its ability to understand members’ needs and provide products and services to attract and retain members; its ability to maintain and enhance the recognition and reputation of its brand; its ability to maintain and improve quality control policies and measures; its ability to establish and maintain relationships with members and business partners; trends and competition in China’s agile office space market; changes in its revenues and certain cost or expense items; the expected growth of China’s agile office space market; PRC governmental policies and regulations relating to the Company’s business and industry, and general economic and business conditions in China and globally and assumptions underlying or related to any of the foregoing. Further information regarding these and other risks, uncertainties or factors is included in the Company’s filings with the SEC. All information provided in this press release and in the attachments is as of the date of this press release, and the Company undertakes no obligation to update any forward-looking statement, except as required under applicable law.

For investor and media inquiries, please contact:

Ucommune International Ltd
[email protected]

ICR, LLC
Robin Yang
[email protected]
+1 (212) 537-3847

View original content:https://www.prnewswire.com/news-releases/ucommune-announces-extraordinary-general-meeting-301597665.html

SOURCE Ucommune International Ltd

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