Market Newsdesk

August 2, 2022 6:20 am

Sequans Communications Announces Second Quarter 2022 Financial Results

PR Newswire

PARIS
, Aug. 2, 2022 /PRNewswire/ — Sequans Communications S.A. (NYSE: SQNS), a leading developer and provider of 5G/4G solutions for IoT devices, today announced financial results for the second quarter ended June 30, 2022.

Second Quarter 2022 Summary Results Table:

(in US$ millions, except share and per share data)	Q2 2022	Q1 2022	Q2 2021
Revenue	$14.2	$13.9	$12.9
Gross profit	8.6	9.5	7.3
Gross margin (%)	60.7 %	68.1 %	56.6 %
Operating loss	(2.1)	(2.0)	(3.4)
Net Profit (Loss)	(3.1)	2.0	(1.3)
Diluted earnings (loss) per ADS	($0.07)	$0.04	($0.04)
Non-IFRS diluted earnings per ADS *	($0.02)	($0.04)	($0.15)
Weighted average number of diluted ADS	47,656,861	46,013,404	37,118,845

“Our second quarter growth was boosted by our Monarch Cat-M product family, which grew 13% sequentially and 122% year-over-year, continuing its first-quarter strong performance,” said Georges Karam, CEO of Sequans. “Revenue for the quarter increased 11% year-over-year, with Massive IoT growing 12% and the Broadband category growing 9%, due to services revenue. Broadband revenue decreased sequentially due to the expected decline of licensing revenue generated by our existing 5G agreements, which was fully offset by the growth in our Massive IoT business. Our product revenue pipeline continues to build with more design wins, and we are moving them towards mass production, although the shutdowns in China have delayed a few product launches. While most of the design wins are with the Monarch family, our main growth driver, we are seeing increasing interest in our new Cat 1 Calliope 2 platform that we expect to drive additional growth in 2023.”

Mr. Karam continued, “I am pleased to announce that we finalized all the terms of a licensing agreement with a new 5G strategic partner that is expected to fully fund the development of our 5G platform. Execution of the deal should be concluded shortly subject to some final logistical steps.”

Q3 2022 Outlook

Management plans to update the outlook once the strategic 5G agreement is closed.

Second Quarter 2022 Highlights:

Revenue: Revenue was $14.2 million, an increase of 2.4% compared to the first quarter of 2022 and an increase of 10.6% compared to the second quarter of 2021. The increase from the first quarter was primarily due to increased Massive IoT revenues that offset the decline in Broadband service revenue.

Gross margin: Gross margin was 60.7% compared to 68.1% in the first quarter of 2022 and compared to 56.6% in the second quarter of 2021 due to the higher proportion of product sales versus license and service revenue in the revenue mix.

Operating loss: Operating loss was $2.1 million flat compared to the first quarter of 2022 and $3.4 million in the second quarter of 2021.

Net profit / loss: Net loss was $3.1 million, or ($0.07) per diluted ADS, compared to net profit of $2.0 million, or $0.04 per ADS, in the first quarter of 2022 and a net loss of $1.3 million, or ($0.04) per ADS, in the second quarter of 2021. Net loss in the second quarter of 2022 includes a $0.7 million gain on the change in fair value of the convertible debt derivative compared to a $6.4 million gain in the first quarter of 2022 and a $1.4 million gain in the second quarter of 2021.

Non-IFRS Net loss and diluted loss per ADS: Excluding the non-cash stock-based compensation, the non-cash impact of the fair-value and effective interest adjustments related to the convertible debt with embedded derivatives and other financings, non-IFRS net loss was $1.1 million, or ($0.02) per ADS, compared to $1.8 million, or ($0.04) per ADS in the first quarter of 2022, and $5.6 million, or ($0.15) per ADS, in the second quarter of 2021. The non-IFRS net loss includes foreign exchange gains of $1.2 million, or $0.02 per ADS, in the second quarter of 2022, $370,000, or less $0.01 per ADS, in the first quarter of 2022 and a loss of $1.0 million, or ($0.03) per ADS, in the second quarter of 2021.

Cash: Cash and cash equivalents and short-term deposits at June 30, 2022 totaled $16.8 million compared to $26.3 million at March 31, 2022. The amount at June 30, 2022 excludes grant funding of $3.0 million received July 1, 2022.

Conference Call and Webcast

Sequans plans to conduct a teleconference and live webcast to discuss the financial results for the second quarter of 2022 today, August 2, 2022 at 8:00 a.m. ET /14:00 CET. To participate in the live call, analysts and investors should dial 877-407-0792 or +1 201-689-8263 if outside the U.S. When prompted, provide the event title or access code: 13730885. A live and archived webcast of the call will be available from the Investors section of the Sequans website at www.sequans.com/investors/. An audio replay of the conference call will be available until August 16, 2022 by dialing toll free 844-512-2921 or +1 412-317-6671 from outside the U.S., using the following access code:13730855.

Forward Looking Statements

This press release contains projections and other forward-looking statements regarding future events, including the expected execution of a new strategic agreement, and our future financial performance. All statements other than present and historical facts and conditions contained in this release, including any statements regarding future results of operations and financial positions, business strategy and plans, including ability to enter into and close a new 5G strategic agreement on presently negotiated terms and the expectation that the potential agreement will fully fund the development of our first 5G platform, expectations for Massive IoT sales, the impact of the Covid-19 on our supply chain and on customer demand, the impact of component shortages and manufacturing capacity, our ability to convert our pipeline to revenue and our objectives for future operations, are forward-looking statements (within the meaning of the Private Securities Litigation Reform Act of 1995, Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended). These statements are only predictions and reflect our current beliefs and expectations with respect to future events and are based on assumptions and subject to risk and uncertainties and subject to change at any time. We undertake no obligation to update the information made in this release in the event facts or circumstances subsequently change after the date of this press release. We operate in a very competitive and rapidly changing environment. New risks emerge from time to time. Given these risks and uncertainties, you should not rely on or place undue reliance on these forward-looking statements. Actual events or results may differ materially from those contained in the projections or forward-looking statements. In addition to the risk factors contained in our Form 20-F for the fiscal year ended December 31, 2021, some of the factors that could cause actual results to differ materially from the forward-looking statements contained herein include, without limitation: (i) the contraction or lack of growth of markets in which we compete and in which our products are sold, (ii) unexpected increases in our expenses resulting from inflationary pressures, including manufacturing expenses, (iii) our inability to adjust spending quickly enough to offset any unexpected revenue shortfall, (iv) delays or cancellations in spending by our customers, (v) unexpected average selling price reductions, (vi) the significant fluctuation to which our quarterly revenue and operating results are subject due to cyclicality in the wireless communications industry and transitions to new process technologies, (vii) our inability to anticipate the future market demands and future needs of our customers, (viii) our inability to achieve new design wins or for design wins to result in shipments of our products at levels and in the timeframes we currently expect, (ix) our inability to enter into and execute on strategic alliances, (x) our ability to meet performance milestones under strategic license agreements, (xi) the impact of natural disasters on our sourcing operations and supply chain, (xii) the impact of the Ukraine–Russia conflict on our independent contractors located in Ukraine, (xiii) the impact of Covid-19 on the ability to operate our business and research, production of our products or demand for our products by customers whose supply chain is impacted or whose operations have been impacted by government shelter-in-place or similar orders or Covid-19 workforce shortages, (xiv) our ability to raise debt and equity financing, and (xv) other factors detailed in documents we file from time to time with the Securities and Exchange Commission.

Use of Non-IFRS/non-GAAP Financial Measures

To supplement our unaudited consolidated financial statements prepared in accordance with IFRS, we disclose certain non-IFRS, or non-GAAP, financial measures. These measures exclude the non-cash stock-based compensation and the non-cash impacts of convertible debt amendments, conversions and repayments, effective interest adjustments related to the convertible debt with embedded derivatives and other financings; and deferred tax benefit or expense related to the convertible debt and other financings. We believe that these measures can be useful to facilitate comparisons among different companies. These non-GAAP measures have limitations in that the non-GAAP measures we use may not be directly comparable to those reported by other companies. We seek to compensate for this limitation by providing a reconciliation of the non-GAAP financial measures to the most directly comparable IFRS measures in the table attached to this press release.

About Sequans Communications

Sequans Communications S.A. (NYSE: SQNS) is a leading developer and provider of 5G and 4G chips and modules for IoT devices. For 5G/4G massive IoT applications, Sequans provides a comprehensive product portfolio based on its flagship Monarch LTE-M/NB-IoT and Calliope Cat 1 chip platforms, featuring industry-leading low power consumption, a large set of integrated functionalities, and global deployment capability. For 5G/4G broadband and critical IoT applications, Sequans offers a product portfolio based on its Cassiopeia 4G Cat 4/Cat 6 and planned high-end Taurus 5G chip platforms, optimized for low-cost residential, enterprise, and industrial applications. Founded in 2003, Sequans is based in Paris, France with additional offices in the United States, United Kingdom, Israel, Hong Kong, Singapore, Finland, Taiwan, South Korea, and China.

Visit Sequans online at www.sequans.com; www.facebook.com/sequans; www.twitter.com/sequans

Media Relations: Kimberly Tassin, +1.425.736.0569, [email protected]
Investor Relations: Kimberly Rogers, +1 385.831-7337, [email protected]

Condensed financial tables follow

SEQUANS COMMUNICATIONS S.A.

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
			Three months ended
	(in thousands of US$, except share and per share amounts)		June 30, 2022	March 31, 2022	June 30, 2021
			June 30, 2022	March 31, 2022	June 30, 2021

	Revenue :
		Product revenue	$ 7,674	$ 5,925	$ 7,393
		Services and license revenue	6,547	7,966	5,464
	Total revenue		14,221	13,891	12,857
	Cost of revenue		5,592	4,436	5,582
	Gross profit		8,629	9,455	7,275
	Operating expenses :
		Research and development	5,875	6,414	5,848
		Sales and marketing	2,499	2,521	2,297
		General and administrative	2,351	2,492	2,507

	Total operating expenses		10,725	11,427	10,652
	Operating loss		(2,096)	(1,972)	(3,377)
	Financial income (expense):
		Interest income (expense), net	(2,858)	(2,672)	(3,411)
		Change in fair value of convertible debt derivative	663	6,397	1,408
		Impact of debt reimbursement	—	—	5,177
		Foreign exchange gain (loss)	1,218	370	(964)
	Profit (Loss) before income taxes		(3,073)	2,123	(1,167)
	Income tax expense		120	104	150
	Profit (Loss)		$ (3,193)	$ 2,019	$ (1,317)
	Attributable to :
		Shareholders of the parent	(3,193)	2,019	(1,317)
		Minority interests	—	—	—
	Basic loss per ADS		($0.07)	$0.05	($0.04)
	Diluted loss per ADS		($0.07)	$0.04	($0.04)
	Weighted average number of ADS used for computing:
	— Basic		47,656,861	41,142,823	37,118,845
	— Diluted		47,656,861	46,013,404	37,118,845

SEQUANS COMMUNICATIONS S.A.

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
		Six months ended June 30,
(in thousands of US$, except share and per share amounts)		2022	2021

Revenue :
	Product revenue	$ 13,599	$ 15,941
	Services and license revenue	14,513	9,237
Total revenue		28,112	25,178
Cost of revenue		10,028	11,725
Gross profit		18,084	13,453
Operating expenses :
	Research and development	12,289	13,102
	Sales and marketing	5,020	4,591
	General and administrative	4,843	4,967

Total operating expenses		22,152	22,660
Operating loss		(4,068)	(9,207)
Financial income (expense):
	Interest income (expense), net	(5,530)	(6,122)
	Change in fair value of convertible debt derivative	7,060	(2,682)
	Impact of debt reimbursement	—	5,177
	Foreign exchange gain (loss)	1,588	394
Profit (Loss) before income taxes		(950)	(12,440)
Income tax expense		224	297
Profit (Loss)		$ (1,174)	$ (12,737)
Attributable to :
	Shareholders of the parent	(1,174)	(12,737)
	Minority interests	—	—
Basic loss per ADS		($0.03)	($0.35)
Diluted loss per ADS		($0.03)	($0.35)
Weighted average number of ADS used for computing:
— Basic		44,388,055	35,894,642
— Diluted		44,388,055	35,894,642

SEQUANS COMMUNICATIONS S.A.

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF FINANCIAL POSITION
		At June 30,	At Dec 31,
(in thousands of US$)		2022	2021
ASSETS
	Non-current assets
	Property, plant and equipment	$ 9,797	$ 8,010
	Intangible assets	45,664	37,984
	Deposits and other receivables	660	2,311
	Other non-current financial assets	327	357
	Total non-current assets	56,448	48,662
	Current assets
	Inventories	6,978	6,433
	Trade receivables	8,820	13,622
	Contract assets	595	789
	Prepaid expenses	2,119	2,108
	Other receivables	8,060	7,252
	Research tax credit receivable	7,808	5,863
	Short-term deposits	7,000	—
	Cash and cash equivalents	9,753	4,835
	Total current assets	51,133	40,902
Total assets		$ 107,581	$ 89,564
EQUITY AND LIABILITIES
	Equity
	Issued capital, euro 0.01 nominal value, 191,135,930 shares authorized, issued and outstanding at June 30, 2022 (151,419,322 shares at December 31, 2021 and euro 0.02 nominal value)	$ 2,283	$ 3,687
	Share premium	2,485	298,389
	Other capital reserves	59,733	57,198
	Accumulated deficit	(57,265)	(383,554)
	Other components of equity	(464)	(26)
	Total equity	6,772	(24,306)
	Non-current liabilities
	Government grant advances, loans and other liabilities	6,201	9,354
	Convertible debt	40,097	36,373
	Convertible debt embedded derivative	3,020	10,081
	Lease liabilities	2,729	3,373
	Trade payables	3,161	964
	Provisions	2,127	2,137
	Deferred tax liabilities	124	138
	Contract liabilities	1,859	2,706
	Total non-current liabilities	59,318	65,126
	Current liabilities
	Trade payables	11,490	13,916
	Interest-bearing receivables financing	12,061	9,518
	Lease liabilities	1,291	1,247
	Government grant advances and loans	5,210	6,206
	Contract liabilities	3,014	8,677
	Other current liabilities and provisions	8,425	9,180
	Total current liabilities	41,491	48,744
Total equity and liabilities		$ 107,581	$ 89,564

SEQUANS COMMUNICATIONS S.A.

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOW
			Six months ended June 30,
(in thousands of US$)			2022	2021
Operating activities
	Profit (Loss) before income taxes		$ (950)	$ (12,440)
	Non-cash adjustment to reconcile income before tax to net cash from (used in) operating activities
		Depreciation and impairment of property, plant and equipment	1,805	1,963
		Amortization and impairment of intangible assets	3,464	3,721
		Share-based payment expense	2,535	2,252
		Increase in provisions	207	253
		Interest expense, net	5,530	6,122
		Change in the fair value of convertible debt embedded derivative	(7,061)	2,682
		Impact of debt reimbursement	—	(5,177)
		Foreign exchange loss (gain)	(363)	(441)
		Loss (Gain) on disposal of property, plant and equipment	—	7
	Working capital adjustments
		Decrease (Increase) in trade receivables and other receivables	5,218	7,432
		Decrease (increase) in inventories	(545)	1,019
		Increase in research tax credit receivable	(853)	(635)
		Increase in trade payables and other liabilities	(4,803)	6,891
		Decrease in contract liabilities	(7,247)	(7,437)
		Increase (Decrease) in government grant advances	(4,143)	561
	Income tax paid		(487)	(270)
Net cash flow provided by (used in) operating activities			(7,693)	6,503
Investing activities
	Purchase of intangible assets and property, plant and equipment		(4,761)	(6,242)
	Capitalized development expenditures		(7,935)	(9,535)
	Sale (Purchase) of financial assets		1,681	(2,814)
	Decrease (increase) of short-term deposit		(7,000)	(15,600)
	Interest received		12	24
Net cash flow provided by (used in) investments activities			(18,003)	(34,167)
Financing activities
	Proceeds from issue of warrants, exercise of stock options/warrants		—	96
	Public and private equity offering proceeds, net of transaction costs paid		30,155	9,894
	Proceeds (Repayment of) from interest-bearing receivables financing		2,611	(3,341)
	Proceeds from convertible debt, net of transaction cost		—	39,647
	Payment of lease liabilities		(602)	(550)
	Repayment of convertible debt		—	(8,750)
	Repayment of government loans		(216)	(240)
	Repayment of venture debt		—	(8,042)
	Repayment of interest-bearing research project financing		(630)	(363)
	Interest paid		(708)	(4,480)
Net cash flows from (used in) financing activities			30,610	23,871
	Net increase (decrease) in cash and cash equivalents		4,914	(3,793)
	Net foreign exchange difference		4	2
	Cash and cash equivalents at January 1		4,835	7,574
Cash and cash equivalents at end of the period			9,753	3,783

SEQUANS COMMUNICATIONS S.A.

UNAUDITED RECONCILIATION OF NON-IFRS FINANCIAL RESULTS
(in thousands of US$, except share and per share amounts)			Three months ended
			June 30, 2022	March 31, 2022	June 30, 2021
Net IFRS loss as reported			$ (3,193)	$ 2,019	$ (1,317)
Add back
	Non-cash stock-based compensation expense according to IFRS 2 ⁽¹⁾		1,239	1,315	1,092
	Non-cash change in the fair value of convertible debt embedded derivative		(663)	(6,397)	(1,408)
	Non-cash interest on convertible debt and other financing ⁽²⁾		1,452	1,218	1,187
	Impact of debt reimbursement		—	—	(5,177)
Non-IFRS loss adjusted			$ (1,165)	$ (1,845)	$ (5,623)
IFRS basic loss per ADS as reported			($0.07)	$0.05	($0.04)
Add back
	Non-cash stock-based compensation expense according to IFRS 2 ⁽¹⁾		$0.03	$0.03	$0.03
	Non-cash change in the fair value of convertible debt embedded derivative		($0.01)	($0.15)	($0.03)
	Non-cash interest on convertible debt and other financing ⁽²⁾		$0.03	$0.03	$0.03
	Impact of debt reimbursement		$0.00	$0.00	($0.14)
Non-IFRS basic loss per ADS			($0.02)	($0.04)	($0.15)
IFRS diluted loss per ADS			($0.07)	$0.04	($0.04)
Add back
	Non-cash stock-based compensation expense according to IFRS 2 ⁽¹⁾		$0.03	$0.03	$0.03
	Non-cash change in the fair value of convertible debt embedded derivative		($0.01)	($0.14)	($0.03)
	Non-cash interest on convertible debt and other financing ⁽²⁾		$0.03	$0.03	$0.03
	Impact of debt reimbursement		$0.00	$0.00	($0.14)
Non-IFRS diluted loss per ADS			($0.02)	($0.04)	($0.15)

	(1) Included in the IFRS loss as follows:
		Cost of product revenue	$ 31	$ 29	$ 14
		Research and development	424	470	513
		Sales and marketing	278	290	206
		General and administrative	506	526	359
	(2) Related to the difference between contractual and effective interest rates

SEQUANS COMMUNICATIONS S.A.

UNAUDITED RECONCILIATION OF NON-IFRS FINANCIAL RESULTS
(in thousands of US$, except share and per share amounts)			Six months ended June 30,
			2022	2021
Net IFRS loss as reported			$ (1,174)	$ (12,737)
Add back
	Non-cash stock-based compensation expense according to IFRS 2 ⁽¹⁾		2,554	2,252
	Non-cash change in the fair value of convertible debt embedded derivative		(7,060)	2,682
	Non-cash interest on convertible debt and other financing (2)		2,670	2,272
	Non-cash impact of deferred tax income (loss)		—	—
	Impact of debt reimbursement		—	(5,177)
	Non-cash impact of convertible debt amendment		—	—
Non-IFRS loss adjusted			$ (3,010)	$ (10,708)
IFRS basic loss per ADS as reported			($0.03)	($0.35)
Add back
	Non-cash stock-based compensation expense according to IFRS 2 ⁽¹⁾		$0.06	$0.06
	Non-cash change in the fair value of convertible debt embedded derivative		($0.16)	$0.07
	Non-cash interest on convertible debt and other financing ⁽²⁾		$0.06	$0.06
	Non-cash impact of deferred tax income (loss)		$0.00	$0.00
	Impact of debt reimbursement		$0.00	($0.14)
	Non-cash impact of convertible debt amendment		$0.00	$0.00
Non-IFRS basic loss per ADS			($0.07)	($0.30)
IFRS diluted loss per ADS			($0.03)	($0.35)
Add back
	Non-cash stock-based compensation expense according to IFRS 2 ⁽¹⁾		$0.06	$0.06
	Non-cash change in the fair value of convertible debt embedded derivative		($0.16)	$0.07
	Non-cash interest on convertible debt and other financing ⁽²⁾		$0.06	$0.06
	Non-cash impact of deferred tax income (loss)		$0.00	$0.00
	Impact of debt reimbursement		$0.00	($0.14)
	Non-cash impact of convertible debt amendment		$0.00	$0.00
Non-IFRS basic loss per ADS			($0.07)	($0.30)

	(1) Included in the IFRS loss as follows:
		Cost of product revenue	$ 60	$ 30
		Research and development	894	1,067
		Sales and marketing	568	423
		General and administrative	1,032	732
	(2) Related to the difference between contractual and effective interest rates

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SOURCE Sequans Communications

August 2, 2022 6:20 am

PepsiCo and AQUA Carpatica Announce Strategic Relationship

PR Newswire

Premium water brand will round out PepsiCo’s portfolio of
offerings in Europe with plans to expand globally

PURCHASE, N.Y.
, Aug. 2, 2022 /PRNewswire/ — PepsiCo, Inc. (NASDAQ: PEP) announced it has entered into a strategic agreement with premium Romanian spring water AQUA Carpatica under which PepsiCo will own a 20 percent equity stake in AQUA Carpatica. Under the agreement, PepsiCo will have rights to distribute the spring water in Romania and in Poland with opportunities to expand into other markets, including the United States.

Founded by Swiss-Greek businessman and entrepreneur Jean Valvis in 2010, the award-winning AQUA Carpatica product line includes still spring water and naturally sparkling mineral waters that are bottled at the source in Romania’s pristine Carpathian Mountains. AQUA Carpatica’s premium sparkling natural mineral water is nitrate- and sodium-free, and provides natural electrolytes.

“With its excellent taste and premium positioning, AQUA Carpatica is a perfect complement to PepsiCo’s existing premium beverage portfolio,” said Silviu Popovici, CEO of PepsiCo Europe. “We are confident that AQUA Carpatica’s strong brand equity will resonate with our customers and consumers globally.”

“AQUA Carpatica is a brand that is as unique as its place of origin. I am delighted with the opportunity to join with PepsiCo to expand our footprint in Europe and explore opportunities to bring AQUA Carpatica and its health benefits to new consumers in new markets,” said Jean Valvis, Founder of AQUA Carpatica. “In little more than a decade, AQUA Carpatica has developed into a beloved brand in Europe, which we aspire to take public in the future. I am pleased that PepsiCo shares our vision to grow the brand in Europe and globally.”

About PepsiCo
PepsiCo products are enjoyed by consumers more than one billion times a day in more than 200 countries and territories around the world. PepsiCo generated more than $79 billion in net revenue in 2021, driven by a complementary beverage and convenient foods portfolio that includes Lay’s, Doritos, Cheetos, Gatorade, Pepsi-Cola, Mountain Dew, Quaker, and SodaStream. PepsiCo’s product portfolio includes a wide range of enjoyable foods and beverages, including many iconic brands that generate more than $1 billion each in estimated annual retail sales.

Guiding PepsiCo is our vision to Be the Global Leader in Beverages and Convenient Foods by Winning with PepsiCo Positive (pep+). pep+ is our strategic end-to-end transformation that puts sustainability and human capital at the center of how we will create value and growth by operating within planetary boundaries and inspiring positive change for planet and people. For more information, visit www.pepsico.com.

About AQUA Carpatica
In the Carpathian Mountains, after five years of analysing mineral water sources and selecting those with exceptional purity and extraordinary taste, the AQUA Carpatica brand was established in 2010 and was immediately adopted as a loved product by Romanian consumers.

In just four years, by 2014, AQUA Carpatica became the best-selling natural spring water nationally, and by 2016 it established an international presence in 16 countries across four continents.

AQUA Carpatica’s portfolio offers a wide range of SKUs in all of the major packaging formats (glass, PET, aluminium cans) tailored to consumer preferences.

The quality ‘nitrate-free’ makes AQUA Carpatica an ideal product for children and pregnant women, and the exceptional taste of its springs distinguishes it for the HoReCa channel.

In order to sustainably preserve the original purity of its sources AQUA Carpatica’s management has implemented a strict zoning perimeter to protect the natural ecosystem.

For more information, visit www.aquacarpatica.com.

Media Contacts:

Europe:

Felix Zadek Ewing

[email protected]
+44 (0)77 2558 0928

United States:

Andrea Foote

[email protected]
+1 914-473-3284

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SOURCE PepsiCo, Inc.

August 2, 2022 6:20 am

Huntsman Announces Second Quarter 2022 Earnings; $501 million of Buybacks in First Half of 2022

PR Newswire

Second Quarter Highlights

Second quarter 2022 net income of $242 million compared to net income of $172 million in the prior year period; second quarter 2022 diluted earnings per share of $1.10 compared to diluted earnings per share of $0.70 in the prior year period.
Second quarter 2022 adjusted net income of $265 million compared to adjusted net income of $191 million in the prior year period; second quarter 2022 adjusted diluted earnings per share of $1.28 compared to adjusted diluted earnings per share of $0.86 in the prior year period.
Second quarter 2022 adjusted EBITDA of $432 million compared to adjusted EBITDA of $334 million in the prior year period.
Second quarter 2022 net cash provided by operating activities from continuing operations was $231 million. Free cash flow from continuing operations was $162 million for the second quarter 2022 compared to an outflow of $83 million in the prior year period.
Repurchased approximately 8.4 million shares for approximately $291 million in the second quarter 2022.

THE WOODLANDS, Texas
, Aug. 2, 2022 /PRNewswire/ —

	Three months ended		Six months ended
	June 30,		June 30,
In millions, except per share amounts	2022	2021	2022	2021

Revenues	$ 2,362	$ 2,024	$ 4,751	$ 3,861

Net income	$ 242	$ 172	$ 482	$ 272
Adjusted net income ⁽¹⁾	$ 265	$ 191	$ 521	$ 338

Diluted income per share	$ 1.10	$ 0.70	$ 2.14	$ 1.07
Adjusted diluted income per share⁽¹⁾	$ 1.28	$ 0.86	$ 2.47	$ 1.52

Adjusted EBITDA⁽¹⁾	$ 432	$ 334	$ 847	$ 623

Net cash provided by (used in) operating activities from continuing operations	$ 231	$ (7)	$ 316	$ (23)
Free cash flow from continuing operations⁽²⁾	$ 162	$ (83)	$ 178	$ (197)

See end of press release for footnote explanations and reconciliations of non-GAAP measures.

Huntsman Corporation (NYSE: HUN) today reported second quarter 2022 results with revenues of $2,362 million, net income of $242 million, adjusted net income of $265 million and adjusted EBITDA of $432 million.

Peter R. Huntsman, Chairman, President, and CEO, commented:

“Second quarter EBITDA margins exceeded 18% on the back of our value over volume strategy, improved pricing, and solid cost control. We remain well ahead or on track to meet the targets that we presented at our Investor Day in November 2021, despite an increasingly challenging economic environment due to extremely high European natural gas prices, headwinds in China associated with government-mandated shutdowns and monetary tightening in the United States. In addition to the positive results, we repurchased approximately $500 million in shares in the first six months of the year and our balance sheet remains extremely strong with a net leverage ratio of 0.6x.

“Regardless of any macro headwinds that may impact the chemical industry in the coming quarters, our priorities around cost control, a focus on downstream businesses and returning capital to shareholders will remain unchanged. Our balance sheet and cash generation places us in an enviable position to take advantage of opportunities as they present themselves to invest in our core businesses.”

Segment Analysis for 2Q22 Compared to 2Q21

Polyurethanes

The increase in revenues in our Polyurethanes segment for the three months ended June 30, 2022 compared to the same period of 2021 was primarily due to higher MDI average selling prices, partially offset by lower sales volumes. MDI average selling prices increased in all our regions. Sales volumes decreased primarily due to the extended government-mandated COVID lockdown in Shanghai, China and lower demand, partially offset by favorable comparisons in Europe due to the scheduled turnaround at our Rotterdam, Netherlands facility in the second quarter of 2021. The increase in segment adjusted EBITDA was primarily due to higher MDI margins and a gain from an insurance settlement, partially offset by lower sales volumes, the negative impact of weaker major international currencies against the U.S. dollar and lower equity earnings from our minority-owned joint venture in China.

Performance Products

The increase in revenues in our Performance Products segment for the three months ended June 30, 2022 compared to the same period of 2021 was primarily due to higher average selling prices, partially offset by lower sales volumes. Average selling prices increased primarily due to commercial excellence programs and in response to an increase in raw material costs. Sales volumes decreased primarily due to a shift in product mix based on demand and business strategy. The increase in segment adjusted EBITDA was primarily due to increased revenues and margins, partially offset by a slight increase in fixed costs.

Advanced Materials

The increase in revenues in our Advanced Materials segment for the three months ended June 30, 2022 compared to the same period of 2021 was primarily due to higher average selling prices, partially offset by lower sales volumes. Average selling prices increased largely in response to higher raw material, energy and logistics costs as well as improved sales mix. Sales volumes decreased primarily due to deselection of lower margin base resins business. The increase in segment adjusted EBITDA was primarily due to higher sales prices and improved sales mix.

Textile Effects

The decrease in revenues in our Textile Effects segment for the three months ended June 30, 2022 compared to the same period of 2021 was primarily due to lower sales volumes, partially offset by higher average selling prices. Sales volumes decreased primarily due to a deselection of certain volume as well as lower demand. Average selling prices increased in response to higher direct costs. The decrease in segment adjusted EBITDA was primarily due to lower revenues, partially offset by improved portfolio mix.

Corporate, LIFO and other

For the three months ended June 30, 2022, adjusted EBITDA from Corporate and other was a loss of $38 million as compared to a loss of $48 million for the same period of 2021. The year-over-year difference was primarily due to translational foreign currency gains related to the Chinese Yuan.

Liquidity and Capital Resources

During the three months ended June 30, 2022, our free cash flow from continuing operations was a source of cash of $162 million as compared to a use of cash of $83 million in the same period of 2021. As of June 30, 2022, we had approximately $2.1 billion of combined cash and unused borrowing capacity.

During the three months ended June 30, 2022, we spent $69 million on capital expenditures as compared to $76 million in the same period of 2021. For 2022, we expect to spend approximately $300 million on capital expenditures.

Income Taxes

In the second quarter of 2022, both our effective tax rate and our adjusted effective tax rate was 22%. We expect our 2022 adjusted effective tax rate to be approximately 22% to 24%.

Earnings Conference Call Information

We will hold a conference call to discuss our second quarter 2022 financial results on Tuesday, August 2, 2022 at 10:00 a.m. ET.

Webcast link: https://event.choruscall.com/mediaframe/webcast.html?webcastid=E6B5RbBA

Participant dial-in numbers:
Domestic callers: (877) 402-8037
International callers: (201) 378-4913

The conference call will be accompanied by presentation slides that will be accessible via the webcast link and Huntsman’s investor relations website, www.huntsman.com/investors. Upon conclusion of the call, the webcast replay will be accessible via Huntsman’s website.

Upcoming Conferences

During the second quarter 2022, a member of management is expected to present at:
Jefferies Industrials Conference on August 10, 2022
Seaport Global Virtual Chemicals Conference on August 23, 2022
UBS Chemicals Conference on September 7, 2022

A webcast of the presentation, if applicable, along with accompanying materials will be available at www.huntsman.com/investors.

Table 1 — Results of Operations

	Three months ended		Six months ended
	June 30,		June 30,
In millions, except per share amounts	2022	2021	2022	2021

Revenues	$ 2,362	$ 2,024	$ 4,751	$ 3,861
Cost of goods sold	1,824	1,593	3,648	3,038
Gross profit	538	431	1,103	823
Operating expenses, net	221	211	482	453
Restructuring, impairment and plant closing costs	24	11	24	35
Operating income	293	209	597	335
Interest expense, net	(16)	(18)	(30)	(37)
Equity in income of investment in unconsolidated affiliates	19	46	34	84
Fair value adjustments to Venator investment, net	–	(6)	(2)	(25)
Loss on early extinguishment of debt	–	(27)	–	(27)
Other income, net	13	9	14	16
Income from continuing operations before income taxes	309	213	613	346
Income tax expense	(67)	(42)	(132)	(76)
Income from continuing operations	242	171	481	270
Income from discontinued operations, net of tax	–	1	1	2
Net income	242	172	482	272
Net income attributable to noncontrolling interests, net of tax	(14)	(16)	(31)	(33)
Net income attributable to Huntsman Corporation	$ 228	$ 156	$ 451	$ 239

Adjusted EBITDA⁽¹⁾	$ 432	$ 334	$ 847	$ 623
Adjusted net income ⁽¹⁾	$ 265	$ 191	$ 521	$ 338

Basic income per share	$ 1.11	$ 0.71	$ 2.16	$ 1.08
Diluted income per share	$ 1.10	$ 0.70	$ 2.14	$ 1.07
Adjusted diluted income per share⁽¹⁾	$ 1.28	$ 0.86	$ 2.47	$ 1.52

Common share information:
Basic weighted average shares	205	221	209	221
Diluted weighted average shares	207	223	211	223
Diluted shares for adjusted diluted income per share	207	223	211	223

See end of press release for footnote explanations.

Table 2 — Results of Operations by Segment

	Three months ended			Six months ended
	June 30,		Better /	June 30,		Better /
In millions	2022	2021	(Worse)	2022	2021	(Worse)

Segment Revenues:
Polyurethanes	$ 1,353	$ 1,155	17 %	$ 2,739	$ 2,223	23 %
Performance Products	492	371	33 %	972	676	44 %
Advanced Materials	336	299	12 %	671	577	16 %
Textile Effects	192	207	(7 %)	389	400	(3 %)
Total Reportable Segments’ Revenue	2,373	2,032	17 %	4,771	3,876	23 %

Intersegment Eliminations	(11)	(8)	n/m	(20)	(15)	n/m

Total Revenues	$ 2,362	$ 2,024	17 %	$ 4,751	$ 3,861	23 %

Segment Adjusted EBITDA⁽¹⁾:
Polyurethanes	$ 229	$ 208	10 %	$ 453	$ 415	9 %
Performance Products	152	88	73 %	298	151	97 %
Advanced Materials	67	58	16 %	134	102	31 %
Textile Effects	22	28	(21 %)	50	53	(6 %)
Total Reportable Segments’ Adjusted EBITDA⁽¹⁾	470	382	23 %	935	721	30 %

Corporate, LIFO and other	(38)	(48)	21 %	(88)	(98)	10 %

Total Adjusted EBITDA⁽¹⁾	$ 432	$ 334	29 %	$ 847	$ 623	36 %
n/m = not meaningful

See end of press release for footnote explanations.

Table 3 — Factors Impacting Sales Revenue


	Three months ended
	June 30, 2022 vs. 2021
	Average Selling Price^(a)
	Local	Exchange	Sales Mix	Sales
	Currency	Rate	& Other	Volume^(b)	Total

Polyurethanes	24 %	(4 %)	1 %	(4 %)	17 %

Performance Products	33 %	(3 %)	6 %	(3 %)	33 %

Advanced Materials	21 %	(5 %)	12 %	(16 %)	12 %

Textile Effects	12 %	(3 %)	0 %	(16 %)	(7 %)


	Six months ended
	June 30, 2022 vs. 2021
	Average Selling Price^(a)
	Local	Exchange	Sales Mix	Sales
	Currency	Rate	& Other	Volume^(b)	Total

Polyurethanes	27 %	(4 %)	0 %	0 %	23 %

Performance Products	40 %	(3 %)	7 %	0 %	44 %

Advanced Materials	23 %	(4 %)	14 %	(17 %)	16 %

Textile Effects	14 %	(2 %)	(2 %)	(13 %)	(3 %)


(a) Excludes sales from tolling arrangements, by-products and raw materials.
(b) Excludes sales from by-products and raw materials.

Table 4 — Reconciliation of U.S. GAAP to Non-GAAP Measures

			Income Tax				Diluted Income
	EBITDA		(Expense) Benefit		Net Income		Per Share
	Three months ended		Three months ended		Three months ended		Three months ended
	June 30,		June 30,		June 30,		June 30,
In millions, except per share amounts	2022	2021	2022	2021	2022	2021	2022	2021

Net income	$ 242	$ 172			$ 242	$ 172	$ 1.17	$ 0.77
Net income attributable to noncontrolling interests	(14)	(16)			(14)	(16)	(0.07)	(0.07)

Net income attributable to Huntsman Corporation	228	156			228	156	1.10	0.70
Interest expense, net from continuing operations	16	18
Income tax expense from continuing operations	67	42	$ (67)	$ (42)
Depreciation and amortization from continuing operations	72	73
Business acquisition and integration expenses and purchase accounting inventory adjustments	4	5	(2)	–	2	5	0.01	0.02
Costs associated with the Albemarle Settlement, net	1	–	–	–	1	–	–	–
EBITDA / Income from discontinued operations, net of tax	–	(1)	N/A	N/A	–	(1)	–	–
Loss (gain) on sale of businesses/assets	7	(30)	(1)	4	6	(26)	0.03	(0.12)
Income from transition services arrangements	(1)	(3)	–	1	(1)	(2)	–	(0.01)
Fair value adjustments to Venator Investment, net^(a)	–	6	–	–	–	6	–	0.03
Loss on early extinguishment of debt	–	27	–	(6)	–	21	–	0.09
Certain legal and other settlements and related expenses	2	8	1	(2)	3	6	0.01	0.03
Certain non-recurring information technology project implementation costs	1	3	(1)	(1)	–	2	–	0.01
Amortization of pension and postretirement actuarial losses	13	21	(3)	(5)	10	16	0.05	0.07
Restructuring, impairment and plant closing and transition costs	27	12	(7)	(2)	20	10	0.10	0.04
Plant incident remediation credits	(5)	(3)	1	1	(4)	(2)	(0.02)	(0.01)

Adjusted⁽¹⁾	$ 432	$ 334	$ (79)	$ (52)	$ 265	$ 191	$ 1.28	$ 0.86

Adjusted income tax expense⁽¹⁾					$ 79	$ 52
Net income attributable to noncontrolling interests, net of tax					14	16

Adjusted pre-tax income ⁽¹⁾					$ 358	$ 259

Adjusted effective tax rate⁽³⁾					22 %	20 %

Effective tax rate					22 %	20 %

			Income Tax				Diluted Income
	EBITDA		(Expense) Benefit		Net Income		Per Share
	Six months ended		Six months ended		Six months ended		Six months ended
	June 30,		June 30,		June 30,		June 30,
In millions, except per share amounts	2022	2021	2022	2021	2022	2021	2022	2021

Net income	$ 482	$ 272			$ 482	$ 272	$ 2.28	$ 1.22
Net income attributable to noncontrolling interests	(31)	(33)			(31)	(33)	(0.15)	(0.15)

Net income attributable to Huntsman Corporation	451	239			451	239	2.14	1.07
Interest expense, net from continuing operations	30	37
Income tax expense from continuing operations	132	76	$ (132)	$ (76)
Depreciation and amortization from continuing operations	143	147
Business acquisition and integration expenses and purchase accounting inventory adjustments	10	14	(2)	(2)	8	12	0.04	0.05
Costs associated with the Albemarle Settlement, net	2	–	–	–	2	–	0.01	–
EBITDA / Income from discontinued operations, net of tax	(1)	(2)	N/A	N/A	(1)	(2)	–	(0.01)
Loss (gain) on sale of businesses/assets	11	(30)	(2)	4	9	(26)	0.04	(0.12)
Income from transition services arrangements	(2)	(4)	–	1	(2)	(3)	(0.01)	(0.01)
Fair value adjustments to Venator Investment, net^(a)	2	25	–	–	2	25	0.01	0.11
Loss on early extinguishment of debt	–	27	–	(6)	–	21	–	0.09
Certain legal settlements and related expenses	14	10	(3)	(3)	11	7	0.05	0.03
Certain non-recurring information technology project implementation costs	3	4	(1)	(1)	2	3	0.01	0.01
Amortization of pension and postretirement actuarial losses	27	43	(6)	(10)	21	33	0.10	0.15
Restructuring, impairment and plant closing and transition costs	30	36	(8)	(8)	22	28	0.10	0.13
Plant incident remediation (credits) costs	(5)	1	1	–	(4)	1	(0.02)	–

Adjusted⁽¹⁾	$ 847	$ 623	$ (153)	$ (101)	$ 521	$ 338	$ 2.47	$ 1.52

Adjusted income tax expense⁽¹⁾					$ 153	$ 101
Net income attributable to noncontrolling interests, net of tax					31	33

Adjusted pre-tax income⁽¹⁾					$ 705	$ 472

Adjusted effective tax rate⁽³⁾					22 %	21 %

Effective tax rate					22 %	22 %

(a) Represents the changes in market value in Huntsman’s remaining interest in Venator and related option to sell those remaining Venator shares.

N/A = not applicable
See end of press release for footnote explanations.

Table 5 — Selected Balance Sheet Items

	June 30,	December 31,
In millions	2022	2021

Cash	$ 608	$ 1,041
Accounts and notes receivable, net	1,288	1,186
Inventories	1,401	1,201
Receivable associated with the Albemarle Settlement	–	333
Other current assets	140	167
Property, plant and equipment, net	2,486	2,576
Other noncurrent assets	2,798	2,888

Total assets	$ 8,721	$ 9,392

Accounts payable	$ 1,128	$ 1,208
Other current liabilities	481	831
Current portion of debt	13	12
Long-term debt	1,508	1,538
Other noncurrent liabilities	1,240	1,244
Huntsman Corporation stockholders’ equity	4,147	4,378
Noncontrolling interests in subsidiaries	204	181

Total liabilities and equity	$ 8,721	$ 9,392

Table 6 — Outstanding Debt

	June 30,	December 31,
In millions	2022	2021

Debt:
Revolving credit facility	$ –	$ –
Accounts receivable programs	–	–
Senior notes	1,451	1,473
Variable interest entities	40	45
Other debt	30	32

Total debt – excluding affiliates	1,521	1,550

Total cash	608	1,041

Net debt – excluding affiliates⁽⁴⁾	$ 913	$ 509

See end of press release for footnote explanations.

Table 7 — Summarized Statement of Cash Flows

	Three months ended		Six months ended
	June 30,		June 30,
In millions	2022	2021	2022	2021

Total cash at beginning of period	$ 807	$ 673	$ 1,041	$ 1,593

Net cash provided by (used in) operating activities from continuing operations	231	(7)	316	(23)
Net cash used in operating activities from discontinued operations	–	–	–	(1)
Net cash used in investing activities	(64)	(46)	(129)	(369)
Net cash used in financing activities	(357)	(112)	(609)	(691)
Effect of exchange rate changes on cash	(9)	2	(11)	1

Total cash at end of period	$ 608	$ 510	$ 608	$ 510

Free cash flow from continuing operations⁽²⁾:
Net cash provided by (used in) operating activities from continuing operations	$ 231	$ (7)	$ 316	$ (23)
Capital expenditures	(69)	(76)	(138)	(174)

Free cash flow from continuing operations	162	(83)	178	(197)

Supplemental cash flow information:
Cash paid for interest	$ (24)	$ (31)	$ (33)	$ (47)
Cash paid for income taxes	(122)	(68)	(154)	(76)
Cash paid for restructuring and integration	(13)	(8)	(26)	(17)
Cash paid for pensions	(13)	(14)	(26)	(28)
Depreciation and amortization	72	73	143	147

Change in primary working capital:
Accounts and notes receivable	$ (8)	$ (97)	$ (142)	$ (214)
Inventories	(52)	(176)	(239)	(332)
Accounts payable	(129)	79	(9)	173
Total change in primary working capital	$ (189)	$ (194)	$ (390)	$ (373)

See end of press release for footnote explanations.

Footnotes

(1)	We use adjusted EBITDA to measure the operating performance of our business and for planning and evaluating the performance of our business segments. We provide adjusted net income because we feel it provides meaningful insight for the investment community into the performance of our business. We believe that net income (loss) is the performance measure calculated and presented in accordance with generally accepted accounting principles in the U.S. (“GAAP”) that is most directly comparable to adjusted EBITDA and adjusted net income (loss). Additional information with respect to our use of each of these financial measures follows:

	Adjusted EBITDA, adjusted net income (loss) and adjusted diluted income (loss) per share, as used herein, are not necessarily comparable to other similarly titled measures of other companies.

	Adjusted EBITDA is computed by eliminating the following from net income (loss): (a) net income attributable to noncontrolling interests, net of tax; (b) interest; (c) income taxes; (d) depreciation and amortization; (e) amortization of pension and postretirement actuarial losses (gains); (f) restructuring, impairment and plant closing costs (credits); and further adjusted for certain other items set forth in the reconciliation of net income (loss) to adjusted EBITDA in Table 4 above.

	Adjusted net income (loss) and adjusted diluted income (loss) per share are computed by eliminating the after tax impact of the following items from net income (loss): (a) net income attributable to noncontrolling interest; (b) amortization of pension and postretirement actuarial losses (gains); (c) restructuring, impairment and plant closing costs (credits); and further adjusted for certain other items set forth in the reconciliation of net income (loss) to adjusted net income (loss) in Table 4 above. The income tax impacts, if any, of each adjusting item represent a ratable allocation of the total difference between the unadjusted tax expense and the total adjusted tax expense, computed without consideration of any adjusting items using a with and without approach.

	We may disclose forward-looking adjusted EBITDA because we cannot adequately forecast certain items and events that may or may not impact us in the near future, such as business acquisition and integration expenses and purchase accounting inventory adjustments, certain legal and other settlements and related expenses, gains on sale of businesses/assets and certain tax only items, including tax law changes not yet enacted. Each of such adjustment has not yet occurred, is out of our control and/or cannot be reasonably predicted. In our view, our forward-looking adjusted EBITDA represents the forecast net income on our underlying business operations but does not reflect any adjustments related to the items noted above that may occur and can cause our adjusted EBITDA to differ.

(2)	Management internally uses free cash flow measure: (a) to evaluate our liquidity, (b) evaluate strategic investments, (c) plan stock buyback and dividend levels and (d) evaluate our ability to incur and service debt. Free cash flow is defined as net cash provided by operating activities less capital expenditures. Free cash flow is not a defined term under U.S. GAAP, and it should not be inferred that the entire free cash flow amount is available for discretionary expenditures.

(3)	We believe adjusted effective tax rate provides improved comparability between periods through the exclusion of certain items that management believes are not indicative of the businesses’ operational profitability and that may obscure underlying business results and trends. In our view, effective tax rate is the performance measure calculated and presented in accordance with U.S. GAAP that is most directly comparable to adjusted effective tax rate. The reconciliation of historical adjusted effective tax rate and effective tax rate is set forth in Table 4 above. Please see the reconciliation of our net income to adjusted net income in Table 4for details regarding the tax impacts of our non-GAAP adjustments.

	Our forward-looking adjusted effective tax rate is calculated based on our forecast effective tax rate, and the range of our forward-looking adjusted effective tax rate equals the range of our forecast effective tax rate. We disclose forward-looking adjusted effective tax rate because we cannot adequately forecast certain items and events that may or may not impact us in the near future, such as business acquisition and integration expenses and purchase accounting inventory adjustments, certain legal and other settlements and related expenses, gains on sale of businesses/assets and certain tax only items, including tax law changes not yet enacted. Each of such adjustment has not yet occurred, is out of our control and/or cannot be reasonably predicted. In our view, our forward-looking adjusted effective tax rate represents the forecast effective tax rate on our underlying business operations but does not reflect any adjustments related to the items noted above that may occur and can cause our effective tax rate to differ.

(4)	Net debt is a measure we use to monitor how much debt we have after taking into account our total cash. We use it as an indicator of our overall financial position, and calculate it by taking our total debt, including the current portion, and subtracting total cash.

About Huntsman:

Huntsman Corporation is a publicly traded global manufacturer and marketer of differentiated and specialty chemicals with 2021 revenues of approximately $8 billion. Our chemical products number in the thousands and are sold worldwide to manufacturers serving a broad and diverse range of consumer and industrial end markets. We operate more than 70 manufacturing, R&D and operations facilities in approximately 30 countries and employ approximately 9,000 associates within our four distinct business divisions. For more information about Huntsman, please visit the company’s website at www.huntsman.com.

Social Media:

Twitter
: www.twitter.com/Huntsman_Corp
Facebook: www.facebook.com/huntsmancorp
LinkedIn: www.linkedin.com/company/huntsman

Forward-Looking Statements:

This press release includes “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. These forward-looking statements include statements concerning our plans, objectives, goals, strategies, future events, future revenue or performance, capital expenditures, financing needs, plans or intentions relating to acquisitions, divestitures or strategic transactions, including the review of the Textile Effects Division, business trends and any other information that is not historical information. When used in this press release, the words “estimates,” “expects,” “anticipates,” “likely,” “projects,” “outlook,” “plans,” “intends,” “believes,” “forecasts,” or future or conditional verbs, such as “will,” “should,” “could” or “may,” and variations of such words or similar expressions are intended to identify forward-looking statements. These forward-looking statements, including, without limitation, management’s examination of historical operating trends and data, are based upon our current expectations and various assumptions and beliefs. In particular, such forward-looking statements are subject to uncertainty and changes in circumstances and involve risks and uncertainties that may affect the Company’s operations, markets, products, prices and other factors as discussed in the Company’s filings with the Securities and Exchange Commission (the “SEC”). In addition, there can be no assurance that the review of the Textile Effects Division will result in one or more transactions or other strategic change or outcome. Significant risks and uncertainties may relate to, but are not limited to, increased energy costs in Europe, inflation and resulting monetary tightening in the US, geopolitical instability, ongoing impact of COVID-19 on our operations and financial results, volatile global economic conditions, cyclical and volatile product markets, disruptions in production at manufacturing facilities, timing of proposed transactions, reorganization or restructuring of the Company’s operations, including any delay of, or other negative developments affecting the ability to implement cost reductions and manufacturing optimization improvements in the Company’s businesses and to realize anticipated cost savings, and other financial, operational, economic, competitive, environmental, political, legal, regulatory and technological factors. Any forward-looking statement should be considered in light of the risks set forth under the caption “Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2021, which may be supplemented by other risks and uncertainties disclosed in any subsequent reports filed or furnished by the Company from time to time. All forward-looking statements apply only as of the date made. Except as required by law, the Company undertakes no obligation to update or revise forward-looking statements to reflect events or circumstances that arise after the date made or to reflect the occurrence of unanticipated events.

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SOURCE Huntsman Corporation

August 2, 2022 6:20 am

Integral Ad Science Names Thomas V. Joseph as Chief Technology Officer

PR Newswire

Former SiriusXM and Pandora executive will lead the technology organization, ensuring continued digital media quality leadership and innovation

NEW YORK
, Aug. 2, 2022 /PRNewswire/ — Integral Ad Science (Nasdaq: IAS), a global leader in digital media quality, today announced that it has named Thomas V. Joseph as Chief Technology Officer (CTO), effective August 8, 2022. As CTO, Joseph will lead the engineering team to develop and scale new offerings while continuing to evolve existing products. Joseph will report directly to Lisa Utzschneider, CEO of IAS, and will execute on the long-term product vision as part of the senior leadership team.

“Thomas is an accomplished leader of high performing engineering teams. He is data driven, innovative, and experienced in dynamic technology environments,” said Utzschneider. “His knowledge of media, advertising, and emerging platforms aligns with IAS’s mission to be the global benchmark for trust and transparency in digital media quality. We are excited to welcome Thomas to the team.”

Joseph brings over two decades of tech-industry leadership experience to the CTO role. Before joining IAS, he served as SVP Engineering at SiriusXM and Pandora, where he was responsible for the full engineering stack and architecture. Prior to SiriusXM and Pandora, Joseph spent several years at Microsoft, spanning a broad spectrum of technologies, starting in gaming and media, and culminating with the launch of Microsoft Office on iOS and Android.

“Digital media is at a crossroads with marketers and publishers adopting new strategies powered by a growing expanse of data. The tools that support the industry today must also be able anticipate what comes next in this fast-changing industry,” said Joseph. “IAS’s mission of using technology to be the global leader in digital media quality and outcomes for the world’s leading brands, publishers, and platforms resonates with my passion for leading world-class engineering organizations and developing future-ready products at scale.”

Joseph’s appointment to the CTO role follows the recent announcement of Yannis Dosios as Chief Commercial Officer, furthering IAS’s drive for continued industry leadership and advancement.

About Integral Ad Science

Integral Ad Science (IAS) is a global leader in digital media quality. IAS makes every impression count, ensuring that ads are viewable by real people in safe and suitable environments, activating contextual targeting, and driving supply path optimization. Our mission is to be the global benchmark for trust and transparency in digital media quality for the world’s leading brands, publishers, and platforms. We do this through data-driven technologies with actionable real-time signals and insight. Founded in 2009 and headquartered in New York, IAS works with thousands of top advertisers and premium publishers worldwide. For more information, visit integralads.com

CONTACT: [email protected]

View original content to download multimedia:https://www.prnewswire.com/news-releases/integral-ad-science-names-thomas-v-joseph-as-chief-technology-officer-301597628.html

SOURCE Integral Ad Science, Inc.

August 2, 2022 6:19 am

Leidos Holdings, Inc. Reports Second Quarter Fiscal Year 2022 Results

PR Newswire

Revenues of $3.6 billion, up 4% year-over-year
Net Income of $172 million; Adjusted EBITDA of $366 million
Diluted Earnings per Share of $1.24, or $1.59 on a non-GAAP basis
Cash Flows from Operations of $40 million; Free Cash Flow of $19 million
Net Bookings of $2.2 billion (book-to-bill ratio of 0.6); backlog of $34.7 billion up 4% year-over-year

RESTON, Va.
, Aug. 2, 2022 /PRNewswire/ — Leidos Holdings, Inc. (NYSE: LDOS), a FORTUNE 500^®science and technology leader, today reported financial results for the second quarter of fiscal year 2022.

Roger Krone, Leidos Chairman and Chief Executive Officer, commented, “Leidos remains on track for another year of solid organic growth and core business profitability. The affirmation of our Defense Enclave Services contract award by the Government Accountability Office demonstrates our leadership in digital modernization across the federal government, with strong demand for our technology solutions and services across our diversified business portfolio. We continue to execute on our disciplined and balanced capital allocation strategy to drive shareholder value. And, we are proving our ability to compete successfully for talent with another quarter of robust hiring.”

Summary Operating Results

	Three Months Ended
(in millions, except margin and per share amounts)	July 1, 2022	July 2, 2021
Revenues	$ 3,597	$ 3,448
Net income	$ 172	$ 170
Net income margin	4.8 %	4.9 %
Diluted earnings per share (EPS)	$ 1.24	$ 1.18

Non-GAAP Measures:*
Adjusted EBITDA	$ 366	$ 359
Adjusted EBITDA margin	10.2 %	10.4 %
Non-GAAP diluted EPS	$ 1.59	$ 1.52


* Non-GAAP financial measures should be considered in addition to, but not as a substitute for, the information provided in accordance with GAAP. Management believes that these non-GAAP measures provide another measure of Leidos’ results of operations and financial condition, including its ability to comply with financial covenants. See Non-GAAP Financial Measures at the end of this press release for more information and a reconciliation of our selected reported results to these non-GAAP measures.

Revenues for the quarter were $3.60 billion, up 4% in total and organically compared to the second quarter of fiscal year 2021. Revenues grew across all reportable segments; the largest contributors were continued growth of the Navy Next Generation Enterprise Network Recompete (NGEN-R) Service Management, Integration and Transport (SMIT) contract and increased deployments on the Defense Healthcare Management System Modernization (DHMSM) program.

Net income was $172 million and diluted EPS was $1.24. Net income and diluted EPS were up 1% and 5% year-over-year, respectively, and net income margin decreased from 4.9% to 4.8% year-over-year. Net interest expense increased to $50 million from $46 million in the second quarter of fiscal year 2021. In addition, the weighted average diluted share count for the quarter was 138 million compared to 143 million in the prior year quarter, which benefited from the retirement of 0.3 million shares as part of the final settlement of the Accelerated Share Repurchase (ASR) agreement implemented in the first quarter of fiscal year 2022.

Adjusted EBITDA was $366 million for the second quarter, up 2% year-over-year. Adjusted EBITDA margin decreased from 10.4% to 10.2% over the same period. Non-GAAP net income was $220 million for the second quarter, which was up slightly year-over-year, and non-GAAP diluted EPS for the quarter was $1.59, which was up 5% compared to the second quarter of fiscal year 2021.

Cash Flow Summary

In the second quarter of fiscal year 2022, Leidos generated $40 million of net cash provided by operating activities, used $8 million in investing activities and generated $6 million in financing activities. After adjusting for payments for property, equipment and software, quarterly free cash flow was $19 million.

In the quarter Leidos entered into a 364-day term loan credit agreement for a senior unsecured term loan facility in an aggregate principal amount of $380 million, and the proceeds were used to repay the $380 million senior unsecured term loan entered into on May 7, 2021. As of July 1, 2022, Leidos had $339 million in cash and cash equivalents and $5.2 billion of debt, including $150 million of Commercial Paper Notes outstanding.

After the close of the quarter, Leidos entered into a definitive agreement with private equity firm Advent International to acquire Cobham Aviation Services Australia’s Special Mission business. The acquired business provides Border Force Airborne Surveillance and Maritime Safety Search and Rescue services to the Australian Federal Government. The acquisition is subject to customary closing conditions, including regulatory approvals.

On July 29, 2022, the Leidos Board of Directors declared that Leidos will pay a cash dividend of $0.36 per share on September 30, 2022 to stockholders of record at the close of business on September 15, 2022.

New Business Awards

Net bookings totaled $2.2 billion in the quarter, representing a book-to-bill ratio of 0.6. As a result, backlog at the end of the quarter was $34.7 billion, of which $7.5 billion was funded. During the quarter Leidos received several particularly important awards:

Defense Information Systems Agency (DISA) Defense Enclave Services (DES). DISA awarded Leidos a single-award, indefinite delivery, indefinite quantity (IDIQ) contract with a total estimated value of $11.5 billion and a four-year base period of performance followed by three two-year option periods. Through the DES contract, Leidos will consolidate enterprise IT services and provide standardized, responsive and cost-effective solutions for more than 370,000 users spanning 22 Department of Defense (DoD) agencies and field activities with over 500 sites both in the U.S. and abroad. This work will focus on mission value and user experience, while improving cybersecurity, network availability and reliability for Fourth Estate agencies.
Program Executive Office (PEO) Integrated Warfare Systems (IWS) Undersea Warfare Combat System and Product Support. Leidos was awarded a follow-on contract to support the Navy’s PEO IWS Directorate. Under the contract, Leidos will perform a range of support services, including shipboard modernization, curriculum development, training conduct, depot support, technical data, maintenance planning and management. The single award, cost-plus-fixed-fee contract holds an approximate value of $291 million and includes a one-year base period of performance with four additional one-year option periods.
Navy Medical Performance Research. Leidos was awarded a new task order by the Naval Medical Readiness Logistics Command, Detachment Fort Detrick, to support research to maximize warfighter performance and survivability in the aviation, underwater and special warfare environments. Under the contract, Leidos will support research on the human cognitive and physiological factors associated with military operations. The research focuses on motion sickness, aeromedical standards, hypoxia, fatigue assessment, aviation safety and both neurocognitive and neurophysiological effects. The contract holds an approximate value of $53 million and includes a one-year base period of performance with four one-year options and one six-month option.
Punta Cana Security Checkpoint Upgrade. Leidos was selected by the Dominican Republic’sPunta Cana International Airport to upgrade their security checkpoints. Punta Cana hosts more than 4 million tourists annually with strong projected growth over the coming years. The Leidos solution will keep passengers and staff safe while enhancing operational efficiencies and increasing passenger throughput. For example, using enhanced screening techniques, passengers will no longer need to remove electronics and liquids from carry-on bags. Implementation will be completed in the first half of 2023.

Forward Guidance

Leidos is maintaining its fiscal year 2022 guidance as follows:

Measure	FY22 Guidance
Revenues (billions)	$13.9 – $14.3
Adjusted EBITDA Margin	10.3% – 10.5%
Non-GAAP Diluted EPS	$6.10 – $6.50
Cash Flows Provided by Operating Activities (billions)	at or above $1.0

For information regarding adjusted EBITDA margin and non-GAAP diluted EPS, see the related explanations and reconciliations to GAAP measures included elsewhere in this release.

Leidos does not provide a reconciliation of forward-looking adjusted EBITDA margins or non-GAAP diluted EPS to net income due to the inherent difficulty in forecasting and quantifying certain amounts that are necessary for such reconciliation. Because certain deductions for non-GAAP exclusions used to calculate projected net income may vary significantly based on actual events, Leidos is not able to forecast on a GAAP basis with reasonable certainty all deductions needed in order to provide a GAAP calculation of projected net income at this time. The amounts of these deductions may be material and, therefore, could result in projected net income and diluted EPS being materially less than what may be implied by projected adjusted EBITDA margins and non-GAAP diluted EPS.

Conference Call Information

Leidos management will discuss operations and financial results in an earnings conference call beginning at 8:00 A.M. eastern time on August 2, 2022. Analysts and institutional investors may participate by dialing +1 (877) 869-3847 (toll-free U.S.) or +1 (201) 689-8261 (international callers).

A live audio broadcast of the conference call along with a supplemental presentation will be available to the public through links on the Leidos Investor Relations website (http://ir.leidos.com).

After the call concludes, an audio replay can be accessed on the Leidos Investor Relations website or by dialing +1 (877) 660-6853 (toll-free U.S.) or +1 (201) 612-7415 (international callers) and entering conference ID 13731269.

About Leidos

Leidos is a Fortune 500^® technology, engineering, and science solutions and services leader working to solve the world’s toughest challenges in the defense, intelligence, civil and health markets. Leidos’ 44,000 employees support vital missions for government and commercial customers. Headquartered in Reston, Va., Leidos reported annual revenues of approximately $13.7 billion for the fiscal year ended December 31, 2021.

For more information, visit www.leidos.com.

Forward-Looking Statements

Certain statements in this release contain or are based on “forward-looking” information within the meaning of the Private Securities Litigation Reform Act of 1995. In some cases, you can identify forward-looking statements by words such as “expects,” “intends,” “plans,” “anticipates,” “believes,” “estimates,” “guidance” and similar words or phrases. Forward-looking statements in this release include, among others, estimates of our future growth and financial and operating performance, including future revenues, adjusted EBITDA margins, diluted EPS (including on a non-GAAP basis), and cash flows provided by operating activities, as well as statements about our business contingency plans, uncertainties in tax due to new tax legislation or other regulatory developments, the impact of COVID-19 and related actions taken to prevent its spread, our contract awards, strategy, planned investments, sustainability goals and our future dividends, share repurchases, capital expenditures, debt repayments, acquisitions, dispositions, and cash flow conversion. These statements reflect our belief and assumptions as to future events that may not prove to be accurate.

Actual performance and results may differ materially from those results anticipated by our guidance and other forward-looking statements made in this release depending on a variety of factors, including, but not limited to: the impact of COVID-19 or future epidemics on our business, including the potential for facility closures, re-evaluation of U.S. government spending levels and priorities, delay of new contract awards, supply chain impacts, airline travel levels, our ability to recover costs under contracts, insurance challenges, uncertainty regarding the efficacy of vaccines against variants, booster vaccinations, or the lack of public acceptance of vaccines and low vaccination rates, and laws and regulations with respect to vaccinations; changes to our reputation and relationships with government agencies, developments in the U.S. government defense budget, including budget reductions, implementation of spending limits or changes in budgetary priorities; delays in the U.S. government budget process or approval of raises to the debt ceiling; delays in the U.S. government contract procurement process or the award of contracts or our ability to win contracts; delays or loss of contracts as a result of competitor protests; changes in U.S. government procurement rules, regulations and practices; changes in interest rates and inflation, and other market factors out of our control, including general economic and political conditions; our compliance with various U.S. government and other government procurement rules and regulations; governmental reviews, audits and investigations of Leidos; our reliance on information technology spending by hospitals/healthcare organizations, infrastructure investments by industrial and natural resources organizations and other customer investments related to our business; our ability to attract, train and retain skilled employees, including our management team, and to obtain security clearances for our employees; the mix of our contracts and our ability to accurately estimate costs associated with our firm-fixed-price and other contracts as well as our ability to realize as revenues the full amount of our backlog; cybersecurity, data security or other security threats, systems failures or other disruptions of our business; resolution of legal and other disputes with our customers and others or legal or regulatory compliance issues; our ability to effectively acquire businesses and make investments and any related contingencies or liabilities to which we may become subject; our ability to maintain relationships with prime contractors, subcontractors and joint venture partners; our ability to manage performance and other risks related to customer contracts, including complex engineering projects; our ability to obtain necessary components and materials to perform our contracts, including semiconductors and related equipment, on reasonable terms or at all; the failure of our inspection or detection systems to detect threats; changes in business conditions that could impact business investments and/or recorded goodwill or the value of other long-lived assets; the adequacy of our insurance programs designed to protect us from significant product or other liability claims; our ability to manage risks associated with our international business; our ability to declare future dividends or repurchase our stock based on our earnings, financial condition, capital requirements and other factors, including compliance with applicable laws and contractual agreements; changes in accounting, U.S. or foreign tax, export or other laws, regulations, and policies and their interpretation or application; and our ability to execute our business plan and long-term management initiatives effectively and to overcome these and other known and unknown risks that we face. This release also contains certain forward-looking statements with respect to Leidos’ proposed acquisition of Cobham Aviation Services Australia, including benefits of the transaction, the anticipated timing of the transaction and the products and markets of each company. Many factors could cause actual future events to differ materially from the forward-looking statements in this release, including but not limited to: (i) the risk that the transaction may not be completed in a timely manner or at all, (ii) the failure to satisfy the conditions to the consummation of the transaction, including the receipt of certain governmental and regulatory approvals, (iii) the occurrence of any event, change or other circumstance that could give rise to the termination of the merger agreement, (iv) the effect of the announcement or pendency of the transaction on Cobham Aviation Services Australia’s business relationships, operating results, and business generally, (v) risks that the proposed transaction disrupts current plans and operations of Leidos or Cobham Aviation Services Australia and potential difficulties in Cobham Aviation Services Australia’s employee retention as a result of the transaction, (vi) risks related to diverting management’s attention from Cobham Aviation Services Australia ongoing business operations, (vii) the outcome of any legal proceedings that may be instituted against Leidos or against Cobham Aviation Services Australia related to the merger agreement or the transaction, (viii) the ability of Leidos to successfully integrate Cobham Aviation Services Australia’s operations, product lines, and technology, and (ix) the ability of Leidos to implement its plans, forecasts, and other expectations with respect to Cobham Aviation Services Australia’s business after the completion of the proposed acquisition and realize additional opportunities for growth and innovation. These are only some of the factors that may affect the forward-looking statements contained in this release. For further information concerning risks and uncertainties associated with our business, please refer to the filings we make from time to time with the U.S. Securities and Exchange Commission (“SEC”), including the “Risk Factors,” “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and “Legal Proceedings” sections of our latest Annual Report on Form 10-K and Quarterly Reports on Form 10-Q, all of which may be viewed or obtained through the Investor Relations section of our website at www.leidos.com.

All information in this release is as of August 2, 2022. Leidos expressly disclaims any duty to update the guidance or any other forward-looking statement provided in this release to reflect subsequent events, actual results or changes in Leidos’ expectations. Leidos also disclaims any duty to comment upon or correct information that may be contained in reports published by investment analysts or others.

CONTACTS:

Investor Relations:					Media Relations:
Stuart Davis					Melissa Lee Dueñas
571.526.6124					571.526.6850
[email protected]					[email protected]

LEIDOS HOLDINGS, INC. UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF INCOME (in millions, except per share amounts)

	Three Months Ended		Six Months Ended
	July 1, 2022	July 2, 2021	July 1, 2022	July 2, 2021
Revenues	$ 3,597	$ 3,448	$ 7,091	$ 6,763
Cost of revenues	3,059	2,950	6,041	5,798
Selling, general and administrative expenses	260	224	494	392
Bad debt expense and recoveries	2	(1)	4	(10)
Acquisition, integration and restructuring costs	5	10	8	15
Asset impairment charges	3	—	3	—
Equity earnings of non-consolidated subsidiaries	(3)	(4)	(1)	(9)
Operating income	271	269	542	577
Non-operating expense:
Interest expense, net	(50)	(46)	(98)	(91)
Other income (expense), net	4	—	3	(1)
Income before income taxes	225	223	447	485
Income tax expense	(53)	(53)	(98)	(110)
Net income	172	170	349	375
Less: net income attributable to non-controlling interest	1	1	3	1
Net income attributable to Leidos common stockholders	$ 171	$ 169	$ 346	$ 374

Earnings per share:
Basic	$ 1.25	$ 1.20	$ 2.51	$ 2.65
Diluted	1.24	1.18	2.49	2.62

Weighted average number of common shares outstanding:
Basic	137	141	138	141
Diluted	138	143	139	143

Cash dividends declared per share	$ 0.36	$ 0.34	$ 0.72	$ 0.68

LEIDOS HOLDINGS, INC. UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS (in millions)
	July 1, 2022	December 31, 2021
Assets:
Cash and cash equivalents	$ 339	$ 727
Receivables, net	2,423	2,189
Inventory, net	286	274
Other current assets	478	429
Total current assets	3,526	3,619
Property, plant and equipment, net	669	670
Intangible assets, net	1,038	1,177
Goodwill	6,673	6,744
Operating lease right-of-use assets, net	614	612
Other long-term assets	367	439
Total assets	$ 12,887	$ 13,261

Liabilities:
Accounts payable and accrued liabilities	$ 2,052	$ 2,141
Accrued payroll and employee benefits	701	605
Short-term debt and current portion of long-term debt	1,153	483
Total current liabilities	3,906	3,229
Long-term debt, net of current portion	4,023	4,593
Operating lease liabilities	614	589
Deferred tax liabilities	89	239
Other long-term liabilities	198	267
Total liabilities	8,830	8,917

Stockholders’ equity:
Common stock, $0.0001 par value, 500 million shares authorized, 137 million and 140 million shares issued and outstanding at July 1, 2022, and December 31, 2021, respectively	—	—
Additional paid-in capital	1,955	2,423
Retained earnings	2,128	1,880
Accumulated other comprehensive loss	(79)	(12)
Total Leidos stockholders’ equity	4,004	4,291
Non-controlling interest	53	53
Total stockholders’ equity	4,057	4,344
Total liabilities and stockholders’ equity	$ 12,887	$ 13,261

LEIDOS HOLDINGS, INC. UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (in millions)

	Three Months Ended		Six Months Ended
	July 1, 2022	July 2, 2021	July 1, 2022	July 2, 2021
Cash flows from operations:
Net income	$ 172	$ 170	$ 349	$ 375
Adjustments to reconcile net income to net cash provided by operations:
Depreciation and amortization	83	80	168	157
Stock-based compensation	19	17	35	32
Deferred income taxes	(75)	3	(136)	3
Other	3	(3)	7	(11)
Change in assets and liabilities, net of effects of acquisitions and dispositions:
Receivables	(6)	(79)	(238)	(89)
Other current assets and other long-term assets	101	86	73	91
Accounts payable and accrued liabilities and other long-term liabilities	(211)	(199)	(271)	(347)
Accrued payroll and employee benefits	(23)	(4)	101	46
Income taxes receivable/payable	(23)	(54)	45	(1)
Net cash provided by operating activities	40	17	133	256
Cash flows from investing activities:
Acquisition of businesses, net of cash acquired	—	(375)	(2)	(593)
Divestiture of a business	6	—	15	—
Payments for property, equipment and software	(21)	(21)	(49)	(47)
Net proceeds from sale of assets	6	—	6	—
Other	1	—	1	—
Net cash used in investing activities	(8)	(396)	(29)	(640)
Cash flows from financing activities:
Proceeds from debt issuance	380	380	380	380
Net proceeds from commercial paper	75	—	150	—
Repayments of borrowings	(407)	(27)	(434)	(53)
Dividend payments	(49)	(48)	(100)	(98)
Repurchases of stock and other	(2)	(3)	(528)	(126)
Net capital (distributions to) contributions from non-controlling interests	(1)	1	(3)	39
Proceeds from issuances of stock	10	10	22	23
Net cash provided by (used in) financing activities	6	313	(513)	165
Net increase (decrease) in cash, cash equivalents and restricted cash	38	(66)	(409)	(219)
Cash, cash equivalents and restricted cash at beginning of period	428	534	875	687
Cash, cash equivalents and restricted cash at end of period	466	468	$ 466	$ 468
Less: restricted cash at end of period	127	130	127	130
Cash and cash equivalents at end of period	$ 339	$ 338	$ 339	$ 338

LEIDOS HOLDINGS, INC. UNAUDITED SEGMENT OPERATING RESULTS (in millions)

	Three Months Ended		Six Months Ended
	July 1, 2022	July 2, 2021	July 1, 2022	July 2, 2021
Revenues:
Defense Solutions	$ 2,052	$ 2,004	$ 4,101	$ 3,962
Civil	857	799	1,652	1,565
Health	688	645	1,338	1,236
Total	$ 3,597	$ 3,448	$ 7,091	$ 6,763

Operating income (loss):
Defense Solutions	$ 139	$ 137	$ 272	$ 289
Civil	38	55	81	129
Health	126	107	244	209
Corporate	(32)	(30)	(55)	(50)
Total	$ 271	$ 269	$ 542	$ 577

Operating income margin:
Defense Solutions	6.8 %	6.8 %	6.6 %	7.3 %
Civil	4.4 %	6.9 %	4.9 %	8.2 %
Health	18.3 %	16.6 %	18.2 %	16.9 %
Total	7.5 %	7.8 %	7.6 %	8.5 %

Defense Solutions

Defense Solutions revenues of $2,052 million increased by 2% compared to the prior year quarter. The primary drivers of revenue growth were the ramp up of the Navy NGEN-R SMIT and the Enduring Indirect Fires Protection Capability (IFPC) contracts, which offset the completion of the programs supporting operations in Afghanistan, a reduction in the volume of material purchases supporting hypersonics programs and an adverse foreign exchange impact. For the quarter Defense Solutions operating income margin was 6.8% and non-GAAP operating income margin was 8.3%, both unchanged compared to the prior year quarter.

Civil

Civil revenues of $857 million increased by 7% compared to the prior year quarter. The primary drivers of revenue growth were the start up of the National Aeronautics and Space Administration (NASA) Advanced Enterprise Global Information Technology Solutions (AEGIS) program and increased demand on existing programs with commercial energy providers and the Department of Energy (DoE). Civil operating income margin for the quarter decreased to 4.4% from 6.9% in the prior year quarter. Non-GAAP operating income margin was 6.5%, compared to 9.1% in the prior year quarter. The decline in segment profitability was primarily attributable to an adverse arbitration ruling and associated legal fees totaling $17 million relating to the acquisition of IS&GS from Lockheed Martin.

Health

Health revenues of $688 million increased by 7% compared to the prior year quarter, primarily as a result of increased volumes on the DHMSM program and the ramp up of the Military and Family Life Counseling (MFLC) program. In addition, Leidos received a $28 million equitable adjustment to cover costs incurred as a result of the COVID-19 pandemic, which was the primary driver for operating income margin to improve from 16.6% to 18.3% and non-GAAP operating income margin to improve from 17.8% to 19.8% compared to the prior year quarter.

LEIDOS HOLDINGS, INC.

UNAUDITED BACKLOG BY REPORTABLE SEGMENT

(in millions)

Backlog represents the estimated amount of future revenues to be recognized under negotiated contracts. Backlog value is based on management’s estimates about volume of services, availability of customer funding and other factors, and excludes contracts that are under protest. Estimated backlog comprises both funded and negotiated unfunded backlog. Backlog estimates are subject to change and may be affected by several factors, including modifications of contracts, non-exercise of options and foreign currency movements.

Funded backlog for contracts with the U.S. government represents the value on contracts for which funding is appropriated less revenues previously recognized on these contracts. Funded backlog for contracts with non-U.S. government entities and commercial customers represents the estimated value on contracts, which may cover multiple future years, under which Leidos is obligated to perform, less revenue previously recognized on the contracts.

Negotiated unfunded backlog represents estimated amounts of revenue to be earned in the future from contracts for which funding has not been appropriated and unexercised priced contract options. Negotiated unfunded backlog does not include unexercised option periods and future potential task orders expected to be awarded under IDIQ, General Services Administration Schedule or other master agreement contract vehicles, with the exception of certain IDIQ contracts where task orders are not competitively awarded or separately priced but instead are used as a funding mechanism, and where there is a basis for estimating future revenues and funding on future anticipated task orders.

The estimated value of backlog as of the dates presented was as follows:

July 1, 2022

July 2, 2021

Segment

Funded

Unfunded

Total

Funded

Unfunded

Total

Defense Solutions

$ 4,351

$ 13,668

$ 18,019

$ 4,293

$ 14,154

$ 18,447

Civil

2,051

8,846

10,897

1,608

7,493

9,101

Health

1,139

4,667

5,806

1,255

4,720

5,975

Total

$ 7,541

$ 27,181

$ 34,722

$ 7,156

$ 26,367

$ 33,523

The increase in backlog includes $49 million of backlog acquired through business combinations in our Defense Solutions reportable segment. Total backlog at July 1, 2022, included a negative impact of $268 million when compared to total backlog at July 2, 2021, primarily due to the exchange rate movements in the British pound and Australian dollar when compared to the U.S. dollar.

LEIDOS HOLDINGS, INC.

UNAUDITED NON-GAAP FINANCIAL MEASURES

Leidos uses and refers to organic growth, non-GAAP operating income, non-GAAP operating margin, adjusted EBITDA, adjusted EBITDA margin, non-GAAP diluted EPS, free cash flow and free cash flow conversion, which are not measures of financial performance under generally accepted accounting principles in the U.S. and, accordingly, these measures should not be considered in isolation or as a substitute for the comparable GAAP measures and should be read in conjunction with Leidos’s consolidated financial statements prepared in accordance with GAAP.

Management believes that these non-GAAP measures provide another representation of the results of operations and financial condition, including its ability to comply with financial covenants. These non-GAAP measures are frequently used by financial analysts covering Leidos and its peers. The computation of non-GAAP measures may not be comparable to similarly titled measures reported by other companies, thus limiting their use for comparability.

Organic growth captures the revenue growth that is inherent in the underlying business excluding the impact of acquisitions made within the prior year; it is computed as current revenues excluding acquisition revenues within the last 12 months divided by previous year revenues excluding revenues from entities divested within the prior year.

Non-GAAP operating income is computed by excluding the following discrete items from operating income:

Acquisition, integration and restructuring costs – Represents acquisition, integration, lease termination and severance costs related to acquisitions.
Amortization of acquired intangible assets – Represents the amortization of the fair value of the acquired intangible assets.
Asset impairment charges – Represents impairments of long-lived intangible assets.

Non-GAAP operating margin is computed by dividing non-GAAP operating income by revenues.

Adjusted EBITDA is computed by excluding the following items from income before income taxes: (i) discrete items as identified above; (ii) interest expense; (iii) interest income; (iv) depreciation expense; and (v) amortization of internally developed intangible assets.

Adjusted EBITDA margin is computed by dividing adjusted EBITDA by revenues.

Non-GAAP net income is computed by excluding the discrete items listed under non-GAAP operating income and their related tax impacts.

Non-GAAP diluted EPS is computed by dividing net income attributable to Leidos common stockholders, adjusted for the discrete items as identified above and the related tax impacts, by the diluted weighted average number of common shares outstanding.

Free cash flow is computed by deducting expenditures for property, equipment and software from net cash provided by operating activities.

Free cash flow conversion is computed by dividing free cash flow by non-GAAP net income attributable to Leidos common stockholders; operating cash flow conversion is computed by dividing net cash provided by operating activities by net income attributable to Leidos shareholders.

LEIDOS HOLDINGS, INC. UNAUDITED NON-GAAP FINANCIAL MEASURES [CONTINUED] (in millions, except growth percentages)
The following table presents the reconciliation of revenues to organic growth by reportable segment and total operations:
	Three Months Ended
	July 1, 2022	July 2, 2021	Percent Change
Defense Solutions
Revenues, as reported	$ 2,052	$ 2,004	2 %
Acquisition and divestiture revenues⁽¹⁾	17	5
Pro-forma revenues (Organic Growth Rate)	$ 2,035	$ 1,999	2 %

Civil
Revenues, as reported	$ 857	$ 799	7 %

Health
Revenues, as reported	$ 688	$ 645	7 %

Total Operations
Revenues, as reported	$ 3,597	$ 3,448	4 %
Total acquisition and divestiture revenues⁽¹⁾	17	5
Pro-forma revenues (Organic Growth Rate)	$ 3,580	$ 3,443	4 %

⁽¹⁾

Current period acquisition revenues reflect revenues in the current as reported figures for 12 months from closing of each acquisition. Acquisition revenues for the three months ended July 1, 2022 for the Defense Solutions segment include Gibbs & Cox (acquired May 7, 2021) and a strategic, immaterial acquisition (acquired September 21, 2021). Year ago acquisition revenues reflect revenues from assets subsequently divested. Acquisitions and divestiture in the three months ended July 2, 2021 for the Defense Solutions segment include the Aviation & Missile Solutions LLC (AMS) divestiture that was completed on April 29, 2022.

UNAUDITED NON-GAAP FINANCIAL MEASURES [CONTINUED] (in millions, except per share amounts and margin and growth percentages)
The following tables present the reconciliation of non-GAAP operating income, net income, diluted EPS, adjusted EBITDA, and adjusted EBITDA margin to the most directly comparable GAAP measures for the three months ended July 1, 2022:
	Three Months Ended July 1, 2022
	As reported	Acquisition, integration and restructuring costs	Amortization of acquired intangibles	Asset impairment charges	Non-GAAP results
Operating income	$ 271	$ 5	$ 57	$ 3	$ 336
Non-operating expense, net	(46)	—	—	—	(46)
Income before income taxes	225	5	57	3	290
Income tax expense⁽¹⁾	(53)	(1)	(15)	(1)	(70)
Net income	172	4	42	2	220
Less: net income attributable to non-controlling interest	1	—	—	—	1
Net income attributable to Leidos common stockholders	$ 171	$ 4	$ 42	$ 2	$ 219

Diluted EPS attributable to Leidos common stockholders⁽²⁾	$ 1.24	$ 0.03	$ 0.31	$ 0.01	$ 1.59
Diluted shares	138	138	138	138	138

	Three Months Ended July 1, 2022
	As reported	Acquisition, integration and restructuring costs	Amortization of acquired intangibles	Asset impairment charges	Non-GAAP results
Net income	$ 172	$ 4	$ 42	$ 2	$ 220
Income tax expense⁽¹⁾	53	1	15	1	70
Income before income taxes	225	5	57	3	290
Depreciation expense	26	—	—	—	26
Amortization of intangibles	57	—	(57)	—	—
Interest expense, net	50	—	—	—	50
EBITDA	$ 358	$ 5	$ —	$ 3	$ 366
EBITDA margin	10.0 %				10.2 %


⁽¹⁾	Calculation uses an estimated statutory tax rate on non-GAAP adjustments.
⁽²⁾	Earnings per share is computed independently for each of the non-GAAP adjustment presented and therefore may not sum to the total non-GAAP earnings per share due to rounding.

LEIDOS HOLDINGS, INC. UNAUDITED NON-GAAP FINANCIAL MEASURES [CONTINUED] (in millions, except per share amounts and margin and growth percentages)
The following tables present the reconciliation of non-GAAP operating income, net income, diluted EPS, adjusted EBITDA, and adjusted EBITDA margin to the most directly comparable GAAP measures for the three months ended July 2, 2021:

	Three Months Ended July 2, 2021
	As reported	Acquisition, integration and restructuring costs	Amortization of acquired intangibles	Non-GAAP results
Operating income	$ 269	$ 10	$ 55	$ 334
Non-operating expense, net	(46)	—	—	(46)
Income before income taxes	223	10	55	288
Income tax expense⁽¹⁾	(53)	(2)	(14)	(69)
Net income	170	8	41	219
Less: net income attributable to non-controlling interest	1	—	—	1
Net income attributable to Leidos common stockholders	$ 169	$ 8	$ 41	$ 218

Diluted EPS attributable to Leidos common stockholders	$ 1.18	$ 0.05	$ 0.29	$ 1.52
Diluted shares	143	143	143	143

	Three Months Ended July 2, 2021
	As reported	Acquisition, integration and restructuring costs	Amortization of acquired intangibles	Non-GAAP results
Net income attributable to Leidos common stockholders	$ 169	$ 8	$ 41	$ 218
Income tax expense⁽¹⁾	53	2	14	69
Income before income taxes	223	10	55	288
Depreciation expense	25	—	—	25
Amortization of intangibles	55	—	(55)	—
Interest expense, net	46	—	—	46
EBITDA	$ 349	$ 10	$ —	$ 359
EBITDA margin	10.1 %			10.4 %


⁽¹⁾	Calculation uses an estimated statutory tax rate on non-GAAP adjustments.

LEIDOS HOLDINGS, INC. UNAUDITED NON-GAAP FINANCIAL MEASURES [CONTINUED] (in millions, except per share amounts and margin and growth percentages)
The following tables present the reconciliation of non-GAAP operating income, net income, diluted EPS, adjusted EBITDA, and adjusted EBITDA margin to the most directly comparable GAAP measures for the six months ended July 1, 2022:

	Six Months Ended July 1, 2022
	As reported	Acquisition, integration and restructuring costs	Amortization of acquired intangibles	Asset impairment charges	Non-GAAP results
Operating income	$ 542	$ 8	$ 115	$ 3	$ 668
Non-operating expense, net	(95)	—	—	—	(95)
Income before income taxes	447	8	115	3	573
Income tax expense⁽¹⁾	(98)	(2)	(29)	(1)	(130)
Net income	349	6	86	2	443
Less: net income attributable to non-controlling interest	3	—	—	—	3
Net income attributable to Leidos common stockholders	$ 346	$ 6	$ 86	$ 2	$ 440

Diluted EPS attributable to Leidos common stockholders	$ 2.49	$ 0.04	$ 0.63	$ 0.01	$ 3.17
Diluted shares	139	139	139	139	139

	Six Months Ended July 1, 2022
	As reported	Acquisition, integration and restructuring costs	Amortization of acquired intangibles	Asset impairment charges	Non-GAAP results
Net income	$ 349	$ 6	$ 86	$ 2	$ 443
Income tax expense⁽¹⁾	98	2	29	1	130
Income before income taxes	447	8	115	3	573
Depreciation expense	52	—	—	—	52
Amortization of intangibles	116	—	(115)	—	1
Interest expense, net	98	—	—	—	98
EBITDA	$ 713	$ 8	$ —	$ 3	$ 724
EBITDA margin	10.1 %				10.2 %


⁽¹⁾	Calculation uses an estimated statutory tax rate on non-GAAP adjustments.

LEIDOS HOLDINGS, INC. UNAUDITED NON-GAAP FINANCIAL MEASURES [CONTINUED] (in millions, except per share amounts and margin and growth percentages)
The following tables present the reconciliation of non-GAAP operating income, net income, diluted EPS, adjusted EBITDA, and adjusted EBITDA margin to the most directly comparable GAAP measures for the six months ended July 2, 2021:

	Six Months Ended July 2, 2021
	As reported	Acquisition, integration and restructuring costs	Amortization of acquired intangibles	Non-GAAP results
Operating income	$ 577	$ 15	$ 109	$ 701
Non-operating expense, net	(92)	—	—	(92)
Income before income taxes	485	15	109	609
Income tax expense(1)	(110)	(3)	(28)	(141)
Net income	375	12	81	468
Less: net income attributable to non-controlling interest	1	—	—	1
Net income attributable to Leidos common stockholders	$ 374	$ 12	$ 81	$ 467

Diluted EPS attributable to Leidos common stockholders	$ 2.62	$ 0.08	$ 0.57	$ 3.27
Diluted shares	143	143	143	143

	Six Months Ended July 2, 2021
	As reported	Acquisition, integration and restructuring costs	Amortization of acquired intangibles	Non-GAAP results
Net income	$ 375	$ 12	$ 81	$ 468
Income tax expense(1)	(110)	(3)	(28)	(141)
Income before income taxes	485	15	109	609
Depreciation expense	47	—	—	47
Amortization of intangibles	110	—	(109)	1
Interest expense, net	91	—	—	91
EBITDA	$ 733	$ 15	$ —	$ 748
EBITDA margin	10.8 %			11.1 %


⁽¹⁾	Calculation uses an estimated statutory tax rate on non-GAAP adjustments.

LEIDOS HOLDINGS, INC. UNAUDITED NON-GAAP FINANCIAL MEASURES [CONTINUED] (in millions, except per share amounts and margin and growth percentages)
The following tables present the reconciliation of non-GAAP operating income by reportable segment and Corporate to operating income:

	Three Months Ended July 1, 2022
	Operating income (loss)	Acquisition, integration and restructuring costs	Amortization of acquired intangibles	Asset impairment charges	Non-GAAP operating income (loss)	Non-GAAP operating margin
Defense Solutions	$ 139	$ —	$ 32	$ —	$ 171	8.3 %
Civil	38	—	18	—	56	6.5 %
Health	126	—	7	3	136	19.8 %
Corporate	(32)	5	—	—	(27)	NM
Total	$ 271	$ 5	$ 57	$ 3	$ 336	9.3 %

		Three Months Ended July 2, 2021
		Operating income (loss)	Acquisition, integration and restructuring costs	Amortization of acquired intangibles	Non-GAAP operating income (loss)	Non-GAAP operating margin
Defense Solutions		$ 137	$ —	$ 29	$ 166	8.3 %
Civil		55	—	18	73	9.1 %
Health		107	—	8	115	17.8 %
Corporate		(30)	10	—	(20)	NM
Total		$ 269	$ 10	$ 55	$ 334	9.7 %

	Six Months Ended July 1, 2022
	Operating income (loss)	Acquisition, integration and restructuring costs	Amortization of acquired intangibles	Asset impairment charges	Non-GAAP operating income (loss)	Non-GAAP operating margin
Defense Solutions	$ 272	$ —	$ 65	$ —	$ 337	8.2 %
Civil	81	—	36	—	117	7.1 %
Health	244	—	14	3	261	19.5 %
Corporate	(55)	8	—	—	(47)	NM
Total	$ 542	$ 8	$ 115	$ 3	$ 668	9.4 %

		Six Months Ended July 2, 2021
		Operating income	Acquisition, integration and restructuring costs	Amortization of acquired intangibles	Non-GAAP operating income	Non-GAAP operating margin
Defense Solutions		$ 289	$ —	$ 57	$ 346	8.7 %
Civil		129	—	36	165	10.5 %
Health		209	—	16	225	18.2 %
Corporate		(50)	15	—	(35)	NM
Total		$ 577	$ 15	$ 109	$ 701	10.4 %

NM – Not Meaningful

LEIDOS HOLDINGS, INC. UNAUDITED NON-GAAP FINANCIAL MEASURES [CONTINUED] (in millions, except percentages)
The following table presents the reconciliation of free cash flow to net cash provided by operating activities as well as the calculation of operating cash flow and free cash flow conversion ratios:

	Three Months Ended
	July 1, 2022	July 2, 2021
Net cash provided by operating activities	$ 40	$ 17
Payments for property, equipment and software	(21)	(21)
Free cash flow	$ 19	$ (4)

Net income attributable to Leidos common stockholders	$ 171	$ 169
Acquisition, integration and restructuring costs ⁽¹⁾	4	8
Amortization of acquired intangibles ⁽¹⁾	42	41
Asset impairment charges ⁽¹⁾	2	—
Non-GAAP net income attributable to Leidos common stockholders	$ 219	$ 218

Operating cash flow conversion ratio	23 %	10 %
Free cash flow conversion ratio	9 %	(2) %


⁽¹⁾	After-tax expenses excluded from non-GAAP net income.

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SOURCE Leidos

August 2, 2022 6:19 am

New Research Reveals Risk Factors to Business Success in a Post-Pandemic World

PR Newswire

Economist Impact survey of 2,000 business leaders, sponsored by Cognizant, shows key challenges include competing priorities, deriving value from technology investments, addressing a talent and skills gap, and sustaining action on ESG

Approximately 90% of respondents cited competing strategic imperatives, including data-driven ways of working, digital business models, and aligning operations with these new ways to work.
Over 60% of respondents are planning for or have already begun adopting advanced technology such as quantum computing, blockchain, and robotics. Yet nearly 50% claim they are not achieving significant value from existing technology investments.
Nearly half of respondents, approximately 46%, recognize they lack the internal talent necessary to implement and utilize advanced technologies.
An overwhelming nine out of 10 respondents recognize attention to Environmental, Social and Governance (ESG) issues is an essential aspect of being a modern business; only 35% are currently incorporating ESG into company strategy.

TEANECK, N.J.
, Aug. 2, 2022 /PRNewswire/ —

Cognizant today introduced The Future-Ready Business Benchmark, research from Economist Impact, commissioned by Cognizant. This comprehensive survey of business leaders across eight industries and 10 countries is aimed at understanding the state of the modern business and how leaders are preparing for long-term success in a post-pandemic world. The research identifies three essential interrelated areas that leaders must prioritize to create a resilient, future-ready enterprise: 1) Realizing full value from accelerated technology adoption, 2) overhauling workforce strategies, and 3) closing the gap on thought and action in the face of growing environmental, social, and governance (ESG) challenges.

“Resilience is the new must-have capability for every organization that expects to thrive in this time of intensifying competition, ever-accelerating digital technology, and unpredictable global events,” said Euan Davis, Head of Cognizant Research. “To succeed as a modern business, leaders must be ready for anything, and prioritization is key when everything seems equally critical. We’ve shown that savvy technology investment, attention on developing talent with new and expanded skillsets, and embedding and acting on an ESG agenda are core elements of focus on which leaders can build. The successful CxOs will build future-ready, resilient businesses by ensuring their organizations learn, adapt, and continually evolve.”

Economist Impact surveyed 2,000 senior executives in 10 countries across North America, Europe, and Asia-Pacific to assess and compare their businesses across a range of metrics.

Survey highlights include these insights:

Strategic clarity is muddled. Over 90% of business leaders surveyed say it is a strategic priority to adopt a data-driven approach and create a digital-first business model, with 37% citing both imperatives, along with the need to align operations with these new modes of working, as “business critical.”
Technology investment is accelerating beyond what has become the standard shopping list of cloud, advanced analytics, IoT and artificial intelligence/machine learning (AI/ML) even while respondents say they are not yet realizing full value of existing investments. In addition to these foundational technologies, of which the vast majority of respondents, 80%, say they have adopted or plan to adopt, there is a growing appetite for an emerging set of technologies; over 60% of respondents say they plan to or are already adopting quantum computing, blockchain, and robotics.
Workforce and talent management strategies need a major overhaul to prepare workers for new ways of work. Nearly half of respondents, at 46%, recognize they lack the skilled talent necessary to make productive use of advanced technologies. When asked about the biggest hurdles to implementing new processes, products, services and technologies over the last 12 months, the two most significant challenges were workforce-related: a lack of knowledgeable staff and a chronic lack of focus on preparing workers for the new ways of work. For example, just one-third, or 33%, of respondents are using data to identify and understand training needs and cultivate talent.
Business resilience is at risk for companies that recognize ESG as a critical consideration but fail to take action to integrate ESG throughout the organization. Nine in 10 decision-makers, or 90%, recognize attending to ESG issues is an important aspect of being a modern business. However, there is a massive disconnect between recognition and action, with only 31% having dedicated staff and resources devoted to ESG, and only 35% incorporating ESG into company strategy. A slight majority, 54%, report setting and taking action on specific environmental targets, while only 44% currently measure social impact.

“Many businesses today are struggling to prepare for next month, let alone years from now,” noted Vaibhav Sahgal, Principal at Economist Impact. “Firms genuinely embedding principles of future-readiness from our Future-Ready Business Benchmark into their operational realities will maintain and grow their competitive advantage. Our data validated the fact that it is particularly challenging to make progress on the matter when juggling a vast array of often competing priorities. Our guidance is to start where the gaps are most significant and dial up the focus on people; the benchmark offers tangible calls to action for businesses across countries and industries. A failure to embrace the volatility that is here to stay, and prioritize business plans and investments accordingly, puts your business at the risk of losing relevance.”

Study Methodology
The Future-Ready Business Benchmark, research from Economist Impact, supported by Cognizant, examines the state of businesses today in light of the needs of tomorrow. It was developed through a rigorous process of research, expert consultations, data collection and analysis. The benchmark reflects a range of key considerations and measures of future-readiness for multi-national firms from 10 developed economies and eight industries, spanning the external environment, business preparedness factors and current performance, and focused on cross-cutting themes including firm fundamentals, talent, technology and innovative ability, and ESG.

Read more about what it takes to be a future-ready business

here

.

About Cognizant

Cognizant (Nasdaq: CTSH) engineers modern businesses. We help our clients modernize technology, reimagine processes and transform experiences so they can stay ahead in our fast-changing world. Together, we’re improving everyday life. See how at www.cognizant.com or @cognizant.

For more information, contact:

U.S.

Jodi Sorensen

[email protected]

Europe / APAC

Christina Schneider

[email protected]

India

Rashmi Vasisht

[email protected]

View original content to download multimedia:https://www.prnewswire.com/news-releases/new-research-reveals-risk-factors-to-business-success-in-a-post-pandemic-world-301596790.html

SOURCE Cognizant

August 2, 2022 6:19 am

Yalla Group Limited to Report Second Quarter 2022 Financial Results on August 8, 2022 Eastern Time

PR Newswire

DUBAI, UAE, Aug. 2, 2022 /PRNewswire/ — Yalla Group Limited (“Yalla” or the “Company”) (NYSE: YALA), the leading voice-centric social networking and entertainment platform in the Middle East and North Africa (MENA), today announced that it will report its unaudited financial results for the second quarter 2022 after the U.S. market closes on Monday, August 8, 2022.

Yalla Group Limited will hold a conference call on Monday, August 8, 2022, at 8:00 P.M. Eastern Time, 4:00 A.M. Dubai Time on Tuesday, August 9, 2022, or 8:00 A.M. Beijing Time on Tuesday, August 9, 2022, to discuss the financial results. Listeners may access the call by dialing the following numbers:

United States Toll Free:	+1-888-317-6003
International:	+1-412-317-6061
United Arab Emirates Toll Free:	80-003-570-3589
Mainland China Toll Free:	400-120-6115
Hong Kong Toll Free:	800-963-976
Access Code:	3596789

The replay will be accessible through August 15, 2022, by dialing the following numbers:

United States Toll Free:	+1-877-344-7529
International:	+1-412-317-0088
Access Code:	6958460

A live and archived webcast of the conference call will also be available at the Company’s investor relations website at https://ir.yallagroup.com.

About Yalla Group Limited

Yalla Group Limited is the largest voice-centric social networking and entertainment platform in the Middle East and Northern Africa (MENA). The Company operates two flagship mobile applications, Yalla, a voice-centric group chat platform, and Yalla Ludo, a casual gaming application featuring online versions of board games, popular in MENA, with in-game voice chat and localized Majlis functionality. Building on the success of Yalla and Yalla Ludo, the Company has expanded its content, creating a regionally-focused, integrated ecosystem dedicated to fulfilling MENA users’ evolving online social networking and entertainment needs. The ecosystem includes YallaChat, an IM product tailored for Arabic users; Waha, a social networking product designed for the metaverse; and games such as Yalla Baloot and 101 Okey Yalla, developed to sustain vibrant local gaming communities in the region. Yalla is also actively exploring outside of MENA, having launched Yalla Parchis, a Ludo game designed for the South American markets. Yalla’s mobile applications deliver a seamless experience that fosters a sense of loyalty and belonging, establishing highly devoted and engaged user communities through close attention to detail and localized appeal that profoundly resonates with its users. In addition, through its holding subsidiary, Yalla Game Limited, the Company has expanded its capabilities in mid-core and hard-core game distribution in the MENA region, leveraging its local expertise to bring exciting new content to its users.

For more information, please visit https://ir.yallagroup.com.

Investor Relations Contact

Yalla Group Limited
Investor Relations
Kerry Gao – IR Director
Tel: +86-571-8980-7962
Email: [email protected]

The Piacente Group, Inc.
Yang Song
Tel: +86-10-6508-0677
Email: [email protected]

In the United States:

The Piacente Group, Inc.
Brandi Piacente
Tel: +1-212-481-2050
Email: [email protected]

View original content:https://www.prnewswire.com/news-releases/yalla-group-limited-to-report-second-quarter-2022-financial-results-on-august-8-2022-eastern-time-301597563.html

SOURCE Yalla Group Limited

August 2, 2022 6:19 am

Allarity Therapeutics Refocuses Oncology Pipeline Strategy Towards Combination Therapies

New
strategy align
s
with
ongoing shift in
oncology
standard
–
of
–
care

towards combination therapies

Combination therapy focus expected to improve the
C
ompany’s
future
funding

a
nd
commercial prospects

New
p
ipeline
strategy
follows
Type C
meeting held
with
FDA
regarding

d
ovitinib
clinical
development path
for
third-
line mRCC

Press release

Cambridge, MA
,
U.S.A
.
(
August
2
,
2022
) — Allarity Therapeutics, Inc. (“Allarity” or the “Company”), a clinical-stage pharmaceutical company developing novel oncology therapeutics together with drug-specific DRP^®companion diagnostics for personalized cancer care, today announced that its Board of Directors has mandated a refocus of the Company’s oncology pipeline strategy away from development of monotherapies towards development of more promising and clinically relevant combination therapies.

Following a lengthy and in-depth analysis of current pipeline opportunities, clinical/commercial/ regulatory risks, development costs and timelines, expected availability of funding, and in consultation with Allarity’s senior management, its Scientific Advisory Board (SAB), and external experts, Allarity’s Board of Directors has concluded that refocusing the Company’s pipeline to development of combination therapies will accomplish the following:

Align with the ongoing shift in cancer therapy standard-of-care away from monotherapies toward combination therapies, which are increasingly driving market opportunities and which have shown dramatic increases in patient benefit.
Strengthen the Company’s ability to attract additional funding from institutional life science investors, which is necessary to support the Company’s clinical development activities and future success.
Significantly broaden the Company’s possibilities for future commercial partnering with larger pharmaceutical companies to maximize the value of its pipeline assets and DRP^® platform technology.
Improve the likelihood of clinical and commercial success of the Company’s pipeline assets.

The Board’s decision also takes into account feedback that the Company recently received from the U.S. Food and Drug Administration (FDA) from a Type C advisory meeting held in Q2 2022, regarding a potential Phase 3 clinical development path for dovitinib as a monotherapy third-line treatment for metastatic renal cell carcinoma (mRCC). As part of that feedback, the FDA has indicated, under its recent Project Optimus guidelines relating to new optimization of therapeutic dosing, that the Company will likely need to conduct a new dosing study for dovitinib prior to Company conducting any future Phase 3 studies that could enable the submission of a new NDA. Conducting a new dosing study for dovitinib, if required, would further delay the initiation and completion of a future Phase 3 study, and increase the cost, time, and market risks of advancing dovitinib as a monotherapy in the increasingly competitive indication of third-line mRCC. In view of those delays and increased costs/risks, the Company has determined that advancing dovitinib as a monotherapy in adults is no longer commercially viable or in the best interests of its shareholders. However, the drug will continue to be externally developed, via the partnership with OncoHeroes Biosciences, as a potential monotherapy for pediatric cancers.

As part of its new strategic pipeline focus, the Company has announced it expects to initiate enrollment in a Phase 1b/2 study of its PARP inhibitor, stenoparib, in combination with its pan-TKI, dovitinib, for the second-line or later treatment of metastatic ovarian cancer by or before Q4 2022. The Company plans to have trial sites in both the U.S. and Europe. The Company is currently evaluating other potential Phase 1b/2 studies for either stenoparib or dovitinib combined with another oncology therapeutic, including the mRCC space. Allarity’s ongoing Phase 2 studies of stenoparib, as monotherapy for ovarian cancer, and IXEMPRA®, as monotherapy for metastatic breast cancer, will continue through their interim data readouts, now anticipated in Q4 2022 and Q1 2023, respectively. All pipeline development activities will continue to utilize drug-specific DRP® companion diagnostics to guide patient selection and treatment.

“We are grateful for the clear guidance fromour Board on the best path our Company can take to advance our mission to improve cancer patient care by realizing the promise of truly personalized medicine,” said James G. Cullem, J.D., Interim Chief Executive Officer of Allarity. “New therapeutic development is recognized as a very challenging endeavor, with constantly shifting regulatory requirements, standard-of-care improvements as new drugs come to market, and financial and market challenges.It hastherefore become increasingly difficult to advance development of monotherapies in increasingly competitive therapeutic spaces. I am confident that our strategic shift of focus and resources is the correct path forward for Allarity given the current regulatory and market realities, and will best leverage our DRP® companion diagnostics to match the right patients to the cancer therapeutic from which they will most likely benefit.”

Dr. Duncan Moore, Ph.D., Allarity’s Board Chairman, stated: “It is clear to our Board, following lengthy discussions with our management team, SAB, and additional key opinion leaders, that the current, and future, standard of care in cancer treatment is combination therapies, and that, increasingly, the field and market opportunities are shifting away from monotherapy approaches. In view of that key shift, and in consideration of many other market and financial factors, as well as the FDA’s new Project Optimus drug dose optimization requirements, we have determined that Allarity’s future pipeline must focus on the development of promising combination therapy approaches utilizing its current assets together with DRP®companion diagnostics. I remain very enthusiastic about the Company’s vision, mission, and strategy, and this strategic refocus towards combination therapies, together with our core DRP® technology, will give Allarity the best chance of success as well as best optimize shareholder return on investment.”

About
Allarity
Therapeutics

Allarity Therapeutics, Inc. (Nasdaq: ALLR) develops drugs for personalized treatment of cancer guided by its proprietary and highly validated companion diagnostic technology, the DRP® platform. The Company has a mature portfolio of three drug candidates: stenoparib, a PARP inhibitor in Phase 2 development for ovarian cancer; dovitinib, a post-Phase 3 pan-tyrosine kinase inhibitor; and IXEMPRA® (Ixabepilone), a microtubule inhibitor approved in the U.S. for the treatment of second-line metastatic breast cancer and in Phase 2 development in Europe for the same indication. Additionally, the Company has rights in two secondary assets: 2X-111, a liposomal formulation of doxorubicin in Phase 2 development for metastatic breast cancer and/or glioblastoma multiforme (GBM), which is the subject of discussions for a restructured out-license to Smerud Medical Research International AS; and LiPlaCis®, a liposomal formulation of cisplatin and its accompanying DRP®, being developed via a partnership with Chosa ApS, an affiliate of Smerud Medical Research International, for late-stage metastatic breast cancer. The Company is headquartered in the United States and maintains an R&D facility in Hoersholm, Denmark. For more information, please visit the Company’s website at www.Allarity.com.

About the Drug Response Predictor – DRP
^®
Companion Diagnostic

Allarity uses its drug-specific DRP^® to select those patients who, by the genetic signature of their cancer, are found to have a high likelihood of responding to the specific drug. By screening patients before treatment, and only treating those patients with a sufficiently high DRP^® score, the therapeutic response rate can be significantly increased. The DRP^® method builds on the comparison of sensitive vs. resistant human cancer cell lines, including transcriptomic information from cell lines combined with clinical tumor biology filters and prior clinical trial outcomes. DRP^® is based on messenger RNA from patient biopsies. The DRP^® platform has proven its ability to provide a statistically significant prediction of the clinical outcome from drug treatment in cancer patients in 37 out of 47 clinical studies that were examined (both retrospective and prospective), including ongoing, prospective Phase 2 trials of Stenoparib and IXEMPRA^®. The DRP^®platform, which can be used in all cancer types and is patented for more than 70 anti-cancer drugs, has been extensively published in peer reviewed literature.

Follow
Allarity
on
S
ocial
M
edia

Facebook: https://www.facebook.com/AllarityTx/
LinkedIn: https://www.linkedin.com/company/allaritytx/
Twitter: https://twitter.com/allaritytx

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 provide Allarity’s current expectations or forecasts of future events. The words “anticipates,” “believe,” “continue,” “could,” “estimate,” “expect,” “intends,” “may,” “might,” “plan,” “possible,” “potential,” “predicts,” “project,” “should,” “would” and similar expressions may identify forward-looking statements, but the absence of these words does not mean that a statement is not forward-looking. These forward-looking statements include, but are not limited to, statements relating to the Company’s related to the expected availability capital to fund its anticipated clinical trials, statements related to advancing dovitinib in combination with another therapeutic candidate or other approved drug, any statements related to ongoing clinical trials for stenoparib as a monotherapy or in combination with another therapeutic candidate for the treatment of advanced ovarian cancer, or ongoing clinical trials (in Europe) for IXEMPRA^® for the treatment of metastatic breast cancer, and statements relating to the effectiveness of the Company’s DRP^® companion diagnostics platform in predicting whether a particular patient is likely to respond to a specific drug. Any forward-looking statements in this press release are based on management’s current expectations of future events and are subject to a number of risks and uncertainties that could cause actual results to differ materially and adversely from those set forth in or implied by such forward-looking statements. These risks and uncertainties include, but are not limited to, the risk that results of a clinical study do not necessarily predict final results and that one or more of the clinical outcomes may materially change following more comprehensive reviews of the data, and as more patient data become available, the risk that results of a clinical study are subject to interpretation and additional analyses may be needed and/or may contradict such results, the receipt of regulatory approval for dovitinib or any of our other therapeutic candidates or, if approved, the successful commercialization of such products, the risk of cessation or delay of any of the ongoing or planned clinical trials and/or our development of our product candidates, the risk that the results of previously conducted studies will not be repeated or observed in ongoing or future studies involving our therapeutic candidates, and the risk that the current COVID-19 pandemic will impact the Company’s current and future clinical trials and the timing of the Company’s preclinical studies and other operations. For a discussion of other risks and uncertainties, and other important factors, any of which could cause our actual results to differ from those contained in the forward-looking statements, see the section entitled “Risk Factors” in our Form S-1 registration statement on file with the Securities and Exchange Commission, available at the Securities and Exchange Commission’s website at www.sec.gov, and as well as discussions of potential risks, uncertainties and other important factors in the Company’s subsequent filings with the Securities and Exchange Commission. All information in this press release is as of the date of the release, and the Company undertakes no duty to update this information unless required by law.

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Company Contact:

        Thomas Jensen
        Senior V.P. of Investor Relations
        [email protected]

Investor Relations:

        Chuck Padala
        LifeSci Advisors
        +1 ‭(646) 627-8390‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬
        [email protected]

U.S. Media Contact:

  Mike Beyer
  Sam Brown, Inc.
  +1 (312) 961-2502
  [email protected]

EU Media Contact:

        Thomas Pedersen
        Carrotize PR & Communications
  +45 6062 9390
        [email protected]

Attachment

Allarity Press Release Pipeline Strategy Change August 2022

August 2, 2022 6:19 am

Quanergy’s M-Series LiDAR Sensors Help Busy Chinese Port Reduce Accidents and False Alarms

Quanergy’s M-Series LiDAR Sensors Help Busy Chinese Port Reduce Accidents and False Alarms

LiDAR Solution Reduced False Alarms by Over 85%

SUNNYVALE, Calif.–(BUSINESS WIRE)–Quanergy Systems, Inc., (NYSE:QNGY) a leading provider of LiDAR sensors and smart 3D solutions, announced today that Nanjing Port (Group) Co., Ltd., has successfully deployed Quanergy’s M-Series LiDAR sensors. Quanergy’s partner, Nanjing Jiuao Technology Co., Ltd., developed the solution and managed the installation and integration.

This press release features multimedia. View the full release here: https://www.businesswire.com/news/home/20220802005400/en/

Quanergy’s M-Series LiDAR Sensors Help Busy Chinese Port Reduce Accidents and False Alarms (Graphic: Business Wire)

Nanjing Port needed an effective detection and warning system to help prevent warehouse damage and other potential accidents during heavy equipment operations. The use case also required a system that would trigger video surveillance cameras and record events.

Prior to the selection of Quanergy, the port had been using a passive infrared (PIR) sensor system, but the false alarm rate was too high, up to 90% in some cases. Nanjing Jiuao selected Quanergy’s LiDAR-based system to resolve these customer challenges, leveraging some of the key benefits of Quanergy’s sensor solutions, including:

Accurate and reliable detection, even in harsh warehouse environments;
3D object identification that can significantly reduce false alarms caused by small animals like birds; and
Coverage of a much larger area than other traditional sensors, requiring fewer devices.

With the above features, Quanergy’s LiDAR-based system brought the false alarm rate down to approximately 2% and fully met Nanjing Port’s requirements for timely detection and warning capabilities.

Sheng Teng, general manager, Nanjing Jiuao, said: “With the data provided from Quanergy’s LiDAR system, our customer’s warehouse team has been able to have a more accurate visual display of the operations area. These added features allowed for a safer environment and cut down on costly repairs that the Nanjing Port Group was experiencing.”

Tony Rigoni, director of industrial markets, Quanergy Systems, Inc., said: “As LiDAR technology matures, more use cases arise across a number of industries. For ports, this deployment with our partner Nanjing Jiuao demonstrates one of LiDAR’s many uses in this setting. This deployment further extends Quanergy’s presence in the port automation market, one of the first industrial segments to embrace the power of 3D LiDAR.”

For more information, visit www.quanergy.com.

About Quanergy Systems, Inc.

Quanergy’s (NYSE: QNGY) mission is to create powerful, affordable smart LiDAR solutions for automotive and IoT applications to enhance people’s experiences and safety. Quanergy has developed the only true 100% solid-state CMOS LiDAR sensor built on optical phased array (OPA) technology to enable the mass production of low-cost, highly reliable 3D LiDAR solutions. Through Quanergy’s smart LiDAR solutions, businesses can now leverage real-time, advanced 3D insights to transform their operations in a variety of industries including industrial automation, physical security, smart cities, smart spaces and much more. Quanergy solutions are deployed by nearly 400 customers across the globe. For more information, please visit us at www.quanergy.com.

Forward-Looking Statements

This press release includes certain statements that are not historical facts but are forward-looking statements for purposes of the safe harbor provisions under the United States Private Securities Litigation Reform Act of 1995. Forward-looking statements generally are accompanied by words such as “believe,” “may,” “will,” “estimate,” “continue,” “anticipate,” “intend,” “expect,” “should,” “would,” “plan,” “predict,” “potential,” “seem,” “seek,” “future,” “outlook,” “project,” “will likely result” and similar expressions that predict or indicate future events or trends or that are not statements of historical matters. All statements, other than statements of present or historical fact included in this press release, are forward-looking statements, including statements regarding the use of our LiDAR sensors in industrial segments and port automation systems and the ability of our sensors to reduce false alarm rates. These forward-looking statements involve significant risks and uncertainties that could cause actual results to differ materially from expected results. Most of these factors are outside Quanergy’s control and are difficult to predict. Factors that may cause such differences include, but are not limited to: changes in domestic and foreign business, market, financial, political and legal conditions; the overall level of consumer demand for Quanergy’s products; general economic conditions and other factors affecting consumer confidence, preferences, and behavior; disruption and volatility in the global currency, capital, and credit markets; the ability to maintain the listing of Quanergy’s securities on the New York Stock Exchange; the financial strength of Quanergy’s customers; Quanergy’s ability to implement its business strategy; changes in governmental regulation, Quanergy’s exposure to litigation claims and other loss contingencies; disruptions and other impacts to Quanergy’s business, as a result of the COVID-19 global pandemic and government actions and restrictive measures implemented in response; stability of Quanergy’s suppliers, as well as consumer demand for its products, in light of disease epidemics and health-related concerns such as the COVID-19 global pandemic; the impact that global climate change trends may have on Quanergy and its suppliers and customers; Quanergy’s ability to protect patents, trademarks and other intellectual property rights; any breaches of, or interruptions in, Quanergy’s information systems; fluctuations in the price, availability and quality of electricity and other raw materials and contracted products as well as foreign currency fluctuations; Quanergy’s ability to utilize potential net operating loss carryforwards; changes in tax laws and liabilities, tariffs, legal, regulatory, political and economic risks; and other risks and uncertainties indicated in Quanergy’s filings with the U.S. Securities and Exchange Commission. In addition, forward-looking statements reflect Quanergy’s expectations, plans or forecasts of future events and views only as of the date of this press release. Quanergy anticipates that subsequent events and developments will cause its assessments to change. However, while Quanergy may elect to update these forward-looking statements at some point in the future, Quanergy specifically disclaims any obligation to do so, except as required by law.

View source version on businesswire.com: https://www.businesswire.com/news/home/20220802005400/en/

Media Contact

Shannon Van Every

[email protected]

Investors:

[email protected]

KEYWORDS: California North America United States Asia Pacific Europe China

INDUSTRY KEYWORDS: Data Management Technology IOT (Internet of Things) Maritime Semiconductor Transport Security Software Audio/Video Internet Hardware

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Quanergy’s M-Series LiDAR Sensors Help Busy Chinese Port Reduce Accidents and False Alarms (Graphic: Business Wire)

August 2, 2022 6:18 am

Axcella Announces Highly Promising Results from Phase 2a Placebo Controlled Clinical Trial for Long COVID

Axcella Announces Highly Promising Results from Phase 2a Placebo Controlled Clinical Trial for Long COVID

Subjects with Long COVID receiving AXA1125 experienced a clinically and statistically significant improvement in mental (p=0.0097) and physical (p=0.0097) fatigue scores compared to placebo subjects

Responders to AXA1125 demonstrated significantly improved scores during a 6 minute walk test

No emergent adverse events (AEs) or serious adverse events (SAEs) occurred

Regulatory meetings are planned to discuss a path to registration trial

Axcella to host a conference call today at 8:00 a.m. ET; To register, click here

CAMBRIDGE, Mass.–(BUSINESS WIRE)–
Axcella Therapeutics (Nasdaq: AXLA), a clinical-stage biotechnology company pioneering novel approaches to treating complex diseases using multi-targeted endogenous metabolic modulator (EMM) compositions, today reported topline results from the Phase 2a randomized, double-blind, placebo-controlled investigation to evaluate the efficacy and safety of AXA1125 in patients with fatigue related to Long COVID.

Long COVID is a persistent and growing challenge of the pandemic, affecting an estimated one hundred million patients worldwide with fatigue as the most common symptom reported. The recent Congressional subcommittee on Long COVID stated that one million Americans have been pushed out of work due to Long COVID. Additionally, it was stated that Long COVID contributed to approximately $1 trillion in lost earnings and $529 billion in increased medical spending.

We believe effective treatment of this complex and often debilitating disease requires addressing the underlying dysregulation of multiple biological pathways. Given the lack of therapeutic options for Long COVID patients and based on our understanding of AXA1125’s positive impact on mitochondrial function, bioenergetics, and inflammation, Axcella conducted a placebo-controlled interventional study in collaboration with clinical researchers at University of Oxford as an exploratory trial to test the hypothesis that administration of AXA1125 could ameliorate fatigue symptoms of Long COVID. Bill Hinshaw, CEO of Axcella, remarked, “At Axcella, once we understood we had a potential Long COVID intervention we acted rapidly to test the hypothesis that we could address the high and growing need that exists for patients living with debilitating Long COVID fatigue. We are delighted to report that we have meaningful clinical results as well as an increased understanding on the best endpoints for future, potentially registrational studies and look forward to engaging with the regulatory authorities around the next steps in clinical development.”

Since established endpoints for Long COVID do not exist, the study incorporated multiple endpoints for prioritization, selection, and use in a future registration trial to assess the effects of AXA1125 compared to placebo in subjects with moderate to severe fatigue. Safety and tolerability were also studied.

In the study, 41 subjects were enrolled and randomized to receive either 67.8 grams per day of AXA1125 (N=21) or a matched placebo (N=20) in two divided doses for 28 days, with a one-week safety follow-up period. All 41 subjects who started the study remained in the study to completion. Endpoints included phosphocreatine recovery time (PCr_τ) following moderate exercise as assessed by 31P-magnetic resonance spectroscopy (MRS), which was included to assess mitochondrial function, and most importantly, clinically relevant endpoints including self-reported mental and physical fatigue as assessed by the Chalder Fatigue Questionnaire (CFQ-11), 6 minute walk test (6MWT) as well as serum lactate levels. The CFQ-11 is a validated patient reported outcome measure of fatigue that has been used in measuring patient impact in fatigue states such as chronic fatigue syndrome.

Subjects who received AXA1125 had improvements in measures of mental and physical fatigue that were both highly statistically significant and clinically relevant compared to those who received placebo. Mean changes in total, physical and mental scores in the CFQ-11 versus placebo were -4.30 (p=0.0039), -2.94 (p=0.0097) and -1.32 (p=0.0097), respectively. Clinically meaningful shifts in the severity of physical and mental fatigue were also noted in subjects who received AXA1125 compared to those who received placebo. There was a statistically significant correlation of improvement in fatigue score and greater distance achieved in the 6MWT (p=0.0027), an objective measure of physical ability, only observed in subjects who received AXA1125.

Baseline PCr_τ among all subjects was significantly higher and had a higher degree of inter-subject variability (92.46 Seconds +35.3 Seconds) than previously reported in the literature. These findings support the hypothesis that there is significant mitochondrial dysfunction in these patients but limits the utility of this parameter in a clinical trial. There was no significant difference on the primary outcome measure of PCr_τ following moderate exercise between subjects receiving AXA1125 and placebo. There was a notable trend toward significant improvement in serum lactate levels after a 6MWT in AXA1125 subjects (p=0.0730). AXA1125 was safe and well tolerated with no significant adverse events reported by study subjects.

“The statistically significant improvement in reported mental and physical fatigue among study participants receiving AXA1125 is a very encouraging finding for Long COVID patients, who often experience extreme and constant fatigue throughout their day,” said study leader, Dr. Betty Raman, Associate Professor of Cardiovascular Medicine at the Radcliffe Department of Medicine, University of Oxford.

Karim Azer PhD, Axcella’s VP, Platform and Discovery stated, “The results of this trial encourage us to further evaluate the multi-targeted effects of AXA1125 on mitochondrial and related biomarkers to advance our understanding of the benefits AXA1125 delivers to Long COVID patients. Preliminary analysis including mitochondrial, inflammatory, and endothelial environment biomarker work provides additional data strengthening the core rationale for AXA-1125’s compelling clinical benefits.”

Dr. Jason Maley, Director of Beth Israel Deaconess Medical Center Critical Illness and COVID-19 Survivorship Program, remarked that, “This is the first pharmaceutical agent to demonstrate improved outcomes for patients with Long COVIDin a randomized controlled trial and suggests that AXA1125 may play an important part in the long-term treatment of these patients as they seek to return to the life they had before the infection. On behalf of the innumerable patients urgently seeking therapies for the debilitating symptoms of Long COVID, I am excited to see the continued development of AXA1125.”

Conference Call Information

Register for the call by clicking here.

A live webcast of the call, as well as a replay, will be available on the Events and Presentations section on the Company’s website: https://ir.axcellatx.com/events-and-presentations.

Internet Posting of Information

Axcella uses the “Investors and News” section of its website, www.axcellatx.com, as a means of disclosing material nonpublic information, to communicate with investors and the public, and for complying with its disclosure obligations under Regulation FD. Such disclosures include, but may not be limited to, investor presentations and FAQs, Securities and Exchange Commission filings, press releases, and public conference calls and webcasts. The information that we post on our website could be deemed to be material information. As a result, we encourage investors, the media and others interested to review the information that we post there on a regular basis. The contents of our website shall not be deemed incorporated by reference in any filing under the Securities Act of 1933, as amended.

About Axcella Therapeutics (Nasdaq: AXLA)

Axcella is a clinical-stage biotechnology company pioneering a new approach to treat complex diseases using compositions of endogenous metabolic modulators (EMMs). The company’s product candidates are comprised of EMMs and derivatives that are engineered in distinct combinations and ratios to restore cellular homeostasis in multiple key biological pathways and improve cellular energetic efficiency. Axcella’s pipeline includes lead therapeutic candidates in Phase 2 development for the treatment of Long COVID and non-alcoholic steatohepatitis (NASH). The company’s unique model allows for the evaluation of its EMM compositions through non-IND clinical studies or IND clinical trials. For more information, please visit www.axcellatx.com.

Forward-Looking Statements

This press release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, as amended, including, without limitation, statements regarding interest that may ensue in the Company’s product candidates or securities following announcement of the Company’s recent clinical trial results and the timing of the Company’s clinical trial data readouts and next steps for its clinical programs, including a potential registration trial of AXA1125 for the treatment of Long COVID. The words “may,” “will,” “could,” “would,” “should,” “expect,” “plan,” “anticipate,” “intend,” “believe,” “estimate,” “predict,” “project,” “potential,” “continue,” “target” and similar expressions are intended to identify forward-looking statements, although not all forward-looking statements contain these identifying words. Any forward-looking statements in this press release are based on management’s current expectations and beliefs and are subject to a number of risks, uncertainties and important factors that may cause actual events or results to differ materially from those expressed or implied by any forward-looking statements contained in this press release, including, without limitation, those related to the belief that mitochondrial dysfunction is a key driver of Long COVID induced fatigue, potential impact of COVID-19 on the Company’s ability to conduct and complete its ongoing or planned clinical studies and clinical trials in a timely manner or at all due to patient or principal investigator recruitment or availability challenges, clinical trial site shutdowns or other interruptions and potential limitations on the quality, completeness and interpretability of data the Company is able to collect in its clinical trials of AXA1125, other potential impacts of COVID-19 on the Company’s business and financial results, including with respect to its ability to raise additional capital and operational disruptions or delays, changes in law, regulations, or interpretations and enforcement of regulatory guidance, whether data readouts support the Company’s clinical trial plans and timing, clinical trial design and target indications for AXA1125, the clinical development and safety profile of AXA1125 and its therapeutic potential, whether and when, if at all, the Company’s product candidates will receive approval from the FDA or other comparable regulatory authorities, potential competition from other biopharma companies in the Company’s target indications, and other risks identified in the company’s SEC filings, including Axcella’s Annual Report on Form 10-K, Quarterly Reports on Form 10-Q and subsequent filings with the SEC. The Company cautions you not to place undue reliance on any forward-looking statements, which speak only as of the date they are made. Axcella disclaims any obligation to publicly update or revise any such statements to reflect any change in expectations or in events, conditions or circumstances on which any such statements may be based, or that may affect the likelihood that actual results will differ from those set forth in the forward-looking statements. Any forward-looking statements contained in this press release represent the company’s views only as of the date hereof and should not be relied upon as representing its views as of any subsequent date. The Company explicitly disclaims any obligation to update any forward-looking statements.

Dr. Maley receives compensation as a consultant for the Company.

View source version on businesswire.com: https://www.businesswire.com/news/home/20220802005461/en/

Company

Ashley Robinson

[email protected]

(617) 430-7577

KEYWORDS: United States North America Massachusetts

INDUSTRY KEYWORDS: COVID-19 Infectious Diseases FDA Clinical Trials Biotechnology Managed Care Health Pharmaceutical General Health

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