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Endeavor Releases First Quarter 2023 Results

Announces Plan to Repurchase Shares and Issue First-Ever Quarterly Dividend

BEVERLY HILLS, Calif.–(BUSINESS WIRE)–
Endeavor Group Holdings, Inc. (NYSE: EDR) (“Endeavor”, “EGH”, or the “Company”), a global sports and entertainment company, today released its financial results for the quarterly period ended March 31, 2023.

Highlights

• Announced two significant transactions in April:
  • Transformational deal to combine UFC and WWE to form a new, publicly listed company

  • Agreement to sell IMG Academy for an enterprise value of $1.25 billion

• Expect to commence an event-driven share repurchase of up to $300 million of Class A common stock

• Plan to begin making quarterly cash dividend payments

• Record Q1 revenue and Adjusted EBITDA for Owned Sports Properties segment

• Saw heightened demand for events, including record attendance and sponsorship sales at the Miami Open

Q1 2023 Consolidated Financial Results

• Revenue: $1.597 billion

• Net income: $36.3 million

• Adjusted EBITDA: $306.4 million

“This quarter, we continued to deliver solid results and set a number of financial and attendance records across our owned sports properties and marquee events,” said Ariel Emanuel, CEO, Endeavor. “Our agreement to sell IMG Academy, together with the planned share repurchase and quarterly dividend announced today, are strong examples of our commitment to maximizing return for our shareholders. We are excited about the unique opportunity the proposed combination of UFC and WWE presents, and remain focused on durable growth as we continue to execute our successful strategy in content and experiences.”

Segment Operating Results

• Owned Sports Properties segment revenue was $353.3 million for the quarter, up $56.6 million, or 19.1%, compared to the first quarter of 2022. Growth was primarily driven by an increase in media rights fees, sponsorships, commercial pay-per-view, and event-related revenue at UFC, primarily resulting from an additional Pay-Per-View event in the quarter, as well as more events with live audiences. Segment results also improved on increased ticket sales at PBR and increased revenue from PBR’s new team series. The segment’s Adjusted EBITDA was $185.7 million, up $36.9 million, or 24.8%, year-over-year.
• Events, Experiences & Rights segment revenue was $800.8 million for the quarter, up $19.9 million, or 2.5%, compared to the first quarter of 2022. Growth was primarily driven by record attendance and sponsorship sales at the Miami Open and growth at IMG Academy, as well as the addition this quarter of Barrett-Jackson, which was acquired in August 2022. Growth was partially offset by the discontinuation of On Location’s music festival business in Mexico, which accounted for $75 million in the prior-year quarter. The segment’s Adjusted EBITDA was $108.0 million for the quarter, down $18.0 million, or 14.3%, year-over-year.
• Representation segment revenue was $350.2 million for the quarter, down $7.1 million, or 2.0%, compared to the first quarter of 2022. The decrease in segment revenue was primarily attributable to $14 million of revenue recorded in the prior year quarter from the restricted Endeavor Content business, which was sold in January 2022. Segment revenue was also impacted by a decrease at our 160over90 business due to the disposition of certain contracts in the quarter, partially offset by revenue increases at WME. Adjusted EBITDA was $84.2 million for the quarter, down $17.5 million, or 17.2%, year-over-year.
• Sports Data & Technology segment revenue was $100.9 million, up $55.8 million, or 123.9%, compared to the first quarter of 2022. Growth was driven by the addition of OpenBet, which we acquired in September 2022, as well as growth at IMG ARENA. The segment’s Adjusted EBITDA was $4.5 million for the quarter, down $2.0 million, or 31.0%, year-over-year, which was affected by certain costs at IMG ARENA incurred in advance of the sales cycle.

2023 Full Year Guidance

• Revenue expected between $5.665 billion and $5.815 billion

• Adjusted EBITDA expected between $1.220 billion to $1.275 billion

• Updated guidance primarily reflects expected sale of IMG Academy

Balance Sheet and Liquidity

At March 31, 2023, cash and cash equivalents totaled $718.7 million, compared to $767.8 million at December 31, 2022. Total debt was $5.151 billion at March 31, 2023, compared to $5.169 billion at December 31, 2022. Upon close of the sale of IMG Academy, Endeavor expects to commence repurchases of up to $300 million under an event-driven share repurchase authorization and pay down an additional $50 million of debt. Endeavor also expects to start making quarterly cash dividends of up to $25 million from Endeavor Operating Company to its common unit holders, including EGH, which, in turn, would dividend its portion each quarter to all holders of Endeavor’s Class A common stock. Endeavor expects to declare and pay the first dividend in the third quarter of 2023.

For further information regarding the Company’s financial results, as well as certain non-GAAP financial measures, and the reconciliations thereof, please refer to the following pages of this release or visit the Company’s Investor Relation site at investor.endeavorco.com.

Webcast Details

Endeavor will host an audio webcast to discuss its results and provide a business update at 2 p.m. PT / 5 p.m. ET today. The event can be accessed at: https://events.q4inc.com/attendee/338510069

The link to the webcast, as well as a recording, will also be available within the News/Events section of investor.endeavorco.com.

Forward-Looking Statements

This press release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. We intend such forward-looking statements to be covered by the safe harbor provisions for forward-looking statements contained in Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. All statements in this press release that do not relate to matters of historical fact should be considered forward-looking statements, including the Company’s guidance for full year 2023, its expected long-term value and market position, contemplated debt repayment, repurchases under the share repurchase authorization and the commencement of declaring a quarterly cash dividend. The words “believe,” “may,” “will,” “estimate,” “potential,” “continue,” “anticipate,” “intend,” “expect,” “could,” “would,” “project,” “plan,” “target,” and similar expressions are intended to identify forward-looking statements, though not all forward-looking statements use these words or expressions. These forward-looking statements are based on management’s current expectations. These statements are neither promises nor guarantees and involve known and unknown risks, uncertainties and other important factors that may cause actual results, performance or achievements to be materially different from what is expressed or implied by the forward-looking statements, including, but not limited to: changes in public and consumer tastes and preferences and industry trends; Endeavor’s ability to adapt to or manage new content distribution platforms or changes in consumer behavior; Endeavor’s dependence on the relationships of its management, agents, and other key personnel with clients; Endeavor’s dependence on key relationships with television and cable networks, satellite providers, digital streaming partners, corporate sponsors, and other distribution partners; risks related to Endeavor’s gaming business and applicable regulatory requirements; risks related to Endeavor’s organization and structure; and other important factors discussed in Part I, Item 1A “Risk Factors” in Endeavor’s Annual Report on Form 10-K for the fiscal year ended December 31, 2022, as any such factors may be updated from time to time in the Company’s other filings with the SEC, including without limitation, the Company’s Quarterly Report on Form 10-Q for the quarterly period ended March 31, 2023, accessible on the SEC’s website at www.sec.gov and Endeavor’s Investor Relations site at investor.endeavorco.com. Forward-looking statements speak only as of the date they are made and, except as may be required under applicable law, Endeavor undertakes no obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.

Additional Information Regarding Share Repurchase Authorization and Quarterly Dividend

Repurchases under the share repurchase authorization may be made in the open market, in privately negotiated transactions or otherwise, with the amount and timing of repurchases to be determined at Endeavor’s discretion, depending on market conditions and corporate needs and would be structured to occur in accordance with applicable federal securities laws. This authorization has no expiration and may be modified, suspended or terminated at any time at Endeavor’s discretion. It also does not obligate Endeavor to acquire any particular amount of Class A common stock. In addition, the ultimate amount of each quarterly dividend referenced above will be subject to market conditions and cash flow requirements.

Non-GAAP Financial Measures

We refer to certain financial measures that are not recognized under United States generally accepted accounting principles (“GAAP”). Please see “Note Regarding Non-GAAP Financial Measures” and the reconciliation tables below for additional information and a reconciliation of the Non-GAAP financial measures to the most comparable GAAP financial measures.

About Endeavor

Endeavor is a global sports and entertainment company, home to many of the world’s most dynamic and engaging storytellers, brands, live events and experiences. The company is comprised of industry leaders including entertainment agency WME; sports, fashion, events and media company IMG; and premier mixed martial arts organization UFC. The Endeavor network specializes in talent representation, sports operations & advisory, event & experiences management, media production & distribution, experiential marketing and brand licensing.

Website Disclosure

Investors and others should note that we announce material financial and operational information to our investors using press releases, SEC filings and public conference calls webcasts, as well as our Investor Relations site at investor.endeavorco.com. We may also use our website as a distribution channel of material Company information. In addition, you may automatically receive email alerts and other information about Endeavor when you enroll your email address by visiting the “Investor Email Alerts” option under the Resources tab on investor.endeavorco.com.

Consolidated Statements of Operations (Unaudited) (In thousands, except share and per share data)
		Three Months Ended March 31,
			2023				2022
Revenue		$	1,596,837			$	1,473,763
Operating expenses:
Direct operating costs			724,282				694,641
Selling, general and administrative expenses			669,213				540,206
Insurance recoveries			–				(993	)
Depreciation and amortization			66,751				65,994
Total operating expenses			1,460,246				1,299,848
Operating income			136,591				173,915
Other (expense) income:
Interest expense, net			(85,097	)			(59,272	)
Tax receivable agreement liability adjustment			2,344				(53,497	)
Other income, net			24,433				459,941
Income before income taxes and equity losses of affiliates			78,271				521,087
Provision for (benefit from) income taxes			35,470				(17,234	)
Income before equity losses of affiliates			42,801				538,321
Equity losses of affiliates, net of tax			(6,546	)			(20,655	)
Net income			36,255				517,666
Less: Net income attributable to non-controlling interests			28,224				198,120
Net income attributable to Endeavor Group Holdings, Inc.		$	8,031			$	319,546
Earnings per share of Class A common stock:
Basic		$	0.03			$	1.19
Diluted		$	0.03			$	1.16
Weighted average number of shares used in computing earnings per share:
Basic			291,936,777				268,489,176
Diluted(1)			295,285,241				443,038,617
(1) The diluted weighted average number of shares of 295,285,241 for the three months ended March 31, 2023 includes weighted average Class A common shares outstanding, plus an assumed exchange of Endeavor Profits Units into 714,931 shares of the Company’s Class A common stock and additional shares from Stock Options, RSUs and Phantom Units, as noted in the table below:
Weighted average Class A Common Shares outstanding – Basic			291,936,777
Additional shares assuming exchange of EOC Profits Units			714,931
Additional shares from RSUs, Stock Options and Phantom Units, as calculated using the treasury stock method			2,633,533
Weighted average Class A Common Shares outstanding – Diluted			295,285,241
Securities that are anti-dilutive for the three months ended March 31, 2023, are additional shares based on an assumed exchange of Endeavor Manager Units and Endeavor Operating Units into 158,796,941 shares, additional shares based on an assumed exchange of 12,488,885 Endeavor Profits Units, as well as additional shares from Stock Options, RSUs and redeemable non-controlling interests.

Segment Results (Unaudited) (In thousands)
		Three Months Ended March 31,
		2023				2022
Revenue:
Owned Sports Properties		$	353,289			$	296,689
Events, Experiences & Rights			800,786				780,935
Representation			350,240				357,321
Sports Data & Technology			100,859				45,043
Eliminations			(8,337	)			(6,225	)
Total Revenue		$	1,596,837			$	1,473,763
Adjusted EBITDA:
Owned Sports Properties		$	185,671			$	148,741
Events, Experiences & Rights			107,991				126,001
Representation			84,206				101,705
Sports Data & Technology			4,472				6,482
Corporate			(75,948	)			(68,480	)

Consolidated Balance Sheets (Unaudited) (In thousands, except share data)
		March 31,				December 31,
			2023				2022
ASSETS
Current Assets:
Cash and cash equivalents		$	718,658			$	767,828
Restricted cash			267,605				278,165
Accounts receivable (net of allowance for doubtful accounts of $57,128 and $54,766, respectively)			991,618				917,000
Deferred costs			283,326				268,524
Assets held for sale			5,984				12,013
Other current assets			271,018				293,206
Total current assets			2,538,209				2,536,736
Property and equipment, net			711,589				696,302
Operating lease right-of-use assets			337,422				346,550
Intangible assets, net			2,190,078				2,205,583
Goodwill			5,302,070				5,284,697
Investments			348,548				336,973
Deferred income taxes			804,981				771,382
Other assets			386,793				325,619
Total assets		$	12,619,690			$	12,503,842
LIABILITIES, REDEEMABLE INTERESTS AND SHAREHOLDERS’ EQUITY
Current Liabilities:
Accounts payable		$	615,232			$	600,605
Accrued liabilities			531,381				525,239
Current portion of long-term debt			88,686				88,309
Current portion of operating lease liabilities			68,673				65,381
Deferred revenue			730,034				716,147
Deposits received on behalf of clients			247,776				258,414
Liabilities held for sale			—				2,672
Current portion of tax receivable agreement liability			154,893				50,098
Other current liabilities			106,359				107,675
Total current liabilities			2,543,034				2,414,540
Long-term debt			5,062,508				5,080,237
Long-term operating lease liabilities			314,556				327,888
Long-term tax receivable agreement liability			842,935				961,623
Other long-term liabilities			459,693				412,982
Total liabilities			9,222,726				9,197,270
Commitments and contingencies
Redeemable non-controlling interests			254,239				253,079
Shareholders’ Equity:
Class A common stock, $0.00001 par value; 5,000,000,000 shares authorized; 299,352,355 and 290,541,729 shares issued and outstanding as of March 31, 2023 and December 31, 2022, respectively			2				2
Class B common stock, $0.00001 par value; 5,000,000,000 shares authorized; none issued and outstanding as of March 31, 2023 and December 31, 2022			—				—
Class C common stock, $0.00001 par value; 5,000,000,000 shares authorized; none issued and outstanding as of March 31, 2023 and December 31, 2022			—				—
Class X common stock, $0.00001 par value; 4,983,448,411 and 4,987,036,068 shares authorized; 175,912,198 and 182,077,479 shares issued and outstanding as of March 31, 2023 and December 31, 2022, respectively			1				1
Class Y common stock, $0.00001 par value; 989,681,838 and 997,261,325 shares authorized; 227,523,031 and 227,836,134 shares issued and outstanding as of March 31, 2023 and December 31, 2022, respectively			2				2
Additional paid-in capital			2,248,015				2,120,794
Accumulated deficit			(208,188	)			(216,219	)
Accumulated other comprehensive loss			(14,997	)			(23,736	)
Total Endeavor Group Holdings, Inc. shareholders’ equity			2,024,835				1,880,844
Nonredeemable non-controlling interests			1,117,890				1,172,649
Total shareholders’ equity			3,142,725				3,053,493
Total liabilities, redeemable interests and shareholders’ equity		$	12,619,690			$	12,503,842

Note Regarding Non-GAAP Financial Measures

This press release includes financial measures that are not calculated in accordance with United States generally accepted accounting principles (“GAAP”), including Adjusted EBITDA and Adjusted EBITDA Margin.

Adjusted EBITDA is a non-GAAP financial measure and is defined as net income (loss), excluding income taxes, net interest expense, depreciation and amortization, equity-based compensation, merger, acquisition and earn-out costs, certain legal costs, restructuring, severance and impairment charges, certain non-cash fair value adjustments, certain equity earnings, tax receivable agreement liability adjustment, and certain other items, when applicable. Adjusted EBITDA margin is a non-GAAP financial measure defined as Adjusted EBITDA divided by Revenue.

Management believes that Adjusted EBITDA is useful to investors as it eliminates the significant level of non-cash depreciation and amortization expense that results from our capital investments and intangible assets recognized in business combinations, and improves comparability by eliminating the significant level of interest expense associated with our debt facilities, as well as income taxes and the tax receivable agreement, which may not be comparable with other companies based on our tax and corporate structure.

Adjusted EBITDA and Adjusted EBITDA margin are used as the primary bases to evaluate our consolidated operating performance.

Adjusted EBITDA, and Adjusted EBITDA margin have limitations as analytical tools, and you should not consider them in isolation or as a substitute for analysis of our results as reported under GAAP. Some of these limitations are:

• they do not reflect every cash expenditure, future requirements for capital expenditures, or contractual commitments;

• Adjusted EBITDA does not reflect the significant interest expense or the cash requirements necessary to service interest or principal payments on our debt;

• although depreciation and amortization are non-cash charges, the assets being depreciated and amortized will often have to be replaced or require improvements in the future, and Adjusted EBITDA and Adjusted EBITDA margin do not reflect any cash requirement for such replacements or improvements; and

• they are not adjusted for all non-cash income or expense items that are reflected in our statements of cash flows.

We compensate for these limitations by using Adjusted EBITDA and Adjusted EBITDA margin along with other comparative tools, together with GAAP measurements, to assist in the evaluation of operating performance.

Adjusted EBITDA and Adjusted EBITDA margin should not be considered substitutes for the reported results prepared in accordance with GAAP and should not be considered in isolation or as alternatives to net income (loss) as indicators of our financial performance, as measures of discretionary cash available to us to invest in the growth of our business or as measures of cash that will be available to us to meet our obligations. Although we use Adjusted EBITDA and Adjusted EBITDA margin as financial measures to assess the performance of our business, such use is limited because it does not include certain material costs necessary to operate our business. Our presentation of Adjusted EBITDA and Adjusted EBITDA margin should not be construed as indications that our future results will be unaffected by unusual or nonrecurring items. These non-GAAP financial measures, as determined and presented by us, may not be comparable to related or similarly titled measures reported by other companies. Set forth below are reconciliations of our most directly comparable financial measures calculated in accordance with GAAP to these non-GAAP financial measures on a consolidated basis.

A reconciliation of the Company’s Adjusted EBITDA guidance to the most directly comparable GAAP financial measure cannot be provided without unreasonable efforts and is not provided herein because of the inherent difficulty in forecasting and quantifying certain amounts that are necessary for such reconciliations, including income taxes, equity-based compensation, merger, acquisition and earn-out costs, certain legal costs, restructuring, severance and impairment charges, certain non-cash fair value adjustments, certain equity earnings, tax receivable agreement liability adjustment, and certain other items reflected in our reconciliation of historical Adjusted EBITDA, the amounts of which, could be material.

Adjusted EBITDA (Unaudited) (In thousands)
		Three Months Ended March 31,
			2023				2022
Net income		$	36,255			$	517,666
Provision for (benefit from) income taxes			35,470				(17,234	)
Interest expense, net			85,097				59,272
Depreciation and amortization			66,751				65,994
Equity-based compensation expense (1)			78,691				50,856
Merger, acquisition and earn-out costs (2)			14,534				12,794
Certain legal costs (3)			2,422				1,002
Restructuring, severance and impairment (4)			8,200				518
Fair value adjustment – equity investments (5)			(713	)			(1,653	)
Equity method losses – Learfield IMG College and Endeavor Content (6)			8,523				24,404
Gain on sale of the restricted Endeavor Content business (7)			—				(463,641	)
Tax receivable agreement liability adjustment (8)			(2,344	)			53,497
Other (9)			(26,494	)			10,974
Adjusted EBITDA		$	306,392			$	314,449
Net income margin			2.3	%			35.1	%
Adjusted EBITDA margin			19.2	%			21.3	%

_________
		(1)		Equity-based compensation represents primarily non-cash compensation expense associated with our equity-based compensation plans.
				The increase for the three months ended March 31, 2023 as compared to the three months ended March 31, 2022 was primarily due to grants issued under the Endeavor Group Holdings, Inc.’s 2021 Incentive Award Plan during the three months ended March 31, 2023. Equity-based compensation was recognized in all segments and Corporate for three months ended March 31, 2023 and 2022.
		(2)		Includes (i) certain costs of professional advisors related to mergers, acquisitions, dispositions or joint ventures and (ii) fair value adjustments for contingent consideration liabilities related to acquired businesses and compensation expense for deferred consideration associated with selling shareholders that are required to retain our employees.
				Such costs for the three months ended March 31, 2023 primarily related to professional advisor costs, which were approximately $8 million and related to our Events, Experiences & Rights and Representation segments and Corporate. Fair value adjustments for contingent consideration liabilities related to acquired businesses and acquisition earn-out adjustments of approximately $4 million, which primarily related to our Events, Experiences & Rights, Representation and Sport Data & Technology segments.
				Such costs for the three months ended March 31, 2022 primarily related to fair value adjustments for contingent consideration liabilities related to acquired businesses and acquisition earn-out adjustments of approximately $8 million, which primarily related to our Events, Experiences & Rights and Representation segments. Professional advisor costs were approximately $5 million and related to all of our segments.
		(3)		Includes costs related to certain litigation or regulatory matters in each of our segments and Corporate.
		(4)		Includes certain costs related to our restructuring activities and non-cash impairment charges.
				Such costs for the three months ended March 31, 2023 primarily relates to the restructuring expenses in our Events, Experiences & Rights and Representation segments and Corporate.
				Such costs for the three months ended March 31, 2022 primarily relates to the restructuring expenses in our Events, Experiences & Rights and Representation segments.
		(5)		Includes the net change in fair value for certain equity investments with and without readily determinable fair values, based on observable price changes.
		(6)		Relates to losses from the 20% interest we retained in the restricted Endeavor Content business, which we sold in January 2022. For the three months ended March, 31, 2022, also relates to equity method losses from our investment in Learfield IMG College.
		(7)		Relates to the gain recorded for the sale of the restricted Endeavor Content business, net of transactions costs of $15.0 million.
		(8)		For the three months ended March 31, 2023, includes a $2.3 million benefit for the tax receivable agreement liability related to a change in estimates related to future TRA payments.
				For the three months ended March, 31, 2022, includes a $53.5 million expense for the tax receivable agreement liability related to the expected realization of certain tax benefits after concluding that such TRA payments would be probable based on estimates of future taxable income over the terms of the TRA.
		(9)		For the three months ended March 31, 2023, other was comprised primarily of gains of approximately $10 million on foreign currency exchange transactions, which related to all of our segments and Corporate; gains of approximately $6 million on the sales of certain businesses, which relates to our Events, Experiences & Rights segment; a gain of approximately $5 million from the resolution of a contingency; and a gain of approximately $3 million related to change in the fair value of forward foreign exchange contracts, which related to our Events, Experiences & Rights segment and Corporate.
				For the three months ended March 31, 2022, other costs were comprised primarily of losses of approximately $5 million on foreign exchange transactions, which related to all of our segments and Corporate, an approximately $1 million loss related to change in the fair value of forward foreign exchange contracts, which related to Corporate and an approximately $1 million loss on disposal of an asset related to our Events, Experiences & Rights segment.

 

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KEYWORDS: California United States North America

INDUSTRY KEYWORDS: Licensing (Sports) Sports Entertainment Marketing Communications Events/Concerts Other Entertainment Martial Arts Licensing (Entertainment)

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Radius Global Infrastructure Reports First Quarter 2023 Results

Revenue Increased 35% YoY

NEW YORK–(BUSINESS WIRE)–
Radius Global Infrastructure, Inc. (Nasdaq: RADI) (“Radius” or the “Company”), one of the largest international owners and acquirors of real property interests and contractual rights underlying essential digital infrastructure assets, today reported financial results for the quarter ended March 31, 2023.

Bill Berkman, Co-Chairman and CEO of Radius Global Infrastructure, commented:

“We generated quarterly revenue of $41.2 million in the first quarter of 2023, up 35% from the first quarter of 2022, with gross profit increasing to $39.3 million, up 32% year-over-year. In the first quarter, our Annualized In-Place Rents increased by 32% to $165.8 million. Our revenues are primarily triple net, inflation-linked rents underlying mission-critical communications sites. In the first quarter of 2023, we acquired 186 communication sites through cash investments in real property interests and related intangible assets of $43.7 million, resulting in Acquisition Capex¹ of $48.2 milion, which generated $3.7 million of annual rent. As of March 31, 2023, Radius has approximately $296.5 million of total cash and cash equivalents, restricted cash (including long-term restricted cash), and short-term investments.

RECENTLY ANNOUNCED TRANSACTION

As previously announced on March 1, 2023, Radius entered into a definitive agreement under which EQT Active Core Infrastructure (“EQT”) and the Public Sector Pension Investment Board (“PSP”), through certain of their controlled affiliates, will acquire the Company. This pending transaction is expected to close in the third quarter of 2023, subject to the satisfaction of certain closing conditions. For additional information relating to this pending transaction, please refer to the preliminary proxy statement on Schedule 14A filed with the Securities and Exchange Commission (the “SEC”) on April 7, 2023 and other relevant materials that the Company has filed and may file with the SEC in connection with this pending transaction.

QUARTERLY RESULTS

Revenue increased 35% to $41.2 million for the three months ended March 31, 2023, as compared to revenue of $30.6 million for the three months ended March 31, 2022. The increase was primarily attributable to the additional revenue streams acquired through investments in real property interests made during the past quarter, adjusted for foreign exchange rate effects.

Gross Profit rose 32% to $39.3 million during the three months ended March 31, 2023, as compared to gross profit of $29.8 million in the corresponding prior year period, reflecting a gross profit (which we also refer to as ground cash flow) margin of approximately 95% during the three months ending March 31, 2023. Ground cash flow margin was impacted by expenses associated with fee simple interests acquired, primarily for property taxes.

Annualized In-Place Rents (“AIPR”) increased to $165.8 million as of March 31, 2023, an increase of $40.4 million, or 32% over AIPR of $125.4 million as of March 31, 2022. On a constant currency basis, AIPR would have increased 35% year-over-year to $169.6 million as of March 31, 2023.

Investments in Real Property Interestsand Related Intangible Assets, as identified in the Company’s Consolidated Statements of Cash Flows, was $43.7 million and $73.1 million for the quarter ended March 31, 2023 and 2022, respectively, or a decrease of $29.4 million for the quarter ended March 31, 2023 over the prior period.

Acquisition Capex was $48.2 million and $74.6 million for the quarter ended March 31, 2023 and 2022, respectively, or a decrease of $26.4 million for the quarter ended March 31, 2023 over the prior period.

Please refer to the GAAP financial disclosures, reconciliations and comparisons to non-GAAP financial measurements set forth below and in the Company’s Form 10-Q for the quarter ended March 31, 2023.

LIQUIDITY

As of March 31, 2023, Radius had $296.5 million of total cash and cash equivalents, restricted cash (including long-term restricted cash), and short-term investments. Of this amount, approximately $273.4 million was available to deploy for asset acquisitions after excluding amounts that are required to be held in interest escrow accounts under certain long-term debt agreements.

OUTLOOK FOR 2023

As previously noted, the Company is not providing guidance with respect to the outlook for Acquisition Capex in 2023 in light of the pending transaction with EQT and PSP.

About the Company

Radius Global Infrastructure, Inc., through its various subsidiaries, is a multinational owner and acquiror of triple net rental streams and real properties leased to wireless operators, wired operators, wireless tower companies, and other digital infrastructure operators as part of their infrastructure required to deliver a wide range of services.

For further information see https://www.radiusglobal.com.

FORWARD-LOOKING STATEMENTS AND DISCLAIMERS

Certain matters discussed in this press release, including the attachments, contain forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), that are subject to risks and uncertainties. For these statements, we claim the protections of the safe harbor for forward-looking statements contained in such Sections. These forward-looking statements include information about possible or assumed future results of our business, financial condition, liquidity, capital expenditures, plans and objectives, including with respect to capital allocation and organizational matters, and information about our proposed transaction with certain affiliates of EQT and PSP. In some cases, these forward-looking statements can be identified by the use of forward-looking terminology, including the terms “believe,” “expect,” “anticipate,” “estimate,” “outlook,” “plan,” “continue,” “intend,” “should,” “may,” “will,” or similar expressions, their negative or other variations or comparable terminology.

Forward-looking statements are subject to significant risks and uncertainties and are based on current beliefs, assumptions and expectations based upon our historical performance and on our current plans, estimates and expectations in light of information available to us. Any forward-looking statement speaks only as of the date on which it is made. Except as required by law, we are not obligated to, and do not intend to, publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise. Forward-looking statements are subject to various risks and uncertainties and assumptions relating to our operations, financial results, financial condition, business, prospects, growth strategy, liquidity and our proposed transaction with certain affiliates of EQT and PSP. Actual results may differ materially from those set forth in the forward-looking statements. Given these risks and uncertainties, investors should not place undue reliance on forward-looking statements as a prediction of actual results.

Certain important factors that we think could cause our actual results to differ materially from expected results are summarized below. Other factors besides those summarized could also adversely affect us. We operate in a very competitive and rapidly changing environment. New risks and uncertainties emerge from time to time and it is not possible for management to predict all such risks and uncertainties or how they may affect us. In addition, we cannot assess the impact of each factor on our business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in any forward-looking statements.

Important other factors that could cause our actual results to differ materially from those expressed in or contemplated by the forward-looking statements include, but are not limited to: our proposed transaction with certain affiliates of EQT and PSP may not be completed in a timely manner or at all, including the risk that any required antitrust and foreign investment approvals are not obtained, are delayed or are subject to unanticipated conditions that could adversely affect us or the expected benefits of the proposed transaction or that the approval of our stockholders is not obtained; the possibility that any or all of the various conditions to the consummation of the proposed transaction may not be satisfied or waived, including the failure (a) to receive any required antitrust and foreign investment approvals from any applicable governmental entities (or any conditions, limitations or restrictions placed on such approvals) and (b) to satisfy conditions related to (i) there being no event of default under certain of the Company’s existing debt facilities, (ii) certain waivers of change of control provisions under certain of the debt agreements of the Company and its subsidiaries being in full force and effect at the closing, including the possibility that such waivers fail to be in full force and effect at the closing because any two of William H. Berkman, Scott G. Bruce and Richard I. Goldstein have ceased to continue in their current capacities as Chief Executive Officer, President and Chief Operating Officer of the Company, respectively, at the closing, and (iii) the Company having a specified minimum cash balance and the Company or any of its subsidiaries having an additional specified amount of additional cash, in each case at the closing; the possibility that compliance with the minimum cash condition to the consummation of the proposed transaction may limit the growth of the Company’s business, depending on the availability to the Company of other sources of capital that are permitted under the terms of the definitive agreement entered into in connection with the proposed transaction; the occurrence of any event, change or other circumstance that could give rise to the termination of the proposed transaction, including in circumstances that would require us to pay a termination fee or other expenses; the effect of the announcement or pendency of the proposed transaction on our ability to retain and hire key personnel, our ability to maintain the relationships with its customers, suppliers and others with whom it does business, or its operating results and business generally; risks related to diverting management’s attention from our ongoing business operations; the risk that stockholder litigation in connection with the proposed transaction may result in significant costs of defense, indemnification and liability; the extent that wireless carriers (mobile network operators, or “MNOs”) or tower companies consolidate their operations, exit the wireless communications business or share site infrastructure to a significant degree; the extent that new technologies reduce demand for wireless infrastructure; competition for assets; whether the tenant leases for the wireless communication tower, antennae or other digital communications infrastructure located on our real property interests are renewed with similar rates or at all; the extent of unexpected lease cancellations, given that most of the tenant leases associated with our assets may be terminated upon limited notice by the MNO or tower company and unexpected lease cancellations could materially impact cash flow from operations; economic, political, cultural, and regulatory risks and other risks to our operations, including risks associated with fluctuations in foreign currency exchange rates and local inflation rates; the effect of the Electronic Communications Code in the United Kingdom, which may limit the amount of lease income we generate in the United Kingdom; the extent that we continue to grow at an accelerated rate, which may prevent us from achieving profitability or positive cash flow at a company level (as determined in accordance with GAAP) for the foreseeable future, particularly given our history of net losses and negative net cash flow; the fact that we have incurred a significant amount of debt and may in the future incur additional indebtedness; the extent that the terms of our debt agreements limit our flexibility in operating our business; and the other factors, risks and uncertainties described in our Annual Report on Form 10-K for the fiscal year ended December 31, 2022 and in our subsequent filings under the Exchange Act.

RADIUS GLOBAL INFRASTRUCTURE, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited)

(in USD thousands, except share and per share amounts)

		Three months ended March 31, 2023				Three months ended March 31, 2022
Revenue		$	41,214			$	30,599
Cost of service			1,892				841
Gross profit			39,322				29,758
Operating expenses:
Selling, general and administrative			29,464				22,687
Share-based compensation			5,184				4,592
Amortization and depreciation			23,085				18,751
Impairment – decommissions			1,050				765
Total operating expenses			58,783				46,795
Operating loss			(19,461	)			(17,037	)
Other income (expense):
Realized and unrealized gain (loss) on foreign currency debt			(15,479	)			24,232
Interest expense			(17,671	)			(16,098	)
Other income (expense), net			3,215				1,092
Total other income (expense), net			(29,935	)			9,226
Loss before income tax expense (benefit)			(49,396	)			(7,811	)
Income tax expense (benefit)			(1,584	)			(3,166	)
Net loss			(47,812	)			(4,645	)
Net loss attributable to noncontrolling interest			(2,227	)			(208	)
Net loss attributable to common stockholders		$	(45,585	)		$	(4,437	)
Loss per common share:
Basic and diluted		$	(0.48	)		$	(0.05	)
Weighted average common shares outstanding:
Basic and diluted			95,821,985				92,104,971

See accompanying notes to condensed consolidated financial statements.

RADIUS GLOBAL INFRASTRUCTURE, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited)

(in USD thousands, except share and per share amounts)

		March 31, 2023					December 31, 2022
Assets
Current assets:
Cash and cash equivalents		$		197,879			$	224,258
Restricted cash				2,417				1,971
Short-term investments				34,612				39,205
Total cash, cash equivalents, restricted cash, and short-term investments				234,908				265,434
Trade receivables, net				11,317				8,200
Prepaid expenses and other current assets				29,747				28,773
Total current assets				275,972				302,407
Real property interests, net:
Right-of-use assets – finance leases, net				415,981				379,052
Telecom real property interests, net				1,582,164				1,569,676
Real property interests, net				1,998,145				1,948,728
Intangible assets, net				11,811				12,121
Property and equipment, net				1,291				1,241
Goodwill				80,509				80,509
Deferred tax asset				1,636				306
Restricted cash, long-term				61,595				88,054
Other long-term assets				21,209				20,124
Total assets		$		2,452,168			$	2,453,490
Liabilities and Stockholders’ Equity
Current liabilities:
Accounts payable and accrued expenses		$		44,121			$	48,767
Rent received in advance				33,938				26,551
Finance lease liabilities, current				14,392				15,589
Telecom real property interest liabilities, current				4,564				7,975
Total current liabilities				97,015				98,882
Finance lease liabilities				21,768				22,277
Telecom real property interest liabilities				4,076				4,483
Long-term debt, net of debt discount and deferred financing costs				1,521,802				1,503,352
Deferred tax liability				134,238				131,229
Other long-term liabilities				11,585				10,473
Total liabilities				1,790,484				1,770,696
Commitments and contingencies
Stockholders’ equity:
Series A Founder Preferred Stock, $0.0001 par value; 1,600,000 shares authorized; 1,600,000 shares issued and outstanding as of March 31, 2023 and December 31, 2022, respectively				—				—
Series B Founder Preferred Stock, $0.0001 par value; 1,386,033 shares authorized; 1,386,033 shares issued and outstanding as of March 31, 2023 and December 31, 2022, respectively				—				—
Class A Common Stock, $0.0001 par value; 1,590,000,000 shares authorized; 99,541,524 and 95,283,563 shares issued and outstanding as of March 31, 2023 and December 31, 2022, respectively				10				10
Class B Common Stock, $0.0001 par value; 200,000,000 shares authorized; 10,378,327 and 12,795,694 shares issued and outstanding as of March 31, 2023 and December 31, 2022, respectively				—				—
Additional paid-in capital				1,082,943				1,060,055
Accumulated other comprehensive loss				(64,622	)			(85,936	)
Accumulated deficit				(384,404	)			(338,819	)
Total stockholders’ equity attributable to Radius Global Infrastructure, Inc.				633,927				635,310
Noncontrolling interest				27,757				47,484
Total liabilities and stockholders’ equity			$	2,452,168			$	2,453,490

See accompanying notes to condensed consolidated financial statements.

RADIUS GLOBAL INFRASTRUCTURE, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)

(in USD thousands)

		Three months ended March 31, 2023				Three months ended March 31, 2022
Cash flows from operating activities:
Net loss		$	(47,812	)		$	(4,645	)
Adjustments to reconcile net loss to net cash used in operating activities:
Amortization and depreciation			23,085				18,751
Amortization of finance lease and telecom real property interest liabilities discount			460				367
Impairment – decommissions			1,050				765
Realized and unrealized gain on foreign currency debt			15,479				(24,232	)
Amortization of debt discount and deferred financing costs			1,715				1,106
Provision for bad debt expense			(64	)			98
Share-based compensation			5,184				4,592
Deferred income taxes			(3,446	)			(3,986	)
Change in assets and liabilities:
Trade receivables, net			(2,790	)			(1,707	)
Prepaid expenses and other assets			1,813				1,563
Accounts payable, accrued expenses and other long-term liabilities			(3,391	)			(1,309	)
Rent received in advance			6,700				3,978
Net cash used in operating activities			(2,017	)			(4,659	)
Cash flows from investing activities:
Investments in real property interests and related intangible assets			(43,688	)			(73,128	)
Advance deposits made for real property interest investments			(2,589	)			—
Proceeds from sales of real property interests			213				—
Proceeds from maturities of short-term investments			5,000				—
Purchases of property and equipment			(231	)			(195	)
Net cash used in investing activities			(41,295	)			(73,323	)
Cash flows from financing activities:
Borrowings under debt agreements			—				256,203
Repayments of term loans and other debt			—				(1,804	)
Debt issuance costs			—				(5,653	)
Proceeds from exercises of stock options			204				88
Repayments of finance lease and telecom real property interest liabilities			(11,075	)			(4,359	)
Net cash provided by (used in) financing activities			(10,871	)			244,475
Effect of change in foreign currency exchange rates on cash, cash equivalents and restricted cash			1,791				(6,426	)
Net change in cash and cash equivalents and restricted cash			(52,392	)			160,067
Cash and cash equivalents and restricted cash at beginning of period			314,283				632,193
Cash and cash equivalents and restricted cash at end of period		$	261,891			$	792,260
Supplemental disclosure of cash and non-cash transactions:
Cash paid for interest		$	18,008			$	15,459
Cash paid for income taxes		$	373			$	150

See accompanying notes to condensed consolidated financial statements.

Non-GAAP Financial Measures

We use certain additional financial measures not defined by generally accepted accounting principles in the United States (“GAAP”) that provide supplemental information we believe is useful to analysts and investors to evaluate our financial performance and ongoing results of operations, when considered alongside other GAAP measures such as net income, operating income and gross profit. These non-GAAP measures exclude the financial impact of items management does not consider in assessing our ongoing operating performance, and thereby facilitate review of our operating performance on a period-to-period basis.

EBITDA and Adjusted EBITDA

EBITDA and Adjusted EBITDA are non-GAAP measures. EBITDA is defined as net income (loss) before interest expense, income tax expense (benefit), and depreciation and amortization. Adjusted EBITDA is calculated by taking EBITDA and further adjusting for non-cash impairment—decommissions expense, realized and unrealized gains and losses on foreign currency debt, realized and unrealized foreign exchange gains/losses associated with non-debt transactions and balances denominated in a currency other than the functional currency, share-based compensation expense and transaction-related costs recorded in selling, general and administrative expenses incurred for incremental business acquisition pursuits (successful and unsuccessful) and related financing and integration activities. Management believes the presentation of EBITDA and Adjusted EBITDA provides valuable additional information for users of the financial statements in assessing our financial condition and results of operations. Each of EBITDA and Adjusted EBITDA has important limitations as analytical tools because they exclude some, but not all, items that affect net income, therefore the calculation of these financial measures may be different from the calculations used by other companies and comparability may therefore be limited. You should not consider EBITDA, Adjusted EBITDA or any of our other non-GAAP financial measures as an alternative or substitute for our results.

The following are reconciliations of EBITDA and Adjusted EBITDA to net income (loss), the most comparable GAAP measure:

(in thousands)		Three months ended March 31, 2023				Three months ended March 31, 2022
(unaudited)
Net loss		$	(47,812	)		$	(4,645	)
Amortization and depreciation			23,085				18,751
Interest expense			17,671				16,098
Income tax expense (benefit)			(1,584	)			(3,166	)
EBITDA			(8,640	)			27,038
Impairment – decommissions			1,050				765
Realized and unrealized (gain) loss on foreign currency debt			15,479				(24,232	)
Share-based compensation expense			5,184				4,592
Non-cash foreign currency adjustments			(34	)			405
Transaction-related costs			7,195				140
Adjusted EBITDA		$	20,234			$	8,708

Acquisition Capex

Acquisition Capex is a non-GAAP financial measure. Our payments for acquisitions of real property interests consist of either a one-time payment upon the acquisition or up-front payments with contractually committed payments made over a period of time, pursuant to each real property interest agreement. In all cases, we contractually acquire all rights associated with the underlying revenue-producing assets upon entering into the agreement to purchase the real property interest and records the related assets in the period of acquisition. Acquisition Capex therefore represents the total cash spent and committed to be spent for the acquisitions of revenue-producing assets during the period measured. Management believes the presentation of Acquisition Capex provides valuable additional information for users of the financial statements in assessing our financial performance and growth, as it is a comprehensive measure of our investments in the revenue-producing assets that we acquire in a given period. Acquisition Capex has important limitations as an analytical tool, because it excludes certain fixed and variable costs related to our selling, marketing and underwriting activities included in selling, general and administrative expenses in the condensed consolidated statements of operations, including corporate overhead expenses. Further, this financial measure may be different from calculations used by other companies and comparability may therefore be limited. You should not consider Acquisition Capex or any of the other non-GAAP measures we utilize as an alternative or substitute for our results.

The following is a reconciliation of Acquisition Capex to the amounts included as an investing cash flow in the condensed consolidated statements of cash flows for investments in real property interests and related intangible assets, the most comparable GAAP measure, which generally represents up-front payments made in connection the acquisition of these assets during the period. The primary adjustment to the comparable GAAP measure is “committed contractual payments for investments in real property interests and intangible assets,” which represents the total amount of future payments that we were contractually committed to make in connection with our acquisitions of real property interests and intangible assets that occurred during the period. Additionally, foreign exchange translation adjustments impact the determination of Acquisition Capex.

(in thousands)		Three months ended March 31, 2023				Three months ended March 31, 2022
(unaudited)
Investments in real property interests and related intangible assets		$	43,688			$	73,128
Committed contractual payments for investments in real property interests and intangible assets			5,279				4,123
Foreign exchange translation impacts and other			(748	)			(2,614	)
Acquisition Capex		$	48,219			$	74,637

Annualized In-Place Rents

Annualized in-place rents is a non-GAAP measure that measures performance based on annualized contractual revenue from the rents expected to be collected on leases owned and acquired (“in place”) as of the measurement date. Annualized in-place rents is calculated using the implied monthly revenue from all revenue producing leases that are in place as of the measurement date multiplied by twelve. Implied monthly revenue for each lease is calculated based on the most recent rental payment under such lease. Management believes the presentation of annualized in-place rents provides valuable additional information for users of the financial statements in assessing our financial performance and growth. In particular, management believes the presentation of annualized in-place rents provides a measurement at the applicable point of time as opposed to revenue, which is recorded in the applicable period on revenue-producing assets in place as they are acquired. Annualized in-place rents has important limitations as an analytical tool because it is calculated at a particular moment in time, the measurement date, but implies an annualized amount of contractual revenue. As a result, following the measurement date, among other things, the underlying leases used in calculating the annualized in-place rents financial measure may be terminated, new leases may be acquired, or the contractual rents payable under such leases may not be collected. In these respects, among others, annualized in-place rents differs from “revenue,” which is the closest comparable GAAP measure and which represents all revenues (contractual or otherwise) earned over the applicable period. Revenue is recorded as earned over the period in which the lessee is given control over the use of the wireless communication sites and recorded over the term of the lease. You should not consider annualized in-place rents or any of the other non-GAAP measures we utilize as an alternative or substitute for our results. The following is a comparison of annualized in-place rents to revenue, the most comparable GAAP measure:

(in thousands)		Three months ended March 31, 2023				Year ended December 31, 2022
(unaudited)
Revenue for year ended December 31						$	135,456
Annualized in-place rents as of December 31						$	157,553
Annualized in-place rents as of March 31		$	165,779

¹ Please see page 9 for a definition of Acquisition Capex and reconciliation to Investments in Real Property Interests and Related Intangible Assets, the most comparable GAAP measure.

View source version on businesswire.com: https://www.businesswire.com/news/home/20230509005961/en/

Investor Relations:

Jason Harbes, CFA

Email: [email protected]

Phone: 1-484-278-2667

KEYWORDS: New York United States North America

INDUSTRY KEYWORDS: Technology Residential Building & Real Estate Telecommunications Commercial Building & Real Estate Construction & Property Urban Planning

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Energy Vault Reports First Quarter 2023 Earnings Results

New project awards increased by ~$1 billion (2.8 GWh), of which ~$725 million (2 GWh) were gravity EVx systems

Recognized revenue of $11.4 million, in-line with expectations, and driven by construction progress of US-based BESS systems

GAAP gross margin of 21.2%, or $2.4 million, driven by the Company’s BESS project activity during the quarter

Reaffirm full-year 2023 financial guidance and project deliveries, including full-year revenue of $325 million to $425 million

On track for commissioning of first 100MWh commercial EVx, gravity-based energy storage system

First Quarter 2023 Financial Highlights

• Revenue of $11.4 million, in-line with expectations, and driven by continued construction progress on BESS system projects in the US.

• GAAP gross margin of 21.2%, or $2.4 million, driven by the Company’s BESS project activity during the quarter.

• Net loss of $(31.2) million.

• Adjusted EBITDA of $(19.0) million.

• Total cash and cash equivalents on the balance sheet of $197.0 million and zero debt as of March 31, 2023.

• Began execution on a new global relationship with Marsh, one of the world’s leading insurance brokers and risk advisors, to provide significant capital project surety and bonding capacity, inclusive Letters of Credit, on a fully non-collateralized cash basis allowing Energy Vault to convert remaining restricted cash balances from LOC’s to unrestricted cash.

• The Company reiterates full year 2023 financial guidance and continues to expect total revenue of $325 million to $425 million, gross margin of 10% to 15%, adjusted EBITDA of $(50) million to $(70) million.

Operating and Other Highlights

• Total near-term commercial funnel increased by over 40% or 11 GWh, quarter over quarter:
  • New project awards increased by 2.8 GWh or approximately $1 billion, a 78% increase from the prior quarter, of which, approximately $725 million relates to new gravity EVx systems

  • Submitted proposals and short-listed projects grew sequentially by 37% to approximately $12 billion and 35% to approximately $720 million, respectively

• Construction of the first 100 MWh Energy Vault EVx gravity energy storage solution continues to advance rapidly in Rudong, China with expected mechanical completion and start of commissioning on track by the end of Q2 2023.

• Construction progressed on the gravity EVx system in Snyder, Texas with our partner, Enel Green Power, with continued site equipment mobilization, piling activity and civil works for the foundation.

• Announced the largest and “first of its kind” micro-grid hybrid storage solution with PG&E, California’s largest public utility, using green hydrogen and Energy Vault’s Energy Management System (EMS) to deliver multi-day energy storage to power the City of Calistoga. It is the largest green hydrogen system announced in the US for energy storage and aims to be one of the largest ultra-long duration energy storage (LDES) systems operating in the world when it comes online, targeted for mid-2024.

• BESS projects of approximately 1 GWh announced in 2022 with Wellhead Electric, Jupiter Power and NV Energy continue to progress in line with customer commercial operation date (“COD”) expectations for turnover in the second half of 2023.

• Cash usage during the quarter was driven primarily by planned project execution, including capex for previously announced owned projects with long term PPA or tolling agreements, working capital timing requirements for US battery projects under construction, and strategic investment capital.
  • Customer capex projects reflect the planned ongoing construction of the gravity EVx system in Snyder, Texas with our partner, Enel Green Power, and the Pacific Gas & Electric’s hybrid green hydrogen micro-grid for multi-day extended duration storage supporting the city of Calistoga, California, which recently received CPUC approval.

  • Project working capital reflects planned quarterly spending for the approximately 1 GWh of previously announced BESS projects booked in 2022 in Texas, California and Nevada for customers Jupiter Power, Wellhead, and Nevada Energy, all with planned COD in the second half of 2023.

  • Strategic investment in Q1 reflects an investment into a US provider of battery cells and modules, maximizing our local US supply chain flexibility and ensuring continuity of domestic US content supply for Energy Vault’s US customers at preferred economics, further amplified by the current IRA legislation.

LUGANO, Switzerland & WESTLAKE VILLAGE, Calif.–(BUSINESS WIRE)–
Energy Vault Holdings, Inc. (NYSE: NRGV) (“Energy Vault” or “the Company”), a leader in sustainable, grid-scale energy storage solutions, announced financial results for the first quarter ended March 31, 2023.

Robert Piconi, Chairman and CEO of Energy Vault, stated, “Following robust quarterly revenues of over $100 million in the fourth quarter of 2022, we had a strong commercial start to the year with impressive near term funnel growth dynamics and project awards of ~$1 billion while continuing our customer focus in executing on ~1 GWh of US battery projects on track for COD in the second half of 2023. We continue to make strong progress on our diverse range of projects, including the first deployment of the Company’s EVx gravity energy storage system (GESS) in China. During my recent trip to Rudong and Beijing in April, I had the opportunity to visit the site and witness the progress being made. We expect mechanical completion in Q2 2023 as previously anticipated and commencement of commissioning activities immediately afterwards.”

Mr. Piconi continued, “Looking ahead, we are laser focused on profitable and timely execution on our project portfolio to meet or exceed all customer requirements. I continue to be impressed with our team’s passion to serve our customers well. This is creating strong current customer references while also enabling additional project discussions to support our existing customer growth plans. This is underpinned by our technology-agnostic software platform and experienced team that can uniquely design solutions across short, long and ultra-long duration energy storage as the recent multi-day green hydrogen hybrid storage solution for PG&E demonstrates. Finally, we are optimistic about the magnitude of potential financial benefits from the Inflation Reduction Act (IRA) and the positive impact they can have to our existing forecast, in particular with our owned projects and what we have announced today with our investment into domestic US content battery supply chains. Overall, there are numerous tailwinds that reinforce my enthusiasm for our current position and our ability to drive long-term shareholder value.”

First Quarter 2023 and Recent Business Highlights:

• Energy Vault and PG&E receive CPUC approval for Calistoga microgrid project: The California Public Utilities Commission (CPUC) has approved the request from Pacific Gas and Electric Company (PG&E), a subsidiary of PG&E Corporation (NYSE: PCG), for Energy Vault to deploy and operate a utility-scale battery plus green hydrogen long-duration energy storage system (BH-ESS). We expect the hybrid system to be capable of powering approximately 2,000 electricity customers within PG&E’s Calistoga microgrid for up to 96 hours (700 MWh of carbon-free energy) during a planned outage. This long-duration energy storage system is the “first-of-its-kind” and integrates a short duration battery system (for grid forming and black start capabilities) with a long duration liquid hydrogen-powered fuel cell system. The system is managed and dispatched by Energy Vault’s technology-agnostic Energy Management Software (EMS) to optimize performance and safety while minimizing operational cost. Further, the project is supported by a 10.5-year tolling agreement.
• Executed a strategic investment in Kore Power, a US manufacturer of batteries cells and modules, to build supply continuity on a prioritized basis for domestic US content supply chains for Energy Vault’s US customers, supporting our short duration battery energy storage solutions on a preferred economic basis. In parallel with Energy Vault’s investment, we also executed a comprehensive battery supply agreement. This agreement will significantly benefit our domestic customers as envisioned with their IRA project eligibility. In Q4 2022, Energy Vault participated in the initial tranche as an undisclosed investor alongside Siemens Financial Services, Quanta Services, Honeywell Ventures and others. In Q1 2023 we made our second and final strategic investment.
• Expanded previously announced Jupiter Power partnership to supply domestic US content of electrochemical battery modules from 2.4 GWh to 10 GWh, further strengthening the relationship with Jupiter to ensure supply chain priority on a 2-5 year planning horizon of project development while maximizing the financial benefits from the current IRA legislation.
• On track for commercial deployment of all three of the battery energy storage systems (BESS) within customer stated COD dates: Our initial project with Wellhead Electric (275 MWh) is expected to be completed in Q3 2023. Subsequently, Jupiter Power (220 MWh) and NV Energy (440 MWh) projects are anticipated to be installed before the end of the year.

2023 Outlook:

Energy Vault is reiterating its previously announced 2023 financial outlook, including:

• Energy Vault expects total revenue to be in the range of $325 million to $425 million, which reflects growth of approximately 2x to 3x over 2022.

• Gross margin in the 10-15% range.

• Adjusted EBITDA for the full-year 2023 is expected to be in the range of $(50) million to $(70) million.

Conference Call Information

Energy Vault will host a conference call today, May 9, 2023 at 4:30 PM ET to discuss the results, followed by a Q&A session. A live webcast of the call can be accessed at https://investors.energyvault.com/events-and-presentations/events. To access the call, participants may dial 1-877-704-4453, international callers may use 1-201-389-0920, and request to join the Energy Vault earnings call. A telephonic replay will be available shortly after the conclusion of the call and until, May 23, 2023. Participants may access the replay at 1-844-512-2921; international callers may use 1-412-317-6671, and enter access code 13737559. The call will also be available for replay via webcast link on the Investors portion of the Energy Vault website at https://www.energyvault.com/.

About Energy Vault

Energy Vault® develops and deploys utility-scale energy storage solutions designed to transform the world’s approach to sustainable energy storage. The Company’s comprehensive offerings include proprietary gravity-based storage, battery storage, and green hydrogen energy storage technologies. Each storage solution is supported by the Company’s hardware technology-agnostic energy management system software and integration platform. Unique to the industry, Energy Vault’s innovative technology portfolio delivers customized short-and-long-duration energy storage solutions to help utilities, independent power producers, and large industrial energy users significantly reduce levelized energy costs while maintaining power reliability. Utilizing eco-friendly materials with the ability to integrate waste materials for beneficial reuse, Energy Vault’s EVx™ gravity-based energy storage technology is facilitating the shift to a circular economy while accelerating the global clean energy transition for its customers. Please visit www.energyvault.com for more information.

Non-GAAP measures

Energy Vault has provided a reconciliation of net loss to adjusted EBITDA, with net loss being the most directly comparable GAAP measure, for the historical periods in this press release. A reconciliation of projected non-GAAP measures for the full-year 2023 has not been provided because certain information necessary to calculate such measures on a GAAP basis is unavailable or dependent on the timing of future events outside of our control. Therefore, because of the uncertainty and variability of the nature of the amount of future adjustments, which could be significant, the Company is unable to provide a reconciliation for these forward-looking non-GAAP measures without unreasonable effort.

Forward-Looking Statements

This press release includes forward-looking statements that reflect the Company’s current views with respect to, among other things, the Company’s operations and financial performance. Forward-looking statements include information concerning possible or assumed future results of operations, including descriptions of our business plan and strategies. These statements often include words such as “ anticipate,” “expect,” “suggest,” “plan,” “believe,” “intend,” “project,” “forecast,” “estimates,” “targets,” “projections,” “should,” “could,” “would,” “may,” “might,” “will” and other similar expressions. We base these forward-looking statements or projections on our current expectations, plans and assumptions, which we have made in light of our experience in our industry, as well as our perceptions of historical trends, current conditions, expected future developments and other factors we believe are appropriate under the circumstances at the time. These forward-looking statements are based on our beliefs, assumptions and expectations of future performance, taking into account the information currently available to us. These forward-looking statements are only predictions based upon our current expectations and projections about future events. These forward-looking statements involve significant risks and uncertainties that could cause our actual results, level of activity, performance or achievements to differ materially from the results, level of activity, performance or achievements expressed or implied by the forward-looking statements, including changes in our strategy, expansion plans, customer opportunities, future operations, future financial position, estimated revenues and losses, projected costs, prospects and plans; the uncertainly of our bookings and backlogs equating to future revenue; the lack of assurance that non-binding letters of intent and other indication of interest can result in binding orders or sales; the possibility of our products to be or alleged to be defective or experience other failures; the implementation, market acceptance and success of our business model and growth strategy; our ability to develop and maintain our brand and reputation; developments and projections relating to our business, our competitors, and industry; the ability of our suppliers to deliver necessary components or raw materials for construction of our energy storage systems in a timely manner; the impact of health epidemics, on our business and the actions we may take in response thereto; our expectations regarding our ability to obtain and maintain intellectual property protection and not infringe on the rights of others; expectations regarding the time during which we will be an emerging growth company under the JOBS Act; our future capital requirements and sources and uses of cash; our ability to obtain funding for our operations and future growth; our business, expansion plans and opportunities and other important factors discussed under the caption “Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2022 filed with the SEC on April 13, 2023, as such factors may be updated from time to time in its other filings with the SEC, accessible on the SEC’s website at www.sec.gov. New risks emerge from time to time and it is not possible for our management to predict all risks, nor can we assess the impact of all factors on our business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in any forward-looking statements we may make. Any forward-looking statement made by us in this press release speaks only as of the date of this press release and is expressly qualified in its entirety by the cautionary statements included in this press release. We undertake no obligation to publicly update or review any forward-looking statement, whether as a result of new information, future developments or otherwise, except as may be required by any applicable laws. You should not place undue reliance on our forward-looking statements.

ENERGY VAULT HOLDINGS, INC. Condensed Consolidated Balance Sheets (Unaudited) (In thousands except par value)
​	March 31, 2023				December 31, 2022
Assets	​			​	​
Current Assets	​			​	​
Cash and cash equivalents	$	114,556			$	203,037
Restricted cash		82,417				83,145
Accounts receivable, net		4,100				37,460
Contract assets, net		29,149				28,978
Inventory		4,899				4,378
Customer financing receivable, current portion, net		1,313				1,500
Advances to suppliers		95,341				24,327
Prepaid expenses and other current assets		6,779				7,242
Total current assets		338,554				390,067
Property and equipment, net		14,784				3,044
Operating lease right-of-use assets, net		1,266				1,442
Customer financing receivable, long-term portion, net		7,415				8,260
Other assets		20,442				13,900
Total Assets	$	382,461			$	416,713
Liabilities and Stockholders’ Equity
Current Liabilities	​				​
Accounts payable	$	8,427			$	60,315
Accrued expenses		19,490				14,749
Contract liabilities, current portion		86,027				49,434
Lease liabilities, current portion		825				825
Total current liabilities		114,769				125,323
Deferred pension obligation		734				890
Asset retirement obligation		444				560
Contract liabilities, long-term portion		1,500				1,500
Other long-term liabilities		529				727
Total liabilities		117,976				129,000
Stockholders’ Equity
Preferred stock, $0.0001 par value; 5,000 shares authorized, none issued		—				—
Common stock, $0.0001 par value; 500,000 shares authorized, 141,392 shares issued and outstanding at March 31, 2023; 138,530 shares issued and outstanding at December 31, 2022		14				14
Additional paid-in capital		445,870				435,852
Accumulated deficit		(180,796	)			(147,265	)
Accumulated other comprehensive loss		(603	)			(888	)
Total stockholders’ equity		264,485				287,713
Total Liabilities and Stockholders’ Equity	$	382,461			$	416,713

ENERGY VAULT HOLDINGS, INC. Condensed Consolidated Statements of Operations and Comprehensive Loss (Unaudited) (In thousands except per share data)
​	Three Months Ended March 31,
		2023				2022
Revenue	$	11,422			$	42,884
Operating expenses:
Cost of revenue		9,003				—
Sales and marketing		4,574				2,580
Research and development		11,241				9,661
General and administrative		19,546				9,806
Loss from operations		(32,942	)			20,837
Other income (expense):
Interest expense		(1	)			(1	)
Change in fair value of warrant liability		—				(20,237	)
Transaction costs		—				(20,586	)
Other income, net		1,776				36
Loss before income taxes		(31,167	)			(19,951	)
Provision for income taxes		—				128
Net loss	$	(31,167	)		$	(20,079	)
Net loss per share — basic and diluted	$	(0.22	)		$	(0.25	)
Weighted average shares outstanding — basic and diluted		139,669				80,806
Other comprehensive income (loss) — net of tax					​
Actuarial gain on pension	$	164			$	278
Foreign currency translation gain (loss)		121				(94	)
Total other comprehensive income		285				184
Total comprehensive loss	$	(30,882	)		$	(19,895	)

ENERGY VAULT HOLDINGS, INC. Condensed Consolidated Statements of Cash Flows (Unaudited) (In thousands)
​	Three Months Ended March 31,
		2023				2022
Cash Flows From Operating Activities	​			​	​
Net loss	$	(31,167	)		$	(20,079	)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization		209				1,218
Non-cash interest income		(334	)			(16	)
Stock based compensation		13,716				9,202
Change in fair value of warrant liability		—				20,237
Change in pension obligation		—				7
Change in asset retirement obligation		(119	)			19
Provision (benefit) for credit losses		(14	)			—
Foreign exchange gains and losses		170				19
Change in operating assets		(35,504	)			(32,550	)
Change in operating liabilities		(17,729	)			5,132
Net cash used in operating activities		(70,772	)			(16,811	)
Cash Flows From Investing Activities	​				​
Purchase of property and equipment		(11,635	)			(83	)
Purchase of equity securities		(6,000	)			—
Net cash used in investing activities		(17,635	)			(83	)
Cash Flows From Financing Activities	​				​
Proceeds from exercise of stock options		35				25
Proceeds from reverse recapitalization and PIPE financing, net		—				235,940
Payment of transaction costs related to reverse recapitalization		—				(20,651	)
Payment of taxes related to net settlement of equity awards		(800	)			—
Payment of finance lease obligations		(10	)			(10	)
Net cash provided by financing activities		(775	)			215,304
Effect of exchange rate changes on cash, cash equivalents, and restricted cash		(27	)			(17	)
Net increase in cash, cash equivalents, and restricted cash		(89,209	)			198,393
Cash, cash equivalents, and restricted cash  –  beginning of the period		286,182				105,125
Cash, cash equivalents, and restricted cash –  end of the period		196,973				303,518
Less: Restricted cash at end of period		82,417				—
Cash and cash equivalents – end of period	$	114,556			$	303,518
Supplemental Disclosures of Cash Flow Information:	​				​
Income taxes paid		—				1
Cash paid for interest		1				23
Supplemental Disclosures of Non-Cash Investing and Financing Information:
Conversion of redeemable preferred stock into common stock in connection with the reverse recapitalization		—				182,034
Warrants assumed as part of reverse recapitalization		—				19,838
Actuarial gain on pension		164				278
Property, plant and equipment financed through accounts payable		4,021				137

Non-GAAP Financial Measure

We use adjusted EBITDA to complement our condensed consolidated statements of operations. Management believes that this non-GAAP financial measure complements our GAAP net loss and such measure is useful to investors. The presentation of this non-GAAP measure is not meant to be considered in isolation or as an alternative to net loss as an indicator of our performance.

The following table provides a reconciliation from net loss to non-GAAP adjusted EBITDA, with net loss being the most directly comparable GAAP measure (amounts in thousands):

	Three Months Ended March 31,
		2023				2022
Net loss (GAAP)	$	(31,167	)		$	(20,079	)
Non-GAAP Adjustments:
Interest income, net		(1,934	)			(47	)
Income tax expense		—				128
Depreciation and amortization		209				1,218
Stock-based compensation expense		13,716				9,202
Change in fair value of warrant liability		—				20,237
Transaction costs		—				20,586
Foreign exchange (gains) and losses		170				(11	)
Adjusted EBITDA (non-GAAP)	$	(19,006	)		$	31,234

We present adjusted EBITDA, which is net loss excluding adjustments that are outlined in the quantitative reconciliation provided above, as a supplemental measure of our performance and because we believe this measure is frequently used by securities analysts, investors, and other interested parties in the evaluation of companies in our industry. The items excluded from adjusted EBITDA are excluded in order to better reflect our continuing operations.

In evaluating adjusted EBITDA, one should be aware that in the future we may incur expenses similar to the adjustments noted above. Our presentation of adjusted EBITDA should not be construed as an inference that our future results will be unaffected by these types of adjustments. Adjusted EBITDA is not a measurement of our financial performance under GAAP and should not be considered as an alternative to net loss, operating loss, or any other performance measures derived in accordance with GAAP or as an alternative to cash flow from operating activities as a measure of our liquidity.

Our adjusted EBITDA measure has limitations as an analytical tool, and should not be considered in isolation or as a substitute for analysis of our results as reported under GAAP. Some of these limitations are:

• it does not reflect our cash expenditures, future requirements for capital expenditures, or contractual commitments;

• it does not reflect changes in, or cash requirements for, our working capital needs;

• it does not reflect stock-based compensation, which is an ongoing expense;

• although depreciation and amortization are non-cash charges, the assets being depreciated and amortized will often have to be replaced in the future, and our adjusted EBITDA measure does not reflect any cash requirements for such replacements;

• it is not adjusted for all non-cash income or expense items that are reflected in our condensed consolidated statements of cash flows;

• it does not reflect the impact of earnings or charges resulting from matters we consider not to be indicative of our ongoing operations;

• it does not reflect limitations on or costs related to transferring earnings from our subsidiaries to us; and

• other companies in our industry may calculate this measure differently than we do, limiting its usefulness as a comparative measure.

Because of these limitations, adjusted EBITDA should not be considered as a measure of discretionary cash available to us to invest in the growth of our business or as a measure of cash that will be available to use to meet our obligations. You should compensate for these limitations by relying primarily on our GAAP results and using adjusted EBITDA only supplementally.

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KEYWORDS: California Europe Switzerland United States North America

INDUSTRY KEYWORDS: Other Energy Environment Utilities Sustainability Alternative Energy Energy

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Posted on May 9, 2023 6:44 pm

American Vanguard Reports Q1 2023 Results

American Vanguard Reports Q1 2023 Results

Reaffirms Double-Digit Full-Year 2023 EBITDA Growth Despite Lower-Than-Expected Q1 Performance

NEWPORT BEACH, Calif.–(BUSINESS WIRE)–
American Vanguard Corporation (NYSE: AVD) today announced financial results for the quarter ended March 31, 2023.

Q1 2023 Financial Performance – versus Q1 2022 (see table below):

Eric Wintemute, Chairman and CEO of American Vanguard, stated: “During 2023, we expect to achieve higher adjusted EBITDA (between $84MM – $86MM) than in 2022, despite a first quarter setback arising from delays in restarting our supply chain, which is now back at capacity. After experiencing multiple delays, our China-based supplier was unable to deliver intermediates in sufficient quantities for our leading corn soil insecticide, Aztec®, until early 2023. As a result, we were only able to produce and sell about one-third of seasonal demand for that product. This, coupled with a glut of generic herbicides (not sold by the Company) in the distribution channel, led to lower sales of domestic crop products during the quarter. While our domestic non-crop and international businesses recorded higher sales, the decrease in sales of higher-margin US crop products led to lower overall profitability.”

In thousands except for per share data		March 31, 2023				March 31, 2022			Change
Net sales		$	124,885			$	149,593		$	(24,708	)
Net income		$	1,918			$	9,935		$	(8,017	)
EPS		$	0.07			$	0.33		$	(0.26	)
Adjusted EBITDA1		$	11,511			$	22,867		$	(11,356	)

Mr. Wintemute continued, “Even after taking into account a lower-than-expected first quarter, we still expect full year 2023 will be stronger than 2022. With extremely low inventories of our domestic crop products in the distribution channel, we anticipate higher sales of US crop products in the second half of 2023. Further, we expect to continue the positive trajectories of our non-crop and international businesses. While below our original targets, our revised 2023 targets nevertheless show better year-over-year performance, as you can see from the table below.”

Mr. Wintemute continued, “For the sake of clarity, starting with this fiscal year, we have adopted an accounting change which is more prevalent among public companies in our sector under which outbound freight is classified as an element of cost of goods, as opposed to an operating expense. For us, these costs have typically been in the range of 7-8% of net sales. Thus, under this revised approach, our gross margin percent would decrease by that amount, and operating expenses as a percent of sales would decrease commensurately. This change has no effect upon operating income, adjusted EBITDA, net income or earnings per share.”

2023 Performance Targets

Metric		2023 Range		2022 Actual		% Change
Net sales		$640MM – $652MM		$610MM		5 to 7%
Gross margin %		33 to 35%		34%		Similar
Opex as % of sales		25 to 27%		25%		Similar
Adjusted EBITDA		$84MM – $86MM		$73MM		14 to 18%
Net income		$32MM – $34MM		$27.5MM		17 to 25%

Mr. Wintemute concluded: “We look forward to giving you a more detailed presentation during our upcoming earnings call, including with respect to our 2025 growth targets.”

Conference Call

Eric Wintemute, Chairman & CEO, Bob Trogele, COO, David T. Johnson, CFO, Scott Hendrix, U.S. Crop SVP and Jim Thompson, Leader of the Green Solutions Initiative, will conduct a conference call focusing on the financial results and strategic themes at 5:00 pm ET on May 9, 2023. Interested parties may participate in the call by dialing 713-481-1320. Please call in 10 minutes before the scheduled start time and ask for the American Vanguard call. The conference call will also be webcast live via the News and Media section of the Company’s web site at www.american-vanguard.com. To listen to the live webcast, go to the web site at least 15 minutes early to register, download and install any necessary audio software. If you are unable to listen live, the conference call will be archived on the Company’s web site.

About American Vanguard

American Vanguard Corporation is a diversified specialty and agricultural products company that develops, manufactures, and markets solutions for crop protection and nutrition, turf and ornamentals management, commercial and consumer pest control. American Vanguard is included on the Russell 2000® & Russell 3000® Indexes and the Standard & Poors Small Cap 600 Index. To learn more about American Vanguard, please reference the Company’s web site at www.american-vanguard.com.

The Company, from time to time, may discuss forward-looking information. Except for the historical information contained in this release, all forward-looking statements are estimates by the Company’s management and are subject to various risks and uncertainties that may cause results to differ from management’s current expectations. Such factors include weather conditions, changes in regulatory policy and other risks as detailed from time-to-time in the Company’s SEC reports and filings. All forward-looking statements, if any, in this release represent the Company’s judgment as of the date of this release.

AMERICAN VANGUARD CORPORATION AND SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEETS (In thousands, except share data) (Unaudited)
		March 31, 2023				December 31, 2022
Current assets:
Cash and cash equivalents		$	19,568			$	20,328
Receivables:
Trade, net of allowance for doubtful accounts of $5,692 and $5,136, respectively			166,120				156,492
Other			9,999				9,816
Total receivables, net			176,119				166,308
Inventories			219,080				184,190
Prepaid expenses			15,324				15,850
Income taxes receivable			4,879				1,891
Total current assets			434,970				388,567
Property, plant and equipment, net			71,538				70,912
Operating lease right-of-use assets			24,460				24,250
Intangible assets, net			181,909				184,664
Goodwill			47,366				47,010
Other assets			10,610				10,769
Deferred income tax assets, net			220				141
Total assets		$	771,073			$	726,313
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable		$	74,887			$	69,000
Customer prepayments			70,338				110,597
Accrued program costs			71,379				60,743
Accrued expenses and other payables			38,038				20,982
Operating lease liabilities, current			5,367				5,279
Total current liabilities			260,009				266,601
Long-term debt, net			97,000				51,477
Operating lease liabilities, long term			19,614				19,492
Other liabilities, net of current installments			4,648				4,167
Deferred income tax liabilities, net			14,808				14,597
Total liabilities			396,079				356,334
Commitments and contingent liabilities
Stockholders’ equity:
Preferred stock, $0.10 par value per share; authorized 400,000 shares; none issued			—				—
Common stock, $0.10 par value per share; authorized 40,000,000 shares; issued 34,463,829 shares at March 31, 2023 and 34,446,194 shares at December 31, 2022			3,446				3,444
Additional paid-in capital			107,591				105,634
Accumulated other comprehensive loss			(9,636	)			(12,182	)
Retained earnings			329,812				328,745
Less treasury stock at cost, 5,057,727 shares at March 31, 2023 and 5,029,892 shares at December 31, 2022			(56,219	)			(55,662	)
Total stockholders’ equity			374,994				369,979
Total liabilities and stockholders’ equity		$	771,073			$	726,313

AMERICAN VANGUARD CORPORATION AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (In thousands, except per share data) (Unaudited)
		For the three months ended March 31
		2023				2022
Net sales		$	124,885			$	149,593
Cost of sales			(86,348	)			(98,198	)
Gross profit			38,537				51,395
Operating expenses			(35,272	)			(36,646	)
Operating income			3,265				14,749
Change in fair value of an equity investment			(22	)			83
Interest expense, net			(1,686	)			(398	)
Income before provision for income taxes			1,557				14,434
Income tax benefit (expense)			361				(4,499	)
Net income		$	1,918			$	9,935
Earnings per common share—basic		$	0.07			$	0.33
Earnings per common share—assuming dilution		$	0.07			$	0.33
Weighted average shares outstanding—basic			28,367				29,677
Weighted average shares outstanding—assuming dilution			29,073				30,349

AMERICAN VANGUARD CORPORATION AND SUBSIDIARIES ANALYSIS OF SALES (Unaudited)
		For the three Months Ended March 31
		2023				2022				Change				% Change
Net sales:
U.S. crop		$	61,876			$	88,193			$	(26,317	)			-30	%
U.S. non-crop			13,899				13,396				503				4	%
Total U.S.			75,775				101,589				(25,814	)			-25	%
International			49,110				48,004				1,106				2	%
Total net sales:		$	124,885			$	149,593			$	(24,708	)			-17	%
Gross profit:
U.S. crop		$	20,622			$	33,993			$	(13,371	)			-39	%
U.S. non-crop			5,446				5,767				(321	)			-6	%
Total U.S.			26,068				39,760				(13,692	)			-34	%
International			12,469				11,635				834				7	%
Total gross profit:		$	38,537			$	51,395			$	(12,858	)			-25	%
Gross margin:
U.S. crop			33	%			39	%
U.S. non-crop			39	%			43	%
Total U.S.			34	%			39	%
International			25	%			24	%
Gross margin:			31	%			34	%

AMERICAN VANGUARD CORPORATION AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (In thousands) (Unaudited)
		For the three months ended March 31
		2023				2022
Cash flows from operating activities:
Net income		$	1,918			$	9,935
Adjustments to reconcile net income to net cash used in operating activities:
Depreciation and amortization of property, plant and equipment and intangible assets			5,539				5,230
Amortization of other long-term assets			714				1,173
Provision for bad debts			581				494
Fair value adjustment of contingent consideration			—				599
Stock-based compensation			1,474				1,563
Change in deferred income taxes			122				207
Change in liabilities for uncertain tax positions or unrecognized tax benefits			371				—
Other			94				2
Foreign currency transaction gains			(446	)			(261	)
Changes in assets and liabilities associated with operations:
Increase in net receivables			(8,779	)			(33,660	)
Increase in inventories			(33,731	)			(11,738	)
Decrease (increase) in prepaid expenses and other assets			600				(800	)
Change in income tax receivable/payable, net			(2,965	)			3,046
Increase in accounts payable			5,655				9,677
Decrease in customer prepayments			(22,759	)			(44,528	)
Increase in accrued program costs			10,660				24,601
(Decrease) increase in other payables and accrued expenses			(500	)			2,145
Net cash used in operating activities			(41,452	)			(32,315	)
Cash flows from investing activities:
Capital expenditures			(2,590	)			(3,294	)
Proceeds from disposal of property, plant and equipment			—				54
Acquisition of a product line			(703	)			—
Intangible assets			(15	)			(1,010	)
Net cash used in investing activities			(3,308	)			(4,250	)
Cash flows from financing activities:
Payments under line of credit agreement			(27,300	)			(12,000	)
Borrowings under line of credit agreement			72,000				58,000
Net receipt from the issuance of common stock under ESPP			480				436
Net receipt from the exercise of stock options			18				—
Receipt payment for tax withholding on stock-based compensation awards			(13	)			(2,174	)
Repurchase of common stock			(557	)			(6,219	)
Payment of cash dividends			(851	)			(594	)
Net cash provided by financing activities			43,777				37,449
Net (decrease) increase in cash and cash equivalents			(983	)			884
Effect of exchange rate changes on cash and cash equivalents			223				672
Cash and cash equivalents at beginning of period			20,328				16,285
Cash and cash equivalents at end of period		$	19,568			$	17,841

AMERICAN VANGUARD CORPORATION AND SUBSIDIARIES RECONCILIATION OF NET INCOME TO EBITDA (In thousands) (Unaudited)
		Three Months Ended March 31,
Reconciliation of Net Income to EBITDA		2023				2022
Net income, as reported		$	1,918			$	9,935
Provision for income taxes			(361	)			4,499
Interest expense, net			1,686				398
Proxy costs			541				—
Depreciation and amortization			6,253				6,472
Stock compensation			1,474				1,563
Adjusted EBITDA2		$	11,511			$	22,867

¹ Earnings before interest, taxes, depreciation, amortization and non-cash stock compensation. Adjusted EBITDA is not a financial measure calculated and presented in accordance with U.S. generally accepted accounting principles (GAAP) and should not be considered as an alternative to net income (loss), operating income (loss) or any other financial measure so calculated and presented, nor as an alternative to cash flow from operating activities as a measure of liquidity. We provide these measures because we believe that they provide helpful comparisons to other companies in our industry and peer group. The items excluded from Adjusted EBITDA are detailed in the reconciliation attached to this news release, and reflect an elimination of taxes, interest, depreciation, amortization, the effects of equity compensation, and the proxy contest costs. Other companies (including the Company’s competitors) may define EBITDA differently.

² Earnings before interest, taxes, depreciation, amortization and non-cash stock compensation. Adjusted EBITDA is not a financial measure calculated and presented in accordance with U.S. generally accepted accounting principles (GAAP) and should not be considered as an alternative to net income (loss), operating income (loss) or any other financial measure so calculated and presented, nor as an alternative to cash flow from operating activities as a measure of liquidity. We provide these measures because we believe that they provide helpful comparisons to other companies in our industry and peer group. The items excluded from Adjusted EBITDA are detailed in the reconciliation attached to this news release, and reflect an elimination of taxes, interest, depreciation, amortization, the effects of equity compensation, and the proxy contest costs. Other companies (including the Company’s competitors) may define EBITDA differently.

View source version on businesswire.com: https://www.businesswire.com/news/home/20230509006219/en/

Company Contact:

American Vanguard Corporation

William A. Kuser, Director of Investor Relations

(949) 260-1200

[email protected]

Investor Representative

the Equity Group Inc.

www.theequitygroup.com

Lena Cati / 212-836-9611

[email protected]

KEYWORDS: California United States North America

INDUSTRY KEYWORDS: Professional Services Insurance Finance

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