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Medicenna Therapeutics to Provide Clinical Update from Phase 1/2 ABILITY Study on August 9, 2023

TORONTO and HOUSTON, Aug. 04, 2023 (GLOBE NEWSWIRE) — Medicenna Therapeutics Corp. (“Medicenna” or “the Company”) (NASDAQ: MDNA TSX: MDNA), a clinical-stage immunotherapy company, announced today that it will host a conference call and live webcast on August 9, 2023 at 8:30AM ET to provide a clinical update from the Phase 1/2 ABILITY study evaluating MDNA11 in patients with melanoma and other select tumors.

Shareholders and financial analysts are invited to join the live audio webcast either by phone or through the webcast link. Both options to connect to the webcast are described on Medicenna’s website: https://ir.medicenna.com/news-and-events/events-and-presentations

The webcast will be recorded and will then be available on Medicenna’s website following the call.

About Medicenna

Medicenna is a clinical stage immunotherapy company focused on the development of novel, highly selective versions of IL-2, IL-4 and IL-13 Superkines and first in class Empowered Superkines. Medicenna’s long-acting IL-2 Superkine, MDNA11, is a next-generation IL-2 with superior CD122 (IL-2 receptor beta) binding without CD25 (IL-2 receptor alpha) affinity thereby preferentially stimulating cancer killing effector T cells and NK cells. Medicenna’s early-stage BiSKITs™ program, (Bifunctional SuperKine ImmunoTherapies) is designed to enhance the ability of Superkines to treat immunologically “cold” tumors. Medicenna’s IL-4 Empowered Superkine, bizaxofusp (formerly MDNA55), has been studied in 5 clinical trials including a Phase 2b trial for recurrent GBM, the most common and uniformly fatal form of brain cancer. Bizaxofusp has obtained FastTrack and Orphan Drug status from the FDA and FDA/EMA, respectively.



Further Information

For further information about the Company please contact:

Elizabeth Williams, Chief Financial Officer, [email protected]

Delphine Davan, Vice President, Investor Relations and Corporate Communications, [email protected]

Media Contact

For media inquiries, please contact:

Tony Russo, Russo Partners, 212-845-4251, [email protected]

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Macerich Declares the Quarterly Dividend on Its Common Shares

SANTA MONICA, Calif., Aug. 04, 2023 (GLOBE NEWSWIRE) — The Board of Directors of the Macerich Company (NYSE: MAC) declared a quarterly cash dividend of $.17 per share of common stock. The dividend is payable on September 8, 2023, to stockholders of record at the close of business on August 18, 2023.

About Macerich

Macerich is a fully integrated, self-managed and self-administered real estate investment trust (REIT). As a leading owner, operator and developer of high-quality retail real estate in densely populated and attractive U.S. markets, Macerich’s portfolio is concentrated in California, the Pacific Northwest, Phoenix/Scottsdale, and the Metro New York to Washington, D.C. corridor. Developing and managing properties that serve as community cornerstones, Macerich currently owns 47 million square feet of real estate consisting primarily of interests in 44 regional town centers. Macerich is firmly dedicated to advancing environmental goals, social good and sound corporate governance. A recognized leader in sustainability, Macerich has achieved a #1 Global Real Estate Sustainability Benchmark (GRESB) ranking for the North American retail sector for eight consecutive years (2015-2022). For more information, please visit www.Macerich.com.

Macerich uses, and intends to continue to use, its Investor Relations website, which can be found at investing.macerich.com, as a means of disclosing material nonpublic information and for complying with its disclosure obligations under Regulation FD. Additional information about Macerich can be found through social media platforms such as LinkedIn. Reconciliations of non-GAAP financial measures, including NOI and FFO, to the most directly comparable GAAP measures are included in the earnings release and supplemental filed on Form 8-K with the SEC, which are posted on the Investor Relations website at investing.macerich.com.

MAC-I

SOURCE: Macerich

INVESTOR CONTACT: Samantha Greening, Director Investor Relations, [email protected]

MEDIA CONTACT: Karen Maurer, AVP Corporate Communications, [email protected]



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WPP 2023 Interim Results

WPP 2023 Interim Results

Resilient performance with second quarter impacted by lower revenues in the US from technology clients and delays in spend on technology projects. Now expect 2023 LFL growth of 1.5-3.0%.  Margin guidance remains at around 15% at 2022 rates

NEW YORK & LONDON–(BUSINESS WIRE)–
WPP (NYSE: WPP) today reported its 2023 Interim Results.

Key figures

£m

H1 2023

+/(-) %

reported1

+/(-) %

LFL2

H1 2022

Revenue

7,221

6.9

3.5

6,755

Revenue less pass-through costs

5,811

5.5

2.0

5,509

 

 

 

 

 

Reported:

 

 

 

 

Operating profit

306

(43.2)

–

539

Profit before tax

204

(51.2)

–

419

Diluted EPS (p)

10.3

(54.6)

–

22.7

Dividends per share (p)

15.0

–

–

15.0

 

 

 

 

 

Headline3:

 

 

 

 

Operating profit

666

4.3

2.7

639

Operating profit margin

11.5%

(0.1pt*)

0.1pt*

11.6%

Profit before tax

546

(2.9)

–

562

Diluted EPS

33.1p

0.3

–

33.0p
 

* Margin points

H1 and Q2 financial highlights

  • H1 reported revenue +6.9%, LFL revenue +3.5% (Q2 +2.3%)

  • H1 revenue less pass-through costs +5.5%, LFL revenue less pass-through costs +2.0% (Q2 +1.3%)

  • In Q2, ex-US growth accelerated to mid-single digits, with China growing albeit less strongly than expected. North America declined in Q2, primarily due to lower revenues from technology clients

  • H1 headline operating profit margin 11.5%, down 0.1pt, and on a constant FX basis improved by 0.1pt. Efficiency benefits offset by investment in IT and higher severance costs

  • Trade working capital favourable movement of £165m year-on-year. Non-trade working capital adverse movement of £316m

  • Adjusted net debt at 30 June 2023 £3.5bn, up £0.3bn year-on-year, £0.4bn lower than Q1 2023. Expect year end net debt to be flat year-on-year

Performance, strategic progress and outlook

  • Global Integrated Agencies H1 LFL revenue less pass-through costs growth +2.2% (Q2 +1.5%): within which GroupM, our media planning and buying business +6.1% (Q2 +6.1%), partially offset by a 0.8% LFL decline at other Global Integrated Agencies (Q2 -2.3%)

  • Solid new business performance: $2.0bn net new billings in H1 with the pipeline of potential new business larger than at the same point in 2022

  • Acquisitions of Goat and Obviously in the fast-growth area of influencer marketing and an investment in Majority, a diversity-led creative agency

  • Transformation programme on track to deliver at least £450m of annual savings this year over a 2019 base

  • Planned review of our property portfolio resulting in a consolidation of our office space with an impairment charge for the full year of approximately £220m which is largely non-cash (H1 2023: £180m)

  • 2023 interim dividend of 15.0p declared (2022: 15.0p)

  • Full year 2023 LFL growth of 1.5-3.0% (previously 3-5%); FY 2023 headline operating profit margin around 15.0% (excluding the impact of FX)

Mark Read, Chief Executive Officer of WPP, said:

“Our performance in the first half has been resilient with Q2 growth accelerating in all regions except the USA, which was impacted in the second quarter by lower spending from technology clients and some delays in technology-related projects. This was felt primarily in our integrated creative agencies. China returned to growth in the second quarter albeit more slowly than expected. In the near term, we expect the pattern of activity in the first half to continue into the second half of the year.

“Our media business, GroupM, grew consistently across the first six months as did our businesses in the UK, Europe, Latin America and Asia-Pacific. Client spending in consumer packaged goods, financial services and healthcare remained good and, despite short-term challenges, our technology clients represent an important driver of long-term growth. Our agencies performed extremely well at the Cannes Lions Festival winning five Grand Prix and 165 Lions with Mindshare recognised as the most-awarded media agency. We won major new business assignments with clients including: Reckitt, Mondelēz, easyJet, Lloyds Banking Group, Pernod Ricard and India’s second largest advertiser, Maruti Suzuki.

“We have exciting future plans in AI that build on our acquisition of Satalia in 2021 and our use of AI across WPP. We are leveraging our efforts with partnerships with the leading players including Adobe, Google, IBM, Microsoft, Nvidia and OpenAI. We are delivering work powered by AI for many clients including Nestlé, Nike and Mondelēz. AI will be fundamental to WPP’s future success and we are committed to embracing it to drive long-term growth and value.”

This announcement contains information that qualifies or may qualify as inside information. The person responsible for arranging the release of this announcement on behalf of WPP plc is Balbir Kelly-Bisla, Company Secretary.

To access WPP’s 2023 interim results financial tables, please visit: www.wpp.com/investors

First half overview

First half revenue was £7.2bn, up 6.9% from £6.8bn in H1 2022, and up 3.5% like-for-like. Revenue less pass-through costs was £5.8bn, up 5.5% from £5.5bn in H1 2022, and up 2.0% like-for-like.

 

Q2 2023

£m

%

reported

%

M&A

%

FX

%

LFL

Revenue

3,761

2.7

1.1

(0.7)

2.3

Revenue less pass-through costs

2,982

1.6

0.9

(0.6)

1.3

 

H1 2023

£m

%

reported

%

M&A

%

FX

%

LFL

Revenue

7,221

6.9

0.9

2.5

3.5

Revenue less pass-through costs

5,811

5.5

0.9

2.6

2.0

Business segment review4

Business segments – revenue less pass-through costs

% LFL +/(-)

Global

Integrated Agencies

Public Relations

Specialist Agencies

Q2 2023

1.5

2.0

(1.6)

H1 2023

2.2

2.1

0.2

Global Integrated Agencies: GroupM, our media planning and buying business, grew consistently during the half and across all regions, benefiting from continued client investment in media, with like-for-like growth in revenue less pass-through costs of +6.1% (Q2 +6.1%), partially offset by a 0.8% LFL decline at other Global Integrated Agencies (Q2 -2.3%).

Ogilvy grew well, supported by recent new business wins including Verizon and SC Johnson. Hogarth, our creative production agency, continued to deliver good growth as it expands its collaboration with other WPP agencies.

Other Global Integrated Agencies, Wunderman Thompson, VMLY&R and AKQA Group, felt the greatest impact from reduced spend across the technology sector and delays in technology-related projects. As anticipated, revenue less pass-through costs in the retail sector was impacted by known 2022 client losses.

Revenue less pass-through costs from our offer in experience, commerce and technology was around 39% of our Global Integrated Agencies, excluding GroupM, compared to around 35% in 2019 and unchanged from H1 2022, impacted by the previously referenced delays in technology-related projects. Our digital billings mix within GroupM increased to 49%, compared to 48% in FY 2022.

Public Relations: FGS Global continued to grow strongly in the first half. H+K Strategies delivered solid growth, lapping double-digit growth in the first half 2022. BCW saw a small decline in revenue less pass-through costs in the first half.

Specialist Agencies: good growth in design agency Landor & Fitch, and our specialist healthcare media planning and buying agency, CMI Media Group, was offset by declines at smaller agencies affected by delays in client projects.

Regional review

Regional segments – revenue less pass-through costs

% LFL +/(-)

North America

United

Kingdom

Western

Continental

Europe

Rest of World

Q2 2023

(4.1)

9.0

3.9

4.3

H1 2023

(1.2)

8.2

3.7

3.1

North America declined by 1.2% in the first half reflecting the lower revenues from technology clients, which predominantly impacted our integrated creative agencies, and the expected impact of 2022 client losses in the retail sector. This was partially offset by growth in spending from consumer packaged goods, healthcare and financial services. GroupM continued to grow well in the region.

The United Kingdom grew strongly led by GroupM. CPG and healthcare were the strongest client sectors. In Western Continental Europe, strong performances in Germany and Spain offset declines in France due to client losses.

The Rest of World saw good growth in the half. China grew 4.8% in the second quarter, as that market continued to recover from Covid-related impacts, albeit at a slower pace than anticipated. India moved into growth in Q2 against a strong comparative of 48% growth in Q2 2022.

Top five markets – revenue less pass-through costs

% LFL +/(-)

USA

UK

Germany

China

India

Q2 2023

(4.5)

9.0

6.6

4.8

2.5

H1 2023

(1.2)

8.2

5.4

(4.0)

0.8

Client sector review

Client sector – revenue less pass-through costs

H1 2023

% share

% growth +/(-)

CPG

26.1

15.1

Tech & Digital Services

17.8

(4.9)

Healthcare & Pharma

12.5

4.2

Automotive

10.2

(0.2)

Retail

9.5

(7.9)

Telecom, Media & Entertainment

6.2

(1.4)

Financial Services

6.1

10.0

Other

5.5

(0.3)

Travel & Leisure

3.6

8.9

Government, Public Sector & Non-profit

2.5

3.6

Strategic progress

There have never been more opportunities for advertisers to reach consumers, reflected in the plethora of marketing channels available. In this increasingly complex world, WPP’s unique position and offer is more relevant than ever. Our clients continue to invest in their brands and seek our support as they navigate this complexity.

Clients:We have won $2.0bn of net new business billings in the first half (H1 2022: $3.4bn) including the potential loss of certain Pfizer assignments currently held by WPP integrated creative agencies. Key assignment wins included Maruti Suzuki (media), Pernod Ricard (creative), Reckitt (media), Beko (creative), and Costa Coffee (PR).

Our Vantage global client satisfaction survey has shown the key measure of “Likely To Recommend” has remained at all-time high levels with an increase in scores related to world-class creativity.

Creativity and awards: Creativity is at the heart of our offer, and we continue to be recognised for our creative excellence. WPP had another successful year at Cannes Lions International Festival of Creativity, winning a total of 165 Lions including one Titanium Lion, five Grand Prix, and 24 Gold awards. Mindshare was also named Media Network of the Year.

Earlier in the year, WARC named WPP the top company in all three of their rankings, the Creative 100, Effective 100 and Media 100 lists. Ogilvy ranked as the top network of the year in both the Creative 100 and Effective 100 while EssenceMediacom took first place in the Media 100. In addition, the Effie Awards named WPP the most effective communication company in the world, with Ogilvy placing first in the most effective agency network rankings.

Investment for growth: We have invested in strategically important areas and growth markets. We acquired Goat, a London-based, data-driven influencer marketing agency; Obviously, a New York-based, technology-led influencer marketing agency; 3K Communication, a Frankfurt-based healthcare PR agency; and amp, one of the world’s leading sonic branding companies. We also made a minority investment in Majority, a diversity-focused US creative agency.

In July, KKR completed their minority investment to become a 29% shareholder in FGS Global, after acquiring all of Golden Gate Capital’s equity and a proportion of the interests of WPP and FGS Global management. WPP remains the majority owner at 51%. The transaction valued FGS Global at $1.425bn.

We have invested organically in new technology platforms to provide a future-facing offer to clients and innovate for the medium term. The main areas of investment are in Choreograph, our data company, and WPP Open, our AI-powered technology platform.

We believe that AI will be fundamental to WPP’s business and are excited by its transformational potential. Our expertise in the application of AI to marketing is based on investments that we have been making over many years, including the appointment of a Head of Creative AI in 2019 and the acquisition of Satalia in 2021.

AI is used extensively across our business today, particularly in GroupM and in Hogarth, our creative production business. Our application of AI includes automation of workflows, speeding up the process of ideation and concepting, and producing innovative creative work for clients. An example is our work for Cadbury’s in India which used AI to allow Bollywood superstar Shah Rukh Khan to produce personalised ads for local businesses which won a Titanium Lion for Creativity at the 2022 Cannes Lions festival and won again at the festival in 2023, securing a Grand Prix for Creative Effectiveness.

We are working with technology from all the main AI companies, including Adobe, Google, IBM, Microsoft, Nvidia, and OpenAI, with dedicated enterprise platforms, proprietary to WPP, to deliver work to clients that protects their information. We recognise the challenges of AI to society and have implemented legal and ethical guidelines to help us responsibly deploy this technology.

In May, WPP and Nvidia announced plans to develop a content engine that harnesses NVIDIA Omniverse™ and AI to enable creative teams to produce high-quality commercial content faster, more efficiently and at scale while staying fully aligned with a client’s brand.

The new engine connects an ecosystem of 3D design, manufacturing and creative supply chain tools, including those from Adobe and Getty Images, letting WPP’s artists and designers integrate 3D content creation with generative AI. This enables our clients to reach consumers in highly personalised and engaging ways, while preserving the quality, accuracy and fidelity of their company’s brand identity, products and logos.

Talent: Our success is driven by our exceptional talent. We have continued to invest to attract, engage and develop the best talent in our industry. In May, we hired Corey duBrowa, one of the industry’s most highly regarded communications leaders, as Chief Executive of BCW.

We have invested in education and training, including through our Future Readiness Academies, a bespoke global learning programme available to everyone across WPP. We also launched the second cohort of our Creative Technology Apprenticeship, a nine-month intensive programme where apprentices learn creative technology skills using the latest software and hardware to prepare them for a career in today’s creative technology field. In addition, we sponsored a cohort of WPP leaders through a Postgraduate Diploma in AI for Business at Oxford University’s Saїd Business School, with 28 senior executives graduating earlier this year.

Transformation: We are making progress on our transformation plan which we set out in December 2020, designed to achieve £600m in gross annual cost efficiencies by 2025. We are on target to achieve our annual run-rate of £450m in efficiencies this year, against a 2019 baseline.

We opened five new campuses, in Atlanta, Austin, Guangzhou, Manchester and Paris, in the half, taking the total to 38 campuses. By the end of the year, we intend to open two further campuses and will accommodate around 60,000 of our people in campus buildings.

A review of our property portfolio has led to ongoing actions including the further consolidation of our operations in campuses across the US, in New York and other cities.

Purpose and ESG

WPP’s purpose is to use the power of creativity to build better futures for our people, planet, clients and communities. During the first six months of the year we have made good progress in fulfilling our commitments in each pillar of our purpose statement.

People: We are committed to our $30m pledge, set out in June 2020, to fund inclusion programmes within WPP and to support external organisations, as part of our Racial Equity Programme. WPP agencies globally apply to receive resources to create and run impactful programmes to advance racial equity. During the quarter, the programme received applications for its fourth round of funding.

Planet:In 2021, we announced our commitment to reduce carbon emissions from our own operations to net zero by 2025 and across our supply chain by 2030. Our net zero pledges are backed by science-based reduction targets, which have been verified by the Science-Based Targets initiative. We have committed to reducing our absolute Scope 1 and 2 emissions by at least 84% by 2025 and reduce Scope 3 emissions by at least 50% by 2030, both from a 2019 base year.

In April, our 2022 Sustainability Report reported that we have delivered a reduction in Scope 1 and 2 emissions of 71% in absolute terms since our 2019 baseline.

WPP maintained a low risk rating in the 2023 Sustainalytics risk rating, which scores the ESG performance of companies. WPP has the lowest risk rating of its peer group and saw an improvement in its score from 12.1 in 2022 to 10.6 in 2023.

Clients:We are proud to enable our clients in their own sustainability journeys and ensure client work is inclusive and accessible. At the Cannes Lions Festival of Creativity 2023 we were recognised for our purpose-driven client work including a Titanium Lion for Corona’s Extra Lime campaign in which Corona partnered with local governments to equip and educate farmers to expand their lime yield, and a Grand Prix for Dove’s #TurnYourBack campaign which raised awareness of the harmful impact of toxic beauty content.

Communities: We make a positive contribution to the communities in which we live and work. WPP collaborated with The One Club for Creativity to introduce ONE School UK, a free intensive portfolio programme spanning 16 weeks, aiming to provide opportunities for promising Black creatives based in the UK. Funded by WPP’s Racial Equity Programme, the virtual ONE School UK welcomed its inaugural cohort in March 2023.

Outlook

We are updating our guidance for 2023 as follows:

 

Like-for-like revenue less pass-through costs growth of 1.5-3.0% for FY 2023 (previously 3-5%); guidance for FY 2023 headline operating margin of around 15% (excluding the impact of FX) maintained

 

Other 2023 financial guidance:

  • Mergers and acquisitions will add 0.5-1.0% to revenue less pass-through costs growth

  • FX impact: current rates (at 31 July 2023) imply a c.2.0% drag on FY 2023 revenues less pass-through costs and a c.0.25pt drag on FY 2023 headline operating margin

  • Headline income from associates is expected to be around 40m5
  • Effective tax rate (measured as headline tax as a % of headline profit before tax) of around 27%

  • Capex of around £250m (previously £300m)

  • Restructuring and property costs of around £400m, consisting of costs of £180m detailed in prior guidance with the addition of £220m of cost relating to the 2023 property review (of which £200m is non-cash)

  • Trade working capital expected to be broadly flat year-on-year, with operational improvement offsetting increased client focus on cash management

  • Non-trade working capital expected to be an outflow of £150m

  • Average adjusted net debt/headline EBITDA within the range of 1.5x-1.75x

  • Year-end adjusted net debt flat year-on-year

Medium-term guidance

We remain confident in our ability to deliver annual revenue less pass-through costs growth of 3-4% and headline operating profit margin of 15.5-16%, as a result of the actions we have taken to broaden and strengthen our services, to increase our exposure to attractive industry segments and to leverage our global scale.

Financial results

Unaudited headline income statement6:
 

Six months ended (£m)

30 June 2023

30 June 2022

+/(-) % reported

+/(-) % LFL

 

 

 

 

 

Revenue

7,221

6,755

6.9

3.5

Revenue less pass-through costs

5,811

5,509

5.5

2.0

Operating profit

666

639

4.3

2.7

Operating profit margin %

11.5%

11.6%

(0.1pt*)

0.1pt*

Income from associates

8

12

(38.2)

 

PBIT

674

651

3.5

 

Net finance costs

(128)

(89)

(43.5)

 

Profit before tax

546

562

(2.9)

 

Tax

(148)

(143)

(3.1)

 

Profit after tax

398

419

(5.0)

 

Non-controlling interests

(37)

(43)

13.7

 

Profit attributable to shareholders

361

376

(4.0)

 

Diluted EPS

33.1p

33.0p

0.3

 
 

*margin points

Reconciliation of profit before tax to headline operating profit:
 

Six months ended (£m)

30 June 2023

30 June 2022

 

 

 

Profit before taxation

204

419

Finance and investment income

(102)

(56)

Finance costs

231

145

Revaluation and retranslation of financial instruments

(26)

(33)

Profit before interest and taxation

307

475

(Earnings)/loss from associates – after interest and tax

(1)

64

Operating profit

306

539

Goodwill impairment

53

–

Amortisation and impairment of acquired intangible assets

36

31

Investment and other impairment charges

11

–

Losses on disposal of investments and subsidiaries

3

48

Gains on remeasurement of equity interests arising from a change in scope of ownership

–

(60)

Litigation settlement

(10)

–

Restructuring and transformation costs

87

81

Property related costs

180

–

Headline operating profit

666

639

Business sector review7

Revenue analysis

 

Q2

 

H1

 

£m

+/(-) %

reported

+/(-) % LFL

 

£m

+/(-) %

reported

+/(-) % LFL

Global Int. Agencies

3,211

3.3

2.9

 

6,107

7.2

4.0

Public Relations

311

2.2

1.7

 

618

7.6

2.7

Specialist Agencies

239

(4.7)

(4.6)

 

496

3.0

(1.3)

Total Group

3,761

2.7

2.3

 

7,221

6.9

3.5

Revenue less pass-through costs analysis

 

Q2

 

H1

 

£m

+/(-) %

reported

+/(-) % LFL

 

£m

+/(-) %

reported

+/(-) % LFL

Global Int. Agencies

2,474

1.8

1.5

 

4,782

5.4

2.2

Public Relations

292

2.3

2.0

 

584

6.7

2.1

Specialist Agencies

216

(1.8)

(1.6)

 

445

4.5

0.2

Total Group

2,982

1.6

1.3

 

5,811

5.5

2.0

Headline operating profit analysis

£m

2023

% margin*

2022

% margin*

Global Int. Agencies

540

11.3

507

11.2

Public Relations

88

15.0

83

15.2

Specialist Agencies

38

8.6

49

11.4

Total Group

666

11.5

639

11.6

* Headline operating profit as a percentage of revenue less pass-through costs

Regional review

Revenue analysis

 

Q2

 

H1

 

£m

% reported

%

LFL

 

£m

% reported

%

LFL

N. America

1,376

(1.6)

(2.1)

 

2,744

6.1

0.4

United Kingdom

567

14.6

12.7

 

1,065

11.3

10.4

W Cont. Europe

781

6.8

4.3

 

1,477

9.3

5.0

AP, LA, AME, CEE*

1,037

(0.2)

2.3

 

1,935

4.0

3.6

Total Group

3,761

2.7

2.3

 

7,221

6.9

3.5
 

* Asia Pacific, Latin America, Africa & Middle East and Central & Eastern Europe

Revenue less pass-through costs analysis

 

Q2

 

H1

 

£m

% reported

%

LFL

 

£m

% reported

%

LFL

N. America

1,134

(3.3)

(4.1)

 

2,284

4.4

(1.2)

United Kingdom

419

9.0

9.0

 

796

8.0

8.2

W Cont. Europe

621

7.3

3.9

 

1,179

8.5

3.7

AP, LA, AME, CEE

808

1.2

4.3

 

1,552

3.6

3.1

Total Group

2,982

1.6

1.3

 

5,811

5.5

2.0

Headline operating profit analysis

£m

2023

% margin*

2022

% margin*

N. America

287

12.6

300

13.7

United Kingdom

98

12.3

67

9.1

W Cont. Europe

111

9.4

99

9.1

AP, LA, AME, CEE

170

11.0

173

11.6

Total Group

666

11.5

639

11.6
 

* Headline operating profit as a percentage of revenue less pass-through costs

Operating profitability

Reported profit before tax was £204m, compared to £419m in the prior period, principally reflecting the impairment taken as a result of the 2023 property review.

Reported profit after tax was £149m compared to £301m in the prior period.

Headline EBITDA (including IFRS 16 depreciation) for the first half was up 2.9% to £767m. Headline operating profit was up 4.3% to £666m.

Headline operating profit margin was down 10 basis points to 11.5% and up 10 basis points year on year on a constant currency basis. Total operating costs were up 5.7% to £5.1bn. Staff costs, excluding incentives, were up 5.4% year-on-year to £4.0bn, including severance costs of £40m (H1 2022: £17m), partially offset by good control over our freelance spend. Severance costs increased as we aligned headcount to market conditions. Incentive costs were £172m, compared to £164m in the first half of 2022.

Establishment costs were up 3.6% at £272m while IT costs were up 13.6% at £350m, reflecting investment in our IT infrastructure, cyber security and a move to cloud computing.

Personal costs rose 16.3% to £112m, reflecting higher client-related business travel, and other operating expenses were down 1.0% at £270m.

On a like-for-like basis, the average number of people in the Group in the first half was 115,000 compared to 113,000 in the first half of 2022. The total number of people as at 30 June 2023 was 114,000 compared to 115,000 as at 30 June 2022.

Adjusting items

The Group incurred £360m of adjusting items in the first half of 2023, mainly relating to restructuring and transformation costs and property and goodwill impairments. This compares with net adjusting items in the first half of 2022 of £100m.

Restructuring costs related to IT and other transformation were £87m in the first half of 2023 (H1 2022: £81m), in line with expectations and as guided. Charges related to the 2023 property review were £180m and relate to lease impairments, primarily in the US, all of which are non-cash. For the full year 2023 we expect adjusting items of around £400m, consisting of £180m detailed in prior guidance with the addition of £220m of charges relating to the 2023 property review (of which £200m is non-cash).

Goodwill impairment, amortisation of acquired intangibles and investment write-downs were £101m in the first half (H1 2022: £31m).

Interest and taxes

Net finance costs (excluding the revaluation of financial instruments) were £128m, an increase of £39m year-on-year, due to higher levels of debt and lower investment income partially offset by higher interest earned on cash.

The headline tax rate (based on headline profit before tax) was 27.0% (2022: 25.5%) and on reported profit before tax was 26.9% (2022: 28.1%). The increase in the headline tax rate is driven by changes in tax rates or tax bases in the markets in which we operate. Given the Group’s geographic mix of profits and the changing international tax environment, the tax rate is expected to increase over the next few years.

Earnings and dividend

Reported profit before tax was down 51.2% to £204m. Headline profit before tax was down 2.9% to £546m.

Profits attributable to share owners were £112m, compared to a profit of £258m in the prior period.

Headline diluted earnings per share from continuing operations rose by 0.3% to 33.1p. Reported diluted earnings per share, on the same basis, was 10.3p, compared to 22.7p in the prior period.

For 2023, the Board is declaring an interim dividend of 15.0p (2022: 15.0p). The record date for the interim dividend is 13 October 2023, and the dividend will be payable on 3 November 2023.

Further details of WPP’s financial performance are provided in Appendix 1.

Cash flow highlights

Six months ended (£ million)

30 June 2023

30 June 2022

Operating profit

306

539

Depreciation and amortisation

259

255

Impairments and investment write-downs

204

8

Lease payments (inc interest)

(184)

(190)

Non-cash compensation

76

67

Net interest paid

(47)

(60)

Tax paid

(171)

(163)

Capex

(104)

(117)

Earnout payments

(12)

(63)

Other

(37)

(9)

Trade working capital

(522)

(1,015)

Other receivables, payables and provisions

(523)

(726)

Adjusted free cash flow

(755)

(1,474)

Disposal proceeds

14

34

Net initial acquisition payments

(203)

(46)

Share purchases

(37)

(681)

Net cash flow

(981)

(2,167)

Net cash outflow for the first half was £1.0bn, compared to £2.2bn in the first half of 2022. The main drivers of the cash flow performance year-on-year were lower reported operating profit and higher consideration for acquisitions offset by a continued focus on working capital management and lower share purchases. A summary of the Group’s unaudited cash flow statement and notes for the six months to 30 June 2023 is provided in Appendix 1.

Balance sheet highlights

As at 30 June 2023 we had cash and cash equivalents of £1.5bn (H1 2022: £1.5bn) and total liquidity, including undrawn credit facilities, of £3.6bn. Average adjusted net debt8 in the first half was £3.6bn, compared to £2.6bn in the prior period, at 2023 exchange rates. On 30 June 2023 adjusted net debt was £3.5bn, against £3.1bn on 30 June 2022, an increase of £0.3bn on reported basis and at 2023 exchange rates.

We spent £37m on share purchases in the first half of the year to offset dilution from share-based payments.

Our bond portfolio at 30 June 2023 had an average maturity of 5.8 years.

In May 2023, we refinanced the November 2023 €750m bond as planned, issuing a May 2028 €750m bond priced at 4.125%.

The average adjusted net debt to EBITDA ratio in the 12 months to 30 June 2023 is 1.68x, which excludes the impact of IFRS 16.

A summary of the Group’s unaudited balance sheet and notes as at 30 June 2023 is provided in Appendix 1.

____________________________
1 Percentage change in reported sterling.
2 Like-for-like. LFL comparisons are calculated as follows: current year, constant currency actual results (which include acquisitions from the relevant date of completion) are compared with prior year, constant currency actual results from continuing operations, adjusted to include the results of acquisitions and disposals for the commensurate period in the prior year. Both periods exclude results from Russia.
3 In this press release not all of the figures and ratios used are readily available from the unaudited interim results included in Appendix 1. Management believes these non-GAAP measures, including constant currency and like-for-like growth, revenue less pass-through costs and headline profit measures, are both useful and necessary to better understand the Group’s results. Where required, details of how these have been arrived at are shown in Appendix 2.
4Prior year figures have been re-presented to reflect the reallocation of a number of businesses between Global Integrated Agencies and Public Relations.
5In accordance with IAS 28: Investments in Associates and Joint Ventures once an investment in an associate reaches zero carrying value, the Group does not recognise any further losses, nor income, until the cumulative share of income returns the carrying value to above zero. WPP’s cumulative reported share of losses in Kantar reduced the carrying value of the investment to zero at the end of December 2022.
6Non-GAAP measures in this table are reconciled in Appendix 1.
7Prior year figures have been re-presented to reflect the reallocation of a number of businesses between Global Integrated Agencies and Public Relations.
8Average adjusted net debt calculated based on a month-end average.

 

Investors and analysts

Tom Waldron

+44 7788 695864

Anthony Hamilton

+44 7464 532903

Caitlin Holt

+44 7392 280178

[email protected]

Media

Chris Wade

+44 20 7282 4600

Richard Oldworth

+44 7710 130 634

Buchanan Communications

+44 20 7466 5000

wpp.com/investors

KEYWORDS: Europe United States United Kingdom North America New York

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Posted on

TOP Ships Announces Management Estimate of Net Asset Value of $285 Million, Net Asset Value per Share of $14.02 and Diluted Net Asset Value per Share of $4.97

ATHENS, Greece, Aug. 04, 2023 (GLOBE NEWSWIRE) — TOP Ships Inc. (the “Company” or “Top Ships”) (NASDAQ:TOPS), an international owner and operator of modern, fuel efficient “ECO” tanker vessels, announced today that following the release of the Company’s financial results for the period ended June 30, 2023 the management estimates the company’s Net Asset Value (“NAV”), as of June 30, 2023 to be $285.3 million.

This translates into an NAV of $14.02 per common share (based on number of common shares currently outstanding) and $4.97 per common share on a fully diluted basis (assuming exercise of all outstanding warrants for cash and conversion of all outstanding Series E perpetual preferred shares at their current conversion price).

About TOP Ships Inc.

TOP Ships Inc. is an international owner and operator of modern, fuel efficient eco tanker vessels focusing on the transportation of crude oil, petroleum products (clean and dirty) and bulk liquid chemicals.

For more information about TOP Ships Inc., visit its website: www.topships.org.

Forward-Looking Statements

Matters discussed in this press release may constitute forward-looking statements. The Private Securities Litigation Reform Act of 1995 provides safe harbor protections for forward-looking statements in order to encourage companies to provide prospective information about their business. Forward-looking statements include statements concerning plans, objectives, goals, strategies, future events or performance, and underlying assumptions and other statements, which are other than statements of historical facts.

The Company desires to take advantage of the safe harbor provisions of the Private Securities Litigation Reform Act of 1995 and is including this cautionary statement in connection with this safe harbor legislation. The words “believe,” “anticipate,” “intends,” “estimate,” “forecast,” “project,” “plan,” “potential,” “may,” “should,” “expect” “pending” and similar expressions identify forward-looking statements. The forward-looking statements in this press release are based upon various assumptions, many of which are based, in turn, upon further assumptions, including without limitation, our management’s examination of historical operating trends, data contained in our records and other data available from third parties. Although we believe that these assumptions were reasonable when made, because these assumptions are inherently subject to significant uncertainties and contingencies which are difficult or impossible to predict and are beyond our control, we cannot assure you that we will achieve or accomplish these expectations, beliefs or projections.

For further information please contact:

Alexandros Tsirikos
Chief Financial Officer
TOP Ships Inc.
Tel: +30 210 812 8107
Email: [email protected]



Posted on

Advantage Solutions Reports Second Quarter 2023 Financial Results and Reaffirms Annual Outlook

IRVINE, Calif., Aug. 04, 2023 (GLOBE NEWSWIRE) — Advantage Solutions Inc. (NASDAQ: ADV) (“Advantage,” “Advantage Solutions,” the “Company,” “we” or “our”), a leading provider of outsourced sales and marketing services to consumer goods manufacturers and retailers, today reported financial results for its second quarter ended June 30, 2023. The results continue to reflect a trendline of improving revenue and Adjusted EBITDA performance for the Company. Revenues for the quarter grew 5.7% year-over-year, an increase of 6.1% excluding foreign exchange, to reach $1.0 billion, and Adjusted EBITDA for the quarter reached $104.2 million, down 3.8% year-over year with a margin decline of approximately 100 basis points. The decline in Adjusted EBITDA reflects an improvement in dollar and margin trajectory relative to prior quarter (which, in the first quarter of 2023, had decreased 4.8% in dollars and approximately 150 basis points in margin, in each case, on a year-over-year basis) and includes the impact of the completed divestiture.

“We’re proud to deliver another consecutive quarter of strong company performance while advancing our transformation journey to position Advantage for long-term, profitable growth,” said Advantage Solutions CEO Dave Peacock. “We‘re taking a strategic approach to strengthen our culture, simplify our operations, improve our financial discipline and enhance our processes as a unified company. These efforts are designed to deliver more value to our stakeholders and better position our business in the marketplace. Our reach, relationships, insights and expertise are unmatched, and I remain confident in our capabilities delivering critical, need-to-have solutions for the world’s largest CPG and retail companies.”

Peacock continued, “Despite an unprecedently tight labor supply, our year-over-year topline growth of approximately 6% in the second quarter was primarily driven by continued volume growth as well as success in pricing realization. Our capital allocation philosophy has maintained a focus on maximizing returns for our equity holders, including deleveraging our balance sheet, as reinforced by our continued voluntary repurchases of our term loan, and investing behind our core business offerings. Over the quarter, we continued to bolster our roster of world-class talent, and our executive leadership team is working hard to implement best-in-class practices across the enterprise. We plan to continue growing value for our stakeholders.”

Second Quarter 2023 Highlights

Revenues

  Three Months Ended June 30,   Change
(amounts in thousands)   2023     2022   $   %
Sales $ 599,828   $ 604,132   $ (4,304 )   (0.7 )%
Marketing   437,227     376,944     60,283     16.0 %
Total revenues $ 1,037,055   $ 981,076   $ 55,979     5.7 %
                         

Adjusted EBITDA and Adjusted EBITDA by Segment

  Three Months Ended June 30,   Change
(amounts in thousands)   2023     2022   $   %
Sales $ 63,678   $ 71,753   $ (8,075 )   (11.3 )%
Marketing   40,534     36,569     3,965     10.8 %
Total Adjusted EBITDA $ 104,212   $ 108,322   $ (4,110 )   (3.8 )%
                         
  • Revenues for the second quarter were $1,037.1 million, up $56.0 million, or 5.7%, from second quarter 2022 revenues of $981.1 million. Excluding the impact of unfavorable foreign exchange rates and acquisitions / divestitures, revenues increased 7.7%.
  • Operating income in the quarter was $22.3 million, compared with operating income of $28.3 million in the second quarter of 2022.
  • Adjusted EBITDA in the quarter was $104.2 million compared with Adjusted EBITDA of $108.3 million in the second quarter of 2022.
  • Net loss in the quarter was $7.8 million compared with net income of $3.7 million in the second quarter of 2022.

The year-over-year increase in revenues was driven by $60.3 million of growth in the marketing segment (an increase of 16% year-over-year) with a sales segment decline of $4.3 million, or 1% year over year. Second quarter growth in the marketing segment was driven primarily by the continued recovery of our in-store sampling and demonstration services, with digital services starting to show signs of stabilization. The second quarter decline in the sales segment was driven by the completed divestiture and intentional and previously anticipated client exit, partially offset by an increase in retail merchandising services, pricing realization and growth in our European joint venture.

The $6.0 million decline to $22.3 million of operating income was primarily due to inflationary cost pressures, the completed divestiture and ongoing mix shift dynamics across the enterprise.

The year-over-year decline in Adjusted EBITDA was primarily due to the decline in operating income.

The year-over-year decrease in net income was driven by the decline in operating income and an increase in interest expense due to the rising interest rate environment, partially offset by lower debt balances.

Balance Sheet Highlights

As of June 30, 2023, the Company’s cash and cash equivalents were $164.7 million, total debt was $2,019.8 million and Net Debt was $1,855.1 million. The debt capitalization consists primarily of the $1,237.5 million First Lien Term Loan and $775.0 million of senior secured notes as of June 30, 2023.

During the quarter, Advantage voluntarily repurchased approximately $52.4 million of its First Lien Term Loan at an attractive discount, resulting in a net leverage ratio of approximately 4.3x LTM Adjusted EBITDA as of June 30, 2023. Approximately 85% of the Company’s debt is hedged or at a fixed interest rate.

Fiscal Year 2023 Outlook

The Company is reiterating its guidance for fiscal 2023 with Adjusted EBITDA anticipated to range from $400 million to $420 million, including the impact of completed divestitures. Our guidance contemplates the continued realization of pricing, growth in in-store sampling and demonstration events and further investments behind technology and talent.

Conference Call Details

Advantage will host a conference call at 8:30 am ET on August 4, 2023 to discuss its second quarter 2023 financial performance and business outlook. To participate, please dial 877-407-4018 within the United States or +1-201-689-8471 outside the United States approximately 10 minutes before the scheduled start of the call. The conference ID for the call is 13739354. The conference call will also be accessible live via audio broadcast on the Investor Relations section of the Advantage website at ir.advantagesolutions.net.

A replay of the conference call will be available online on the investor section of the Advantage website. In addition, an audio replay of the call will be available for one week following the call and can be accessed by dialing 844-512-2921 within the United States or +1-412-317-6671 outside the United States. The replay ID is 13739354.

About Advantage Solutions

Advantage Solutions (NASDAQ: ADV) is a leading provider of outsourced sales and marketing solutions that is uniquely positioned at the intersection of brands and retailers. Our data- and technology-driven services — which include headquarter sales, retail merchandising, in-store and online sampling, digital commerce, omnichannel marketing, retail media and others — help brands and retailers of all sizes get products into the hands of consumers, wherever they shop. As a trusted partner and problem solver, we help our clients sell more while spending less. Headquartered in Irvine, California, Advantage has offices throughout North America and strategic investments in select markets throughout Africa, Asia, Australia and Europe through which the Company serves the global needs of multinational, regional and local manufacturers. For more information, please visit advantagesolutions.net.

Included with this press release are the Company’s consolidated and condensed financial statements as of and for the three and six months ended June 30, 2023. These financial statements should be read in conjunction with the information contained in the Company’s Quarterly Report on Form 10-Q, to be filed with the Securities and Exchange Commission on August 4, 2023.

Forward-Looking Statements  

Certain statements in this press release may be considered forward-looking statements within the meaning of the federal securities laws, including statements regarding the expected future performance of Advantage’s business and projected financial results. Forward-looking statements generally relate to future events or Advantage’s future financial or operating performance. These forward-looking statements generally are identified by the words “may”, “should”, “expect”, “intend”, “will”, “would”, “could”, “estimate”, “anticipate”, “believe”, “predict”, “confident”, “potential” or “continue”, or the negatives of these terms or variations of them or similar terminology. Such forward-looking statements are predictions, projections and other statements about future events that are based on current expectations and assumptions and, as a result, are subject to risks, uncertainties and other factors which could cause actual results to differ materially from those expressed or implied by such forward looking statements.

These forward-looking statements are based upon estimates and assumptions that, while considered reasonable by Advantage and its management at the time of such statements, are inherently uncertain. Factors that may cause actual results to differ materially from current expectations include, but are not limited to, market-driven wage changes or changes to labor laws or wage or job classification regulations, including minimum wage; the COVID-19 pandemic and the measures taken in response thereto; the availability, acceptance, administration and effectiveness of any COVID-19 vaccine; Advantage’s ability to continue to generate significant operating cash flow; client procurement strategies and consolidation of Advantage’s clients’ industries creating pressure on the nature and pricing of its services; consumer goods manufacturers and retailers reviewing and changing their sales, retail, marketing and technology programs and relationships; Advantage’s ability to successfully develop and maintain relevant omni-channel services for our clients in an evolving industry and to otherwise adapt to significant technological change; Advantage’s ability to maintain proper and effective internal control over financial reporting in the future; potential and actual harms to Advantage’s business arising from the Take 5 Matter; Advantage’s substantial indebtedness and our ability to refinance at favorable rates; and other risks and uncertainties set forth in the section titled “Risk Factors” in the Annual Report on Form 10-K filed by the Company with the Securities and Exchange Commission (the “SEC”) on March 1, 2023, and in its other filings made from time to time with the SEC. These filings identify and address other important risks and uncertainties that could cause actual events and results to differ materially from those contained in the forward-looking statements. Forward-looking statements speak only as of the date they are made. Readers are cautioned not to put undue reliance on forward-looking statements, and Advantage assumes no obligation and does not intend to update or revise these forward-looking statements, whether as a result of new information, future events or otherwise, except as required by law.

Non-GAAP Financial Measures and Related Information

This press release includes certain financial measures not presented in accordance with generally accepted accounting principles (“GAAP”), including Adjusted EBITDA and Net Debt. These are not measures of financial performance calculated in accordance with GAAP and may exclude items that are significant in understanding and assessing Advantage’s financial results. Therefore, the measures are in addition to, and not a substitute for or superior to, measures of financial performance prepared in accordance with GAAP, and should not be considered in isolation or as an alternative to net income, cash flows from operations or other measures of profitability, liquidity or performance under GAAP. You should be aware that Advantage’s presentation of these measures may not be comparable to similarly titled measures used by other companies. Reconciliations of historical non-GAAP measures to their most directly comparable GAAP counterparts are included below.

Advantage believes these non-GAAP measures provide useful information to management and investors regarding certain financial and business trends relating to Advantage’s financial condition and results of operations. Advantage believes that the use of Adjusted EBITDA and Net Debt provides an additional tool for investors to use in evaluating ongoing operating results and trends and in comparing Advantage’s financial measures with other similar companies, many of which present similar non-GAAP financial measures to investors. Non-GAAP financial measures are subject to inherent limitations as they reflect the exercise of judgments by management about which expense and income are excluded or included in determining these non-GAAP financial measures. Additionally, other companies may calculate non-GAAP measures differently, or may use other measures to calculate their financial performance, and therefore Advantage’s non-GAAP measures may not be directly comparable to similarly titled measures of other companies.

Adjusted EBITDA means net (loss) income before (i) interest expense, net, (ii) provision for (benefit from) income taxes, (iii) depreciation, (iv) amortization of intangible assets, (v) equity-based compensation of Karman Topco L.P., (vi) changes in fair value of warrant liability, (vii) stock based compensation expense, (viii) fair value adjustments of contingent consideration related to acquisitions, (ix) acquisition-related expenses, (x) loss on disposal of assets, (xi) costs associated with COVID-19, net of benefits received, (xii) EBITDA for economic interests in investments, (xiii) reorganization and restructuring expenses, (xiv) litigation expenses, (xv) recovery from Take 5, (xvi) costs associated with the Take 5 Matter and (xvii) other adjustments that management believes are helpful in evaluating our operating performance.

Net Debt represents the sum of current portion of long-term debt and long-term debt, less cash and cash equivalents and debt issuance costs. With respect to Net Debt, cash and cash equivalents are subtracted from the GAAP measure, total debt, because they could be used to reduce the debt obligations. We present Net Debt because we believe this non-GAAP measure provides useful information to management and investors regarding certain financial and business trends relating to the Company’s financial condition and to evaluate changes to the Company’s capital structure and credit quality assessment.

Due to rounding, numbers presented throughout this document may not add up precisely to the totals provided and percentages may not precisely reflect the absolute figures.

This press release also includes certain estimates and projections of Adjusted EBITDA, including with respect to expected fiscal 2023 results. Due to the high variability and difficulty in making accurate estimates and projections of some of the information excluded from Adjusted EBITDA, together with some of the excluded information not being ascertainable or accessible, Advantage is unable to quantify certain amounts that would be required to be included in the most directly comparable GAAP financial measures without unreasonable effort. Consequently, no disclosure of estimated or projected comparable GAAP measures is included and no reconciliation of such forward-looking non-GAAP financial measures is included.

Advantage Solutions Inc.

Condensed Consolidated Balance Sheets

(Unaudited)

  June 30,   December 31,
(in thousands, except share data)   2023       2022  
ASSETS      
Current assets      
Cash and cash equivalents $ 164,678     $ 120,715  
Restricted cash   17,474       17,817  
Accounts receivable, net of allowance for expected credit losses
    of $31,053 and $22,752, respectively		   816,348       869,000  
Prepaid expenses and other current assets   121,639       149,476  
Total current assets   1,119,139       1,157,008  
Property and equipment, net   76,075       70,898  
Goodwill   890,286       887,949  
Other intangible assets, net   1,791,995       1,897,503  
Investments in unconsolidated affiliates   130,359       129,491  
Other assets   114,245       119,522  
Total assets $ 4,122,099     $ 4,262,371  
LIABILITIES AND STOCKHOLDERS’ EQUITY      
Current liabilities      
Current portion of long-term debt $ 15,522     $ 13,991  
Accounts payable   218,445       261,464  
Accrued compensation and benefits   155,018       154,744  
Other accrued expenses   156,454       133,173  
Deferred revenues   50,084       37,329  
Total current liabilities   595,523       600,701  
Long-term debt, net of current portion   1,966,211       2,022,819  
Deferred income tax liabilities   264,983       297,874  
Other long-term liabilities   94,992       111,507  
Total liabilities   2,921,709       3,032,901  
       
       
Redeemable noncontrolling interest   3,784       3,746  
       
Equity attributable to stockholders of Advantage Solutions Inc.      
Common stock, $0.0001 par value, 3,290,000,000 shares
    authorized; 324,481,143 and 319,690,300 shares issued
    and outstanding as of June 30, 2023 and December 31, 2022,
    respectively		   32       32  
Additional paid in capital   3,427,490       3,408,836  
Accumulated deficit   (2,303,458 )     (2,247,109 )
Loans to Karman Topco L.P.   (6,375 )     (6,363 )
Accumulated other comprehensive loss   (13,603 )     (18,849 )
Treasury stock, at cost; 1,610,014 shares as of June 30, 2023
   and December 31, 2022, respectively		   (12,567 )     (12,567 )
Total equity attributable to stockholders of
    Advantage Solutions Inc.		   1,091,519       1,123,980  
Nonredeemable noncontrolling interest   106,087       101,744  
Total stockholders’ equity   1,197,606       1,225,724  
Total liabilities, redeemable noncontrolling interest,
    and stockholders’ equity		 $ 4,122,099     $ 4,262,371  



Advantage Solutions Inc.

Condensed Consolidated Statements of Operations and Comprehensive (Loss) Income

(Unaudited)

  Three Months Ended June 30,
(in thousands, except share and per share data)   2023       2022  
Revenues $ 1,037,055     $ 981,076  
Cost of revenues (exclusive of
   depreciation and amortization
    shown separately below)		   904,761       841,790  
Selling, general, and administrative
    expenses		      53,285       52,576  
Depreciation and amortization   56,738       58,444  
Total operating expenses   1,014,784       952,810  
Operating income   22,271       28,266  
Other expenses (income):      
Change in fair value of warrant liability   74       (4,914 )
Interest expense, net   30,459       28,188  
Total other expenses   30,533       23,274  
(Loss) income before income taxes   (8,262 )     4,992  
(Benefit from) provision for income taxes   (416 )     1,316  
Net (loss) income   (7,846 )     3,676  
Less: net income attributable
   to noncontrolling interest		   916       305  
Net (loss) income attributable to
stockholders of Advantage Solutions
Inc.		   (8,762 )     3,371  
Other comprehensive income (loss),
   net of tax:		      
Foreign currency translation
   adjustments		   3,722       (13,272 )
Total comprehensive loss
attributable to stockholders of
Advantage Solutions Inc.		 $                            (5,040 )   $                              (9,901 )
       
Basic (loss) earnings per common share $ (0.03 )   $ 0.01  
Diluted (loss) earnings per common share $ (0.03 )   $ 0.01  
       
Weighted-average number of common shares:   324,178,691       318,418,746  
Weighted-average number of common shares,
 assuming dilution		   324,178,691       319,114,865  


Advantage Solutions Inc.

Condensed Consolidated Statement of Cash Flows

(Unaudited)

  Six Months Ended June 30,
(in thousands)   2023       2022  
       
CASH FLOWS FROM OPERATING ACTIVITIES      
Net (loss) income $ (55,524 )   $ 21,210  
Adjustments to reconcile net (loss) income to net cash provided by
 operating activities		      
Noncash interest income   (9,458 )     (26,564 )
Amortization of deferred financing fees   4,238       4,428  
Depreciation and amortization   113,842       116,212  
Change in fair value of warrant liability   —       (20,356 )
Fair value adjustments related to contingent consideration   9,360       5,788  
Deferred income taxes   (33,179 )     (11,648 )
Equity-based compensation of Karman Topco L.P.   (3,487 )     (6,314 )
Stock-based compensation   22,436       22,732  
Equity in earnings of unconsolidated affiliates   (3,002 )     (4,687 )
Distribution received from unconsolidated affiliates   1,611       1,143  
Loss on sale of businesses and assets held for sale   17,655       —  
Gain on repurchases of Term Loan Facility debt   (4,969 )     —  
Loss on disposal of assets   —       2,850  
Changes in operating assets and liabilities, net of effects from divestitures and
   purchases of businesses:		      
Accounts receivable, net   50,006       (11,053 )
Prepaid expenses and other assets   20,489       (42,580 )
Accounts payable   (40,379 )     (26,485 )
Accrued compensation and benefits   365       (9,260 )
Deferred revenues   12,286       (539 )
Other accrued expenses and other liabilities   2,700       15,115  
Net cash provided by operating activities   104,990       29,992  
CASH FLOWS FROM INVESTING ACTIVITIES      
Purchase of businesses, net of cash acquired   —       (67,611 )
Purchase of property and equipment   (18,552 )     (21,533 )
Proceeds from divestiture   12,763       —  
Net cash used in investing activities   (5,789 )     (89,144 )
CASH FLOWS FROM FINANCING ACTIVITIES      
Borrowings under lines of credit   72,735       67,134  
Payments on lines of credit   (71,278 )     (22,034 )
Proceeds from issuance of long-term debt   —       278  
Proceeds from government loans for COVID-19 relief   1,384       —  
Principal payments on long-term debt   (6,786 )     (6,653 )
Repurchases of Term Loan Facility debt   (49,427 )     —  
Proceeds from issuance of common stock   1,193       1,653  
Payments for taxes related to net share settlement
 under 2020 Incentive Award Plan		   (1,277 )     —  
Contingent consideration payments   (1,867 )     (20,882 )
Holdback payments   (1,598 )     (715 )
Redemption of noncontrolling interest   (154 )     —  
Net cash (used in) provided by financing activities   (57,075 )     18,781  
Net effect of foreign currency changes on cash   1,494       (6,603 )
Net change in cash, cash equivalents and restricted cash   43,620       (46,974 )
Cash, cash equivalents and restricted cash, beginning of period   138,532       180,637  
Cash, cash equivalents and restricted cash, end of period $ 182,152     $ 133,663  
SUPPLEMENTAL CASH FLOW INFORMATION      
Purchase of property and equipment recorded in accounts payable
 and accrued expenses		 $ 1,507     $ 311  



Advantage Solutions Inc.

Reconciliation of Net Income (Loss) to Adjusted EBITDA

(Unaudited)

Consolidated Three Months Ended June 30,
    2023       2022  
(in thousands)      
Net (loss) income $ (7,846 )   $ 3,676  
Add:      
Interest expense, net   30,459       28,188  
(Benefit from) provision for income taxes   (416 )     1,316  
Depreciation and amortization   56,738       58,444  
Equity-based compensation of Karman Topco L.P.(a)   (1,218 )     (3,519 )
Change in fair value of warrant liability   74       (4,914 )
Stock-based compensation expense(b)   11,226       14,961  
Fair value adjustments related to contingent consideration
 related to acquisitions(c)		   5,068       3,654  
Acquisition-related expenses(d)   498       5,998  
Loss on disposal of assets(g)   1,158       —  
EBITDA for economic interests in investments(l)   (2,457 )     (1,020 )
Reorganization and restructuring expenses(e)   5,837       253  
Litigation expenses(f)   4,350       (800 )
Costs associated with COVID-19, net of benefits received(i)   2,317       1,362  
Recovery from Take 5(n)   (1,675 )     —  
Costs associated with the Take 5 Matter(j)   99       723  
Adjusted EBITDA $ 104,212     $ 108,322  

Sales Segment Three Months Ended June 30,
    2023       2022  
(in thousands)      
Operating income $ 7,123     $ 15,177  
Add:      
Depreciation and amortization   39,390       40,543  
Equity-based compensation of Karman Topco L.P.(a)   (580 )     (2,032 )
Stock-based compensation expense(b)   6,313       9,171  
Fair value adjustments related to contingent consideration
 related to acquisitions(c)		   3,804       6,090  
Acquisition-related expenses(d)   366       3,540  
Loss on disposal of assets(g)   1,710       —  
EBITDA for economic interests in investments(l)   (2,415 )     (1,155 )
Reorganization and restructuring expenses(e)   3,340       340  
Litigation expenses (recovery)(f)   4,350       (100 )
Costs associated with COVID-19, net of benefits received(i)   277       179  
Sales Segment Adjusted EBITDA $ 63,678     $ 71,753  

Marketing Segment Three Months Ended June 30,
    2023       2022  
(in thousands)      
Operating income $ 15,148     $ 13,089  
Add:      
Depreciation and amortization   17,348       17,901  
Equity-based compensation of Karman Topco L.P.(a)   (638 )     (1,487 )
Stock-based compensation expense(b)   4,913       5,790  
Fair value adjustments related to contingent consideration
 related to acquisitions(c)		   1,264       (2,436 )
Acquisition-related expenses(d)   132       2,458  
Loss on disposal of assets(g)   (552 )     —  
EBITDA for economic interests in investments(l)   (42 )     135  
Reorganization and restructuring expenses(e)   2,497       (87 )
Litigation recovery(f)   —       (700 )
Costs associated with COVID-19, net of benefits received(i)   2,040       1,183  
Recovery from Take 5(n)   (1,675 )     —  
Costs associated with the Take 5 Matter(j)   99       723  
Marketing Segment Adjusted EBITDA $ 40,534     $ 36,569  

(a) Represents expenses related to (i) equity-based compensation expense associated with grants of Common Series D Units of Topco made to one of the equity holders of Topco and (ii) equity-based compensation expense associated with the Common Series C Units of Topco.
(b) Represents non-cash compensation expense related to the 2020 Incentive Award Plan and the 2020 Employee Stock Purchase Plan.
(c) Represents adjustments to the estimated fair value of our contingent consideration liabilities related to our acquisitions. For additional information see the condensed financial statements and footnotes to be included in the Company Form 10-Q filing for the three and six months ended June 30, 2023 and 2022.
(d) Represents fees and costs associated with activities related to our acquisitions and related reorganization activities, including professional fees, due diligence, and integration activities.
(e) Represents fees and costs associated with various internal reorganization activities, including professional fees, lease exit costs, severance, and nonrecurring compensation costs.
(f) Represents legal settlements, reserves, and expenses that are unusual or infrequent costs associated with our operating activities.
(g) Represents losses on disposal of assets related to divestitures and losses on sale of businesses and assets held for sale, less cost to sell.
(h) Represents the amortization of intangible assets recorded in connection with the 2014 Topco Acquisition and our other acquisitions.
(i) Represents (i) costs related to implementation of strategies for workplace safety in response to COVID-19, including additional sick pay for front-line associates and personal protective equipment; and (ii) benefits received from government grants for COVID-19 relief.
(j) Represents costs associated with the Take 5 Matter, primarily, professional fees and other related costs.
(k) Represents the tax provision or benefit associated with the adjustments above, taking into account the Company’s applicable tax rates, after excluding adjustments related to items that do not have a related tax impact.
(l) Represents additions to reflect our proportional share of Adjusted EBITDA related to our equity method investments and reductions to remove the Adjusted EBITDA related to the minority ownership percentage of the entities that we fully consolidate in our financial statements.
(m) Represents a gain associated with the repurchases from the Term Loan Facility during the three months ended June 30, 2023. For additional information, see the condensed financial statements and footnotes to be included in the Company Form 10-Q filing for the three and six months ended June 30, 2023 and 2022.
(n) Represents cash receipts from an insurance policy for claims related to the Take 5 Matter.
   


Advantage Solutions Inc.

Disaggregated revenues

(Unaudited)

  Three Months Ended June 30,
    2023     2022
(in thousands)      
Sales brand-centric services $ 346,763   $ 332,874
Sales retail-centric services   253,065     271,258
Total sales revenues   599,828     604,132
Marketing brand-centric services   135,312     136,340
Marketing retail-centric services   301,915     240,604
Total marketing revenues   437,227     376,944
Total revenues $ 1,037,055   $ 981,076



Advantage Solutions Inc.

Reconciliation of Total Debt to Net Debt

(Unaudited)

  June 30,   December 31,   June 30,
(in millions) 2023     2022     2022  
Current portion of long-term debt $ 15.5     $ 14.0     $ 59.8  
Long-term debt, net of current portion   1,966.2       2,022.8       2,026.0  
Less: Debt issuance costs   (38.1 )     (42.4 )     (45.4 )
Total Debt   2,019.8       2,079.2       2,131.2  
Less: Cash and cash equivalents   164.7       120.7       115.8  
Total Net Debt $ 1,855.1     $ 1,958.5     $ 2,015.4  



Contacts: 
Sean Choksi
[email protected]    



Posted on

Foghorn Therapeutics Provides Second Quarter 2023 Financial and Corporate Update

— Initiating FHD-286 combination study in AML in the third quarter of 2023

— Selective BRM, ARID1B, EP300, and CBP, targeting key regulators of gene expression, continue to advance toward IND

— Cash, cash equivalents, and marketable securities of $284.3 million, as of June 30, 2023, provides cash runway into the second half of 2025

CAMBRIDGE, Mass., Aug. 04, 2023 (GLOBE NEWSWIRE) — Foghorn® Therapeutics Inc. (Nasdaq: FHTX), a clinical-stage biotechnology company pioneering a new class of medicines that treat serious diseases by correcting abnormal gene expression, today provided a financial and corporate update in conjunction with the Company’s 10-Q filing for the quarter ended June 30, 2023. With an initial focus in oncology, Foghorn’s Gene Traffic Control® Platform and resulting broad pipeline have the potential to transform the lives of people suffering from a wide spectrum of diseases.

“Foghorn made important progress across both our clinical and preclinical pipeline in the second quarter. We successfully resolved the clinical hold for FHD-286 in AML and disclosed the clinical data from the Phase 1 study which suggested that FHD-286 is a potent, broad-based differentiation agent. We are on track to initiate dosing in a combination study of FHD-286 in AML in the third quarter. We continue to advance our selective BRM, selective CBP, selective EP300, and selective ARID1B programs, demonstrating our ability to repeatedly drug important targets in oncology,” said Adrian Gottschalk, President and Chief Executive Officer of Foghorn.

Key Recent Updates and Upcoming Milestones

  • FHD-286. FHD-286 is a potent, selective inhibitor of the BRG1 and BRM subunits of the BAF chromatin remodeling complex where dependency on BRG1/BRM is well-established preclinically with multiple tumor types, including acute myelogenous leukemia (AML)/myelodysplastic syndrome (MDS), non–small cell lung cancer (NSCLC) and prostate cancer.

    • AML/MDS Update. Foghorn plans to commence a Phase 1 study of FHD-286 in combination with decitabine or low-dose cytarabine (LDAC) in relapsed and/or refractory AML patients. The decision to advance to the Phase 1 combination study is based on clinical data demonstrating FHD-286’s effect as a broad-based differentiation agent, its safety profile, as well as supportive preclinical combination data, including robust efficacy data in multiple CDX and PDX models.
    • mUM Update. On June 28, 2023, Foghorn announced data from the Phase 1 dose escalation safety study of FHD-286 in metastatic uveal melanoma (mUM). These data reinforced the safety and tolerability profile of FHD-286. At this time, the company does not plan to advance FHD-286 in uveal melanoma independently.
  • Differentiated Pipeline Advancement. Foghorn continues to expand its platform and pipeline. The Company anticipates the potential for six new investigational new drug (IND) applications in the next four years. The Company continues to progress programs for multiple targets which include chromatin remodeling complexes, transcription factors, helicases and other chromatin related factors. These targets include Selective BRM* and wholly owned programs including CBP, EP300, and ARID1B, as well as other undisclosed targets, which combined could address more than 20 tumor types impacting more than 500,000 new patients annually.
  • Strategic Collaborations. Foghorn continued to progress its strategic collaborations with world-leading pharmaceutical companies, which validate the rigor of our science, highlight the importance of the targets we are tackling, and confirm the relevance of the biology on which Foghorn is focused.

    • In December 2021, Foghorn entered into a strategic collaboration with Loxo@Lilly. In 2023, Foghorn anticipates continued progress across the collaboration including a co-development and co-commercialization agreement on the Selective BRM program*, an additional undisclosed oncology target and three additional discovery programs. The Selective BRM program is on track to transition to Loxo@Lilly in the second half of 2023.
    • In July 2020, Foghorn entered into a strategic collaboration with Merck Sharp & Dohme. Through the first two quarters of 2023, Foghorn continued to utilize its Gene Traffic Control platform to discover and develop novel therapeutics under the collaboration based on disruptors of a specified transcription factor target.

*In December 2021, Foghorn announced a strategic collaboration with Loxo@Lilly to create novel oncology medicines. The collaboration includes a co-development and co-commercialization agreement for Foghorn’s Selective BRM oncology program and an additional undisclosed oncology target. In addition, the collaboration includes three discovery programs using Foghorn’s proprietary Gene Traffic Control platform.

Second Quarter 2023 Financial Highlights

  • Strong Balance Sheet and Cash Runway. As of June 30, 2023, the Company had $284.3 million in cash, cash equivalents and marketable securities, which provides a cash runway into the second half of 2025.
  • Collaboration Revenues. Collaboration revenue was $5.6 million for the three months ended June 30, 2023, compared to $4.5 million for the three months ended June 30, 2022. The increase year-over-year was primarily driven by revenue recognized under the Lilly collaboration agreement.
  • Research and Development Expenses. Research and development expenses were $29.2 million for the three months ended June 30, 2023, compared to $26.0 million for the three months ended June 30, 2022. This increase was primarily due to costs associated with continued investment in R&D personnel and platform and early-stage research investments, modestly offset by a decline in clinical trial spend
  • General and Administrative Expenses. General and administrative expenses were $8.4 million for the three months ended June 30, 2023, compared to $7.7 million for the three months ended June 30, 2022. This increase was primarily due to an increase in investments to support the growing business which included increases in personnel-related costs and stock-based compensation expense.
  • Net Loss. Net loss was $29.5 million for the three months ended June 30, 2023, compared to a net loss of $27.3 million for the three months ended June 30, 2022.

About FHD-286

FHD-286 is a highly potent, selective, allosteric and orally available, small-molecule, enzymatic inhibitor of BRG1 (SMARCA4) and BRM (SMARCA2), two highly similar proteins that are the ATPases, or the catalytic engines of the BAF complex, one of the key regulators within the chromatin regulatory system. In preclinical studies, FHD-286 has shown anti-tumor activity across a broad range of malignancies including both hematologic and solid tumors. FHD-286 is being developed for relapsed and/or refractory AML, and the company plans to commence a Phase 1 study, in combination with decitabine or cytarabine, in the third quarter of 2023.

About AML

Adult acute myeloid leukemia (AML) is a cancer of the blood and bone marrow and the most common type of acute leukemia in adults. AML is a diverse disease associated with multiple genetic mutations. It is diagnosed in about 20,000 people every year in the United States.

About Foghorn Therapeutics

Foghorn® Therapeutics is discovering and developing a novel class of medicines targeting genetically determined dependencies within the chromatin regulatory system. Through its proprietary scalable Gene Traffic Control® platform, Foghorn is systematically studying, identifying and validating potential drug targets within the chromatin regulatory system. The Company is developing multiple product candidates in oncology. Visit our website at www.foghorntx.com for more information on the company, and follow us on Twitter and LinkedIn.

Forward-Looking Statements

This press release contains “forward-looking statements” regarding the Company’s clinical programs for FHD-286, including its initiation of a Phase 1 study of FHD-286 in combination with decitabine or low-dose cytarabine (LDAC) in relapsed and/or refractory AML patients, its collaborations with Lilly and Merck and its research pipeline, including the status of its Selective BRM program, the filing of INDs, and its protein degrader efforts. Forward-looking statements include statements regarding the Company’s clinical trials, product candidates and research efforts and other statements identified by words such as “could,” “may,” “might,” “will,” “likely,” “anticipates,” “intends,” “plans,” “seeks,” “believes,” “estimates,” “expects,” “continues,” “projects” and similar references to future periods. Forward-looking statements are based on our current expectations and assumptions regarding capital market conditions, our business, the economy and other future conditions. Because forward-looking statements relate to the future, by their nature, they are subject to inherent uncertainties, risks and changes in circumstances that are difficult to predict. As a result, actual results may differ materially from those contemplated by the forward-looking statements. Important factors that could cause actual results to differ materially from those in the forward-looking statements include regional, national or global political, economic, business, competitive, market and regulatory conditions, including risks relating to our clinical trials and other factors set forth under the heading “Risk Factors” in the Company’s Annual Report on Form 10-K for the year ended December 31, 2022, as filed with the Securities and Exchange Commission. Any forward-looking statement made in this press release speaks only as of the date on which it is made.

Condensed Consolidated Balance Sheets
(In thousands)
 
  June 30,    
  2023   Dec. 31, 2022
Cash, cash equivalents and marketable securities $ 284,311     $ 345,798  
All other assets   55,265       59,085  
Total assets $ 339,576     $ 404,883  
Deferred revenue, total $ 325,912     $ 336,820  
All other liabilities   63,014       67,951  
Total liabilities   388,926       404,771  
Total stockholders’ equity (deficit)   (49,350 )     112  
Total liabilities and stockholders’ equity $ 339,576     $ 404,883  

Condensed Consolidated Statements of Operations
(In thousands, except share and per share amounts)
 
  Three Months Ended June 30,
    2023       2022  
Collaboration revenue $ 5,599     $ 4,490  
Operating expenses:      
Research and development   29,248       25,974  
General and administrative   8,401       7,704  
Total operating expenses   37,649       33,678  
Loss from operations   (32,050 )     (29,188 )
Total other income, net   3,505       1,875  
Provision for income taxes   (942 )     —  
Net loss $ (29,487 )   $ (27,313 )
Net loss per share attributable to common stockholders—basic and diluted $ (0.70 )   $ (0.66 )
Weighted average common shares outstanding—basic and diluted   41,825,555       41,515,305  



Contact:

Ben Strain, Foghorn Therapeutics Inc. (Media and Investors)
[email protected]

Karin Hellsvik, Foghorn Therapeutics Inc. (Media)
[email protected]

 



Posted on

Rand Capital Reports 34% Increase in Total Investment Income for Second Quarter 2023

Rand Capital Reports 34% Increase in Total Investment Income for Second Quarter 2023

  • Total investment income increased 34% to $1.8 million for the quarter compared with the second quarter last year driven by strong growth in interest and fee income
  • Net asset value per share (“NAV”) was $23.79 at June 30, 2023, up 3% from March 31, 2023 and up 6% from year-end 2022
  • Invested $4.7 million in new and follow on investments during the quarter
  • Received $6.8 million in proceeds from single portfolio company investment sale, which included a gain of $2.5 million
  • Announced a quarterly dividend of $0.25 per share for third quarter 2023

BUFFALO, N.Y.–(BUSINESS WIRE)–Rand Capital Corporation (Nasdaq: RAND) (“Rand” or the “Company”), a business development company providing alternative financing for lower middle market companies, announced its results for the second quarter ended June 30, 2023.

Daniel P. Penberthy, President and Chief Executive Officer of Rand, commented, “We delivered a strong quarter of total investment income growth, fueled by the addition of high-quality debt investments. Additionally, Rand recognized a sizable gain from the sale of our debt and equity investment in Dealer Solutions and Design (DSD) during the quarter, further strengthening our balance sheet and liquidity position. We believe we can continue to execute our strategy as we look to the second half of the year and beyond. With our strong cash position, we paid down some of our outstanding borrowings under our credit facility in July and expect to utilize additional cash on hand and our credit facility to further strengthen and solidify our portfolio in order to drive our earnings potential and support a growing dividend.”

Second Quarter Highlights (compared with the prior-year period unless otherwise noted)

  • Total investment income grew $462,000, or 34%, to $1.8 million driven by a 47% increase in interest from portfolio companies and higher fee income.

  • Total expenses were $1.3 million compared with a credit of $96,000 in the prior-year second quarter. The increase largely reflects a change in accrued capital gains incentive fees to the Company’s external investment adviser. The current period included $491,000 of capital gains incentive fees expense compared with a credit of $663,000 for the second quarter of 2022. The increase in total expenses also reflects $259,000 in interest expense from the senior revolving credit facility entered into in June 2022 to fund growth, compared with no interest expense during the prior year quarter. Offsetting these increases was a $112,000 decline in professional fees.

  • Excluding capital gains incentive fees expense, adjusted expenses, which is a non-GAAP financial measure, were $816,000 compared with $567,000 in the second quarter of 2022. See the attached description of this non-GAAP financial measure and reconciliation table for adjusted expenses.
  • Net investment income was $493,000, or $0.19 per share, compared with $1.4 million, or

    $0.55 per share, in the second quarter of 2022. Adjusted net investment income per share, a non-GAAP financial measure, which excludes the capital gains incentive fee accrual expense, was $0.38 per share, up from $0.29 in last year’s second quarter. See the attached description of this non-GAAP financial measure and reconciliation table for adjusted net investment income per share.

Portfolio and Investment Activity

As of June 30, 2023, Rand’s portfolio included investments with a fair value of $66.8 million across 29 portfolio businesses. This was up $5.3 million, or 9%, from December 31, 2022, and reflected new and follow on investments and valuation adjustments in multiple portfolio companies. This was partially offset by equity sales and loan repayments. At June 30, 2023, the portfolio was comprised of approximately 60% in debt investments, 29% in equity investments in private companies, and 11% in publicly traded equities consisting of other BDCs and ACV Auctions. The annualized weighted average yield of debt investments was 13.5%.

Second quarter 2023:

  • Funded $4.3 million to INEA, consisting of $3.3 million of senior subordinated debt and $1.0 million of preferred equity. INEA is a stocking distributor of controlled expansion alloys, electronic grade nickels, refractory grade metals and alloys, and soft magnetic alloys. The company plays an important role between the mills that produce the specialty alloys and the end-users whose order sizes don’t require full mill quantities.

  • Funded a follow on debt investment of $390,000 to ITA Acquisition, LLC, a blind and shade manufacturer, to help support a new line of business. Rand’s total debt and equity investment in ITA had a fair value of $4.0 million at quarter-end.

  • Portfolio investment company DSD was sold during June 2023, which resulted in the full repayment of Rand’s subordinated debt and sale of its preferred equity investments. In total, Rand received $6.8 million of proceeds, which included a net gain of $2.5 million.

  • Sold 125,000 shares of ACV Auctions at an average price of $14.03 per share for a realized gain of $1.7 million. Rand held 194,934 shares of ACV at quarter-end, which represented approximately 5% of its portfolio’s fair value.

  • Sold remaining small equity position in Somerset Gas, a provider of natural gas transmission services.

Liquidity and Capital Resources

Cash at the end of the second quarter of 2023 was $8.4 million, up considerably from $1.4 million at year-end 2022, reflecting the proceeds received from the DSD and ACV Auctions share sales. As of June 30, 2023, the Company held shares valued at approximately $4.0 million in other publicly traded BDCs and $3.4 million in ACV Auctions, all of which are available for future liquidity needs including dividends and portfolio investments.

At June 30, 2023, Rand had outstanding borrowings of $10.7 million on its existing $25.0 million senior secured revolving credit facility. The outstanding borrowings carried an interest rate of 8.59% at quarter-end. Subsequent to quarter-end, in July, Rand used $3.0 million of its cash on hand to pay down its outstanding borrowings.

The Company did not repurchase any outstanding common stock during the second quarter of 2023.

Dividends

On July 25, 2023, Rand declared its regular quarterly cash dividend distribution of $0.25 per share. The cash dividend will be distributed on or about September 14, 2023, to shareholders of record as of August 31, 2023.

Webcast and Conference Call

Rand will host a conference call and webcast on Friday, August 4, 2023, at 11:00 a.m. Eastern Time, to review its financial results. The review will be accompanied by a slide presentation, which will be available on Rand’s website at www.randcapital.com in the “Investor Relations” section. Rand’s conference call can be accessed by calling (201) 689-8263. Alternatively, the webcast can be monitored on Rand’s website at www.randcapital.com under “Investor Relations” where the replay will also be available.

A telephonic replay will be available from 2:00 p.m. ET on the day of the call through Friday, August 18, 2023. To listen to the archived call, dial (412) 317-6671 and enter replay pin number 13739663. A transcript of the call will also be posted once available.

ABOUT RAND CAPITAL

Rand Capital (Nasdaq: RAND) is an externally managed business development company (BDC). The Company’s investment objective is to maximize total return to its shareholders with current income and capital appreciation by focusing its debt and related equity investments in privately-held, lower middle market companies with committed and experienced managements in a broad variety of industries. Rand invests in early to later stage businesses that have sustainable, differentiated and market-proven products, revenue of more than $2 million and a path to free cash flow or up to $5 million in EBITDA. The Company’s investment activities are managed by its external investment adviser, Rand Capital Management, LLC. Additional information can be found at the Company’s website where it regularly posts information: https://www.randcapital.com/.

Safe Harbor Statement

This press release contains “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. All statements, other than historical facts, including but not limited to statements regarding the strategy of the Company and its outlook; statements regarding the implementation of the Company’s strategy; statements regarding increasing the Company’s dividend, and any assumptions underlying any of the foregoing, are forward-looking statements. Forward-looking statements concern future circumstances and results and other statements that are not historical facts and are sometimes identified by the words “may,” “will,” “should,” “potential,” “intend,” “expect,” “endeavor,” “seek,” “anticipate,” “estimate,” “overestimate,” “underestimate,” “believe,” “could,” “project,” “predict,” “continue,” “target” or other similar words or expressions. Should one or more of these risks or uncertainties materialize, or should underlying assumptions prove to be incorrect, actual results may vary materially from those indicated or anticipated by such forward-looking statements. The inclusion of such statements should not be regarded as a representation that such plans, estimates or expectations will be achieved. Important factors that could cause actual results to differ materially from such plans, estimates or expectations include, among others, (1) evolving legal, regulatory and tax regimes; (2) changes in general economic and/or industry specific conditions; and (3) other risk factors as detailed from time to time in Rand ’s reports filed with the Securities and Exchange Commission (“SEC”), including Rand’s annual report on Form 10-K for the year ended December 31, 2022, quarterly reports on Form 10-Q, and other documents filed with the SEC. Consequently, such forward-looking statements should be regarded as Rand’s current plans, estimates and beliefs. Except as required by applicable law, Rand assumes no obligation to update the forward-looking information contained in this release.

FINANCIAL TABLES FOLLOW

Rand Capital Corporation and Subsidiaries

Consolidated Statements of Financial Position
 

 

 

June 30,

2023

(Unaudited)

 

 

December 31,

2022

 

ASSETS

 

 

 

 

 

 

Investments at fair value:

 

 

 

 

 

 

Control investments (cost of $5,155,545 and $4,660,017, respectively)

 

$

4,031,735

 

 

$

3,536,207

 

Affiliate investments (cost of $35,940,068 and $30,204,160, respectively)

 

 

43,090,799

 

 

 

38,241,589

 

Non-Control/Non-Affiliate investments (cost of $19,873,405 and $20,852,060, respectively)

 

 

19,669,209

 

 

 

19,726,463

 

Total investments, at fair value (cost of $60,969,018 and $55,716,237, respectively)

 

 

66,791,743

 

 

 

61,504,259

 

Cash

 

 

8,356,401

 

 

 

1,368,996

 

Interest receivable

 

 

199,587

 

 

 

208,338

 

Prepaid income taxes

 

 

—

 

 

 

76,396

 

Deferred tax asset

 

 

174,826

 

 

 

28,160

 

Other assets

 

 

532,280

 

 

 

295,043

 

Total assets

 

$

76,054,837

 

 

$

63,481,192

 

LIABILITIES AND STOCKHOLDERS’ EQUITY (NET ASSETS)

 

 

 

 

 

 

Liabilities:

 

 

 

 

 

 

Due to investment adviser

 

$

255,867

 

 

$

562,221

 

Accounts payable and accrued expenses

 

 

79,983

 

 

 

66,680

 

Income taxes payable

 

 

253,870

 

 

 

—

 

Line of credit

 

 

10,650,000

 

 

 

2,550,000

 

Capital gains incentive fees

 

 

2,949,000

 

 

 

2,167,000

 

Deferred revenue

 

 

464,089

 

 

 

413,971

 

Total liabilities

 

 

14,652,809

 

 

 

5,759,872

 

Stockholders’ equity (net assets):

 

 

 

 

 

 

Common stock, $0.10 par; shares authorized 100,000,000; shares issued: 2,648,916; shares outstanding: 2,581,021 at 6/30/23 and 12/31/22

 

 

264,892

 

 

 

264,892

 

Capital in excess of par value

 

 

51,464,267

 

 

 

51,464,267

 

Treasury stock, at cost: 67,895 shares at 6/30/23 and 12/31/22

 

 

(1,566,605

)

 

 

(1,566,605

)

Total distributable earnings

 

 

11,239,474

 

 

 

7,558,766

 

Total stockholders’ equity (net assets) (per share –6/30/23: $23.79; 12/31/22: $22.36)

 

 

61,402,028

 

 

 

57,721,320

 

Total liabilities and stockholders’ equity (net assets)

 

$

76,054,837

 

 

$

63,481,192

 

Rand Capital Corporation and Subsidiaries

Consolidated Statements of Operations

(Unaudited)
 

 

 

Three months

ended

June 30, 2023

 

 

Three months

ended

June 30, 2022

 

 

Six months

ended

June 30, 2023

 

 

Six months

ended

June 30, 2022

 

Investment income:

 

 

 

 

 

 

 

 

 

 

 

 

Interest from portfolio companies:

 

 

 

 

 

 

 

 

 

 

 

 

Control investments

 

$

179,922

 

 

$

—

 

 

$

330,838

 

 

$

—

 

Affiliate investments

 

 

941,201

 

 

 

614,997

 

 

 

1,729,022

 

 

 

1,185,113

 

Non-Control/Non-Affiliate investments

 

 

352,417

 

 

 

389,835

 

 

 

710,583

 

 

 

731,858

 

Total interest from portfolio companies

 

 

1,473,540

 

 

 

1,004,832

 

 

 

2,770,443

 

 

 

1,916,971

 

Interest from other investments:

 

 

 

 

 

 

 

 

 

 

 

 

Non-Control/Non-Affiliate investments

 

 

104

 

 

 

1

 

 

 

236

 

 

 

1

 

Total interest from other investments

 

 

104

 

 

 

1

 

 

 

236

 

 

 

1

 

Dividend and other investment income:

 

 

 

 

 

 

 

 

 

 

 

 

Affiliate investments

 

 

59,677

 

 

 

202,785

 

 

 

406,825

 

 

 

246,510

 

Non-Control/Non-Affiliate investments

 

 

132,920

 

 

 

113,735

 

 

 

260,515

 

 

 

243,000

 

Total dividend and other investment income

 

 

192,597

 

 

 

316,520

 

 

 

667,340

 

 

 

489,510

 

Fee income:

 

 

 

 

 

 

 

 

 

 

 

 

Control investments

 

 

4,311

 

 

 

—

 

 

 

8,211

 

 

 

—

 

Affiliate investments

 

 

138,902

 

 

 

22,515

 

 

 

206,744

 

 

 

52,820

 

Non-Control/Non-Affiliate investments

 

 

5,978

 

 

 

9,314

 

 

 

13,956

 

 

 

18,628

 

Total fee income

 

 

149,191

 

 

 

31,829

 

 

 

228,911

 

 

 

71,448

 

Total investment income

 

 

1,815,432

 

 

 

1,353,182

 

 

 

3,666,930

 

 

 

2,477,930

 

Expenses:

 

 

 

 

 

 

 

 

 

 

 

 

Base management fee

 

 

255,867

 

 

 

230,767

 

 

 

501,260

 

 

 

471,042

 

Capital gains incentive fees

 

 

491,000

 

 

 

(663,000

)

 

 

782,000

 

 

 

(902,760

)

Interest expense

 

 

258,912

 

 

 

—

 

 

 

417,312

 

 

 

—

 

Professional fees

 

 

100,307

 

 

 

212,138

 

 

 

271,282

 

 

 

443,221

 

Stockholders and office operating

 

 

85,080

 

 

 

64,890

 

 

 

149,384

 

 

 

121,588

 

Directors’ fees

 

 

67,391

 

 

 

44,883

 

 

 

131,241

 

 

 

89,983

 

Administrative fees

 

 

37,250

 

 

 

—

 

 

 

74,500

 

 

 

—

 

Insurance

 

 

10,380

 

 

 

13,353

 

 

 

23,340

 

 

 

22,263

 

Corporate development

 

 

554

 

 

 

726

 

 

 

4,267

 

 

 

3,753

 

Other operating

 

 

—

 

 

 

45

 

 

 

—

 

 

 

90

 

Total expenses

 

 

1,306,741

 

 

 

(96,198

)

 

 

2,354,586

 

 

 

249,180

 

Net investment income before income taxes:

 

 

508,691

 

 

 

1,449,380

 

 

 

1,312,344

 

 

 

2,228,750

 

Income taxes, including excise tax expense

 

 

16,061

 

 

 

31,243

 

 

 

104,798

 

 

 

38,610

 

Net investment income

 

 

492,630

 

 

 

1,418,137

 

 

 

1,207,546

 

 

 

2,190,140

 

Net realized gain on sales and dispositions of investments:

 

 

 

 

 

 

 

 

 

 

 

 

Affiliate investments

 

 

2,537,765

 

 

 

167,159

 

 

 

2,596,094

 

 

 

167,159

 

Non-Control/Non-Affiliate investments

 

 

1,280,482

 

 

 

1,372,984

 

 

 

1,275,541

 

 

 

521,513

 

Net realized gain on sales and dispositions of investments, before income taxes

 

 

3,818,247

 

 

 

1,540,143

 

 

 

3,871,635

 

 

 

688,672

 

Income tax expense

 

 

338,158

 

 

 

—

 

 

 

338,158

 

 

 

—

 

Net realized gain on sales and dispositions of investments

 

 

3,480,089

 

 

 

1,540,143

 

 

 

3,533,477

 

 

 

688,672

 

Net change in unrealized appreciation/depreciation on investments:

 

 

 

 

 

 

 

 

 

 

Affiliate investments

 

 

(886,698

)

 

 

47,841

 

 

 

(886,698

)

 

 

47,841

 

Non-Control/Non-Affiliate investments

 

 

(480,572

)

 

 

(4,902,510

)

 

 

921,401

 

 

 

(5,233,579

)

Change in unrealized appreciation/depreciation before income taxes

 

 

(1,367,270

)

 

 

(4,854,669

)

 

 

34,703

 

 

 

(5,185,738

)

Deferred income tax benefit

 

 

(66,441

)

 

 

—

 

 

 

(66,441

)

 

 

—

 

Net change in unrealized appreciation/depreciation on investments

 

 

(1,300,829

)

 

 

(4,854,669

)

 

 

101,144

 

 

 

(5,185,738

)

Net realized and unrealized gain (loss) on investments

 

 

2,179,260

 

 

 

(3,314,526

)

 

 

3,634,621

 

 

 

(4,497,066

)

Net increase (decrease) in net assets from operations

 

$

2,671,890

 

 

$

(1,896,389

)

 

$

4,842,167

 

 

$

(2,306,926

)

Weighted average shares outstanding

 

 

2,581,021

 

 

 

2,581,021

 

 

 

2,581,021

 

 

 

2,581,021

 

Basic and diluted net increase (decrease) in net assets from operations per share

 

$

1.04

 

 

$

(0.73

)

 

$

1.88

 

 

$

(0.89

)

Rand Capital Corporation and Subsidiaries

Consolidated Statements of Changes in Net Assets

(Unaudited)
 

 

 

 

Three

months

ended

June 30, 2023

 

 

Three

months

ended

June 30, 2022

 

 

Six months

ended

June 30, 2023

 

 

Six months

ended

June 30, 2022

 

Net assets at beginning of period

 

$

59,375,393

 

 

$

59,947,726

 

 

$

57,721,320

 

 

$

60,745,416

 

Net investment income

 

 

492,630

 

 

 

1,418,137

 

 

 

1,207,546

 

 

 

2,190,140

 

Net realized gain on sales and dispositions of investments

 

 

3,480,089

 

 

 

1,540,143

 

 

 

3,533,477

 

 

 

688,672

 

Net change in unrealized appreciation/depreciation on investments

 

 

(1,300,829

)

 

 

(4,854,669

)

 

 

101,144

 

 

 

(5,185,738

)

Net increase (decrease) in net assets from operations

 

 

2,671,890

 

 

 

(1,896,389

)

 

 

4,842,167

 

 

 

(2,306,926

)

Declaration of dividend

 

 

(645,255

)

 

 

(387,153

)

 

 

(1,161,459

)

 

 

(774,306

)

Net assets at end of period

 

$

61,402,028

 

 

$

57,664,184

 

 

$

61,402,028

 

 

$

57,664,184

 

Rand Capital Corporation and Subsidiaries

Reconciliation of GAAP Total Expense/(Credits) to Non-GAAP Adjusted Expenses

(Unaudited)

In addition to reporting total expenses, which is a U.S. generally accepted accounting principle (“GAAP”) financial measure, Rand presents adjusted expenses, which is a non-GAAP financial measure. Adjusted expenses is defined as GAAP total expenses/(credits) removing the effect of any expenses/(credits) for capital gains incentive fees. GAAP total expenses is the most directly comparable GAAP financial measure. Rand believes that adjusted expenses provides useful information to investors regarding financial performance because it is a method the Company uses to measure its financial and business trends related to its results of operations. The presentation of this additional information is not meant to be considered in isolation or as a substitute for financial results prepared in accordance with GAAP.

 

Three months

ended

June 30, 2023

Three months

ended

June 30, 2022

Total expenses/(credits)

$

1,306,741

$

(96,198

)

Exclude expenses/(credits) for capital gains incentive fees

 

491,000

 

(663,000

)

Adjusted expenses

$

815,741

$

566,802

 

Reconciliation of Adjusted Net Investment Income per Share to

GAAP Net Investment Income per Share

(Unaudited)

In addition to reporting Net Investment Income per Share, which is a U.S. generally accepted accounting principle (“GAAP”) financial measure, the Company presents Adjusted Net Investment Income per Share, which is a non-GAAP financial measure. Adjusted Net Investment Income per Share is defined as GAAP Net Investment Income per Share removing the effect of any expenses/(credits) for capital gains incentive fees. GAAP Net Investment Income per Share is the most directly comparable GAAP financial measure. Rand believes that Adjusted Net Investment Income per Share provides useful information to investors regarding financial performance because it is a method the Company uses to measure its financial and business trends related to its results of operations. The presentation of this additional information is not meant to be considered in isolation or as a substitute for financial results prepared in accordance with GAAP.

 

Three months

ended

June 30, 2023

Three months

ended

June 30, 2022

Net investment income per share

$

0.19

$

0.55

 

Exclude expenses/(credits) for capital gains incentive fees

 

0.19

 

(0.26

)

Adjusted net investment income per share

$

0.38

$

0.29

 

 

Company:

Daniel P. Penberthy

President and CEO

716.853.0802

[email protected]

Investors:

Deborah K. Pawlowski / Craig P. Mychajluk

Kei Advisors LLC

716-843-3908 / 716-843-3832

[email protected] / [email protected]

KEYWORDS: United States North America New York

INDUSTRY KEYWORDS: Technology Finance Homeland Security Public Policy/Government Aerospace Business Professional Services Manufacturing Software

MEDIA:

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Laser Photonics to Showcase DefenseTech Product Line at the DoD Corrosion Expo

Laser Photonics to Showcase DefenseTech Product Line at the DoD Corrosion Expo

ORLANDO, Fla.–(BUSINESS WIRE)–Laser Photonics Corporation (NASDAQ: LASE), a leading global industrial developer of CleanTech laser systems for laser cleaning and other material applications, today announced that it is hosting an exhibitor space later this month at the DoD Corrosion Prevention Technology Symposium, a four-day event that is the only DOD conference solely focused on the effects, mitigation and prevention of corrosion on weapon systems, equipment and facilities.

“We are excited to showcase our recently launched DefenseTech line of products to the defense and military professionals attending this great event,” said Wayne Tupuola, chief executive officer of Laser Photonics.

Laser Photonics will be displaying its DefenseTech LPC-MLRI-200 handheld laser cleaning system. The LPC-MLRI-200 is a finishing-class laser cleaning system that provides a non-abrasive cleaning process that is safer, easier to use and more eco-friendly than traditional cleaning methods. This product is ideal for use in the defense industry and effectively removes corrosion from metal surfaces on missiles and other equipment without damaging the underlying material.

What: DoD Corrosion Prevention Technology Symposium

When: August 14 – 17, 2023

Where: Booth 206 at El Conquistador Tucson, A Hilton Resort in Tucson, Arizona

DefenseTech Laser Cleaning Technology

DefenseTech Laser Cleaning by Laser Photonics is an eco-friendly, cost-effective and time-efficient system for industrial cleaning, rust removal, coating removal and surface preparation. Laser cleaning is superior to traditional cleaning methods like sandblasting, dry ice blasting and other abrasive blasting techniques. Remove coatings, contaminants, rust and more with this high-quality laser product that leaves substrates untouched.

About Laser Photonics Corporation

Laser Photonics is a vertically integrated manufacturer and R&D Center of Excellence for industrial laser technologies and systems. LPC seeks to disrupt the $46 billion, centuries old, sand and abrasives blasting markets, focusing on surface cleaning, rust removal, corrosion control, de-painting, and other laser-based industrial applications. LPC’s new generation of leading-edge laser blasting technologies and equipment also addresses the numerous health, safety, environmental, and regulatory issues associated with the old methods. As a result, LPC has quickly gained a reputation as an industry leader for industrial laser systems with a brand that stands for quality, technology, and product innovation. Currently, world-renowned and Fortune 1000 manufacturers in the aerospace, automotive, defense, energy, industrial, maritime, space exploration and shipbuilding industries are using LPC’s “unique-to-industry” systems. For more information, visit www.laserphotonics.com.

David Thierer

Marketing Specialist

Laser Photonics Corporation

[email protected]

KEYWORDS: United States North America Florida

INDUSTRY KEYWORDS: Electronic Design Automation Defense Technology Manufacturing Other Technology Other Manufacturing Other Defense

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Janus International Group Successfully Completes Debt Refinancing

Janus International Group Successfully Completes Debt Refinancing

TEMPLE, Ga.–(BUSINESS WIRE)–
Janus International Group, Inc. (NYSE: JBI) (“Janus” or the “Company”), a leading provider of cutting-edge access control technologies and building product solutions for the self-storage and other commercial and industrial sectors, today announced a series of related transactions to refinance its debt.

Summary of Transactions:

  • Subsequent to Q1 made a voluntary prepayment of $35 million toward first lien term loan using cash on hand

  • Entered into an amended and restated first lien term loan agreement and established a new $625 million 7-year First Lien Term Loan which refinanced its existing term loans

  • Entered into a new $125 million asset-backed lending (ABL) revolving credit facility which replaced and refinanced its existing $80 million ABL revolving credit facility

“We are pleased to announce the successful completion of our debt refinancing program,” said Anselm Wong, Chief Financial Officer. “This strategic refinancing is another proactive step to ensure we are well positioned to have the financial flexibility to execute on our long-term outlook and drive total shareholder return.”

The $625 million first lien term loan facility, which was privately placed with institutional lenders in the syndicated loan market, will accrue interest at an annual rate of Term SOFR + Term SOFR Adjustment of 10 bps + 325 bps and will mature on August 3, 2030. Goldman Sachs acted as Left Lead Arranger and Joint Bookrunner and J.P. Morgan and Bank of America Securities, Inc. acted as Joint Lead Arrangers and Joint Bookrunners.

J.P. Morgan acted as Left Lead Arranger and Joint Bookrunner and administrative agent and Goldman Sachs and Bank of America Securities, Inc. acted as Joint Lead Arrangers and Joint Bookrunners under the $125 million ABL revolving credit facility. The new ABL revolving credit agreement will mature on August 3, 2028.

About Janus International Group

Janus International Group, Inc. (www.JanusIntl.com) is a leading global manufacturer and supplier of turn-key self-storage, commercial and industrial building solutions, including roll-up and swing doors, hallway systems, re-locatable storage units and facility and door automation technologies. The Janus team operates out of several U.S. locations and six locations internationally.

Forward Looking Statements

Certain statements in this communication may be considered “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. All statements other than statements of historical fact included in this communication are forward-looking statements, including, but not limited to statements regarding Janus’s positioning in the industry to strengthen its pipeline and deliver on its objectives, the anticipated impact of this appointment, and Janus’s belief regarding the demand outlook for Janus’s products and the strength of the industrials markets. When used in this communication, words such as “may,” “should,” “could,” “would,” “expect,” “plan,” “anticipate,” “believe,” “estimate,” “continue,” or the negative of such terms or other similar expressions, as they relate to the management team, identify forward-looking statements. Such forward-looking statements are based on the current beliefs of Janus’s management, based on currently available information, as to the outcome and timing of future events, and involve factors, risks, and uncertainties that may cause actual results in future periods to differ materially from such statements.

In addition to factors previously disclosed in Janus’s reports filed with the SEC and those identified elsewhere in this communication, the following factors, among others, could cause actual results to differ materially from forward-looking statements or historical performance: (i) risks of the self-storage industry; (ii) the highly competitive nature of the self-storage industry and Janus’s ability to compete therein; and (iii) the risk that the demand outlook for Janus’s products may not be as strong as anticipated.

There can be no assurance that the events, results, or trends identified in these forward-looking statements will occur or be achieved. Forward-looking statements speak only as of the date they are made, and Janus is not under any obligation and expressly disclaims any obligation to update, alter, or otherwise revise any forward-looking statement, whether as a result of new information, future events or otherwise, except as required by law. This communication is not intended to be all-inclusive or to contain all the information that a person may desire in considering an investment in Janus and is not intended to form the basis of an investment decision in Janus. All subsequent written and oral forward-looking statements concerning Janus or other matters and attributable to Janus or any person acting on its behalf are expressly qualified in their entirety by the cautionary statements above and under the heading “Risk Factors” in Janus’s most recently filed Annual Report on Form 10-K and Quarterly Report on Form 10-Q, as updated from time to time in amendments and its subsequent filings with the SEC.

Investors, Janus

John Rohlwing

Vice President, Investor Relations, FP&A & M&A, Janus International

770-562-6399

[email protected]

Media, Janus

Suzanne Reitz

Vice President of Marketing, Janus International

770-746-9576

[email protected]

KEYWORDS: Georgia United States North America

INDUSTRY KEYWORDS: Other Construction & Property Manufacturing Commercial Building & Real Estate Construction & Property Building Systems Other Manufacturing

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Creative Realities Reports 2nd Quarter 2023 Results


  • Announces 2Q 2023 Revenue of $9.2 million

  • Announces Record Annual Recurring Revenue run-rate now ~$15.2 million

  • Announces 2Q Gross Profit of $4.3 million (46.7%)

  • Announces 1H 2023 Record Gross Profit of $9.4 million (49.0%)

  • Reiterates Projected Backlog Revenue exceeds $110 million

LOUISVILLE, Ky., Aug. 04, 2023 (GLOBE NEWSWIRE) — Creative Realities, Inc. (“Creative Realities,” “CRI,” or the “Company”) (NASDAQ: CREX, CREXW), a leading provider of digital signage and media solutions, announced its financial results for the three and six months ended June 30, 2023.

Rick Mills, Chief Executive Officer, commented “I am pleased to report second quarter 2023 revenue of $9.2 million, with $4.3 million in gross profit, which equates to a second quarter gross profit margin of 46.7% – a 406 basis-point improvement over the second quarter of last year – continuing the improved year-over-year trend in our margins that was evident in the first quarter. This brings the Company’s gross profit to a record $9.4 million for the first six months of the year at a record gross profit margin for the first half of any year of 49.0%, the latter of which is an approximately 960 basis-point improvement over 2022.”

Mr. Mills continued, “We continue to focus on critical path actions to grow both our customer base and, importantly, our annual SaaS subscription revenue contracts, or ARR, the latter of which now exceeds a $15.2 million run-rate. CRI continues to win in the marketplace, having now successfully converted approximately 69% of our RFP opportunities over the past 12 months. Our new customer acquisition momentum, combined with continued growth in our ARR, has strengthened our expectations for the near and long-term prospects of this business. We are actively competing in a significant number of new customer engagements for which an award of business is currently pending.

“The current quarter has met our expectations. We have had a shift in the revenue ramp associated with the Bowling deployment due to unexpected supply chain delays for certain route/switch equipment, which was being procured and delivered by a third-party, that have since been alleviated in full. We expect that these delays could ultimately impact our full year revenue results, however we believe the revenues from this project have not vanished but have instead experienced a shift in timing. The associated revenues will be realized, and we continue to project a step-function change in run-rate revenue on a go-forward basis beginning in the third quarter, with an increasing effect in subsequent quarters thereafter for the foreseeable future. The Company expects to generate between $60 million and $80 million in revenue for the next twelve-month period beginning in third quarter 2023, but expects that generating an $80 million run-rate may take an additional quarter or two as we catch up on the third-party supply chain delays that were recently resolved,” Mr. Mills added.

“Importantly, we also project ongoing improvements in profitability associated with both scale and new deployments, the latter of which drive SaaS and other downstream recurring and services revenue at significantly more favorable margins. We are demonstrating the improvements in profitability already and, as we realize our backlog of $110 million, EBITDA and free cash flow will follow. These effects are running in parallel with accelerated debt service as we simultaneously reduce debt and grow profit into an optimal leverage ratio.”

Mr. Mills encouraged investors to attend the Company’s earnings release call, “In addition to providing additional context to our second quarter earnings, we will convey several important announcements and updates relating to new customer acquisitions and the scaling of our CMS platforms.”

Revenue backlog is primarily related to projected network deployments and project work, which upon execution will result in additional ARR. The Company’s backlog calculation is comprised of the full rollout of projects that have been communicated to us by our current customers under contract, and includes all revenues to be received by the Company by deploying all of our products and services necessary to service such stated projects, including projected revenues that are not currently subject to binding purchase orders or firm commitments.



2Q 2023 Financial Overview

All references to current year and prior year represent references to the three months ended June 30, 2023 and 2022, respectively.

Key Highlights:

  • Revenue in-line with previously communicated expectations for second quarter 2023, between $9 – $10 million.
  • Expansion of gross margin percentage to 46.7% in the current year from 42.7% in the prior year.
  • Expansion of Annualized Recurring Revenue to forward run-rate of ~$15.2 million.

Revenue, gross profit, and gross margin:

  • Revenue in the current year were $9,196, representing a decrease of $1,727, or 16%, as compared to prior year. Hardware revenues were $3,437 in the current year, a decrease of $2,230, or 39%, as compared to the prior year. Hardware revenues generated in the prior year were driven by two customers which refreshed their digital hardware throughout their entire geographic footprint. These refresh activities are cyclical in nature and no current customer executed a similar large-scale refresh during the current year. Those refresh activities represented $2,418 in incremental hardware revenue during the prior year. 
  • Services and other revenues in the current year were $5,759, an increase of $503, or 10%, as compared to prior year driven primarily by increases in installation services revenue and growth in managed services revenue. Managed services revenue, which includes both software-as-a-service (“SaaS”), help desk technical subscription services, and other services revenues. While those managed services revenues were effectively flat at $3,835, the prior year figure included the last remaining software license contracts associated with Safe Space Solutions, which were discontinued earlier in 2023.
  • Gross profit decreased by $364, or 8% in the current year as compared to prior year driven by an increase in installation services revenue.
  • Gross profit margin increased to 47% during the current year, from 43% in the prior year driven by (1) favorable revenue mix during the three months ended June 30, 2023 as managed services, which includes higher margin SaaS and other services revenues, increased to 42% of total revenue in the current year as compared to 35% of total revenues in the prior year, and (2) margin expansion in hardware, partially offset by reduced revenue in the current year.

Operating expenses:

  • Sales and marketing expenses generally include the salaries, taxes, and benefits of our sales and marketing personnel, as well as trade show activities, travel, and other related sales and marketing costs. Sales and marketing expenses increased by $82, or 7%, in the current year as compared to the prior year driven primarily by the Company’s enhanced investments into sales and marketing activities. Following the Company’s merger with Reflect Systems, Inc. (the “Merger”), the Company adopted certain tools, technology, and processes – particularly with respect to lead generation and brand marketing – that were historically undercapitalized by the Company and have since accelerated new customer acquisition. Through completion of the Merger, the Company also acquired a media sales business unit that serves to monetize customer networks via the direct sale of advertising to be displayed on digital advertising networks owned by those customers. This business utilizes internal and third-party sales agents – the salaries and commissions of which are included within Sales and Marketing Expense within the Condensed Consolidated Statement of Operations. We expect the sales and marketing expenses of the Company for the three months ended June 30, 2023 to adequately reflect normal spend in these areas in future reporting periods.
  • Research and development expenses generally include personnel and development tools costs associated with the continued development of the Company’s content management systems and other related application development. The Company capitalizes certain of these expenses and amortizes those costs through the Condensed Consolidated Statement of Operations on a straight-line basis over the economic useful life of the software feature or functionality. Research and development expenses decreased by $41, or 10%, in the current year as compared to prior year driven primarily by an elevated level of capitalized activity during the current quarter associated with a customer-facing opportunity.
  • General and administrative expenses were effectively flat, increasing $33, or 1%, in the current year as compared to prior year driven by reductions (1) of $203 in stock compensation expense as outstanding performance awards were fully expensed as of December 31, 2022, and (2)  in certain expenses following completion of integration activities/projects completed during 2022 following the Reflect Merger (including but not limited to consolidation of CMS tools, cloud hosting environments, IT tools) that materialized through the balance of 2022. These decreases were offset by increases of $278 in personnel costs in the current year as a result of higher headcount following the Merger and scaled up operations in response to an increase in customer acquisitions.

Operating loss, net loss, and EBITDA:

  • Operating loss was $0.7 million for the current year ended as compared to breakeven in the prior year, inclusive of approximately $0.8 and $0.5 million in non-cash amortization of fixed and intangible assets in the current and prior year, respectively.
  • Net loss was $1.4 million for the current period as compared to net income of $1.3 million for the same period in 2022, which was driven in the prior year by a non-cash gain of $2.5 million on mark-to-market liabilities no longer included in the Company’s condensed consolidated balance sheet.
  • Adjusted EBITDA was approximately $0.3 million in the current period as compared to $0.9 million in the prior period, with Adjusted EBITDA margin percentage of 3.2% in the current period as compared to 8.3% in the prior period. See the appendix for a description of these non-GAAP financial measures and reconciliation to our net income.

A reconciliation of the GAAP-basis net income/(loss) to Adjusted EBITDA is provided in a table at the end of this press release.

Other notes:

  • Cash: The Company’s cash on hand as of June 30, 2023 increased to $3.3 million from $1.6 million as of December 31, 2022 as a result of collections on accounts receivable, annual billings associated with our SaaS-based contracts, and increases in customer deposits on future deployments, partially offset by investments in software development projects and repayment of debt.

  • Debt: Through June 30, 2023, the Company has repaid in excess of $2.5 million in principal on debt, reducing the Company’s leverage ratio. The Company anticipates that starting on September 1, 2023, it will begin making principal debt payments of approximately $399. In response to these conditions, management plans to either refinance or recapitalize its debt should the Company not produce sufficient cash flows to continue to make repayments of principal.

Conference Call Details

The Company will host a conference call to review the results of the Company’s second quarter 2023, and provide additional commentary about the Company’s recent performance, on Friday, August 4, 2023 at 9:00 am Eastern Time.

Prior to the call, participants should register at http://bit.ly/CRIearnings2023Q2. Once registered, participants can use the dial-in information provided in the registration email to listen to the Company’s prepared remarks and participate in the live question and answer session. An archived edition of the conference call will also be posted on our website at www.cri.com later that same day and will remain available to interested parties via the same link for one year.

About Creative Realities, Inc.

Creative Realities helps clients use place-based digital media to achieve business objectives such as increased revenue, enhanced customer experiences, and improved productivity. The Company designs, develops and deploys digital signage experiences for enterprise-level networks, and is actively providing recurring SaaS and support services across diverse vertical markets, including but not limited to retail, automotive, digital-out-of-home (DOOH) advertising networks, convenience stores, foodservice/QSR, gaming, theater, and stadium venues.

With its recent acquisition of Reflect Systems, Inc. (“Reflect”), a leading provider of digital signage software platforms, the Company is poised to extend its product and service offering and accelerate growth in SaaS revenue. While Reflect provided a broad range of digital signage solutions, Reflect’s flagship products are the market-leading ReflectView digital signage platform and Reflect AdLogic ad management platform. ReflectView is the industry’s most comprehensive, scalable, enterprise-grade digital signage platform, powering enterprise customer networks. Meanwhile, Reflect AdLogic has become the benchmark for digital signage powered ad networks, delivering nearly 50 million ads daily. The acquisition of Reflect also brought to the Company a media sales division with the expertise and relationships to help any digital signage venue owner develop and execute a monetization plan for their network.

Use of Non-GAAP Measures

Creative Realities, Inc. prepares its consolidated financial statements in accordance with United States generally accepted accounting principles (“GAAP”). In addition to disclosing financial results prepared in accordance with GAAP, the Company discloses information regarding “EBITDA” and “Adjusted EBITDA.” CRI defines “EBITDA” as earnings before interest, income taxes, depreciation and amortization of intangibles. CRI defines “Adjusted EBITDA” as EBITDA excluding stock-based compensation, fair value adjustments and both cash and non-cash non-recurring gains and charges. EBITDA and Adjusted EBITDA are not measures of performance defined in accordance with GAAP. However, EBITDA and Adjusted EBITDA are used internally in planning and evaluating the Company’s operating performance. Accordingly, management believes that disclosure of these metrics offers investors, bankers and other stakeholders an additional view of the Company’s operations that, when coupled with the GAAP results, provides a more complete understanding of the Company’s financial results.

EBITDA and Adjusted EBITDA should not be considered as an alternative to net income/(loss) or to net cash used in operating activities as measures of operating results or liquidity. Our calculation of EBITDA and Adjusted EBITDA may not be comparable to similarly titled measures used by other companies, and the measures exclude financial information that some may consider important in evaluating the Company’s performance. A reconciliation of GAAP net income/(loss) to EBITDA and Adjusted EBITDA is included in the accompanying financial schedules.

For further information, please refer to Creative Realities, Inc.’s filings available online at www.sec.gov, including its Annual Report on Form 10-K filed with the Securities and Exchange Commission on March 30, 2023.

Cautionary Note on Forward-Looking Statements

This press release contains “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended, Section 21E of the Securities Exchange Act of 1934, as amended, and the Private Securities Litigation Reform Act of 1995, and includes, among other things, discussions of our business strategies, product releases, future operations and capital resources. Words such as “estimates,” “projected,” “expects,” “anticipates,” “forecasts,” “plans,” “intends,” “believes,” “seeks,” “may,” “will,” “should,” “future,” “propose” and variations of these words or similar expressions (or the negative versions of such words or expressions) are intended to identify forward-looking statements. Forward-looking statements are not guarantees of future performance, conditions or results. They are based on the opinions, estimates and beliefs of management as of the date such statements are made, and they are subject to known and unknown risks, uncertainties, assumptions and other factors, many of which are outside of our control, that may cause the actual results, level of activity, performance or achievements to be materially different from those expressed or implied by such forward-looking statements. Some of these risks are discussed in the “Risk Factors” section contained in Item 1A of our Annual Report on Form 10-K for the year ended December 31, 2022 and in our Quarterly Report on Form 10-Q for the period ended June 30, 2023, and the Company’s subsequent filings with the U.S. Securities and Exchange Commission. Important factors, among others, that may affect actual results or outcomes include: our ability to effectively integrate Reflect’s business operations, our strategy for customer retention, growth, product development, market position, financial results and reserves, our ability to execute on our business plan, our ability to retain key personnel, our ability to remain listed on the Nasdaq Capital Market, our ability to realize the revenues included in our future guidance and backlog reports, our ability to satisfy our upcoming debt obligations and other liabilities, the ability of the Company to continue as a going concern, potential litigation, supply chain shortages, and general economic and market conditions impacting demand for our products and services, including those as a result of the COVID-19 pandemic. Readers should not place undue reliance upon any forward-looking statements. We assume no obligation to update or revise the forward-looking statements, whether as a result of new information, future events or otherwise, except as required by law.

Contact

Christina Davies
[email protected]

Investor Relations:
[email protected]

https://investors.cri.com/

CREATIVE REALITIES, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(In thousands, except per share amounts)
 
    June 30,     December 31,  
    2023     2022  
    (unaudited)          
ASSETS                
CURRENT ASSETS                
Cash and cash equivalents   $ 3,264     $ 1,633  
Accounts receivable, net     6,496       8,263  
Work-in-process and inventories, net     1,148       2,267  
Prepaid expenses and other current assets     784       1,819  
Total current assets   $ 11,692     $ 13,982  
Property and equipment, net     453       201  
Operating lease right-of-use assets     1,356       1,584  
Intangibles, net     23,936       23,752  
Goodwill     26,453       26,453  
Other assets     44       43  
TOTAL ASSETS   $ 63,934     $ 66,015  
                 
LIABILITIES AND SHAREHOLDERS’ EQUITY                
CURRENT LIABILITIES                
Accounts payable   $ 2,892     $ 3,757  
Accrued expenses     3,217       3,828  
Deferred revenues     2,827       1,223  
Customer deposits     3,985       2,478  
Current maturities of operating leases     645       711  
Short-term portion of Secured Promissory Note     833       1,248  
Short-term portion of related party Consolidation Term Loan, net of $747 and $745 discount, respectively     3,245       1,251  
Short-term related party Term Loan (2022)     119       2,000  
Total current liabilities     17,763       16,496  
Long-term Secured Promissory Note     –       208  
Long-term related party Acquisition Term Loan, net of $1,139 and $1,484 discount, respectively     8,861       8,516  
Long-term related party Consolidation Term Loan, net of $469 and $840 discount, respectively     2,724       4,349  
Long-term obligations under operating leases     711       873  
Contingent acquisition consideration, at fair value     9,881       9,789  
Other liabilities     136       205  
TOTAL LIABILITIES     40,076       40,436  
                 
SHAREHOLDERS’ EQUITY                
Common stock, $0.01 par value, 66,666 shares authorized; 7,409 and 7,266 shares issued and outstanding, respectively     74       72  
Additional paid-in capital     76,618       75,916  
Accumulated deficit     (52,834 )     (50,409 )
Total shareholders’ equity     23,858       25,579  
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY   $ 63,934     $ 66,015  
   

CREATIVE REALITIES, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(In thousands, except per share amounts)

(Unaudited) 		 
   
    For the Three Months
Ended 		    For the Six Months
Ended 		 
    June 30,     June 30,  
    2023     2022     2023     2022  
Sales                                
Hardware   $ 3,437     $ 5,667     $ 7,759     $ 12,126  
Services and other     5,759       5,256       11,381       9,554  
Total sales     9,196       10,923       19,140       21,680  
Cost of sales                                
Hardware     2,724       4,610       5,930       9,992  
Services and other     2,174       1,651       3,823       3,134  
Total cost of sales     4,898       6,261       9,753       13,126  
Gross profit     4,298       4,662       9,387       8,554  
Operating expenses:                                
Sales and marketing expenses     1,229       1,147       2,365       1,854  
Research and development expenses     377       418       743       659  
General and administrative expenses     2,595       2,562       5,493       5,422  
Depreciation and amortization expense     797       468       1,576       1,175  
Deal and transaction expenses     –       37       –       428  
Total operating expenses     4,998       4,632       10,177       9,538  
Operating income/(loss)     (700 )     30       (790 )     (984 )
                                 
Other income (expenses):                                
Interest expense, including amortization of debt discount     (787 )     (750 )     (1,590 )     (1,199 )
Change in fair value of warrant liability     –       2,433       –       7,902  
Change in fair value of equity guarantee     (16 )     (73 )     (92 )     (73 )
Loss on debt waiver consent     –       –       –       (1,212 )
Loss on warrant amendment     –       (345 )     –       (345 )
Gain/(loss) on settlement of obligations     –       21       –       (274 )
Other income (expense)     123       (1 )     135       5  
Total other income (expense)     (680 )     1,285       (1,547 )     4,804  
Net (loss) income before income taxes     (1,380 )     1,315       (2,337 )     3,820  
Provision for income taxes     (45 )     (53 )     (88 )     (56 )
Net (loss) income   $ (1,425 )   $ 1,262     $ (2,425 )   $ 3,764  
Basic (loss) earnings per common share   $ (0.19 )   $ 0.17     $ (0.33 )   $ 0.62  
Diluted (loss) earnings per common share   $ (0.19 )   $ 0.17     $ (0.33 )   $ 0.62  
Weighted average shares outstanding – basic     7,406       7,234       7,379       6,060  
Weighted average shares outstanding – diluted     7,406       7,234       7,379       6,060  
   

CREATIVE REALITIES, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)

(Unaudited) 		 
   
    Six Months Ended  
    June 30,  
    2023     2022  
Operating Activities:                
Net (loss) income   $ (2,425 )   $ 3,764  
Adjustments to reconcile net (loss) income to net cash provided by operating activities                
Depreciation and amortization     1,576       1,175  
Amortization of debt discount     714       541  
Amortization of stock-based compensation     493       1,014  
Loss on debt waiver consent     –       1,212  
Loss on warrant amendment     –       345  
Change on change in fair value of warrants     –       274  
Bad debt expense     309       106  
Gain on change in fair value of warrants     –       (7,902 )
Loss on change in fair value of contingent consideration     92       73  
Deferred income taxes     46       –  
Changes to operating assets and liabilities:                
Accounts receivable     1,458       (4,035 )
Work-in-process and inventories     1,119       (562 )
Prepaid expenses and other current assets     1,035       (811 )
Accounts payable     (585 )     2,487  
Accrued expenses     (559 )     229  
Deferred revenues     1,604       1,178  
Customer deposits     1,507       809  
Other     (40 )     40  
Net cash provided by (used in) operating activities     6,344       (63 )
Investing activities                
Acquisition of business, net of cash acquired     –       (17,186 )
Purchases of property and equipment     (219 )     (32 )
Capitalization of labor for software development     (1,984 )     (2,328 )
Net cash used in investing activities     (2,203 )     (19,546 )
Financing activities                
Principal payments on finance leases     (6 )     –  
Proceeds from sale of common stock in PIPE, net of offering expenses     –       1,814  
Proceeds from sale & exercise of pre-funded warrants in PIPE, net of offering expenses     –       8,295  
Proceeds from Acquisition Loan, net of offering expenses     –       9,868  
Repayment of Term Loan (2022)     (1,881 )     –  
Repayment of Secured Promissory Note     (623 )     (411 )
Net cash (used in) provided by financing activities     (2,510 )     19,566  
Increase (decrease) in Cash and Cash Equivalents     1,631       (43 )
Cash and Cash Equivalents, beginning of period     1,633       2,883  
Cash and Cash Equivalents, end of period   $ 3,264     $ 2,840  
   

RECONCILIATION OF GAAP NET LOSS TO ADJUSTED EBITDA

(in thousands, unaudited)

Creative Realities, Inc. prepares its consolidated financial statements in accordance with United States generally accepted accounting principles (“GAAP”). In addition to disclosing financial results prepared in accordance with GAAP, the Company discloses information regarding “EBITDA” and “Adjusted EBITDA.” CRI defines “EBITDA” as earnings before interest, income taxes, depreciation and amortization of intangibles. CRI defines “Adjusted EBITDA” as EBITDA excluding stock-based compensation, fair value adjustments and both cash and non-cash non-recurring gains and charges.

EBITDA and Adjusted EBITDA are non-GAAP financial measures and should not be considered as a substitute for net income (loss), operating income (loss) or any other performance measure derived in accordance with United States generally accepted accounting principles (“GAAP”) or as an alternative to net cash provided by operating activities as a measure of CRI’s profitability or liquidity. CRI’s management believes EBITDA and Adjusted EBITDA are useful financial metrics because they allow external users of CRI’s financial statements, such as industry analysts, investors, lenders and rating agencies, to more effectively evaluate CRI’s operating performance, compare the results of its operations from period to period and against CRI’s peers without regard to CRI’s financing methods, hedging positions or capital structure and because it highlights trends in CRI’s business that may not otherwise be apparent when relying solely on GAAP measures. CRI also presents EBITDA and Adjusted EBITDA because it believes EBITDA and Adjusted EBITDA are important supplemental measures of its performance that are frequently used by others in evaluating companies in its industry. Because EBITDA and Adjusted EBITDA exclude some, but not all, items that affect net income (loss) and may vary among companies, the EBITDA and Adjusted EBITDA CRI presents may not be comparable to similarly titled measures of other companies.

The following table presents a reconciliation of EBITDA and Adjusted EBITDA from net loss, CRI’s most directly comparable financial measure calculated and presented in accordance with GAAP.

    Quarters Ended  
    June 30     March 31     December
31 		    September
30 		    June 30  
Quarters ended   2023     2023     2022     2022     2022  
GAAP net income (loss)   $ (1,425 )   $ (1,000 )   $ (1,334 )   $ (554 )   $ 1,262  
Interest expense:                                        
Amortization of debt discount     358       356       364       363       360  
Other interest, net     429       447       423       394       390  
Depreciation/amortization:                                        
Amortization of intangible assets     754       754       743       848       431  
Amortization of employee share-based awards     151       225       448       456       316  
Depreciation of property & equipment     43       25       30       37       37  
Income tax expense/(benefit)     45       43       33       (10 )     53  
EBITDA   $ 355     $ 850     $ 707     $ 1,534     $ 2,849  
Adjustments                                        
Gain on fair value of warrant liability     –       –       –       –       (2,433 )
Gain on settlement of obligations     –       –       –       (37 )     (21 )
Loss on warrant amendment     –       –       –       –       345  
(Gain)/loss on fair value of equity guarantee     16       76       (705 )     (442 )     73  
Disposal of Safe Space Solutions inventory     –       –       909       –       –  
Deal and transaction expenses     –       –       54       110       37  
Other (income)/expense     (123 )     (12 )     7       2       1  
Stock-based compensation – Director grants     43       43       56       82       82  
Adjusted EBITDA   $ 291       957       1,028       1,249       933