Market Newsdesk

August 4, 2023 6:28 am

Praxis Precision Medicines to Participate at the 2023 Wedbush PacGrow Healthcare Conference

BOSTON, Aug. 03, 2023 (GLOBE NEWSWIRE) — Praxis Precision Medicines, Inc. (NASDAQ: PRAX), a clinical-stage biopharmaceutical company translating genetic insights into the development of therapies for central nervous system (CNS) disorders characterized by neuronal excitation-inhibition imbalance, today announced that management will participate at the 2023 Wedbush PacGrow Healthcare Conference on Wednesday, August 9, 2023 at 9:30a.m. ET on the panel David vs. Goliath – How Can Orphan Epilepsy Development Accelerate and Broaden its Reach? Please contact your Wedbush representative for details about how to participate.

About Praxis

Praxis Precision Medicines is a clinical-stage biopharmaceutical company translating insights from genetic epilepsies into the development of therapies for CNS disorders characterized by neuronal excitation-inhibition imbalance. Praxis is applying genetic insights to the discovery and development of therapies for rare and more prevalent neurological disorders through our proprietary small molecule platform, Cerebrum™, and antisense oligonucleotide (ASO) platform, Solidus™, using our understanding of shared biological targets and circuits in the brain. Praxis has established a diversified, multimodal CNS portfolio including multiple programs across movement disorders and epilepsy, with four clinical-stage product candidates. For more information, please visit www.praxismedicines.com and follow us on Facebook, LinkedIn and Twitter.

Investor Contact
Praxis Precision Medicines
[email protected]
857-702-9452

Media Contact
Ian Stone
Canale Communications
[email protected]
619-849-5388

August 4, 2023 6:24 am

Green Dot Reports Second Quarter 2023 Results

Green Dot Reports Second Quarter 2023 Results

Company Nears Completion of Platform Conversions, Announces BaaS Partner Launch and New Financial Services Channel Partner

Reaffirms Revenue Guidance and Mid-Point of Adjusted EBITDA and non-GAAP EPS

AUSTIN, Texas–(BUSINESS WIRE)–
Green Dot Corporation (NYSE: GDOT) today reported financial results for the quarter ended June 30, 2023.

“I am pleased with the quarter’s results and the progress we’re making against our 2023 operating goals, including launching a new major BaaS partner and adding a new partner to our financial services channel,” said George Gresham, Chief Executive Officer of Green Dot. “We are also nearing completion of our platform conversions, enabling us to shift our focus and resources toward enhanced customer and user experiences, business development and accelerated growth.”

Consolidated Results Summary

	Three Months Ended June 30,								Six Months Ended June 30,
		2023			2022		% Change			2023			2022		% Change
	(In thousands, except per share data and percentages)
GAAP financial results
Total operating revenues	$	365,876		$	362,769		1	%	$	782,256		$	763,386		2	%
Net income	$	578		$	15,008		(96	)%	$	36,590		$	53,632		(32	)%
Diluted earnings per common share	$	0.01		$	0.27		(96	)%	$	0.70		$	0.97		(28	)%

Non-GAAP financial results¹
Non-GAAP total operating revenues¹	$	361,144		$	355,101		2	%	$	773,507		$	749,779		3	%
Adjusted EBITDA¹	$	38,869		$	67,548		(42	)%	$	121,412		$	157,874		(23	)%
Adjusted EBITDA/Non-GAAP total operating revenues (adjusted EBITDA margin)		10.8	%		19.0	%	(8.2	)%		15.7	%		21.1	%	(5.4	)%
Non-GAAP net income¹	$	19,154		$	40,438		(53	)%	$	70,447		$	99,015		(29	)%
Non-GAAP diluted earnings per share¹	$	0.37		$	0.74		(50	)%	$	1.35		$	1.80		(25	)%

Reconciliations of total operating revenues to non-GAAP total operating revenues, net income to adjusted EBITDA, net income to non-GAAP net income, and diluted earnings per share to non-GAAP diluted earnings per share, respectively, are provided in the tables immediately following the unaudited consolidated financial statements. Additional information about the Company’s non-GAAP financial measures can be found under the caption “About Non-GAAP Financial Measures” below.

Key Metrics

The following table shows Green Dot’s quarterly key business metrics for each of the last six calendar quarters on a consolidated basis and by each of its reportable segments. Please refer to Green Dot’s latest Annual Report on Form 10-K for a description of the key business metrics, as well as additional information regarding how Green Dot organizes its business by segment.

	2023				2022
	Q2		Q1		Q4		Q3		Q2		Q1
	(In millions)
Consolidated *
Gross dollar volume	$	24,724	$	23,289	$	20,010	$	18,682	$	17,356	$	17,436
Number of active accounts		3.71		3.84		4.15		4.33		4.61		4.93
Purchase volume	$	5,734	$	6,145	$	6,292	$	6,443	$	6,760	$	7,192
Consumer Services
Gross dollar volume	$	5,122	$	5,677	$	5,426	$	5,495	$	5,715	$	6,621
Number of active accounts		2.35		2.41		2.37		2.51		2.78		3.04
Direct deposit active accounts		0.59		0.60		0.63		0.66		0.67		0.69
Purchase volume	$	3,984	$	4,344	$	4,229	$	4,302	$	4,588	$	5,017
B2B Services
Gross dollar volume	$	19,602	$	17,612	$	14,584	$	13,187	$	11,641	$	10,815
Number of active accounts		1.36		1.43		1.78		1.82		1.83		1.89
Purchase volume	$	1,750	$	1,801	$	2,063	$	2,141	$	2,172	$	2,175
Money Movement
Number of cash transfers		8.66		8.70		9.03		9.16		9.00		8.87
Number of tax refunds processed		3.87		9.91		0.20		0.28		4.48		9.61

*	Represents the sum of Green Dot’s Consumer Services and B2B (as defined herein) Services segments.

Unencumbered cash at the holding company was approximately $71 million as of June 30, 2023.

“It was a solid quarter with results largely in line with our expectations. Solid operating performance coupled with a focus on cost control are intended to position us to absorb some incremental headwinds in the second half of the year. We are reaffirming our revenue guidance while narrowing the range for adjusted EBITDA and non-GAAP EPS, with the mid-point remaining intact with prior guidance,” said Jess Unruh, CFO of Green Dot.

Updated 2023 Financial Guidance

Green Dot has provided its most recent financial outlook for 2023. Green Dot’s outlook is based on a number of assumptions that management believes are reasonable at the time of this earnings release. In particular, its outlook reflects several considerations, including but not limited to, the expected impact of the previously announced loss of certain partnerships and programs, negative trends within certain channels of its business, the current macro-economic environment including rising interest rates, the expected timing of expected cost savings from its platform conversion, and its investment in strategic initiatives. Information regarding potential risks that could cause the actual results to differ from these forward-looking statements is set forth below and in Green Dot’s filings with the Securities and Exchange Commission.

Total Non-GAAP Operating Revenues²

Green Dot is reaffirming its guidance range for full year non-GAAP total operating revenues² to be between $1.376 billion and $1.462 billion, or approximately flat year-over-year at the mid-point.

Adjusted EBITDA²

Green Dot is reaffirming the mid-point of its full year adjusted EBITDA²range while narrowing the low and high end of its range to $182 million and $188 million, or down 23% year-over-year at the mid-point, versus its previous guidance range of $180 million and $190 million.

Non-GAAP EPS²

Green Dot is reaffirming the mid-point of its full year non-GAAP EPS² range while narrowing the low and high end of its range to $1.80 and $1.90, or down 29% year-over-year at the mid-point, versus its previous guidance range of $1.77 and $1.93.

The components of Green Dot’s non-GAAP EPS² guidance range are as follows:

	Range
	Low			High
	(In millions, except per share data)
Adjusted EBITDA	$	182.0		$	188.0
Depreciation and amortization*		(56.5	)		(56.5	)
Net interest expense		(2.0	)		(2.0	)
Non-GAAP pre-tax income	$	123.5		$	129.5
Tax impact**		(29.0	)		(30.4	)
Non-GAAP net income	$	94.5		$	99.1
Non-GAAP diluted weighted-average shares issued and outstanding		52.4			52.4
Non-GAAP earnings per share	$	1.80		$	1.90

*	Excludes the impact of amortization of acquired intangible assets
**	Assumes a non-GAAP effective tax rate of approximately 23.5% for full year.

2	For additional information, see reconciliations of forward-looking guidance for these non-GAAP financial measures to their respective, most directly comparable projected GAAP financial measures provided in the tables immediately following the reconciliation of Net Income to Adjusted EBITDA.

Conference Call

Green Dot’s management will host a conference call to discuss second quarter 2023 financial results today at 5:00 p.m. ET. The conference call can be accessed live from Green Dot’s investor relations website at http://ir.greendot.com/. Green Dot uses this website as a tool to disclose important information about the company to investors and comply with its disclosure obligations under Regulation Fair Disclosure. A replay of the webcast will be available at the same website following the call. The replay will be available until Thursday, August 10, 2023.

Forward-Looking Statements

This earnings release contains forward-looking statements, which are subject to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. These statements include, among other things, statements in the quotes of Green Dot’s executive officers and under the heading “Updated 2023 Financial Guidance,” as well as about other future events that involve risks and uncertainties. Actual results may differ materially from those contained in the forward-looking statements contained in this earnings release, and reported results should not be considered as an indication of future performance. The potential risks and uncertainties that could cause actual results to differ from those projected include, among other things, Green Dot’s ability to timely and successfully complete its technology transformation and achieve the expected cost savings and other benefits therefrom, impacts from and changes in general economic conditions on Green Dot’s business, results of operations and financial condition, including any continuing impacts of the COVID-19 pandemic, and the U.S. government’s response thereto, shifts in consumer behavior towards electronic payments, the timing and impact of revenue growth activities, Green Dot’s dependence on revenues derived from Walmart, the timing and impact of non-renewals or terminations of agreements with other large partners, impact of competition, Green Dot’s reliance on retail distributors for the promotion of its products and services, demand for Green Dot’s new and existing products and services, continued and improving returns from Green Dot’s investments in strategic initiatives, Green Dot’s ability to operate in a highly regulated environment, including with respect to any restrictions imposed on its business, changes to governmental policies or rulemaking or enforcement priorities affecting financial institutions or to existing laws or regulations affecting Green Dot’s operating methods or economics, Green Dot’s reliance on third-party vendors, changes in credit card association or other network rules or standards, changes in card association and debit network fees or products or interchange rates, instances of fraud developments in the prepaid financial services industry that impact prepaid debit card usage generally, business interruption or systems failure, economic, political and other conditions may adversely affect trends in consumer spending and Green Dot’s involvement in litigation or investigations. These and other risks are discussed in greater detail in Green Dot’s Securities and Exchange Commission filings, including its most recent annual report on Form 10-K and quarterly report on Form 10-Q, which are available on Green Dot’s investor relations website at ir.greendot.com and on the SEC website at www.sec.gov. All information provided in this release and in the attachments is as of August 3, 2023, and Green Dot assumes no obligation to update this information as a result of future events or developments, except as required by law.

About Non-GAAP Financial Measures

To supplement Green Dot’s consolidated financial statements presented in accordance with accounting principles generally accepted in the United States of America (GAAP), Green Dot uses measures of operating results that are adjusted for, among other things, non-operating net interest income and expense; other non-interest investment income earned by its bank; income tax benefit and expense; depreciation and amortization, including amortization of acquired intangibles; certain legal settlement gains and charges; stock-based compensation and related employer payroll taxes; changes in the fair value of contingent consideration; transaction costs from acquisitions; amortization attributable to deferred financing costs, impairment charges; extraordinary severance expenses; earnings or losses from equity method investments; changes in the fair value of loans held for sale; commissions and certain processing-related costs associated with Banking as a Service (“BaaS”) products and services where Green Dot does not control customer acquisition; realized gains on investment securities; other charges and income not reflective of ongoing operating results; and income tax effects. This earnings release includes non-GAAP total operating revenues, adjusted EBITDA, non-GAAP net income, and non-GAAP diluted earnings per share. These non-GAAP financial measures are not calculated or presented in accordance with, and are not alternatives or substitutes for, financial measures prepared in accordance with GAAP, and should be read only in conjunction with Green Dot’s financial measures prepared in accordance with GAAP. Green Dot’s non-GAAP financial measures may be different from similarly-titled non-GAAP financial measures used by other companies. Green Dot believes that the presentation of non-GAAP financial measures provides useful information to management and investors regarding underlying trends in its consolidated financial condition and results of operations. Green Dot’s management regularly uses these supplemental non-GAAP financial measures internally to understand, manage and evaluate Green Dot’s business and make operating decisions. For additional information regarding Green Dot’s use of non-GAAP financial measures and the items excluded by Green Dot from one or more of its historic and projected non-GAAP financial measures, investors are encouraged to review the reconciliations of Green Dot’s historic and projected non-GAAP financial measures to the comparable GAAP financial measures, which are attached to this earnings release, and which can be found by clicking on “Financial Information” in the Investor Relations section of Green Dot’s website at http://ir.greendot.com/.

About Green Dot

Green Dot Corporation (NYSE: GDOT) is a financial technology and registered bank holding company committed to giving all people the power to bank seamlessly, affordably, and with confidence. Green Dot’s technology platform enables it to build products and features that address the most pressing financial challenges of consumers and businesses, transforming the way they manage and move money and making financial empowerment more accessible for all.

Green Dot offers a broad set of financial services to consumers and businesses including debit, checking, credit, prepaid, and payroll cards, as well as robust money processing services, tax refunds, cash deposits and disbursements. Its flagship digital banking platform GO2bank offers consumers simple and accessible mobile banking designed to help improve financial health over time. The company’s banking platform services business enables a growing list of the world’s largest and most trusted consumer and technology brands to deploy customized, seamless, value-driven money management solutions for their customers.

Founded in 1999, Green Dot has served more than 33 million customers directly and many millions more through its partners. The Green Dot Network of more than 90,000 retail distribution locations nationwide, more than all remaining bank branches in the U.S. combined, enables it to operate primarily as a “branchless bank.” Green Dot Bank is a subsidiary of Green Dot Corporation and member of the FDIC. For more information about Green Dot’s products and services, please visit www.greendot.com.

GREEN DOT CORPORATION CONSOLIDATED BALANCE SHEETS

	June 30, 2023			December 31, 2022
	(unaudited)
Assets	(In thousands, except par value)
Current assets:
Unrestricted cash and cash equivalents	$	661,452		$	813,945
Restricted cash		4,000			5,900
Investment securities available-for-sale, at fair value		15,556			—
Settlement assets		523,606			493,395
Accounts receivable, net		61,109			74,437
Prepaid expenses and other assets		57,123			78,155
Total current assets		1,322,846			1,465,832
Investment securities available-for-sale, at fair value		2,268,857			2,363,687
Loans to bank customers, net of allowance for loan losses of $12,641 and $9,078 as of June 30, 2023 and December 31, 2022, respectively		29,966			21,421
Prepaid expenses and other assets		221,175			192,901
Property, equipment, and internal-use software, net		171,589			160,222
Operating lease right-of-use assets		6,685			8,316
Deferred expenses		1,792			14,547
Net deferred tax assets		118,841			117,167
Goodwill and intangible assets		431,154			445,083
Total assets	$	4,572,905		$	4,789,176
Liabilities and Stockholders’ Equity
Current liabilities:
Accounts payable	$	106,135		$	113,891
Deposits		3,234,606			3,450,105
Obligations to customers		236,068			218,239
Settlement obligations		31,368			40,691
Amounts due to card issuing banks for overdrawn accounts		137			328
Other accrued liabilities		91,932			98,580
Operating lease liabilities		3,151			3,167
Deferred revenue		7,990			25,029
Income tax payable		13,957			11,641
Total current liabilities		3,725,344			3,961,671
Other accrued liabilities		2,927			5,777
Operating lease liabilities		3,395			5,247
Line of credit		—			35,000
Total liabilities		3,731,666			4,007,695

Stockholders’ equity:
Class A common stock, $0.001 par value; 100,000 shares authorized as of June 30, 2023 and December 31, 2022; 52,341 and 51,674 shares issued and outstanding as of June 30, 2023 and December 31, 2022, respectively		52			52
Additional paid-in capital		360,812			340,575
Retained earnings		800,172			763,582
Accumulated other comprehensive loss		(319,797	)		(322,728	)
Total stockholders’ equity		841,239			781,481
Total liabilities and stockholders’ equity	$	4,572,905		$	4,789,176

GREEN DOT CORPORATION CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)

	Three Months Ended June 30,						Six Months Ended June 30,
		2023			2022			2023			2022
	(In thousands, except per share data)
Operating revenues:
Card revenues and other fees	$	242,107		$	218,574		$	481,973		$	431,402
Cash processing revenues		53,846			57,467			155,669			157,495
Interchange revenues		59,967			76,038			123,982			154,894
Interest income, net		9,956			10,690			20,632			19,595
Total operating revenues		365,876			362,769			782,256			763,386
Operating expenses:
Sales and marketing expenses		62,823			77,376			138,035			160,902
Compensation and benefits expenses		64,985			57,611			133,766			123,875
Processing expenses		153,126			112,388			298,180			224,480
Other general and administrative expenses		80,156			91,455			156,494			178,598
Total operating expenses		361,090			338,830			726,475			687,855
Operating income		4,786			23,939			55,781			75,531
Interest expense, net		238			29			1,882			116
Other expense, net		(2,224	)		(4,038	)		(5,248	)		(4,808	)
Income before income taxes		2,324			19,872			48,651			70,607
Income tax expense		1,746			4,864			12,061			16,975
Net income	$	578		$	15,008		$	36,590		$	53,632

Basic earnings per common share:	$	0.01		$	0.28		$	0.70		$	0.98
Diluted earnings per common share	$	0.01		$	0.27		$	0.70		$	0.97
Basic weighted-average common shares issued and outstanding:		52,193			53,928			52,004			54,240
Diluted weighted-average common shares issued and outstanding:		52,437			54,389			52,201			54,855

GREEN DOT CORPORATION CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)

	Six Months Ended June 30,
		2023			2022
	(In thousands)
Operating activities
Net income	$	36,590		$	53,632
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization of property, equipment and internal-use software		27,587			28,399
Amortization of intangible assets		12,945			12,181
Provision for uncollectible overdrawn accounts from purchase transactions		5,529			7,407
Provision for loan losses		15,731			18,452
Stock-based compensation		19,798			20,493
Losses in equity method investments		7,611			6,647
Amortization of discount on available-for-sale investment securities		(1,129	)		(544	)
Impairment of long-lived assets		—			4,134
Other		(2,293	)		(1,445	)
Changes in operating assets and liabilities:
Accounts receivable, net		7,799			5,614
Prepaid expenses and other assets		16,023			15,809
Deferred expenses		12,755			9,562
Accounts payable and other accrued liabilities		(14,993	)		12,046
Deferred revenue		(17,466	)		(14,192	)
Income tax receivable/payable		1,706			11,968
Other, net		(427	)		(2,709	)
Net cash provided by operating activities		127,766			187,454

Investing activities
Purchases of available-for-sale investment securities		—			(694,358	)
Proceeds from maturities of available-for-sale securities		82,221			165,635
Proceeds from sales and calls of available-for-sale securities		56			2,875
Payments for acquisition of property and equipment		(38,120	)		(36,537	)
Net changes in loans		(17,866	)		(18,732	)
Investment in TailFin Labs, LLC		(35,000	)		(35,000	)
Purchases of other investments		—			(31,934	)
Other investing activities		(872	)		(1,448	)
Net cash used in investing activities		(9,581	)		(649,499	)

Financing activities
Borrowings on revolving line of credit		83,000			50,000
Repayments on revolving line of credit		(118,000	)		(50,000	)
Proceeds from exercise of options and ESPP purchases		3,415			3,415
Taxes paid related to net share settlement of equity awards		(2,976	)		(4,016	)
Net changes in deposits		(216,312	)		85,240
Net changes in settlement assets and obligations to customers		(21,705	)		(120,063	)
Contingent consideration payments		—			(1,647	)
Repurchase of Class A common stock		—			(44,046	)
Net cash used in financing activities		(272,578	)		(81,117	)

Net decrease in unrestricted cash, cash equivalents and restricted cash		(154,393	)		(543,162	)
Unrestricted cash, cash equivalents and restricted cash, beginning of period		819,845			1,325,640
Unrestricted cash, cash equivalents and restricted cash, end of period	$	665,452		$	782,478

Cash paid for interest	$	2,721		$	326
Cash paid for income taxes	$	9,289		$	4,086

Reconciliation of unrestricted cash, cash equivalents and restricted cash at end of period:
Unrestricted cash and cash equivalents	$	661,452		$	776,305
Restricted cash		4,000			6,173
Total unrestricted cash, cash equivalents and restricted cash, end of period	$	665,452		$	782,478

GREEN DOT CORPORATION REPORTABLE SEGMENTS (UNAUDITED)

	Three Months Ended June 30,						Six Months Ended June 30,
		2023			2022			2023			2022
Segment Revenue	(In thousands)
Consumer Services	$	129,091		$	150,959		$	268,924		$	309,716
B2B Services		180,652			143,514			351,944			277,414
Money Movement Services		49,974			54,143			148,215			151,459
Corporate and Other		1,427			6,485			4,424			11,190
Total segment revenues		361,144			355,101			773,507			749,779
BaaS commissions and processing expenses (8)		5,418			8,429			10,178			14,941
Other income (9)		(686	)		(761	)		(1,429	)		(1,334	)
Total operating revenues	$	365,876		$	362,769		$	782,256		$	763,386

	Three Months Ended June 30,						Six Months Ended June 30,
		2023			2022			2023			2022
Segment Profit	(In thousands)
Consumer Services	$	44,272		$	60,376		$	97,024		$	114,664
B2B Services		17,706			22,775			39,925			45,039
Money Movement Services		29,774			30,151			90,800			91,611
Corporate and Other		(52,883	)		(45,754	)		(106,337	)		(93,440	)
Total segment profit *		38,869			67,548			121,412			157,874
Reconciliation to income before income taxes
Depreciation and amortization of property, equipment and internal-use software		13,886			14,595			27,587			28,399
Stock based compensation and related employer taxes		10,740			5,770			20,289			20,939
Amortization of acquired intangible assets		7,281			5,664			12,945			12,181
Impairment charges		—			1,871			—			4,134
Legal settlements and related expenses		1,319			13,921			1,419			13,495
Other expense		857			1,788			3,391			3,195
Operating income		4,786			23,939			55,781			75,531
Interest expense, net		238			29			1,882			116
Other expense, net		(2,224	)		(4,038	)		(5,248	)		(4,808	)
Income before income taxes	$	2,324		$	19,872		$	48,651		$	70,607

*	Total segment profit is also referred to herein as adjusted EBITDA in its non-GAAP measures. Additional information about the Company’s non-GAAP financial measures can be found under the caption “About Non-GAAP Financial Measures.”

Green Dot’s segment reporting is based on how its Chief Operating Decision Maker (“CODM”) manages its businesses, including resource allocation and performance assessment. Its CODM (who is the Chief Executive Officer) organizes and manages the business primarily on the basis of the channels in which its product and services are offered and uses net revenue and segment profit to assess profitability. Segment profit reflects each segment’s net revenue less direct costs, such as sales and marketing expenses, processing expenses, third-party call center support and transaction losses. Green Dot’s operations are aggregated amongst three reportable segments: 1) Consumer Services, 2) Business to Business (“B2B”) Services and 3) Money Movement Services.

The Corporate and Other segment primarily consists of net interest income, certain other investment income earned by Green Dot’s bank, interest profit sharing arrangements with certain BaaS partners (a reduction of revenue), eliminations of inter-segment revenues and expenses, and unallocated corporate expenses, which include Green Dot’s fixed expenses, such as salaries, wages and related benefits for its employees, professional service fees, software licenses, telephone and communication costs, rent, utilities, and insurance that are not considered when Green Dot’s CODM evaluates segment performance. Non-cash expenses such as stock-based compensation, depreciation and amortization of long-lived assets, impairment charges and other non-recurring expenses that are not considered by Green Dot’s CODM when its evaluating overall consolidated financial results are excluded from its unallocated corporate expenses. Green Dot does not evaluate performance or allocate resources based on segment asset data, and therefore such information is not presented.

GREEN DOT CORPORATION Reconciliation of Total Operating Revenues to Non-GAAP Total Operating Revenues ⁽¹⁾ (Unaudited)

	Three Months Ended June 30,						Six Months Ended June 30,
		2023			2022			2023			2022
	(In thousands)
Total operating revenues	$	365,876		$	362,769		$	782,256		$	763,386
BaaS commissions and processing expenses (8)		(5,418	)		(8,429	)		(10,178	)		(14,941	)
Other income (9)		686			761			1,429			1,334
Non-GAAP total operating revenues	$	361,144		$	355,101		$	773,507		$	749,779

Reconciliation of Net Income to Non-GAAP Net Income ⁽¹⁾ (Unaudited)

	Three Months Ended June 30,						Six Months Ended June 30,
		2023			2022			2023			2022
	(In thousands, except per share data)
Net income	$	578		$	15,008		$	36,590		$	53,632
Stock-based compensation and related employer payroll taxes (3)		10,740			5,770			20,289			20,939
Amortization of acquired intangible assets (4)		7,281			5,664			12,945			12,181
Change in fair value of contingent consideration (4)		—			—			—			300
Transaction and related acquisition costs (4)		—			331			(3	)		744
Amortization of deferred financing costs (5)		36			36			72			72
Impairment charges (5)		—			1,871			—			4,134
Legal settlements and related expenses (5)		1,319			13,921			1,419			13,495
Losses in equity method investments (5)		3,543			4,939			7,611			6,647
Change in fair value of loans held for sale (5)		(689	)		(160	)		(929	)		(712	)
Extraordinary severance expenses (6)		662			419			2,431			540
Other (income) expense, net (5)		(435	)		297			(471	)		484
Income tax effect (7)		(3,881	)		(7,658	)		(9,507	)		(13,441	)
Non-GAAP net income	$	19,154		$	40,438		$	70,447		$	99,015
Diluted earnings per common share
GAAP	$	0.01		$	0.27		$	0.70		$	0.97
Non-GAAP	$	0.37		$	0.74		$	1.35		$	1.80

Diluted weighted-average common shares issued and outstanding
GAAP		52,437			54,389			52,201			54,855
Non-GAAP		52,437			54,579			52,201			55,085

Reconciliation of GAAP to Non-GAAP Diluted Weighted-Average Shares Issued and Outstanding (Unaudited)

	Three Months Ended June 30,		Six Months Ended June 30,
	2023	2022	2023	2022
	(In thousands)
Diluted weighted-average shares issued and outstanding	52,437	54,389	52,201	54,855
Weighted-average unvested Walmart restricted shares (10)	—	190	—	230
Non-GAAP diluted weighted-average shares issued and outstanding	52,437	54,579	52,201	55,085

GREEN DOT CORPORATION Supplemental Detail on Non-GAAP Diluted Weighted-Average Common Shares Issued and Outstanding (Unaudited)

	Three Months Ended June 30,			Six Months Ended June 30,
	2023		2022	2023		2022
	(In thousands)
Class A common stock outstanding as of June 30:	52,341		53,740	52,341		53,740
Weighting adjustment	(148	)	378	(337	)	730
Dilutive potential shares:
Stock options	—		121	—		169
Service based restricted stock units	192		182	135		191
Performance-based restricted stock units	41		148	52		243
Employee stock purchase plan	11		10	10		12
Non-GAAP diluted weighted-average shares issued and outstanding	52,437		54,579	52,201		55,085

Reconciliation of Net Income to Adjusted EBITDA ⁽¹⁾ (Unaudited)

	Three Months Ended June 30,						Six Months Ended June 30,
		2023			2022			2023			2022
	(In thousands)
Net income	$	578		$	15,008		$	36,590		$	53,632
Interest expense, net (2)		238			29			1,882			116
Income tax expense		1,746			4,864			12,061			16,975
Depreciation and amortization of property, equipment and internal-use software (2)		13,886			14,595			27,587			28,399
Stock-based compensation and related employer payroll taxes (2)(3)		10,740			5,770			20,289			20,939
Amortization of acquired intangible assets (2)(4)		7,281			5,664			12,945			12,181
Change in fair value of contingent consideration (2)(4)		—			—			—			300
Transaction and related acquisition costs (2)(4)		—			331			(3	)		744
Impairment charges (2)(5)		—			1,871			—			4,134
Legal settlements and related expenses (2)(5)		1,319			13,921			1,419			13,495
Losses in equity method investments (2)(5)		3,543			4,939			7,611			6,647
Change in fair value of loans held for sale (2)(5)		(689	)		(160	)		(929	)		(712	)
Extraordinary severance expenses (2)(6)		662			419			2,431			540
Other (income) expense, net (2)(5)		(435	)		297			(471	)		484
Adjusted EBITDA	$	38,869		$	67,548		$	121,412		$	157,874

Non-GAAP total operating revenues	$	361,144		$	355,101		$	773,507		$	749,779
Adjusted EBITDA/Non-GAAP total operating revenues (adjusted EBITDA margin)		10.8	%		19.0	%		15.7	%		21.1	%

GREEN DOT CORPORATION Reconciliation of Forward Looking Guidance for Non-GAAP Financial Measures to Projected GAAP Total Operating Revenues ⁽¹⁾ (Unaudited)

	FY 2023
	Range
	Low			High
	(In millions)
Total operating revenues	$	1,393		$	1,479
Adjustments (8)(9)		(17	)		(17	)
Non-GAAP total operating revenues	$	1,376		$	1,462

Reconciliation of Forward Looking Guidance for Non-GAAP Financial Measures to Projected GAAP Net Income ⁽¹⁾ (Unaudited)

	FY 2023
	Range
	Low			High
	(In millions)
Net income	$	27.1		$	31.6
Adjustments (11)		154.9			156.4
Adjusted EBITDA	$	182.0		$	188.0

Non-GAAP total operating revenues	$	1,462		$	1,376
Adjusted EBITDA / Non-GAAP total operating revenues (Adjusted EBITDA margin)		12.4	%		13.7	%

Reconciliation of Forward Looking Guidance for Non-GAAP Financial Measures to Projected GAAP Net Income and GAAP Diluted Weighted-Average Shares Issued and Outstanding ⁽¹⁾ (Unaudited)

	FY 2023
	Range
	Low		High
	(In millions, except per share data)
Net income	$	27.1	$	31.6
Adjustments (11)		67.3		67.5
Non-GAAP net income	$	94.5	$	99.1
Diluted earnings per share
GAAP	$	0.52	$	0.60
Non-GAAP	$	1.80	$	1.90

Diluted weighted-average shares issued and outstanding
GAAP		52.4		52.4

(1)		To supplement Green Dot’s consolidated financial statements presented in accordance with GAAP, Green Dot uses measures of operating results that are adjusted to exclude various, primarily non-cash, expenses and charges. These financial measures are not calculated or presented in accordance with GAAP and should not be considered as alternatives to or substitutes for operating revenues, operating income, net income or any other measure of financial performance calculated and presented in accordance with GAAP. These financial measures may not be comparable to similarly-titled measures of other organizations because other organizations may not calculate their measures in the same manner as Green Dot does. These financial measures are adjusted to eliminate the impact of items that Green Dot does not consider indicative of its core operating performance. You are encouraged to evaluate these adjustments and the reasons Green Dot considers them appropriate.

		Green Dot believes that the non-GAAP financial measures it presents are useful to investors in evaluating Green Dot’s operating performance for the following reasons:

		adjusted EBITDA is widely used by investors to measure a company’s operating performance without regard to items, such as non-operating net interest income and expense, income tax benefit and expense, depreciation and amortization, stock-based compensation and related employer payroll taxes, changes in the fair value of contingent consideration, transaction costs, impairment charges, extraordinary severance expenses, certain legal settlement charges, earnings or losses from equity method investments, changes in the fair value of loans held for sale, and other charges and income that can vary substantially from company to company depending upon their respective financing structures and accounting policies, the book values of their assets, their capital structures and the methods by which their assets were acquired; securities analysts use adjusted EBITDA as a supplemental measure to evaluate the overall operating performance of companies; and Green Dot records stock-based compensation from period to period, and recorded stock-based compensation expenses and related employer payroll taxes, net of forfeitures, of approximately $10.7 million and $5.8 million for the three months ended June 30, 2023 and 2022, respectively. By comparing Green Dot’s adjusted EBITDA, non-GAAP net income and non-GAAP diluted earnings per share in different historical periods, investors can evaluate Green Dot’s operating results without the additional variations caused by stock-based compensation expense and related employer payroll taxes, which may not be comparable from period to period due to changes in the fair market value of Green Dot’s Class A common stock (which is influenced by external factors like the volatility of the public markets and the financial performance of Green Dot’s peers) and is not a key measure of Green Dot’s operations.

		Green Dot’s management uses the non-GAAP financial measures:

		as measures of operating performance, because they exclude the impact of items not directly resulting from Green Dot’s core operations; for planning purposes, including the preparation of Green Dot’s annual operating budget; to allocate resources to enhance the financial performance of Green Dot’s business; to evaluate the effectiveness of Green Dot’s business strategies; to establish metrics for variable compensation; and in communications with Green Dot’s board of directors concerning Green Dot’s financial performance.

		Green Dot understands that, although adjusted EBITDA and other non-GAAP financial measures are frequently used by investors and securities analysts in their evaluations of companies, these measures have limitations as an analytical tool, and you should not consider them in isolation or as substitutes for an analysis of Green Dot’s results of operations as reported under GAAP. Some of these limitations are:

		that these measures do not reflect Green Dot’s capital expenditures or future requirements for capital expenditures or other contractual commitments; that these measures do not reflect changes in, or cash requirements for, Green Dot’s working capital needs; that these measures do not reflect non-operating interest expense or interest income; that these measures do not reflect cash requirements for income taxes; that, although depreciation and amortization are non-cash charges, the assets being depreciated or amortized will often have to be replaced in the future, and these measures do not reflect any cash requirements for these replacements; and that other companies in Green Dot’s industry may calculate these measures differently than Green Dot does, limiting their usefulness as comparative measures.

(2)		Green Dot does not include any income tax impact of the associated non-GAAP adjustment to adjusted EBITDA, as the case may be, because each of these adjustments to the non-GAAP financial measure is provided before income tax expense.

(3)		This expense consists primarily of expenses for restricted stock units (including performance-based restricted stock units), performance-based stock options and related employer payroll taxes. Stock-based compensation expense is not comparable from period to period due to changes in the fair market value of Green Dot’s Class A common stock (which is influenced by external factors like the volatility of public markets and the financial performance of Green Dot’s peers) and is not a key measure of Green Dot’s operations. Green Dot excludes stock-based compensation expense from its non-GAAP financial measures primarily because it consists of non-cash expenses that Green Dot does not believe are reflective of ongoing operating results. Green Dot also believes that it is not useful to investors to understand the impact of stock-based compensation to its results of operations. Further, the related employer payroll taxes are dependent upon volatility in Green Dot’s stock price, as well as the timing and size of option exercises and vesting of restricted stock units, over which Green Dot has limited to no control. This expense is included as a component of compensation and benefits expenses on Green Dot’s consolidated statements of operations.

(4)		Green Dot excludes certain income and expenses that are the result of acquisitions. These acquisition-related adjustments include items such as transaction costs, the amortization of acquired intangible assets, changes in the fair value of contingent consideration, settlements of contingencies established at time of acquisition and other acquisition related charges, such as integration charges and professional and legal fees, which result in Green Dot recording expenses or fair value adjustments in its GAAP financial statements. Green Dot analyzes the performance of its operations without regard to these adjustments. In determining whether any acquisition-related adjustment is appropriate, Green Dot takes into consideration, among other things, how such adjustments would or would not aid in the understanding of the performance of its operations. These items are included as a component of other general and administrative expenses on Green Dot’s consolidated statements of operations, as applicable for the periods presented.

(5)		Green Dot excludes certain income and expenses that are not reflective of ongoing operating results. It is difficult to estimate the amount or timing of these items in advance. Although these events are reflected in Green Dot’s GAAP financial statements, Green Dot excludes them in its non-GAAP financial measures because Green Dot believes these items may limit the comparability of ongoing operations with prior and future periods. These adjustments include items such as amortization attributable to deferred financing costs, impairment charges related to long-lived assets, earnings or losses from equity method investments, legal settlements and related expenses, changes in the fair value of loans held for sale, realized gains on investment securities and other income and expenses, as applicable for the periods presented. In determining whether any such adjustment is appropriate, Green Dot takes into consideration, among other things, how such adjustments would or would not aid in the understanding of the performance of its operations. Each of these adjustments, except for amortization of deferred financing costs, earnings and losses from equity method investments, fair value changes on loans held for sale, and realized gains on investment securities, which are all included below operating income, are included within other general and administrative expenses on Green Dot’s consolidated statements of operations.

(6)		During the three and six months ended June 30, 2023, Green Dot recorded charges of $0.7 million and $2.4 million, respectively, related to extraordinary severance expenses, which were paid out in connection with reductions in force and other extraordinary involuntary terminations of employment. Although severance expenses may arise throughout the fiscal year, Green Dot believes the nature of these extraordinary costs are not indicative of its core operating performance. This expense is included as a component of compensation and benefits expenses on Green Dot’s consolidated statements of operations.

(7)		Represents the tax effect for the related non-GAAP measure adjustments using Green Dot’s year to date non-GAAP effective tax rate. It also excludes both the impact of excess tax benefits related to stock-based compensation and the IRC §162(m) limitation that applies to performance-based restricted stock units and stock options expense as of June 30, 2023.

(8)		Represents commissions and certain processing-related costs associated with BaaS products and services where Green Dot does not control customer acquisition. This adjustment is netted against Green Dot’s B2B Services revenues when evaluating segment performance.

(9)		Represents other non-interest investment income earned by Green Dot Bank. This amount is included along with operating interest income in Green Dot’s Corporate and Other segment since the yield earned on these investments are generated on a recurring basis and earned similarly to its investment securities available for sale.

(10)		Represents the weighted average of the unvested balance of restricted shares issued to Walmart in January 2020. Walmart is entitled to voting rights and participate in any dividends paid on the unvested balance and therefore, the shares are included in the computation of non-GAAP diluted earnings per share.

(11)		These amounts represent estimated adjustments for items such as non-operating net interest income, income taxes, depreciation and amortization, employee stock-based compensation and related employer taxes, amortization attributable to deferred financing costs, extraordinary severance expenses, earnings and losses from equity method investments, changes in the fair value of loans held for sale, legal settlement gains and expenses, and other income and expenses. Employee stock-based compensation expense includes assumptions about the future fair value of the Company’s Class A common stock (which is influenced by external factors like the volatility of public markets and the financial performance of the Company’s peers).

View source version on businesswire.com: https://www.businesswire.com/news/home/20230803400140/en/

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KEYWORDS: Texas United States North America

INDUSTRY KEYWORDS: Apps/Applications Technology Mobile/Wireless Finance Fintech Banking Professional Services Digital Cash Management/Digital Assets Software

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August 4, 2023 6:22 am

KVH Industries to Host Second Quarter Conference Call on August 9, 2023

MIDDLETOWN, R.I., Aug. 03, 2023 (GLOBE NEWSWIRE) — KVH Industries, Inc., (Nasdaq: KVHI), will announce its financial results for the second quarter that ended June 30, 2023, on Wednesday, August 9, 2023. In conjunction with the release, the company will conduct its investor conference call at 9:00 a.m. ET, hosted by Mr. Brent Bruun, CEO and Mr. Roger Kuebel, CFO.

A live broadcast of the call will be available online at investors.kvh.com. In addition, an audio replay of the conference call will be available on the website for at least two weeks. To listen to the replay, visit investors.kvh.com starting three hours following the conclusion of the call. Investors who wish to submit questions during or following the call may do so to [email protected].

About KVH Industries, Inc.

KVH Industries, Inc., is a global leader in mobile connectivity systems, with innovative technology designed to enable a mobile world. A market leader in maritime VSAT, KVH designs, manufactures, and provides connectivity and content services globally. Founded in 1982, the company has more than a dozen offices around the globe with research, development, and manufacturing operations based in Middletown, RI.

Contact:	Chris Watson
	VP, Marketing/Communications
	KVH Industries, Inc.
	401-845-2441
	[email protected]

August 4, 2023 6:20 am

Monster Beverage Reports 2023 Second Quarter Financial Results

— Record Second Quarter Net Sales Rise 12.1 Percent to $1.85 Billion —

—

Net Sales, Adjusted for Adverse Changes in Foreign Currency of $38.4 Million, Rise 14.4 Percent

—

— Second Quarter Net Income Increases 51.4 Percent to $413.9 Million —

CORONA, Calif., Aug. 03, 2023 (GLOBE NEWSWIRE) — Monster Beverage Corporation (NASDAQ: MNST) today reported financial results for the three- and six-months ended June 30, 2023.

Second Quarter Results

Net sales for the 2023 second quarter increased 12.1 percent to $1.85 billion, from $1.66 billion in the same period last year. Net changes in foreign currency exchange rates had an unfavorable impact on net sales for the 2023 second quarter of $38.4 million. Net sales on a foreign currency adjusted basis increased 14.4 percent in the 2023 second quarter.

Net sales for the Company’s Monster Energy® Drinks segment, which primarily includes the Company’s Monster Energy® drinks, Reign Total Body Fuel® high performance energy drinks and Reign Storm® total wellness energy drinks, increased 9.7 percent to $1.69 billion for the 2023 second quarter, from $1.54 billion for the 2022 second quarter. Net changes in foreign currency exchange rates had an unfavorable impact on net sales for the Monster Energy® Drinks segment of approximately $36.3 million for the 2023 second quarter. Net sales on a foreign currency adjusted basis for the Monster Energy® Drinks segment increased 12.1 percent in the 2023 second quarter.

Net sales for the Company’s Strategic Brands segment, which primarily includes the various energy drink brands acquired from The Coca-Cola Company, as well as the Company’s affordable energy brands, increased 26.0 percent to $99.7 million for the 2023 second quarter, from $79.1 million in the 2022 second quarter. Net changes in foreign currency exchange rates had an unfavorable impact on net sales for the Strategic Brands segment of approximately $2.1 million for the 2023 second quarter. Net sales on a foreign currency adjusted basis for the Strategic Brands segment increased 28.7 percent in the 2023 second quarter.

Net sales for the Alcohol Brands segment, which is comprised of The Beast Unleashed^TM, as well as the various craft beers and hard seltzers purchased as part of the CANarchy transaction on February 17, 2022, increased 88.2 percent to $61.1 million for the 2023 second quarter, from $32.4 million in the 2022 second quarter.

Net sales for the Company’s Other segment, which primarily includes certain products of American Fruits and Flavors, LLC, a wholly owned subsidiary of the Company, sold to independent third-party customers (the “AFF Third-Party Products”), increased 22.2 percent to $7.3 million for the 2023 second quarter, from $6.0 million in the 2022 second quarter.

Net sales to customers outside the United States increased 10.2 percent to $715.4 million in the 2023 second quarter, from $649.0 million in the 2022 second quarter. Such sales were approximately 39 percent in both the 2023 and 2022 second quarters. Net sales to customers outside the United States, on a foreign currency adjusted basis, increased 16.1 percent in the 2023 second quarter.

Gross profit as a percentage of net sales for the 2023 second quarter was 52.5 percent, compared with 47.1 percent in the 2022 second quarter. The increase in gross profit as a percentage of net sales was primarily the result of pricing actions, decreased freight-in costs and decreased aluminum can costs.

Operating expenses for the 2023 second quarter were $450.4 million, compared with $406.9 million in the 2022 second quarter. Operating expenses as a percentage of net sales for the 2023 second quarter were 24.3 percent, compared with 24.6 percent in the 2022 second quarter.

Distribution expenses for the 2023 second quarter were $82.0 million, or 4.4 percent of net sales, compared with $87.9 million, or 5.3 percent of net sales, in the 2022 second quarter.

Selling expenses for the 2023 second quarter were $172.6 million, or 9.3 percent of net sales, compared with $150.4 million, or 9.1 percent of net sales, in the 2022 second quarter.

General and administrative expenses for the 2023 second quarter were $195.8 million, or 10.6 percent of net sales, compared with $168.7 million, or 10.2 percent of net sales, for the 2022 second quarter. Stock-based compensation was $18.6 million for the 2023 second quarter, compared with $16.3 million in the 2022 second quarter.

Operating income for the 2023 second quarter was $523.8 million, compared with $373.0 million in the 2022 second quarter.

The effective tax rate for the 2023 second quarter was 23.2 percent, compared with 25.3 percent in the 2022 second quarter.

Net income for the 2023 second quarter increased 51.4 percent to $413.9 million, from $273.4 million in the 2022 second quarter. Net income per diluted share for the 2023 second quarter increased 52.8 percent to $0.39, from $0.26 in the second quarter of 2022.

Hilton H. Schlosberg, Vice Chairman and Co-Chief Executive Officer, said, “We are seeing sustained growth in the energy drink market in the United States, as well as internationally. We are pleased to report another quarter of continued revenue growth, with record sales for our second fiscal quarter. The quarter was again impacted by unfavorable foreign currency exchange rates.

“Gross profit margins in the quarter improved significantly as compared to the 2022 second quarter, primarily as a result of pricing actions, decreased freight-in costs and decreased aluminum can costs. As expected, promotional allowances as a percentage of net sales for the 2023 second quarter were marginally higher than the comparable 2022 second quarter as well as marginally higher than the 2023 first quarter.

“Internationally, we implemented price increases in certain markets during the 2023 second quarter, with additional price increases planned in a number of other markets during the remainder of the year. In certain markets, such increases are in addition to price increases implemented in 2022.

“On July 31, 2023, we completed our purchase of Bang Energy and are in the process of integrating this brand into our portfolio,” Schlosberg added.

Rodney C. Sacks, Chairman and Co-Chief Executive Officer, said, “We are pleased with our new product innovation launches in the first half of this year. We are particularly excited with the launch in March 2023, of Reign Storm®, positioned in the total wellness energy category in the United States.

“During the second quarter, we continued our roll-out of our first flavored malt beverage alcohol product, The Beast Unleashed™, in the United States. We are pleased with the results of the launch to date and are continuing to expand distribution into additional markets, with the goal of being national by the end of the year. We will be launching certain flavors of The Beast Unleashed™ in new 24 oz. single serve cans mainly for the convenience and gas market.

“We also plan to launch a hard iced tea extension of The Beast Unleashed™, named Nasty Beast™ Hardcore Tea, later this year or early next year, with a goal of national distribution in the first half of 2024. The brand will be available in four flavors: Original, Half & Half, Razzleberry and Green. Nasty Beast™ Hardcore Tea will be sold in a variety 12-pack and 24 oz. single-serve cans.

“We have a robust innovative pipeline of both alcoholic and non-alcoholic beverages,” Sacks added.

2023 Six-Months Results

Net sales for the six-months ended June 30, 2023 increased 12.0 percent to $3.55 billion, from $3.17 billion in the comparable period last year. Net changes in foreign currency exchange rates had an unfavorable impact of $90.4 million on net sales for the six-months ended June 30, 2023. Net sales on a foreign currency adjusted basis increased 14.8 percent in the six-months ended June 30, 2023.

Gross profit as a percentage of net sales for the six-months ended June 30, 2023 was 52.7 percent, compared with 49.0 percent in the comparable period last year.

Operating expenses for the six-months ended June 30, 2023 were $863.2 million, compared with $784.1 million in the comparable period last year.

Operating income for the six-months ended June 30, 2023 increased to $1.01 billion, from $772.4 million in the comparable period last year.

The effective tax rate for the six-months ended June 30, 2023 was 21.7 percent, compared with 25.2 percent in the comparable period last year.

Net income for the six-months ended June 30, 2023 increased 42.9 percent to $811.3 million, from $567.6 million in the comparable period last year. Net income per diluted share for the six-months ended June 30, 2023 was $0.77, compared with $0.53 in the comparable period last year.

Share Repurchase Program

No shares of the Company’s common stock were repurchased during the 2023 second quarter under the previously authorized repurchase programs. As of August 3, 2023, approximately $682.8 million remained available for repurchase under the previously authorized repurchase programs.

Bang Energy

On July 31, 2023 the Company completed its acquisition of substantially all of the assets of Vital Pharmaceuticals, Inc. and certain of its affiliates (collectively, “Bang Energy”) for a purchase price of approximately $362 million, subject to adjustments. The acquired assets include Bang Energy beverages and a beverage production facility in Phoenix, Arizona.

Investor Conference Call

The Company will host an investor conference call today, August 3, 2023, at 2:00 p.m. Pacific Time (5:00 p.m. Eastern Time). The conference call will be open to all interested investors through a live audio web broadcast via the internet at www.monsterbevcorp.com in the “Events & Presentations” section. For those who are not able to listen to the live broadcast, the call will be archived for approximately one year on the website.

Monster Beverage Corporation

Based in Corona, California, Monster Beverage Corporation is a holding company and conducts no operating business except through its consolidated subsidiaries. The Company’s subsidiaries develop and market energy drinks, including Monster Energy® drinks, Monster Energy Ultra® energy drinks, Juice Monster® Energy + Juice energy drinks, Java Monster® non-carbonated coffee + energy drinks, Rehab® Monster® non-carbonated energy drinks, Monster Hydro® non-carbonated refreshment + energy drinks, Monster Energy® Nitro energy drinks, Reign Total Body Fuel® high performance energy drinks, Reign Inferno® thermogenic fuel high performance energy drinks, Reign Storm® clean energy drinks, NOS® energy drinks, Full Throttle® energy drinks, BPM® energy drinks, BU® energy drinks, Burn® energy drinks, Gladiator® energy drinks, Live+® energy drinks, Mother® energy drinks, Nalu® energy drinks, Play® and Power Play® (stylized) energy drinks, Relentless® energy drinks, Samurai® energy drinks, Ultra Energy® drinks, Predator® energy drinks and Fury® energy drinks. The Company’s subsidiaries also develop and market still and sparkling waters under the Monster Tour Water® brand name. The Company’s subsidiaries also develop and market craft beers, hard seltzers and flavored malt beverages under a number of brands, including Jai Alai® IPA, Dale’s Pale Ale®, Dallas Blonde®, Wild Basin® hard seltzers and The Beast Unleashed™. For more information visit www.monsterbevcorp.com.

Caution Concerning Forward-Looking Statements

Certain statements made in this announcement may constitute “forward-looking statements” within the meaning of the U.S. federal securities laws, as amended, regarding the expectations of management with respect to our future operating results and other future events including revenues and profitability. The Company cautions that these statements are based on management’s current knowledge and expectations and are subject to certain risks and uncertainties, many of which are outside of the control of the Company, that could cause actual results and events to differ materially from the statements made herein. Such risks and uncertainties include, but are not limited to, the following: the impact of the military conflict in Ukraine, including supply chain disruptions, volatility in commodity prices, increased economic uncertainty and escalating geopolitical tensions; our extensive commercial arrangements with The Coca-Cola Company (TCCC) and, as a result, our future performance’s substantial dependence on the success of our relationship with TCCC; our ability to implement our growth strategy, including expanding our business in existing and new sectors; the inherent operational risks presented by the alcoholic beverage industry that may not be adequately covered by insurance or lead to litigation relating to the abuse or misuse of our products; our ability to successfully integrate Bang Energy businesses and assets, transition the acquired beverages to the Company’s primary distributors, and retain and increase sales of the acquired beverages; exposure to significant liabilities due to litigation, legal or regulatory proceedings; intellectual property injunctions; unanticipated litigation concerning the Company’s products; the current uncertainty and volatility in the national and global economy and changes in demand due to such economic conditions; changes in consumer preferences; adverse publicity surrounding obesity, alcohol consumption and other health concerns related to our products, product safety and quality; activities and strategies of competitors, including the introduction of new products and competitive pricing and/or marketing of similar products; changes in the price and/or availability of raw materials; other supply issues, including the availability of products and/or suitable production facilities including limitations on co-packing availability including retort production; disruption to our manufacturing facilities and operations related to climate, labor, production difficulties, capacity limitations, regulations or other causes; product distribution and placement decisions by retailers; the effects of retailer and/or bottler/distributor consolidation on our business; unilateral decisions by bottlers/distributors, buying groups, convenience chains, grocery chains, mass merchandisers, specialty chain stores, e-commerce retailers, e-commerce websites, club stores and other customers to discontinue carrying all or any of our products that they are carrying at any time, restrict the range of our products they carry, impose restrictions or limitations on the sale of our products and/or the sizes of containers for our products and/or devote less resources to the sale of our products; changes in governmental regulation; the imposition of new and/or increased excise sales and/or other taxes on our products; our ability to adapt to the changing retail landscape with the rapid growth in e-commerce retailers and e-commerce websites; the impact of proposals to limit or restrict the sale of energy or alcohol drinks to minors and/or persons below a specified age and/or restrict the venues and/or the size of containers in which energy or alcohol drinks can be sold; possible recalls of our products and/or the consequences and costs of defective production; or our ability to absorb, reduce or pass on to our bottlers/distributors increases in commodity costs, including freight costs. For a more detailed discussion of these and other risks that could affect our operating results, see the Company’s reports filed with the Securities and Exchange Commission, including our annual report on Form 10-K for the year ended December 31, 2022 and our subsequently filed quarterly report. The Company’s actual results could differ materially from those contained in the forward-looking statements. The Company assumes no obligation to update any forward-looking statements, whether as a result of new information, future events or otherwise.

(tables below)

MONSTER BEVERAGE CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF INCOME AND OTHER INFORMATION

FOR THE THREE- AND SIX-MONTHS ENDED JUNE 30, 2023 AND 2022

(In Thousands, Except Per Share Amounts) (Unaudited)

	Three-Months Ended						Six-Months Ended
	June 30,						June 30,
		2023			2022			2023			2022

Net sales¹	$	1,854,961		$	1,655,260		$	3,553,891		$	3,173,833

Cost of sales		880,739			875,399			1,681,820			1,617,306

Gross profit¹		974,222			779,861			1,872,071			1,556,527
Gross profit as a percentage of net sales		52.5	%		47.1	%		52.7	%		49.0	%

Operating expenses		450,417			406,910			863,201			784,088
Operating expenses as a percentage of net sales		24.3	%		24.6	%		24.3	%		24.7	%

Operating income¹		523,805			372,951			1,008,870			772,439
Operating income as a percentage of net sales		28.2	%		22.5	%		28.4	%		24.3	%


Interest and other income (expense), net		15,159			(6,781	)		27,653			(14,080	)

Income before provision for income taxes¹		538,964			366,170			1,036,523			758,359

Provision for income taxes		125,093			92,810			225,208			190,796
Income taxes as a percentage of income before taxes		23.2	%		25.3	%		21.7	%		25.2	%

Net income	$	413,871		$	273,360		$	811,315		$	567,563
Net income as a percentage of net sales		22.3	%		16.5	%		22.8	%		17.9	%

Net income per common share:
Basic	$	0.40		$	0.26		$	0.78		$	0.54
Diluted	$	0.39		$	0.26		$	0.77		$	0.53

Weighted average number of shares of common stock and common stock equivalents:
Basic		1,047,065			1,057,233			1,045,993			1,058,017
Diluted		1,060,093			1,069,622			1,059,667			1,070,418

Energy drink case sales (in thousands) (in 192-ounce case equivalents)		198,406			184,197			380,850			352,990
Average net sales per case²	$	9.00		$	8.78		$	9.02		$	8.82

_{¹Includes $10.0 million and $10.1 million for the three-months ended June 30, 2023 and 2022, respectively, related to the recognition of deferred revenue. Includes $19.9 million and $20.1 million for the six-months ended June 30, 2023 and 2022, respectively, related to the recognition of deferred revenue.}

_{²

E

xcludes Alcohol

Brands

segment net sales of $

61.1

million

and $32.4 million

for the three-months ended June 30,

202

3

and 202

2,

respectively,

as these sales do not have unit case equivalents. E

xcludes Other segment net sales of $

7.3

million and $

6.0

million for the three-months ended

June

3

0

,

20

2

3

and 20

2

2

, respectively, comprised

primarily

of net sales of AFF Third-Party Products to independent third-party customers, as these sales do not have unit case equivalents.

Excludes Alcohol

Brands

segment net sales of $

107.4 million and

$

47.7

million for the six-months ended June 30,

202

3

and 2022, respectively

, as these sales do not have unit case equivalents.

Excludes Other segment net sales of $

11.9

million for

both

the six-months ended June 30,

20

2

3

and 20

2

2

, respectively, comprised

primarily

of net sales of AFF Third-Party Products to independent third-party customers, as these sales do not have unit case equivalents.}

MONSTER BEVERAGE CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

AS OF JUNE 30, 2023 AND DECEMBER 31, 2022

(In Thousands, Except Par Value) (Unaudited)

	June 30, 2023			December 31, 2022
ASSETS
CURRENT ASSETS:
Cash and cash equivalents	$	1,869,774		$	1,307,141
Short-term investments		1,417,239			1,362,314
Accounts receivable, net		1,333,004			1,016,203
Inventories		846,812			935,631
Prepaid expenses and other current assets		148,750			109,823
Prepaid income taxes		38,534			33,785
Total current assets		5,654,113			4,764,897

INVESTMENTS		62,248			61,443
PROPERTY AND EQUIPMENT, net		576,645			516,897
DEFERRED INCOME TAXES		177,039			177,039
GOODWILL		1,417,941			1,417,941
OTHER INTANGIBLE ASSETS, net		1,224,100			1,220,410
OTHER ASSETS		151,252			134,478
Total Assets	$	9,263,338		$	8,293,105

LIABILITIES AND STOCKHOLDERS’ EQUITY
CURRENT LIABILITIES:
Accounts payable	$	568,613		$	444,265
Accrued liabilities		198,656			172,991
Accrued promotional allowances		283,647			255,631
Deferred revenue		42,765			43,311
Accrued compensation		56,195			72,463
Income taxes payable		12,704			13,317
Total current liabilities		1,162,580			1,001,978

DEFERRED REVENUE		215,039			223,800

OTHER LIABILITIES		44,255			42,286

STOCKHOLDERS’ EQUITY:
Common stock – $0.005 par value; 5,000,000 shares authorized; 1,118,269 shares issued and 1,047,485 shares outstanding as of June 30, 2023; 1,283,688 shares issued and 1,044,600 shares outstanding as of December 31, 2022		5,591			6,418
Additional paid-in capital		4,869,791			4,776,804
Retained earnings		5,120,063			9,001,173
Accumulated other comprehensive loss		(155,725	)		(159,073	)
Common stock in treasury, at cost; 70,784 shares and 239,088 shares as of June 30, 2023 and December 31, 2022, respectively		(1,998,256	)		(6,600,281	)
Total stockholders’ equity		7,841,464			7,025,041
Total Liabilities and Stockholders’ Equity	$	9,263,338		$	8,293,105

CONTACTS:	Rodney C. Sacks Chairman and Co-Chief Executive Officer (951) 739-6200

	Hilton H. Schlosberg Vice Chairman and Co-Chief Executive Officer (951) 739-6200

	Roger S. Pondel / Judy Lin PondelWilkinson Inc. (310) 279-5980

August 4, 2023 6:18 am

IGM Biosciences Announces Second Quarter 2023 Financial Results

– Continued progress in clinical development across portfolio –
– Public equity offering and concurrent private placement with gross proceeds of $120.0 million –

MOUNTAIN VIEW, Calif., Aug. 03, 2023 (GLOBE NEWSWIRE) — IGM Biosciences, Inc. (Nasdaq: IGMS), a clinical-stage biotechnology company focused on creating and developing engineered IgM antibodies, today announced its financial results for the quarter ended June 30, 2023.

“We continued to make good progress in the development of our IgM platform in the second quarter, as reflected in our announcement of encouraging data from the clinical trials of IGM-8444, now known as aplitabart, and in the clearance by the FDA of two Investigational New Drug applications to begin clinical trials of imvotamab, our IgM-based CD20 x CD3 bispecific antibody T cell engager, in severe systemic lupus erythematosus and severe rheumatoid arthritis,” said Fred Schwarzer, Chief Executive Officer of IGM Biosciences. “Building on this progress, during the third quarter we expect to initiate these two Phase 1b autoimmune clinical trials and to continue to build enrollment in our randomized clinical trial of aplitabart in combination with standard of care FOLFIRI chemotherapy and bevacizumab in second-line metastatic colorectal cancer patients.”

Pipeline Progress

Aplitabart (IGM-8444) (DR5 agonist)

Clinical data with 3 mg/kg of aplitabart plus FOLFIRI from a non-randomized Phase 1 clinical trial. In June 2023, the Company reported Phase 1 data from a cohort of patients treated with aplitabart, the Company’s IgM agonist antibody targeting death receptor 5 (DR5), in combination with FOLFIRI through a data cut-off date of April 12, 2023.
- In 51 CRC patients treated with the combination regimens, no drug related clinically significant hepatotoxicity was observed, with only grade 1 and grade 2 transient liver enzyme elevations noted as of the data cut-off date.
- In these predominantly third-line metastatic colorectal cancer patients, the combination of aplitabart dosed at 3 mg/kg and FOLFIRI showed promising activity in terms of progression-free survival.
- Multiple confirmed partial responses were observed among the patients treated with 3 mg/kg of aplitabart and FOLFIRI, including some patients who had previously progressed on FOLFIRI treatment.
Clinical development of aplitabart advances. The Company continues to advance the clinical development of aplitabart.
- Dosing ongoing in the randomized colorectal cancer clinical trial. The Company is currently enrolling patients in an open-label randomized clinical trial of aplitabart plus FOLFIRI and bevacizumab in second-line metastatic colorectal cancer. This randomized trial will assess the additional benefit of 3 mg/kg of aplitabart with a primary endpoint of progression-free survival (PFS) and secondary endpoints of overall response rate and overall survival as compared to the current standard of care treatment arm of FOLFIRI and bevacizumab. The Company’s goal is to have enrolled approximately 110 patients in the trial by the end of the first quarter of 2024 and to have median PFS data from these patients by the end of 2024.
- Dosing at 10 mg/kg ongoing in the single arm colorectal cancer clinical trial. The Company has also begun dosing additional colorectal cancer patients at 10 mg/kg of aplitabart in its single arm FOLFIRI combination clinical trial.
- Dosing ongoing in the venetoclax combination. The Company is currently treating patients with acute myeloid leukemia in its aplitabart plus venetoclax and azacytidine Phase 1 combination cohort.
- Dosing ongoing in birinapant combination. The Company is also currently treating patients in its aplitabart plus birinapant Phase 1 combination cohort.

Imvotamab (CD20 x CD3)

FDA clearance to begin autoimmune clinical trials. In the second quarter, the Company received clearance of two Investigational New Drug (IND) applications with the U.S. Food and Drug Administration (FDA) for imvotamab, an IgM-based CD20 x CD3 bispecific antibody T cell engager, which will enable the initiation of two Phase 1b clinical trials, one in severe systemic lupus erythematosus (SLE) and one in severe rheumatoid arthritis (RA), during third quarter 2023.

IGM-7354 (IL-15 x PD-L1)

Phase 1 trial continues. The Company continues to enroll patients in a Phase 1 clinical trial exploring the safety, efficacy and biomarker activity of IGM-7354, an IgM-targeted immunostimulatory IL-15 cytokine, in the treatment of patients with solid tumors.

IGM-2644 (CD38 x CD3)

Phase 1 trial initiated. The Company has initiated a clinical trial exploring the safety and efficacy of IGM-2644, a CD38 x CD3 IgM T cell engaging antibody, in patients with recurrent or refractory multiple myeloma.

Financing

Completed underwritten public offering of common stock and concurrent private placement. As previously announced, the Company recently closed a public offering of its voting and non-voting common stock and concurrent private placement of non-voting common stock, with total gross proceeds of $120.0 million and net proceeds of $113.5 million, after deducting underwriting discounts and commissions and estimated offering expenses payable by the Company, of which $68.5 million had been received by the Company as of June 30, 2023 and $45.0 million was received on July 3, 2023.

Second Quarter 2023 Financial Results

Cash and Investments: Cash and investments as of June 30, 2023 were $386.9 million (which amount does not include an additional $45.0 million from the public equity offering received on July 3, 2023), compared to $427.2 million as of December 31, 2022.
Collaboration Revenue: For the second quarter of 2023, collaboration revenues were $0.4 million, compared to $0.4 million for the same period in 2022.
Research and Development (R&D) Expenses: For the second quarter of 2023, R&D expenses were $55.7 million, compared to $47.2 million for the same period in 2022.
General and Administrative (G&A) Expenses: For the second quarter of 2023, G&A expenses were $13.0 million, compared to $12.4 million for the same period in 2022.
Net Loss: For the second quarter of 2023, net loss was $64.4 million, or a loss of $1.43 per share, compared to a net loss of $58.6 million, or a loss of $1.33 per share, for the same period in 2022.

2023 Financial Guidance

The Company expects full year 2023 GAAP operating expenses of $275 million to $285 million, including estimated non-cash stock-based compensation expense of approximately $45 million, and full year collaboration revenue of approximately $3 million related to the Sanofi agreement. The Company expects to end 2023 with more than $325 million in cash and investments, and the Company expects its existing cash and investments and anticipated collaboration payments to fund operations into the second half of 2025.

About IGM Biosciences, Inc.

IGM Biosciences is a clinical-stage biotechnology company committed to developing and delivering a new class of medicines to treat patients with cancer, autoimmune and inflammatory diseases and infectious diseases. IGM’s pipeline of clinical and preclinical assets is based on the IgM antibody, which has 10 binding sites compared to conventional IgG antibodies with only 2 binding sites. IGM also has an exclusive worldwide collaboration agreement with Sanofi to create, develop, manufacture, and commercialize IgM antibody agonists against oncology and immunology and inflammation targets. For more information, please visit www.igmbio.com.

Cautionary Note Regarding Forward-Looking Statements

This press release contains forward-looking statements. Such forward-looking statements are not based on historical fact and include, but are not limited to: the potential of, and expectations regarding, IGM’s technology platform and its IgM antibodies and product candidates, including aplitabart and imvotamab; IGM’s plans and expectations regarding its clinical development efforts and activities; statements regarding the clinical development of aplitabart, imvotamab, IGM-7354 and IGM-2644, including the timing of initiation of clinical trials, patient enrollment and availability of clinical data; IGM’s expectations regarding its financial position and guidance, including collaboration revenue, operating expenses, stock-based compensation expense, ending 2023 cash and investments and projected cash runway; and statements by IGM’s Chief Executive Officer. Such statements are subject to numerous important factors, risks and uncertainties that may cause actual events or results to differ materially, including but not limited to: IGM’s early stages of clinical drug development; risks related to the use of engineered IgM antibodies, which is a novel and unproven therapeutic approach; IGM’s ability to demonstrate the safety and efficacy of its product candidates; IGM’s ability to successfully and timely advance its product candidates through clinical trials; IGM’s ability to enroll patients in its clinical trials; the potential for the results of clinical trials to differ from preclinical, preliminary, initial or expected results; the risk of significant adverse events, toxicities or other undesirable side effects; IGM’s ability to successfully manufacture and supply its product candidates for clinical trials; the potential impact of continuing or worsening supply chain constraints; the risk that all necessary regulatory approvals cannot be obtained; the potential market for IGM’s product candidates, and the progress and success of alternative therapeutics currently available or in development; IGM’s ability to obtain additional capital to finance its operations, if needed; uncertainties related to the projections of the size of patient populations suffering from the diseases IGM is targeting; IGM’s ability to obtain, maintain and protect its intellectual property rights; developments relating to IGM’s competitors and its industry, including competing product candidates and therapies; any potential delays or disruptions resulting from catastrophic events, including epidemics or other outbreaks of infectious disease; general economic and market conditions, including inflation; and other risks and uncertainties, including those more fully described in IGM’s filings with the Securities and Exchange Commission (SEC), including IGM’s Quarterly Report on Form 10-Q filed with the SEC on August 3, 2023 and in IGM’s future reports to be filed with the SEC. Any forward-looking statements contained in this press release speak only as of the date hereof, and IGM specifically disclaims any obligation to update any forward-looking statement, except as required by law.

Contact:

Argot Partners
David Pitts
212-600-1902
[email protected]


IGM Biosciences, Inc.
Selected Statement of Operations Data
(unaudited)
(in thousands, except share and per share data)

		Three Months Ended						Six Months Ended
		June 30,						June 30,
			2023			2022			2023			2022
	Collaboration revenue	$	448		$	366		$	970		$	366

	Operating expenses:
	Research and development ⁽¹⁾		55,673			47,218			106,567			86,093
	General and administrative ⁽¹⁾		12,983			12,372			25,985			25,453
	Total operating expenses		68,656			59,590			132,552			111,546
	Loss from operations		(68,208	)		(59,224	)		(131,582	)		(111,180	)

	Other income (expense):
	Interest income		3,894			760			8,066			814
	Other expense		—			(131	)		(20	)		(123	)
	Total other income (expense)		3,894			629			8,046			691
	Loss before income tax expense		(64,314	)		(58,595	)		(123,536	)		(110,489	)
	Income tax expense		(109	)		—			(196	)		—
	Net loss	$	(64,423	)	$	(58,595	)	$	(123,732	)	$	(110,489	)

	Net loss per share, basic and diluted	$	(1.43	)	$	(1.33	)	$	(2.76	)	$	(2.84	)
	Weighted-average common shares outstanding, basic and diluted		45,122,900			43,919,092			44,796,644			38,906,839


⁽¹⁾Amounts include stock-based compensation expense as follows:
	Research and development	$	8,248		$	6,335		$	14,687		$	12,942
	General and administrative		6,061			4,951			10,669			9,843
	Total stock-based compensation expense	$	14,309		$	11,286		$	25,356		$	22,785

IGM Biosciences, Inc.
Selected Balance Sheet Data
(unaudited)
(in thousands)

		June 30,			December 31,
			2023			2022
	Cash and investments	$	386,869		$	427,162
	Total assets		480,658			513,499
	Accounts payable		4,936			2,512
	Accrued liabilities		27,737			33,621
	Deferred revenue		147,961			148,931
	Total liabilities		222,051			226,236
	Accumulated deficit		(698,558	)		(574,826	)
	Total stockholders’ equity		258,607			287,263

August 4, 2023 6:17 am

Zio Granted High Medical Needs Designation by the Japanese Ministry of Health, Labour, and Welfare

Designation reflects recommendation by the Japanese Heart Rhythm Society (JHRS)

Shonin pre-market application submitted by iRhythm in July 2023

SAN FRANCISCO, Aug. 03, 2023 (GLOBE NEWSWIRE) — iRhythm Technologies, Inc. (NASDAQ:IRTC), a leading digital health care company focused on creating trusted solutions that detect, predict, and prevent disease, announced today that its application for manufacturing and marketing approval for Zio Monitor System in Japan has been designated for high medical needs by the Japanese Ministry of Health, Labour, and Welfare (“MHLW”). The high medical needs designation in Japan is granted to innovative devices recognized as having high medical utility for significant diseases.

The Zio Monitor System was indicated for this designation at the recommendation of the Japanese Heart Rhythm Society based on the clinical improvement that Zio services provides compared to traditional Holter monitoring¹ and the significant need that patients in Japan face to improve detection of potential cardiac arrhythmias. With this classification in hand, iRhythm submitted its Shonin pre-market application to the Japanese Pharmaceutical and Medical Device Agency (the “PMDA”) on July 31, 2023.

“We are delighted that the Ministry of Health, Labour, and Welfare has granted high medical need designation to the Zio Monitor System as we seek to drive better health outcomes and more equitable access for patients around the globe,” said Quentin Blackford, iRhythm President and Chief Executive Officer. “Working in close collaboration with the Japanese Heart Rhythm Society, our teams did an exceptional job to effectively convey Zio services’ improved clinical accuracy compared to existing traditional Holter monitoring standard of care¹^,2, the significant body of clinical study evidence regarding the Zio services, and our deep-learned AI algorithm³ as key differentiators. We look forward to continuing our collaboration with the Japanese Heart Rhythm Society and the Japanese Pharmaceutical and Medical Device Agency during their review of our regulatory dossier.”

Japan is the second largest ambulatory cardiac monitoring market in the world with an estimated 1.5 million tests prescribed annually – a number that is expected to continue to increase based on stroke and cardiovascular disease burden in an aging population⁴^,5. However, detection of potential arrhythmias amongst Japanese patients predominantly utilizes the traditional Holter monitoring as standard of care with very limited adoption of patch-based technologies.

About iRhythm Technologies, Inc.

iRhythm is a leading digital health care company that creates trusted solutions that detect, predict, and prevent disease. Combining wearable biosensors and cloud-based data analytics with powerful proprietary algorithms, iRhythm distills data from millions of heartbeats into clinically actionable information. Through a relentless focus on patient care, iRhythm’s vision is to deliver better data, better insights, and better health for all. To learn more about iRhythm, including its portfolio of Zio products and services, please visit irhythmtech.com.

Investor Relations Contact:

Stephanie Zhadkevich
(919) 452-5430
[email protected]

iRhythm Media Contact:

Saige Smith
(262) 289-7065
[email protected]

Barrett P. et al. Comparison of 24-hour Holter monitoring vs. 14-day novel adhesive patch electrocardiographic monitoring. American Heart Journal of Medicine, 2014.
Turakhia, M. et al. Diagnostic Utility of a Novel Leadless Arrhythmia Monitoring Device, American Journal of Cardiology, 2013.
Hannun, AY. et al. Cardiologist-level arrhythmia detection and classification in ambulatory electrocardiograms using a deep neural network. Nature Medicine, 2019.
Matsuda S. Health Policy in Japan – Current Situation and Future Challenges. JMA Journal, 2019.
Annual Pharmaceutical Production Statistics, Ministry of Health, Labour, and Welfare (“MHLW”).

August 4, 2023 6:15 am

Applied Optoelectronics Reports Second Quarter 2023 Results

SUGAR LAND, Texas, Aug. 03, 2023 (GLOBE NEWSWIRE) — Applied Optoelectronics, Inc. (NASDAQ: AAOI), a leading provider of fiber-optic access network products for the cable broadband, internet datacenter, telecom and fiber-to-the-home (FTTH) markets, today announced financial results for its second quarter 2023 ended June 30, 2023.

“Our second quarter revenue was in-line with our expectations, and we are pleased to report non-GAAP gross margin and non-GAAP EPS above our expectations.” said Dr. Thompson Lin, Applied Optoelectronics Inc. Founder, President and Chief Executive Officer. “Favorable product mix combined with our cost reduction efforts, and the benefit of some of the intentional actions we have taken to improve our cost structure led to a strong improvement in our gross margin, which is a trend we expect will continue. We are thrilled with the increased demand we saw for our 100G and 400G datacenter products. Total revenue for our 400G products doubled sequentially and accounted for 11% of our total datacenter revenue in Q2, and we believe revenue from our 400G products will continue to grow this year based on the anticipated initial deliveries under the recently-announced deal with Microsoft. Lastly, we made progress in strengthening our newly formed broadband access group with the addition of considerable talent to the team, and believe we are well positioned to execute on our new strategy to sell our CATV products directly to MSO customers.”

Second Quarter 2023 Financial Summary

GAAP revenue was $41.6 million, compared $52.3 million in the second quarter of 2022 and $53.0 million in the first quarter of 2023.
GAAP gross margin was 19.0%, compared with 16.5% in the second quarter of 2022 and 17.4% in the first quarter of 2023. Non-GAAP gross margin was 24.8%, compared with 16.7% in the second quarter of 2022 and 23.2% in the first quarter of 2023.
GAAP net loss was $16.9 million, or $0.57 per basic share, compared with net loss of $14.5 million, or $0.52 per basic share in the second quarter of 2022, and a net loss of $16.3 million, or $0.56 per basic share in the first quarter of 2023.
Non-GAAP net loss was $6.1 million, or $0.21 per basic share, compared with non-GAAP net loss of $7.6 million, or $0.28 per basic share in the second quarter of 2022, and a non-GAAP net loss of $7.1million, or $0.25 per basic share in the first quarter of 2023.

A reconciliation between all GAAP and non-GAAP information referenced above is contained in the tables below. Please also refer to “Non-GAAP Financial Measures” below for a description of these non-GAAP financial measures.

Third Quarter 2023 Business Outlook
⁽⁺⁾

For the third quarter of 2023, the company currently expects:

Revenue in the range of $60 million to $66 million.
Non-GAAP gross margin in the range of 29.5% to 31%.
Non-GAAP net profit in the range of a loss of $1.9 million to profit of $0.2 million, and non-GAAP earnings per share in the range of a loss of $0.06 to earnings of $0.01 using approximately 33.1 million shares.

⁽⁺⁾
_{Please refer to the note below on forward-looking statements and the risks involved with such statements as well as the note on non-GAAP financial measures.}

Conference Call Information

The company will host a conference call and webcast for analysts and investors on August 3, 2023 to discuss its second quarter 2023 results and outlook for its third quarter of 2023 at 4:30 p.m. Eastern time / 3:30 p.m. Central time. Open to the public, investors may access the call by dialing 844-890-1794 (domestic) or 412-717-9586 (international). A live audio webcast of the conference call along with supplemental financial information will also be accessible on the company’s website at investors.ao-inc.com. Following the webcast, an archived version will be available on the website for one year. A telephonic replay of the call will be available one hour after the call and will run for five business days and may be accessed by dialing 877-344-7529 (domestic) or 412-317-0088 (international) and entering passcode 1076424.

Forward-Looking Information

This press release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. In some cases, you can identify forward-looking statements by terminology such as “believe,” “may,” “estimate,” “continue,” “anticipate,” “intend,” “should,” “could,” “would,” “target,” “seek,” “aim,” “predicts,” “think,” “objectives,” “optimistic,” “new,” “goal,” “strategy,” “potential,” “is likely,” “will,” “expect,” “plan” “project,” “permit” or by other similar expressions that convey uncertainty of future events or outcomes. These statements include management’s beliefs and expectations related to our outlook for the third quarter of 2023. Such forward-looking statements reflect the views of management at the time such statements are made. These forward-looking statements involve risks and uncertainties, as well as assumptions and current expectations, which could cause the company’s actual results to differ materially from those anticipated in such forward-looking statements. These risks and uncertainties include but are not limited to: the impact of the COVID-19 pandemic on our business and financial results; reduction in the size or quantity of customer orders; change in demand for the company’s products due to industry conditions; changes in manufacturing operations; volatility in manufacturing costs; delays in shipments of products; disruptions in the supply chain; change in the rate of design wins or the rate of customer acceptance of new products; the company’s reliance on a small number of customers for a substantial portion of its revenues; potential pricing pressure; a decline in demand for our customers’ products or their rate of deployment of their products; general conditions in the internet datacenter, cable television (CATV) broadband, telecom, or fiber-to-the-home (FTTH) markets; changes in the world economy (particularly in the United States and China); changes in the regulation and taxation of international trade, including the imposition of tariffs; changes in currency exchange rates; the negative effects of seasonality; and other risks and uncertainties described more fully in the company’s documents filed with or furnished to the Securities and Exchange Commission, including our Annual Report on Form 10-K for the year ended December 31, 2022. More information about these and other risks that may impact the company’s business are set forth in the “Risk Factors” section of the company’s quarterly and annual reports on file with the Securities and Exchange Commission. You should not rely on forward-looking statements as predictions of future events. All forward-looking statements in this press release are based upon information available to us as of the date hereof, and qualified in their entirety by this cautionary statement. Except as required by law, we assume no obligation to update forward-looking statements for any reason after the date of this press release to conform these statements to actual results or to changes in the company’s expectations.

Non-GAAP Financial Measures

We provide non-GAAP gross margin, non-GAAP net income (loss), and non-GAAP earnings per share to eliminate the impact of items that we do not consider indicative of our overall operating performance. To arrive at our non-GAAP gross margin, we exclude stock-based compensation expense, expenses associated with discontinued products, and non-recurring (income) expenses, if any, from our GAAP gross margin. To arrive at our non-GAAP net income (loss), we exclude all amortization of intangible assets, stock-based compensation expense, non-recurring expenses, unrealized foreign exchange loss (gain), losses from the disposal of idle assets, if any, non-GAAP tax benefit (expenses), and expenses associated with discontinued products, from our GAAP net income (loss). Included in our non-recurring expenses in Q2 2023 and Q2 2022, and Q1 2023, are certain non-recurring expenses related to extreme weather and pandemic events (if any) and non-recurring tax expenses or benefits (if any), and employee severance expenses (if any). In computing our non-GAAP income tax benefit (expense), we have applied an estimate of our annual effective income tax rate and applied it to our net income before income taxes. Our non-GAAP diluted net loss per share is calculated by dividing our non-GAAP net loss by the fully diluted share count (for periods in which non-GAAP net income is positive) or basic share count (for periods in which our non-GAAP net income is negative). We believe that our non-GAAP measures are useful to investors in evaluating our operating performance for the following reasons:

We believe that elimination of items such as amortization of intangible assets, stock-based compensation expense, non-recurring revenue and expenses, losses from the disposal of idle assets, unrealized foreign exchange gain or loss, and depreciation on certain equipment undergoing reconfiguration is appropriate because treatment of these items may vary for reasons unrelated to our overall operating performance;
We believe that elimination of expenses associated with discontinued products, including depreciation and inventory obsolescence is appropriate because these expenses are not indicative of our ongoing operations;
We believe that estimating non-GAAP income taxes allows comparison with prior periods and provides additional information regarding the generation of potential future deferred tax assets;
We believe that non-GAAP measures provide better comparability with our past financial performance, period-to-period results and with our peer companies, many of which also use similar non-GAAP financial measures; and
We anticipate that investors and securities analysts will utilize non-GAAP measures as a supplement to GAAP measures to evaluate our overall operating performance.

A reconciliation of our GAAP net income (loss) and GAAP earnings (loss) per share for Q2 2023 to our non-GAAP net income (loss) and earnings (loss) per share is provided below, together with corresponding reconciliations for Q2 2022. A reconciliation of our GAAP net income (loss) and GAAP earnings (loss) per share for Q1 2023 to our non-GAAP net income (loss) and earnings (loss) per share was provided in our Q1 2023 earnings release.

Non-GAAP measures should not be considered as an alternative to net income (loss), earnings (loss) per share, or any other measure of financial performance calculated and presented in accordance with GAAP. Our non-GAAP measures may not be comparable to similarly titled measures of other organizations because other organizations may not calculate such other non-GAAP measures in the same manner. We have not reconciled the non-GAAP measures included in our guidance to the appropriate GAAP financial measures because the GAAP measures are not readily determinable on a forward-looking basis. GAAP measures that impact our non-GAAP financial measures may include stock-based compensation expense, non-recurring expenses, amortization of intangible assets, unrealized exchange loss (gain), asset impairment charges, and loss (gain) from disposal of idle assets. These GAAP measures cannot be reasonably predicted and may directly impact our non-GAAP gross margin, our non-GAAP net income and our non-GAAP fully-diluted earnings per share, although changes with respect to certain of these measures may offset other changes. In addition, certain of these measures are out of our control. Accordingly, a reconciliation of the non-GAAP financial measure guidance to the corresponding GAAP measures is not available without unreasonable effort.

About Applied Optoelectronics

Applied Optoelectronics Inc. (AOI) is a leading developer and manufacturer of advanced optical products, including components, modules and equipment. AOI’s products are the building blocks for broadband fiber access networks around the world, where they are used in the CATV broadband, internet datacenter, telecom and FTTH markets. AOI supplies optical networking lasers, components and equipment to tier-1 customers in all four of these markets. In addition to its corporate headquarters, wafer fab and advanced engineering and production facilities in Sugar Land, TX, AOI has engineering and manufacturing facilities in Taipei, Taiwan and Ningbo, China. For additional information, visit www.ao-inc.com.

Investor Relations Contacts:

The Blueshirt Group, Investor Relations
Lindsay Savarese
+1-212-331-8417
[email protected]

Cassidy Fuller
+1-415-217-4968
[email protected]

Applied Optoelectronics, Inc.
Preliminary Condensed Consolidated Balance Sheets
(In thousands)
(Unaudited)
	June 30, 2023			December 31, 2022

ASSETS
CURRENT ASSETS
Cash, Cash Equivalents and Restricted Cash	$	28,612		$	35,587
Accounts Receivable, Net		42,598			61,175
Notes receivable		782			339
Inventories		66,321			79,679
Prepaid Income Tax		2			–
Prepaid Expenses and Other Current Assets		6,231			6,384
Total Current Assets		144,546			183,164

Property, Plant And Equipment, Net		197,879			210,184
Land Use Rights, Net		4,990			5,238
Operating Right of Use Asset		5,296			5,566
Financing Right of Use Asset		10			26
Intangible Assets, Net		3,625			3,699
Other Assets		531			386
TOTAL ASSETS	$	356,877		$	408,263

LIABILITIES AND STOCKHOLDERS’ EQUITY

CURRENT LIABILITIES
Accounts Payable	$	35,111		$	47,845
Bank Acceptance Payable		8,637			12,337
Accrued Expenses		14,702			17,222
Deferred Revenue		10,720			3,000
Current Lease Liability-Operating		1,055			1,041
Current Lease Liability-Financing		53			63
Current Portion of Notes Payable and Long Term Debt		37,276			57,074
Current Portion of Convertible Debt		79,916			–
Total Current Liabilities		187,470			138,582

Deferred Revenue, net of current portion		1,000			–
Convertible Senior Notes		–			79,506
Other Long-Term Liabilities		5,148			5,505
TOTAL LIABILITIES		193,618			223,593

STOCKHOLDERS’ EQUITY
Total Preferred Stock
Common Stock		32			29
Additional Paid-in Capital		407,003			391,526
Cumulative Translation Adjustment		(1,470	)		2,183
Retained Earnings		(242,306	)		(209,068	)
TOTAL STOCKHOLDERS’ EQUITY		163,259			184,670

TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY	$	356,877		$	408,263

Applied Optoelectronics, Inc.
Preliminary Condensed Consolidated Statements of Operations
(In thousands, except per share data)
(Unaudited)
Q2 2023	Three Months Ended June 30,						Six Months Ended June 30,
Revenue		2023			2022			2023			2022
CATV		9,343			23,713		$	37,123		$	48,694
Datacenter		27,571			21,497			47,924			42,911
Telecom		4,231			6,276			7,938			11,541
FTTH		55			27			57			124
Other		415			786			1,603			1,270
Total Revenue		41,615			52,299			94,645			104,540

Total Cost of Goods Sold		33,717			43,671			77,503			86,888

Total Gross Profit		7,898			8,628			17,142			17,652

Operating Expenses:
Research and Development		8,640			8,328			17,176			17,814
Sales and Marketing		2,269			2,164			4,596			4,722
General and Administrative		12,954			11,035			25,502			22,254
Total Operating Expenses		23,863			21,527			47,274			44,790

Operating Loss		(15,965	)		(12,899	)		(30,132	)		(27,138	)

Other Income (Expense):
Interest Income		37			31			70			59
Interest Expense		(2,175	)		(1,408	)		(4,312	)		(2,810	)
Other Income (Expense), net		1,167			(180	)		1,145			(629	)
Total Other Income (Expense):		(971	)		(1,557	)		(3,097	)		(3,380	)

Net loss before Income Taxes		(16,936	)		(14,456	)		(33,229	)		(30,518	)

Income Tax Expense		(8	)		–			(8	)		–

Net loss	$	(16,944	)	$	(14,456	)	$	(33,237	)	$	(30,518	)
Net loss per share attributable to common stockholders
basic	$	(0.57	)	$	(0.52	)	$	(1.14	)	$	(1.11	)
diluted	$	(0.57	)	$	(0.52	)	$	(1.14	)	$	(1.11	)

Weighted-average shares used to compute net loss per share attributable to common stockholders
basic		29,489			27,612			29,182			27,537
diluted		29,489			27,612			29,182			27,537

Applied Optoelectronics, Inc.
Reconciliation of Statements of Operations under GAAP and Non-GAAP
(In thousands, except per share data)
(Unaudited)
	Three Months Ended June 30,						Six Months Ended June 30,
		2023			2022			2023			2022
GAAP revenue	$	41,615		$	52,299		$	94,645		$	104,540
Non-recurring customer credit		–			–			–			–
Non-GAAP revenue	$	41,615		$	52,299		$	94,645		$	104,540

GAAP total gross profit ^(a)	$	7,898		$	8,628		$	17,142		$	17,652
Share-based compensation expense		156			114			270			250
Non-recurring expense		–			–			–			1
Expenses associated with discontinued products		2,254			–			5,216			–
Non-GAAP total gross profit ^(a)	$	10,308		$	8,742		$	22,628		$	17,903

GAAP net loss	$	(16,944	)	$	(14,456	)	$	(33,237	)	$	(30,518	)
Share-based compensation expense		3,062			2,144			5,352			4,616
Expenses associated with discontinued products		2,254			–			5,216			–
Non-cash expenses associated with discontinued products		1,148			1,103			2,311			2,269
Amortization of intangible assets		162			153			321			304
Non-recurring (income) expense		602			9			960			34
Unrealized exchange loss (gain)		(66	)		298			(1,175	)		1,279
Non-GAAP tax benefit		3,710			3,151			7,037			6,545
Non-GAAP net loss	$	(6,072	)	$	(7,598	)	$	(13,216	)	$	(15,470	)

GAAP diluted net loss per share	$	(0.57	)	$	(0.52	)	$	(1.14	)	$	(1.11	)
Share-based compensation expense		0.10			0.08			0.19			0.17
Expenses associated with discontinued products		0.08			–			0.18			–
Non-cash expenses associated with discontinued products		0.04			0.03			0.08			0.08
Amortization of intangible assets		0.01			0.01			0.01			0.01
Non-recurring (income) expense		0.02			0.00			0.03			0.00
Unrealized exchange loss (gain)		(0.01	)		0.01			(0.04	)		0.05
Non-GAAP tax benefit		0.12			0.11			0.24			0.24
Non-GAAP diluted net loss per share	$	(0.21	)	$	(0.28	)	$	(0.45	)	$	(0.56	)

Shares used to compute diluted loss per share		29,489			27,612			29,182			27,537
Shares used to compute diluted earnings per share		29,489			27,612			29,182			27,537

(a) Provided for the purpose of calculating gross profit as a percentage of revenue (gross margin).

August 4, 2023 6:13 am

Ventas Reports 2023 Second Quarter Results

Ventas Reports 2023 Second Quarter Results

CHICAGO–(BUSINESS WIRE)–
Ventas, Inc. (NYSE: VTR) (“Ventas” or the “Company”) today reported results for the second quarter ended June 30, 2023.

CEO Remarks

“We are pleased to deliver strong second quarter results with broad-based organic property growth across our diverse portfolio,” said Debra A. Cafaro, Ventas Chairman and CEO.

“All our businesses are contributing positively to total company performance. We demonstrated the significant competitive advantage of our scale and access to attractively priced capital across markets, providing us with outstanding liquidity and reinforcing our financial strength and flexibility. The performance of the properties underpinning our former mezzanine loan is off to a positive start, as our experienced and active asset management teams focus on driving performance and value in that portfolio.

“In SHOP, we continue to strongly believe in and experience the multiyear growth and recovery cycle. Growth in the quarter was led by outsized performance in U.S. assisted living, complemented by our highly occupied Canadian portfolio. We are actively managing our SHOP portfolio with our proven playbook to maximize performance.

“Our second quarter results underscore the growth in our diversified enterprise that serves a large and growing aging population, and we are pleased to confirm our full year enterprise outlook,” Cafaro concluded.

Second Quarter 2023 Highlights

Net Income Attributable to Common Stockholders (“Net Income”) per share of $0.26

Normalized Funds From Operations* (“Normalized FFO”) per share of $0.75

Total Company Net Operating Income* (“NOI”) year-over-year growth of 7.9%. Total Company Same-Store Cash NOI* year-over-year growth of 7.0%

On a Same-Store Cash NOI* basis, the Company’s senior housing operating portfolio (“SHOP”) grew 14% year-over-year led by the U.S. which grew 19% year-over-year. SHOP Same-Store Cash NOI growth was driven principally by REVPOR growth of 6.6% and moderating operating expense growth, which resulted in margin expansion of 160 basis points

* Some of the financial measures throughout this press release are non-GAAP measures. Refer to the Non-GAAP Financial Measures Reconciliation tables at the end of this press release for additional information and a reconciliation to the most directly comparable GAAP measure.

Second Quarter 2023 Enterprise Results

For the Second Quarter 2023, reported per share results were:

	Quarter Ended June 30,
	2023	2022	$ Change	% Change
Attributable Net Income	$0.26	($0.11)	$0.37	n/a
Nareit FFO*	$1.02	$0.60	$0.42	70%
Normalized FFO*	$0.75	$0.72	$0.03	4%
* Some of the financial measures throughout this press release are non-GAAP measures. Refer to the Non-GAAP Financial Measures Reconciliation tables at the end of this press release for additional information and a reconciliation to the most directly comparable GAAP measure.

Equitized Loan Portfolio Transaction

On May 1, 2023, Ventas took ownership of the properties that secured the Company’s mezzanine loan to Santerre Health Investors (the “Santerre Mezzanine Loan”) by converting the outstanding principal amount of the Santerre Mezzanine Loan to equity, with no additional consideration being paid. These properties consist of a diverse pool of outpatient medical buildings, SHOP communities and triple-net leased healthcare facilities in the United States (such assets, collectively the “Equitized Loan Portfolio”).

On May 1, 2023, the fair value of the Equitized Loan Portfolio, as determined by a third-party appraisal, was estimated at $1.566 billion. In connection with taking ownership of the Equitized Loan Portfolio, the Company recognized $41 million in asset and liability valuation-related increases to Attributable Net Income composed of a $29 million gain and a $12 million reversal of a previously recorded CECL reserve on the Santerre Mezzanine Loan, which increases are included in Nareit FFO and excluded from Normalized FFO in the second quarter.

Financial Strength and Flexibility

Ventas’s long-term success is supported by its scale, strong liquidity and access to multiple sources of attractive capital. Year to date, the Company’s active capital markets activities have totaled approximately $2.4 billion, which has been used to refinance 2023 and 2024 maturing debt and improve its floating rate debt exposure to 10% of total consolidated debt, while enhancing its liquidity at June 30, 2023 to over $2.7 billion. Selected highlights of year-to-date successful capital markets activity include:

Ventas Realty, LP issued $862.5 million of 3.75% Exchangeable Senior Notes due 2026 in June.
Ventas Canada Finance Limited issued CAD $600 million of 5.398% Senior Notes due 2028 in April, and repurchased, at a discount to par, approximately CAD $527 million aggregate principal amount of its 2.80% Senior Notes due April 2024 and approximately CAD $87 million aggregate principal amount of its 4.125% Senior Notes due September 2024.
In July, Ventas entered into a $427 million 10-year mortgage loan, which (after Ventas completes its contemplated purchase of a 7.5% tranche of the original principal balance of the loan) will result in a $395 million net mortgage loan at an all-in expected weighted average cash rate of 5.5%.
The Company issued and sold under its “at-the-market” equity offering program (“ATM program”) a total of 2.3 million shares of common stock year-to-date at an average gross issuance price of $47.89 per share, resulting in approximately $110 million in gross proceeds.

Dispositions Including Partial Sale of Ardent Health Services Equity (“Ardent OpCo”)

During the second quarter, Ventas sold approximately 24% of its successful investment in Ardent OpCo for approximately $50 million in total cash proceeds. The valuation on the partial sale represents a greater than 4x equity multiple versus Ventas’s original investment basis. After the sale, Ventas retains an approximately 7.5% equity investment in Ardent OpCo. As a result of the sale, the Company recognized in Attributable Net Income and Nareit FFO a gain on sale of approximately $34 million in the second quarter, which is excluded from Normalized FFO.

In addition, the Company has received approximately $155 million year-to-date in disposition and loan repayment proceeds. The Company now expects to generate capital recycling proceeds of $450 million in 2023, which is an increase from the previous guidance for $300 million of capital recycling proceeds, principally composed of exercised purchase options and skilled nursing facilities from its Equitized Loan Portfolio.

Updated Full Year 2023 Guidance

The Company’s guidance contains forward-looking statements and is based on a number of assumptions; actual results may differ materially.

	As of 5/8/23	As of 8/3/23
Attributable Net Income Per Share Range	$0.20 – $0.34	$0.22 – $0.32
Attributable Net Income Per Share Midpoint	$0.27	$0.27
Nareit FFO Per Share Range*	$2.97 – $3.11	$3.19 – $3.29
Nareit FFO Per Share Midpoint*	$3.04	$3.24
2023 Normalized Per Share FFO Range*	$2.90 – $3.04	$2.92 – $3.02
2023 Normalized Per Share FFO Midpoint*	$2.97	$2.97
* Some of the financial measures throughout this press release are non-GAAP measures. Refer to the Non-GAAP Financial Measures Reconciliation tables at the end of this press release for additional information and a reconciliation to the most directly comparable GAAP measure.

Investor Presentation

A second quarter earnings presentation is posted to the Events & Presentations section of Ventas’s website at ir.ventasreit.com/events-and-presentations. Additional information regarding the Company can be found in its second quarter 2023 supplemental posted at ir.ventasreit.com. The information contained on, or that may be accessed through, our website, including the information contained in the aforementioned presentation and supplemental, is not incorporated by reference into, and is not part of, this document.

Second Quarter 2023 Results Conference Call

Ventas will hold a conference call to discuss this earnings release on Friday, August 4, 2023 at 10:00 a.m. Eastern Time (9:00 a.m. Central Time).

The dial-in number for the conference call is (888) 330-3576 (or +1 (646) 960-0672 for international callers), and the participant passcode is 7655497. A live webcast can be accessed from the Investor Relations section of www.ventasreit.com.

A telephonic replay will be available at (800) 770-2030 (or +1 (647) 362-9199 for international callers), passcode 7655497, after the earnings call and will remain available for 30 days. The webcast replay will be posted in the Investor Relations section of www.ventasreit.com.

About Ventas

Ventas Inc., an S&P 500 company, operates at the intersection of two large and dynamic industries – healthcare and real estate. Fueled by powerful demographic demand from growth in the aging population, Ventas owns or has investments in a highly diversified portfolio of approximately 1,400 properties in the United States, Canada, and the United Kingdom. Ventas uses the power of its capital to unlock the value of senior housing communities, outpatient medical buildings, research centers, hospitals and other healthcare facilities. A globally-recognized real estate investment trust, Ventas follows a successful long-term strategy, proven over more than 20 years, built on diversification of property types, capital sources and industry leading partners, financial strength and flexibility, consistent and reliable growth and industry leading ESG achievements, managed by a collaborative and experienced team dedicated to its stakeholders.

Non-GAAP Financial Measures

This press release includes certain financial performance measures not defined by generally accepted accounting principles in the United States (“GAAP”), such as Nareit FFO, Normalized FFO, NOI and Same-Store Cash NOI. Reconciliations of these non-GAAP financial measures to the most directly comparable GAAP measures are included in this press release. Our definitions and calculations of these non-GAAP measures may not be the same as similar measures reported by other REITs.

These non-GAAP financial measures should not be considered as alternatives for, or superior to, financial measures calculated in accordance with GAAP.

Cautionary Statements

Certain of the information contained herein, including intra-quarter operating information and number of confirmed cases of COVID-19, has been provided by our operators and we have not verified this information through an independent investigation or otherwise. We have no reason to believe that this information is inaccurate in any material respect, but we cannot assure you of its accuracy.

This press release includes 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. These forward-looking statements include, among others, statements of expectations, beliefs, future plans and strategies, anticipated results from operations and developments and other matters that are not historical facts. Forward-looking statements include, among other things, statements regarding our and our officers’ intent, belief or expectation as identified by the use of words such as “assume,” “may,” “will,” “project,” “expect,” “believe,” “intend,” “anticipate,” “seek,” “target,” “forecast,” “plan,” “potential,” “opportunity,” “estimate,” “could,” “would,” “should” and other comparable and derivative terms or the negatives thereof.

Forward-looking statements are based on management’s beliefs as well as on a number of assumptions concerning future events. You should not put undue reliance on these forward-looking statements, which are not a guarantee of performance and are subject to a number of uncertainties and other factors that could cause actual events or results to differ materially from those expressed or implied by the forward-looking statements. We do not undertake a duty to update these forward-looking statements, which speak only as of the date on which they are made. We urge you to carefully review the disclosures we make concerning risks and uncertainties that may affect our business and future financial performance, including those made below and in our filings with the Securities and Exchange Commission, such as in the sections titled “Cautionary Statements — Summary Risk Factors,” “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in our Annual Report on Form 10-K for the year ended December 31, 2022.

Certain factors that could affect our future results and our ability to achieve our stated goals include, but are not limited to: (a) the impact of the ongoing COVID-19 pandemic and other viruses and infections, such as flu and respiratory syncytial virus, and their extended consequences, including of any variants, on our revenue, level of profitability, liquidity and overall risk exposure and the implementation and impact of regulations related to the CARES Act and other stimulus legislation and any future COVID-19 relief measures, including the risk that some or all of the CARES Act or other COVID-19 relief payments we or our tenants, managers or borrowers received may be subject to recoupment; (b) our ability to achieve the anticipated benefits and synergies from, and effectively integrate, our completed or anticipated acquisitions and investments, including our ownership of the properties that previously secured the Santerre Mezzanine Loan; (c) our exposure and the exposure of our tenants, managers and borrowers to complex healthcare and other regulation and the challenges and expense associated with complying with such regulation; (d) the potential for significant general and commercial claims, legal actions, regulatory proceedings or enforcement actions that could subject us or our tenants, managers or borrowers to increased operating costs, uninsured liabilities fines or significant operational limitations, including the loss or suspension of or moratoriums on accreditations, licenses or certificates of need, suspension of new admissions, suspension, decertification or exclusion from federal, state or foreign healthcare programs or facility or community closure; (e) the impact of market and general economic conditions on us and our tenants, managers and borrowers, including economic and financial market events, such as bank failures and other events affecting financial institutions, market volatility, increases in inflation, changes in interest rates and exchange rates, tightening of lending standards and reduced availability of credit or capital, supply chain pressures, rising labor costs and historically low unemployment, events that affect consumer confidence, our occupancy rates and resident fee revenues, and the actual and perceived state of the real estate markets, labor markets and public and private capital markets; (f) our reliance and the reliance of our tenants, managers and borrowers on the financial, credit and capital markets and the risk that those markets may be disrupted or become constrained, including as a result of bank failures or concerns or rumors about such events, tightening of lending standards and reduced availability of credit or capital; (g) our ability, and the ability of our tenants, managers and borrowers, to navigate the trends impacting our or their businesses and the industries in which we or they operate; (h) the risk of bankruptcy, inability to obtain benefits from governmental programs, insolvency or financial deterioration of our tenants, managers, borrowers and other obligors which may, among other things, have an adverse impact on the ability of such parties to pay obligations due to us or our financial results and financial condition; (i) the risk that the borrowers under our loans or other investments default or that, to the extent we are able to foreclose or otherwise acquire the collateral securing our loans or other investments, we will be required to incur additional expense or indebtedness in connection therewith, that the assets will underperform expectations or that we may not be able to subsequently dispose of all or part of such assets on favorable terms; (j) the recognition of reserves, allowances, credit losses or impairment charges are inherently uncertain, may increase or decrease in the future and may not represent or reflect the ultimate value of, or loss that we ultimately realize with respect to, the relevant assets, which could have an adverse impact on our results of operations and financial condition; (k) the non-renewal of any leases or management agreement or defaults by tenants or managers thereunder and the risk of our inability to replace those tenants or managers on favorable terms, if at all; (l) our ability to identify and consummate future investments in or dispositions of healthcare assets and effectively manage our portfolio opportunities and our investments in co-investment vehicles, joint ventures and minority interests, including our ability to dispose of such assets on favorable terms as a result of rights of first offer or rights of first refusal in favor of third parties; (m) risks related to development, redevelopment and construction projects, including costs associated with inflation, rising interest rates, labor conditions and supply chain pressures; (n) our ability to attract and retain talented employees; (o) the limitations and significant requirements imposed upon our business as a result of our status as a REIT and the adverse consequences (including the possible loss of our status as a REIT) that would result if we are not able to comply with such requirements; (p) the risk of changes in healthcare law or regulation or in tax laws, guidance and interpretations, particularly as applied to REITs, that could adversely affect us or our tenants, managers or borrowers; (q) increases in our borrowing costs as a result of becoming more leveraged, including in connection with acquisitions or other investment activity and rising interest rates; (r) our reliance on third parties to operate a majority of our assets and our limited control and influence over such operations and results; (s) our dependency on a limited number of tenants and managers for a significant portion of our revenues and operating income; (t) the availability, adequacy and pricing of insurance coverage provided by our policies and policies maintained by our tenants, managers or other counterparties; (u) the occurrence of cyber incidents that could disrupt our operations, result in the loss of confidential information or damage our business relationships and reputation; (v) the impact of merger, acquisition and investment activity in the healthcare industry or otherwise affecting our tenants, managers or borrowers; (w) disruptions to the management and operations of our business and the uncertainties caused by activist investors; (x) the risk of catastrophic or extreme weather and other natural events and the physical effects of climate change; (y) the impact of purchase accounting adjustments, impairments, write downs and other non-cash charges related to our equitization of the Santerre Mezzanine Loan; (z) the risk of potential dilution resulting from future sales or issuances of our equity securities; and (aa) the other factors set forth in our periodic filings with the Securities and Exchange Commission.

CONSOLIDATED BALANCE SHEETS
(In thousands, except per share amounts; dollars in USD; unaudited)

	As of June 30, 2023			As of December 31, 2022
Assets
Real estate investments:
Land and improvements	$	2,630,480		$	2,437,905
Buildings and improvements		27,438,274			26,020,048
Construction in progress		387,194			310,456
Acquired lease intangibles		1,498,639			1,346,190
Operating lease assets		321,344			310,307
		32,275,931			30,424,906
Accumulated depreciation and amortization		(9,792,822	)		(9,264,456	)
Net real estate property		22,483,109			21,160,450
Secured loans receivable and investments, net		27,749			537,075
Investments in unconsolidated real estate entities		629,184			579,949
Net real estate investments		23,140,042			22,277,474
Cash and cash equivalents		138,648			122,564
Escrow deposits and restricted cash		71,699			48,181
Goodwill		1,045,147			1,044,415
Assets held for sale		21,027			44,893
Deferred income tax assets, net		6,980			10,490
Other assets		647,319			609,823
Total assets	$	25,070,862		$	24,157,840
Liabilities and equity
Liabilities:
Senior notes payable and other debt	$	13,354,740		$	12,296,780
Accrued interest		112,788			110,542
Operating lease liabilities		200,968			190,440
Accounts payable and other liabilities		1,069,590			1,031,689
Liabilities related to assets held for sale		2,959			6,492
Deferred income tax liabilities		29,702			35,570
Total liabilities		14,770,747			13,671,513
Redeemable OP unitholder and noncontrolling interests		271,671			264,650
Commitments and contingencies
Equity:
Ventas stockholders’ equity:
Preferred stock, $1.00 par value; 10,000 shares authorized, unissued		—			—
Common stock, $0.25 par value; 600,000 shares authorized, 400,620 and 399,707 shares outstanding at June 30, 2023 and December 31, 2022, respectively		100,206			99,912
Capital in excess of par value		15,584,858			15,539,777
Accumulated other comprehensive loss		(14,552	)		(36,800	)
Retained earnings (deficit)		(5,688,499	)		(5,449,385	)
Treasury stock, 276 and 10 shares issued at June 30, 2023 and December 31, 2022, respectively		(13,631	)		(536	)
Total Ventas stockholders’ equity		9,968,382			10,152,968
Noncontrolling interests		60,062			68,709
Total equity		10,028,444			10,221,677
Total liabilities and equity	$	25,070,862		$	24,157,840

CONSOLIDATED STATEMENTS OF INCOME
(In thousands, except per share amounts; dollars in USD; unaudited)

	For the Three Months Ended June 30,						For the Six Months Ended June 30,
	2023			2022			2023				2022
Revenues
Rental income:
Triple-net leased	$	154,355		$	149,397		$	304,094			$	300,958
Outpatient medical and research portfolio		215,807			199,241			418,811				399,781
		370,162			348,638			722,905		—		700,739
Resident fees and services		724,614			658,056			1,429,607				1,309,177
Third party capital management revenues		3,996			4,326			8,173				8,275
Income from loans and investments		6,554			10,752			20,143				20,599
Interest and other income		1,032			1,166			2,775				1,702
Total revenues		1,106,358			1,022,938			2,183,603				2,040,492
Expenses
Interest		143,265			113,951			271,340				224,745
Depreciation and amortization		304,689			283,075			586,808				572,139
Property-level operating expenses:
Senior housing		547,110			507,446			1,084,332				982,976
Outpatient medical and research portfolio		72,171			63,328			139,084				126,511
Triple-net leased		3,537			3,585			7,333				7,593
		622,818			574,359			1,230,749				1,117,080
Third party capital management expenses		1,436			1,410			3,142				2,723
General, administrative and professional fees		34,399			32,915			79,197				75,913
(Gain) loss on extinguishment of debt, net		(6,801	)		7			(6,801	)			7
Transaction expenses and deal costs		3,069			13,078			4,455				33,070
Allowance on loans receivable and investments		(12,065	)		(62	)		(20,129	)			(116	)
Gain on foreclosure of real estate		(29,127	)		—			(29,127	)			—
Other		(17,959	)		48,116			(10,197	)			20,926
Total expenses		1,043,724			1,066,849			2,109,437				2,046,487
Income (loss) before unconsolidated entities, real estate dispositions, income taxes and noncontrolling interests		62,634			(43,911	)		74,166				(5,995	)
Income (loss) from unconsolidated entities		31,254			(1,047	)		25,631				(5,316	)
Gain (loss) on real estate dispositions		1,405			(34	)		11,606				2,421
Income tax benefit		9,773			3,790			12,575				8,280
Income (loss) from continuing operations		105,066			(41,202	)		123,978				(610	)
Net income (loss)		105,066			(41,202	)		123,978				(610	)
Net income attributable to noncontrolling interests		1,613			1,214			3,008				3,074
Net income (loss) attributable to common stockholders	$	103,453		$	(42,416	)	$	120,970			$	(3,684	)
Earnings per common share
Basic:
Income (loss) from continuing operations	$	0.26		$	(0.10	)	$	0.31			$	—
Net income (loss) attributable to common stockholders		0.26			(0.11	)		0.30				(0.01	)
Diluted:¹
Income (loss) from continuing operations	$	0.26		$	(0.10	)	$	0.31			$	—
Net income (loss) attributable to common stockholders		0.26			(0.11	)		0.30				(0.01	)
Weighted average shares used in computing earnings per common share
Basic		400,431			399,592			400,211				399,445
Diluted		404,122			403,526			403,957				403,393

¹ Potential common shares are not included in the computation of diluted earnings per share when a loss from continuing operations exists as the effect would be an antidilutive per share amount.

NON-GAAP FINANCIAL MEASURES RECONCILIATION Funds From Operations Attributable to Common Stockholders (FFO) (In thousands, except per share amounts; dollars in USD; totals may not sum due to rounding; unaudited)

							Q2 YoY
	2023			2022			Change
	Q2			Q2			’23-’22
Net income (loss) attributable to common stockholders	$	103,453		$	(42,416	)	n/a
*Net income (loss) attributable to common stockholders per share*	$	*0.26*		$	*(0.11*	)	*n/a*
Adjustments:
Depreciation and amortization on real estate assets		304,095			282,313
Depreciation on real estate assets related to noncontrolling interests		(4,344	)		(4,335	)
Depreciation on real estate assets related to unconsolidated entities		10,675			7,621
(Gain) loss real estate dispositions		(1,405	)		34
Gain on real estate dispositions and other related to unconsolidated entities		—			(301	)
Subtotal: Nareit FFO adjustments		309,021			285,332
Subtotal: Nareit FFO adjustments per share	$	0.76		$	0.71
Nareit FFO attributable to common stockholders	$	412,474		$	242,916		70	%
*Nareit FFO attributable to common stockholders per share*	$	*1.02*		$	*0.60*		70	%

Adjustments:
Change in fair value of financial instruments		(12,290	)		37,837
Non-cash income tax benefit		(11,535	)		(5,379	)
(Gain) loss on extinguishment of debt, net of noncontrolling interests and including Ventas’ share attributable to unconsolidated entities		(6,795	)		7
Gain on transactions related to unconsolidated entities		(33,492	)		—
Transaction expenses and deal costs, net of noncontrolling interests and including Ventas’ share attributable to unconsolidated entities		3,376			15,027
Amortization of other intangibles including Ventas’ share attributable to unconsolidated entities		96			268
Other items related to unconsolidated entities		1,006			(1,285	)
Non-cash impact of changes to equity plan		(2,402	)		(2,389	)
Materially disruptive events, net and including Ventas’ share attributable to unconsolidated entities		(6,902	)		2,074
Allowance on loan investments and impairment of unconsolidated entities, net of noncontrolling interests		(12,064	)		(61	)
Gain on foreclosure of real estate		(29,127	)		—
Subtotal: Normalized FFO adjustments		(110,129	)		46,099
Subtotal: Normalized FFO adjustments per share	$	(0.27	)	$	0.11
Normalized FFO attributable to common stockholders	$	302,345		$	289,015		5	%
*Normalized FFO attributable to common stockholders per share*	$	*0.75*		$	*0.72*		4	%
Weighted average diluted shares		404,122			403,526

Historical cost accounting for real estate assets implicitly assumes that the value of real estate assets diminishes predictably over time. However, since real estate values historically have risen or fallen with market conditions, many industry investors deem presentations of operating results for real estate companies that use historical cost accounting to be insufficient by themselves. For that reason, the Company considers Nareit FFO and Normalized FFO to be appropriate supplemental measures of operating performance of an equity REIT. The Company believes that the presentation of FFO, combined with the presentation of required GAAP financial measures, has improved the understanding of operating results of REITs among the investing public and has helped make comparisons of REIT operating results more meaningful. Management generally considers Nareit FFO to be a useful measure for understanding and comparing our operating results because, by excluding gains and losses related to sales of previously depreciated operating real estate assets, impairment losses on depreciable real estate and real estate asset depreciation and amortization (which can differ across owners of similar assets in similar condition based on historical cost accounting and useful life estimates), Nareit FFO can help investors compare the operating performance of a company’s real estate across reporting periods and to the operating performance of other companies. The Company believes that Normalized FFO is useful because it allows investors, analysts and Company management to compare the Company’s operating performance to the operating performance of other real estate companies across periods on a consistent basis without having to account for differences caused by non-recurring items and other non-operational events such as transactions and litigation. In some cases, the Company provides information about identified non-cash components of Nareit FFO and Normalized FFO because it allows investors, analysts and Company management to assess the impact of those items on the Company’s financial results.

Nareit Funds From Operations Attributable to Common Stockholders (“Nareit FFO”)

The Company uses the National Association of Real Estate Investment Trusts (“Nareit”) definition of FFO. Nareit defines FFO as net income attributable to common stockholders (computed in accordance with GAAP) excluding gains (or losses) from sales of real estate property, including gain (or loss) on re-measurement of equity method investments and impairment write-downs of depreciable real estate, plus real estate depreciation and amortization, and after adjustments for unconsolidated entities and noncontrolling interests. Adjustments for unconsolidated entities and noncontrolling interests will be calculated to reflect FFO on the same basis.

Normalized FFO

The Company defines Normalized FFO as Nareit FFO excluding the following income and expense items, without duplication: (a) transaction expenses and deal costs, including transaction, integration and severance-related costs and expenses, and amortization of intangibles, in each case net of noncontrolling interests’ share of these items and including Ventas’ share of these items from unconsolidated entities; (b) the impact of expenses related to asset impairment and valuation allowances, the write-off of unamortized deferred financing fees or additional costs, expenses, discounts, make-whole payments, penalties or premiums incurred as a result of early retirement or payment of the Company’s debt; (c) the non-cash effect of income tax benefits or expenses, the non-cash impact of changes to the Company’s executive equity compensation plan, derivative transactions that have non-cash mark-to-market impacts on the Company’s income statement and non-cash charges related to leases; (d) the financial impact of contingent consideration; (e) gains and losses for non-operational foreign currency hedge agreements and changes in the fair value of financial instruments; (f) gains and losses on non-real estate dispositions and other items related to unconsolidated entities; (g) net expenses or recoveries related to materially disruptive events; and (h) other items set forth in the Normalized FFO reconciliation included herein.

Nareit FFO and Normalized FFO presented herein may not be comparable to those presented by other real estate companies due to the fact that not all real estate companies use the same definitions. Nareit FFO and Normalized FFO should not be considered as alternatives to net income attributable to common stockholders (determined in accordance with GAAP) as indicators of the Company’s financial performance or as alternatives to cash flow from operating activities (determined in accordance with GAAP) as measures of the Company’s liquidity, nor are they necessarily indicative of sufficient cash flow to fund all of the Company’s needs. The Company believes that in order to facilitate a clear understanding of the consolidated historical operating results of the Company, Nareit FFO and Normalized FFO should be examined in conjunction with net income attributable to common stockholders as presented elsewhere herein.

NON-GAAP FINANCIAL MEASURES RECONCILIATION Net Income and FFO Attributable to Common Stockholders Full Year 2023 Guidance^1,2 (In millions, except per share amounts; dollars in USD; totals may not sum due to rounding; unaudited)

	FY 2023						FY 2023 – Per Share
	Low			High			Low			High

Net income attributable to common stockholders	$	88		$	128		$	0.22		$	0.32

Depreciation and amortization adjustments		1,215			1,215			3.00			3.00
Gain on real estate dispositions		(12	)		(12	)		(0.03	)		(0.03	)
Other adjustments³		—			—			0.00			0.00

Nareit FFO attributable to common stockholders	$	1,291		$	1,331		$	3.19		$	3.29

Other adjustments³		(108	)		(108	)		(0.27	)		(0.27	)

Normalized FFO attributable to common stockholders	$	1,183		$	1,223		$	2.92		$	3.02
% Year-over-year growth								(2	%)		1	%

Weighted average diluted shares (in millions)		405			405

¹ The Company’s guidance constitutes forward-looking statements within the meaning of the federal securities laws and is based on a number of assumptions that are subject to change and many of which are outside the control of the Company. Actual results may differ materially from the Company’s expectations depending on factors discussed herein and in the Company’s filings with the Securities and Exchange Commission.
² Totals may not add due to minor corporate-level adjustments.
³ Other adjustments include the categories of adjustments presented in our “Non-GAAP Financial Measures Reconciliation – Funds From Operations Attributable to Common Stockholders (FFO)”.

NON-GAAP FINANCIAL MEASURES RECONCILIATION Second Quarter 2023 Same-Store Cash NOI by Segment (Dollars in thousands USD, unless otherwise noted; totals may not sum due to rounding; unaudited)

	For the Three Months Ended June 30, 2023
	SHOP			OM&R			Triple-Net			Non-Segment			Total
Net income attributable to common stockholders													$	103,453
Adjustments:
Interest and other income														(1,032	)
Interest expense														143,265
Depreciation and amortization														304,689
General, administrative and professional fees														34,399
Gain on extinguishment of debt, net														(6,801	)
Transaction expenses and deal costs														3,069
Allowance on loans receivable and investments														(12,065	)
Gain on foreclosure of real estate														(29,127	)
Other														(17,959	)
Income from unconsolidated entities														(31,254	)
Gain on real estate dispositions														(1,405	)
Income tax benefit														(9,773	)
Net income attributable to noncontrolling interests														1,613
NOI	$	177,504		$	144,195		$	150,818		$	8,555		$	481,072
Adjustments:
Straight-lining of rental income		—			(1,958	)		519			—			(1,439	)
Non-cash rental income		—			(2,177	)		(12,502	)		—			(14,679	)
NOI not included in cash NOI¹		(162	)		(852	)		(519	)		—			(1,533	)
Non-segment NOI		—			—			—			(8,555	)		(8,555	)
Cash NOI	$	177,342		$	139,208		$	138,316		$	—		$	454,866
Adjustments:
Cash NOI not included in same-store		(10,015	)		(9,859	)		(8,029	)		—			(27,903	)
Same-store Cash NOI	$	167,327		$	129,349		$	130,287		$	—		$	426,963
Percentage increase		14.0	%		3.8	%		2.0	%					7.0	%

	For the Three Months Ended June 30, 2022
	SHOP			OM&R			Triple-Net			Non-Segment			Total
Net loss attributable to common stockholders													$	(42,416	)
Adjustments:
Interest and other income														(1,166	)
Interest expense														113,951
Depreciation and amortization														283,075
General, administrative and professional fees														32,915
Loss on extinguishment of debt, net														7
Transaction expenses and deal costs														13,078
Allowance on loans receivable and investments														(62	)
Other														48,116
Loss from unconsolidated entities														1,047
Loss on real estate dispositions														34
Income tax benefit														(3,790	)
Net income attributable to noncontrolling interests														1,214
NOI	$	150,610		$	136,583		$	145,812		$	12,998		$	446,003
Adjustments:
Straight-lining of rental income		—			(2,747	)		(971	)		—			(3,718	)
Non-cash rental income		—			(3,493	)		(12,610	)		—			(16,103	)
NOI not included in cash NOI¹		1,431			(1,391	)		(4,495	)		—			(4,455	)
Non-segment NOI		—			—			—			(12,998	)		(12,998	)
NOI impact from change in FX		(2,255	)		—			(26	)		—			(2,281	)
Cash NOI	$	149,786		$	128,952		$	127,710		$	—		$	406,448
Adjustments:
Cash NOI not included in same-store		(3,084	)		(4,361	)		—			—			(7,445	)
NOI impact from change in FX not in same-store		124			—			—			—			124
Same-store Cash NOI	$	146,826		$	124,591		$	127,710		$	—		$	399,127

¹ Excludes sold assets, assets held for sale, development properties not yet operational and land parcels.

The Company considers NOI and Cash NOI as important supplemental measures because they allow investors, analysts and the Company’s management to assess its unlevered property-level operating results and to compare its operating results with those of other real estate companies and between periods on a consistent basis.

NOI

The Company defines NOI as total revenues, less interest and other income, property-level operating expenses and third party capital management expenses.

Cash NOI

The Company defines Cash NOI as NOI for its reportable business segments (i.e., SHOP, Outpatient Medical and Research Portfolio and Triple-Net), determined on a Constant Currency basis, excluding the impact of, without duplication (i) non-cash items such as straight-line rent and the amortization of lease intangibles, (ii) sold assets, assets held for sale, development properties not yet operational and land parcels and (iii) other items set forth in the Cash NOI reconciliation included herein. In certain cases, results may be adjusted to reflect the receipt of cash payments, fees, and other consideration that is not fully recognized as NOI in the period.

Same-store

The Company defines same-store as properties owned, consolidated and operational for the full period in both comparison periods and that are not otherwise excluded; provided, however, that the Company may include selected properties that otherwise meet the same-store criteria if they are included in substantially all of, but not a full, period for one or both of the comparison periods, and in the Company’s judgment such inclusion provides a more meaningful presentation of its segment performance. Newly acquired development properties and recently developed or redeveloped properties in the Company’s SHOP reportable business segment will be included in same-store once they are stabilized for the full period in both periods presented. These properties are considered stabilized upon the earlier of (a) the achievement of 80% sustained occupancy or (b) 24 months from the date of acquisition or substantial completion of work. Recently developed or redeveloped properties in the outpatient medical and research portfolio and triple-net leased properties reportable business segments will be included in same-store once substantial completion of work has occurred for the full period in both periods presented. SHOP and triple-net leased properties that have undergone operator or business model transitions will be included in same-store once operating under consistent operating structures for the full period in both periods presented.

Properties are excluded from same-store if they are: (i) sold, classified as held for sale or properties whose operations were classified as discontinued operations in accordance with GAAP; (ii) impacted by materially disruptive events such as flood or fire; (iii) for SHOP, those properties that are currently undergoing a materially disruptive redevelopment; (iv) for the outpatient medical and research portfolio and triple-net leased properties reportable business segments, those properties for which management has an intention to institute, or has instituted, a redevelopment plan because the properties may require major property-level expenditures to maximize value, increase NOI, or maintain a market-competitive position and/or achieve property stabilization, most commonly as the result of an expected or actual material change in occupancy or NOI; or (v) for SHOP and triple-net leased properties reportable business segments, those properties that are scheduled to undergo operator or business model transitions, or have transitioned operators or business models after the start of the prior comparison period.

Constant Currency

To eliminate the impact of exchange rate movements, all portfolio performance-based disclosures assume constant exchange rates across comparable periods, using the following methodology: the current period’s results are shown in actual reported USD, while prior comparison period’s results are adjusted and converted to USD based on the average exchange rate for the current period.

View source version on businesswire.com: https://www.businesswire.com/news/home/20230803353154/en/

BJ Grant

(877) 4-VENTAS

KEYWORDS: Illinois United States North America

INDUSTRY KEYWORDS: Commercial Building & Real Estate Seniors Construction & Property Managed Care Health Hospitals REIT Consumer

MEDIA:

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August 4, 2023 6:12 am

Motorola Solutions Reports Second Quarter 2023 Financial Results

Motorola Solutions Reports Second Quarter 2023 Financial Results

Company raises full-year revenue and earnings outlook again driven by record Q2 orders and backlog

Sales of $2.4 billion, up 12% versus a year ago
- Products and Systems Integration sales up 12%
- Software and Services sales up 13%
GAAP earnings per share (EPS) of $2.15, up 62% versus a year ago
Non-GAAP EPS* of $2.65, up 28% versus a year ago
GAAP operating margin of 21.6%, up 490 bps versus a year ago
Non-GAAP operating margin* of 26.7%, up 350 bps versus a year ago
Record Q2 ending backlog of $14.3 billion, up 6% versus a year ago, driven by record Q2 orders in both segments

CHICAGO–(BUSINESS WIRE)–
Motorola Solutions, Inc. (NYSE: MSI) today reported its earnings results for the second quarter of 2023.

“Q2 was another exceptional quarter across the board, highlighted by double-digit revenue and operating earnings growth in both segments,” said Greg Brown, chairman and CEO. “The continued strong demand we’re seeing in all technologies and regions resulted in record second-quarter orders and record ending backlog. Our momentum entering the second half is strong and we’re again raising our revenue and earnings guidance for the full year.”

KEY FINANCIAL RESULTS (presented in millions, except per share data and percentages)

	Q2 2023	Q2 2022	% Change
Sales	$2,403	$2,140	12 %
GAAP
Operating Earnings	$518	$358	45 %
% of Sales	21.6 %	16.7 %
EPS	$2.15	$1.33	62 %
Non-GAAP*
Operating Earnings	$641	$497	29 %
% of Sales	26.7 %	23.2 %
EPS	$2.65	$2.07	28 %
Products and Systems Integration Segment
Sales	$1,437	$1,285	12 %
GAAP Operating Earnings	$212	$118	80 %
% of Sales	14.8 %	9.2 %
Non-GAAP Operating Earnings*	$285	$188	52 %
% of Sales	19.8 %	14.6 %
Software and Services Segment
Sales	$966	$855	13 %
GAAP Operating Earnings	$306	$240	28 %
% of Sales	31.7 %	28.1 %
Non-GAAP Operating Earnings*	$356	$309	15 %
% of Sales	36.9 %	36.1 %

*Non-GAAP financial information excludes the after-tax impact of approximately $0.50 per diluted share related to highlighted items, including share-based compensation expenses and intangible assets amortization expense. Details regarding these non-GAAP adjustments and the use of non-GAAP measures are included later in this news release.

OTHER SELECTED FINANCIAL RESULTS

Revenue – Sales were $2.4 billion, up 12% from the year-ago quarter driven by growth in North America and International. Revenue from acquisitions was $20 million and currency headwinds were $23 million in the quarter. The Products and Systems Integration segment grew 12%, driven by growth in Land Mobile Radio Communications (“LMR”) and Video Security and Access Control (“Video”). The Software and Services segment grew 13%, driven by growth in LMR, Command Center and Video.
Operating margin –GAAP operating margin was 21.6% of sales, up from 16.7% in the year-ago quarter and Non-GAAP operating margin was 26.7% of sales, up 350 basis points from 23.2% in the year-ago quarter. The increase in both GAAP and Non-GAAP operating margin was driven by higher sales, inclusive of higher pricing, lower direct material costs, and improved operating leverage.

Taxes – The GAAP effective tax rate was 23.4%, down from 23.7% in the year-ago quarter. The non-GAAP effective tax rate was 22.9%, up from 22.3% in the year-ago quarter, primarily driven by a higher UK tax rate in the current year.

Cash flow –Operating cash flow was $93 million, compared to $10 million in the year-ago quarter and free cash flow was $40 million compared to a usage of $49 million in the year-ago quarter. Both the operating cash flow and free cash flow for the quarter increased primarily due to higher earnings, net of non-cash charges and improved working capital, partially offset by higher cash taxes.

Capital allocation –During the quarter, the company repurchased $224 million of shares, paid $148 million in cash dividends, and incurred $53 million of capital expenditures.

Backlog –The company ended the quarter with record Q2 backlog of $14.3 billion, up 6% or $856 million from the year-ago quarter. Products and Systems Integration segment backlog was up $496 million, or 11%, driven primarily by strong LMR demand. Software and Services segment backlog was up $360 million or 4%, driven by an increase in multi-year software and services contracts in North America, partially offset by revenue recognition for the Airwave contract and a reduction related to the exit from the ESN contract.

NOTABLE WINS AND ACHIEVEMENTS

Software and Services

$34M video order for the Virginia State Police, which included our largest ever in-car video order

$15M LMR service agreement with City of Baltimore, MD

$13M LMR managed services agreement renewal in Latin America

$12M command center order for a U.S. federal customer

$8M LMR service agreement with a U.S. federal customer

Products and Systems Integration

$145M P25 system upgrade for Kern County, CA

$41M P25 system and device order for a U.S. federal customer

$31M P25 system expansion for Ventura County, CA

$19M P25 device order for a U.S. federal customer

$6M fixed video order for a U.S. healthcare customer

BUSINESS OUTLOOK

Third quarter 2023 – The company expects revenue growth of approximately 6%, compared to the third quarter of 2022. The company expects non-GAAP EPS in the range of $2.99 to $3.04 per share. This assumes approximately 172 million fully diluted shares and a non-GAAP effective tax rate between 23% and 24%.

Full-year 2023 – The company now expects revenue in the range of $9.875 billion to $9.900 billion, up from its prior guidance of $9.725 billion to $9.775 billion, and non-GAAP EPS of between $11.40 and $11.48 per share, up from its prior guidance of between $11.21 and $11.29 per share. This outlook assumes approximately $25 million in foreign exchange headwinds, approximately 172 million fully diluted shares and a non-GAAP effective tax rate between 23% and 24%.

The company has not quantitatively reconciled its guidance for forward-looking non-GAAP metrics to their most comparable GAAP measures because the company does not provide specific guidance for the various reconciling items as certain items that impact these measures have not occurred, are out of the company’s control, or cannot be reasonably predicted. Accordingly, a reconciliation to the most comparable GAAP financial metric is not available without unreasonable effort. Please note that the unavailable reconciling items could significantly impact the company’s results.

RECENT EVENTS

CMA UPDATE

In October 2021, the United Kingdom’s Competition and Markets Authority (the “CMA”) announced that it had opened a market investigation into the Mobile Radio Network Services market. This investigation included Airwave, the company’s private mobile radio communications network that it acquired in 2016. Airwave provides mission-critical voice and data communications to emergency services and other agencies in Great Britain.

On April 5, 2023, the CMA issued its final decision which stated it will impose a prospective price control on Airwave. The company strongly disagrees with the CMA’s final decision and it filed an appeal with the Competition Appeal Tribunal (“CAT”) on June 5, 2023. On July 31, 2023, the CMA adopted a remedies order which implements the price control set out in its final decision; however, the remedies order has been suspended until the CAT’s judgment on the company’s appeal. The CAT appeal hearing took place on August 2 and 3, 2023. Depending on the outcome, further appeals may occur throughout 2023 and 2024.

Based on the adoption of the remedies order, beginning August 1, 2023, revenue under the Airwave contract will be recognized in accordance with the prospective price control until a successful appeal. Further, as a result of the issuance of a final decision from the CMA during the quarter ended July 1, 2023, the company has tested its Airwave asset group for impairment, noting the assets are expected to be recoverable.

MACROECONOMIC EVENTS

Since the beginning of the COVID-19 pandemic, the company has navigated disruptions in its supply chain, in particular challenges in procuring certain semiconductor components along with diminished transportation capacity and higher freight costs. During 2023 the company experienced gradual improvement in the market conditions influenced by the effects of the COVID-19 pandemic and the inflationary cost environment, particularly with respect to availability of materials in the semiconductor market. Where appropriate, the company has taken pricing actions around its product and service offerings to mitigate its exposure to inflationary pressures and benefited from these adjustments during the first half of 2023, and expects to continue to benefit from such adjustments in the second half of 2023. The company continues to remain focused on improving its supplier network, engineering alternative designs and working to reduce supply shortages and effectively manage costs. In addition, the company continues to actively manage its inventory in an effort to enable continuity of supply and services to its customers, which includes making changes that diversify the footprint of its supply chain operations. The company expects to maintain elevated levels of inventory until supply conditions stabilize.

CONFERENCE CALL AND WEBCAST Motorola Solutions will host its quarterly conference call beginning at 4 p.m. U.S. Central Time (5 p.m. U.S. Eastern Time) on Thursday, August 3. The conference call will be webcast live at www.motorolasolutions.com/investors/. An archive of the webcast will be available for a limited period of time thereafter.

CONSOLIDATED GAAP RESULTS(presented in millions, except per share data)

A comparison of results from operations is as follows:

Q2 2023

Q2 2022

Net sales

$2,403

$2,140

Gross margin

$1,189

$990

Operating earnings

$518

$358

Amounts attributable to Motorola Solutions, Inc. common stockholders

Net earnings

$371

$228

Diluted EPS

$2.15

$1.33

Weighted average diluted common shares outstanding

172.6

170.9

USE OF NON-GAAP FINANCIAL INFORMATION

In addition to the results presented in accordance with accounting principles generally accepted in the U.S. (“GAAP”) included in this news release, Motorola Solutions also has included non-GAAP measurements of results, including free cash flow, non-GAAP operating earnings, non-GAAP EPS, non-GAAP operating margin, non-GAAP tax rate and organic revenue. The company has provided these non-GAAP measurements to help investors better understand its core operating performance, enhance comparisons of core operating performance from period-to-period and allow better comparisons of its operating performance to that of its competitors. Among other things, management uses these operating results, excluding the identified items, to evaluate the performance of its businesses and to evaluate results relative to certain incentive compensation targets. Management uses operating results excluding these items because it believes these measurements enable it to make better period-to-period evaluations of the financial performance of its core business operations. The non-GAAP measurements are intended only as a supplement to the comparable GAAP measurements and the company compensates for the limitations inherent in the use of non-GAAP measurements by using GAAP measures in conjunction with the non-GAAP measurements. As a result, investors should consider these non-GAAP measurements in addition to, and not in substitution for or as superior to, GAAP measurements.

Reconciliations: Details and reconciliations of such non-GAAP measurements to the corresponding GAAP measurements can be found at the end of this news release.

Free cash flow: Free cash flow represents net cash provided by operating activities less capital expenditures. The company believes that free cash flow is useful to investors as the basis for comparing its performance and coverage ratios with other companies in the company’s industries, although the company’s measure of free cash flow may not be directly comparable to similar measures used by other companies. This measure is also used as a component of incentive compensation.

Organic revenue: Organic revenue reflects net sales calculated under GAAP excluding net sales from acquired business owned for less than four full quarters. The company believes organic revenue provides useful information for evaluating the periodic growth of the business on a consistent basis and provides for a meaningful period-to-period comparison and analysis of trends in the business.

Non-GAAP operating earnings, non-GAAP EPS and non-GAAP operating margin each excludes highlighted items, including share-based compensation expenses and intangible assets amortization expense, as follows:

Highlighted items: The company has excluded the effects of highlighted items including, but not limited to, acquisition-related transaction fees, tangible and intangible asset impairments, reorganization of business charges, certain non-cash pension adjustments, legal settlements and other contingencies, gains and losses on investments and businesses, Hytera-related legal expenses, gains and losses on the extinguishment of debt and the income tax effects of significant tax matters, from its non-GAAP operating expenses and net income measurements because the company believes that these historical items do not reflect expected future operating earnings or expenses and do not contribute to a meaningful evaluation of the company’s current operating performance or comparisons to the company’s past operating performance. For the purposes of management’s internal analysis over operating performance, the company uses financial statements that exclude highlighted items, as these charges do not contribute to a meaningful evaluation of the company’s current operating performance or comparisons to the company’s past operating performance.

Hytera-Related Legal Expenses: On March 14, 2017, the company filed a complaint in the U.S. District Court for the Northern District of Illinois (the “Court”) against Hytera Communications Corporation Limited of Shenzhen, China; Hytera America, Inc.; and Hytera Communications America (West), Inc. (collectively, “Hytera”), alleging trade secret theft and copyright infringement and seeking, among other things, injunctive relief, compensatory damages and punitive damages. On February 14, 2020, the company announced that a jury decided in the company’s favor in its trade secret theft and copyright infringement case. In connection with this verdict, the jury awarded the company $345.8 million in compensatory damages and $418.8 million in punitive damages, for a total of $764.6 million. In a series of post-trial rulings in 2021, the Court subsequently reduced the judgment to $543.7 million, but also ordered Hytera to pay the company $51.1 million in pre-judgment interest and $2.6 million in costs, as well as $34.2 million in attorneys fees. The company continues to seek collection of the judgment through the ongoing legal process.

On December 17, 2020, the Court held that Hytera must pay the company a forward-looking reasonable royalty on products that use the company’s stolen trade secrets, and on December 15, 2021, set royalty rates for Hytera’s sale of relevant products from July 1, 2019 forward. On July 5, 2022, the Court ordered that Hytera pay into a third-party escrow on July 31, 2022, the royalties owed to the company based on the sale of relevant products from July 1, 2019 to June 30, 2022. Hytera failed to make the required royalty payment on July 31, 2022. On August 1, 2022, Hytera filed a motion to modify or stay the Court’s previous July 5, 2022 royalty order. On August 3, 2022, the company filed a motion seeking to hold Hytera in civil contempt for violating the royalty order by not making the required royalty payment on July 31, 2022. Hytera made quarterly royalty payments on October 31, 2022, January 31, 2023, April 25, 2023 and July 25, 2023 into a third-party escrow. The amounts paid into escrow were de minimis and will not be recognized until all contingencies are resolved and amounts are released from escrow. On July 11, 2023, the Court denied Hytera’s modification and stay motions and stated that it will consider the company’s contempt motion on August 8, 2023, if Hytera has not yet made the deposit previously due on July 31, 2022, into the escrow account. The Court subsequently set the company’s contempt motion for hearing on August 17, 2023.

On August 2, 2022, Hytera appealed the Court’s judgment with the U.S. Court of Appeals for the Seventh Circuit (the “Court of Appeals”).The company filed its cross-appeal on August 5, 2022. The parties have now submitted all briefs and responses on Hytera’s appeal and the company’s cross-appeal. The Court of Appeals has not set an oral argument date yet.

Separate from the company’s litigation with Hytera, on May 27, 2020, Hytera America, Inc. and Hytera Communications America (West), Inc. each filed for Chapter 11 bankruptcy protection in the U.S. Bankruptcy Court for the Central District of California (the “Bankruptcy Court”). On February 11, 2022, the Court entered an order to confirm the liquidation plan for the two Hytera entities and the distributions were made on February 25, 2022 to the creditors, including $13 million to the company. On December 22, 2022, an additional distribution of $2 million was made to the Company as well as an assignment of various delinquent accounts receivable of the bankrupt Hytera entities. The gain was recorded to Other charges (income).

Management typically considers legal expenses associated with defending the company’s intellectual property as “normal and recurring” and accordingly, Hytera-related legal expenses were included in both the company’s GAAP and non-GAAP operating income for fiscal years 2017, 2018 and 2019. The company anticipates further expenses associated with Hytera-related litigation; however, as of 2020, the company believes that these expenses are no longer a part of the “normal and recurring” legal expenses incurred to operate its business. In addition, as any contingent or actual gains associated with the Hytera litigation are recognized, they will be similarly excluded from the company’s non-GAAP operating income, consistent with the company’s treatment of the $13 million of proceeds realized in Q1 2022. The company believes after the jury award, the presentation of excluding both Hytera-related legal expenses and gains related to awards better aligns with how management evaluates the company’s ongoing underlying business performance.

Share-based compensation expenses: The company has excluded share-based compensation expenses from its non-GAAP operating expenses and net income measurements. Although share-based compensation is a key incentive offered to the company’s employees and the company believes such compensation contributed to the revenue earned during the periods presented and also believes it will contribute to the generation of future period revenues, the company continues to evaluate its performance excluding share-based compensation expenses primarily because it represents a significant non-cash expense. Share-based compensation expenses will recur in future periods.

Intangible assets amortization expense: The company has excluded intangible assets amortization expense from its non-GAAP operating expenses and net earnings measurements primarily because it represents a non-cash expense and because the company evaluates its performance excluding intangible assets amortization expense. Amortization of intangible assets is consistent in amount and frequency but is significantly affected by the timing and size of the company’s acquisitions. Investors should note that the use of intangible assets contributed to the company’s revenues earned during the periods presented and will contribute to the company’s future period revenues as well. Intangible assets amortization expense will recur in future periods.

FORWARD LOOKING STATEMENTS

This news release contains “forward-looking statements” within the meaning of applicable federal securities law. These statements are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995 and generally include words such as “believes,” “expects,” “intends,” “anticipates,” “estimates” and similar expressions. The company can give no assurance that any actual or future results or events discussed in these statements will be achieved. Any forward-looking statements represent the company’s views only as of today and should not be relied upon as representing the company’s views as of any subsequent date. Readers are cautioned that such forward- looking statements are subject to a variety of risks and uncertainties that could cause the company’s actual results to differ materially from the statements contained in this release. Such forward-looking statements include, but are not limited to, Motorola Solutions’ financial outlook for the third quarter and full-year of 2023; the impact of the CMA’s final decision regarding Airwave (including the appeal of the final decision to the Competition Appeal Tribunal); and the impact of the COVID-19 pandemic, supply chain constraints and inflation, including the impact of actions taken by Motorola Solutions or others in response to such events, on Motorola Solutions’ business and results of operations. Motorola Solutions cautions the reader that the risks and uncertainties below, as well as those in Part I Item 1A of Motorola Solutions’ 2022 Annual Report on Form 10-K, Part II, Item 1A of Motorola Solutions’ Quarterly Report on Form 10-Q for the First Quarter of 2023 and in its other SEC filings available for free on the SEC’s website at www.sec.gov and on Motorola Solutions’ website at www.motorolasolutions.com, could cause Motorola Solutions’ actual results to differ materially from those estimated or predicted in the forward-looking statements. Many of these risks and uncertainties cannot be controlled by Motorola Solutions, and factors that may impact forward-looking statements include, but are not limited to: (i) the impact, including increased costs and potential liabilities, associated with changes in laws and regulations regarding privacy, data protection and information security; (ii) challenges relating to existing or future legislation and regulations pertaining to artificial intelligence (“AI”), AI-enabled products and the use of biometrics and other video analytics; (iii) the impact of government regulation of radio frequencies; (iv) audits and regulations and laws applicable to our U.S. government customer contracts and grants; (v) the impact, including additional compliance obligations, associated with existing or future telecommunications-related laws and regulations; (vi) the evolving state of environmental regulation relating to climate change, and the physical risks of climate change; (vii) impact of product regulatory and safety, consumer, worker safety and environmental laws; (viii) impact of tax matters; (ix) the continuing and future impact of the COVID-19 pandemic on our business; (x) impact of elevated inventory levels; (xi) additional compliance obligations and increased risk, costs and competition associated with the expansion of our technologies within our Products and Systems Integration and Software and Services segments (including, but not limited to, with respect to the CMA’s final decision regarding Airwave and our actions in response to such decision); (xii) the effectiveness of our investments in new products and technologies; (xiii) the effectiveness of our strategic acquisitions, including the integrations of such acquired businesses; (xiv) increased cybersecurity threats, a security breach or other significant disruption of our IT systems or those of our outsource partners, suppliers or customers; (xv) our inability to protect our intellectual property or potential infringement of intellectual property rights of third parties; (xvi) our license of the MOTOROLA, MOTO, MOTOROLA SOLUTIONS and the Stylized M logo and all derivatives and formatives thereof from Motorola Trademark Holdings, LLC; (xvii) the global nature of our employees, customers, suppliers and outsource partners; (xviii) our use of third-parties to develop, design and/or manufacture many of our components and some of our products, and to perform portions of our business operations; (xix) the inability of our subcontractors to perform in a timely and compliant manner or adhere to our Human Rights Policy; (xx) our inability to purchase at acceptable prices a sufficient amount of materials, parts, and components, as well as software and services, to meet the demands of our customers, and any disruption to our suppliers or significant increase in the price of supplies; (xxi) risks related to our large, multi-year system and services contracts (including, but not limited to, with respect to the ESN and Airwave contracts); (xxii) the inability of our products to meet our customers’ expectations or regulatory or industry standards; (xxiii) impact of current global economic and political conditions in the markets in which we operate (including, but not limited to inflation); (xxiv) impact of returns on pension and retirement plan assets and interest rate changes; (xxv) inability to access the capital markets for financing on acceptable terms and conditions; (xxvi) inability to attract and retain senior management and key employees; (xxvii) the impact of the ARPA on our business; and (xxviii) the return of capital to shareholders through dividends and/or repurchasing shares. Motorola Solutions undertakes no obligation to publicly update any forward-looking statement or risk factor, whether as a result of new information, future events or otherwise.

ABOUT MOTOROLA SOLUTIONS

Motorola Solutions is a global leader in public safety and enterprise security. Our solutions in land mobile radio communications, video security and access control and command center, bolstered by managed & support services, create an integrated technology ecosystem to help make communities safer and businesses stay productive and secure. At Motorola Solutions, we’re ushering in a new era in public safety and security. Learn more at www.motorolasolutions.com.

GAAP-1

Motorola Solutions, Inc. and Subsidiaries

Condensed Consolidated Statements of Operations

(In millions, except per share amounts)

Three Months Ended

July 1, 2023 July 2, 2022

Net sales from products
$

1,349

$

1,212

Net sales from services

1,054

928

Net sales

2,403

2,140

Costs of products sales

636

637

Costs of services sales

578

513

Costs of sales

1,214

1,150

Gross margin

1,189

990

Selling, general and administrative expenses

390

356

Research and development expenditures

215

191

Other charges

23

20

Intangibles amortization

43

65

Operating earnings

518

358

Other income (expense):

Interest expense, net

(57

)

(56

)

Other, net

26

(2

)

Total other expense

(31

)

(58

)

Net earnings before income taxes

487

300

Income tax expense

114

71

Net earnings

373

229

Less: Earnings attributable to non-controlling interests

2

1

Net earnings attributable to Motorola Solutions, Inc.
$

371

$

228

Earnings per common share:

Basic
$

2.21

$

1.36

Diluted
$

2.15

$

1.33

Weighted average common shares outstanding:

Basic

167.5

167.2

Diluted

172.6

170.9

Percentage of Net Sales*

Net sales from products

56.1

%

56.6

%

Net sales from services

43.9

%

43.4

%

Net sales

100.0

%

100.0

%

Costs of products sales

47.1

%

52.6

%

Costs of services sales

54.8

%

55.3

%

Costs of sales

50.5

%

53.7

%

Gross margin

49.5

%

46.3

%

Selling, general and administrative expenses

16.2

%

16.6

%

Research and development expenditures

8.9

%

8.9

%

Other charges

1.0

%

0.9

%

Intangibles amortization

1.8

%

3.0

%

Operating earnings

21.6

%

16.7

%

Other income (expense):

Interest expense, net

(2.4

)%

(2.6

)%

Other, net

1.1

%

(0.1

)%

Total other expense

(1.3

)%

(2.7

)%

Net earnings before income taxes

20.3

%

14.0

%

Income tax expense

4.7

%

3.3

%

Net earnings

15.5

%

10.7

%

Less: Earnings attributable to non-controlling interests

0.1

%

—

%

Net earnings attributable to Motorola Solutions, Inc.

15.4

%

10.7

%

* Percentages may not add up due to rounding

GAAP-2

Motorola Solutions, Inc. and Subsidiaries

Condensed Consolidated Statements of Operations

(In millions, except per share amounts)

Six Months Ended

July 1, 2023 July 2, 2022

Net sales from products
$

2,573

$

2,258

Net sales from services

2,001

1,774

Net sales

4,574

4,032

Costs of products sales

1,209

1,185

Costs of services sales

1,130

1,001

Costs of sales

2,339

2,186

Gross margin

2,235

1,846

Selling, general and administrative expenses

757

692

Research and development expenditures

426

380

Other charges

37

46

Intangibles amortization

98

131

Operating earnings

917

597

Other income (expense):

Interest expense, net

(111

)

(112

)

Gain on sales of investments and businesses, net

1

2

Other, net

39

33

Total other expense

(71

)

(77

)

Net earnings before income taxes

846

520

Income tax expense

194

23

Net earnings

652

497

Less: Earnings attributable to non-controlling interests

3

2

Net earnings attributable to Motorola Solutions, Inc.
$

649

$

495

Earnings per common share:

Basic
$

3.88

$

2.95

Diluted
$

3.76

$

2.88

Weighted average common shares outstanding:

Basic

167.4

167.6

Diluted

172.6

172.0

Percentage of Net Sales*

Net sales from products

56.3

%

56.0

%

Net sales from services

43.7

%

44.0

%

Net sales

100.0

%

100.0

%

Costs of products sales

47.0

%

52.5

%

Costs of services sales

56.5

%

56.4

%

Costs of sales

51.1

%

54.2

%

Gross margin

48.9

%

45.8

%

Selling, general and administrative expenses

16.6

%

17.2

%

Research and development expenditures

9.3

%

9.4

%

Other charges

0.8

%

1.1

%

Intangibles amortization

2.1

%

3.2

%

Operating earnings

20.0

%

14.8

%

Other income (expense):

Interest expense, net

(2.4

)%

(2.8

)%

Gain on sales of investments and businesses, net

—

%

—

%

Other, net

0.9

%

0.8

%

Total other expense

(1.6

)%

(1.9

)%

Net earnings before income taxes

18.5

%

12.9

%

Income tax expense (benefit)

4.2

%

0.6

%

Net earnings

14.3

%

12.3

%

Less: Earnings attributable to non-controlling interests

0.1

%

—

%

Net earnings attributable to Motorola Solutions, Inc.

14.2

%

12.3

%

* Percentages may not add up due to rounding

GAAP-3

Motorola Solutions, Inc. and Subsidiaries

Condensed Consolidated Balance Sheets

(In millions)

July 1, 2023 December 31, 2022

Assets

Cash and cash equivalents
$

710

$

1,325

Accounts receivable, net

1,513

1,518

Contract assets

1,033

974

Inventories, net

1,020

1,055

Other current assets

350

383

Total current assets

4,626

5,255

Property, plant and equipment, net

935

927

Operating lease assets

478

485

Investments

162

147

Deferred income taxes

1,172

1,036

Goodwill

3,295

3,312

Intangible assets, net

1,261

1,342

Other assets

323

310

Total assets
$

12,252

$

12,814

Liabilities and Stockholders’ Equity

Current portion of long-term debt
$

—

$

1

Accounts payable

676

1,062

Contract liabilities

1,764

1,859

Accrued liabilities

1,326

1,638

Total current liabilities

3,766

4,560

Long-term debt

6,015

6,013

Operating lease liabilities

391

419

Other liabilities

1,729

1,691

Total Motorola Solutions, Inc. stockholders’ equity

337

116

Non-controlling interests

14

15

Total liabilities and stockholders’ equity
$

12,252

$

12,814

GAAP-4

Motorola Solutions, Inc. and Subsidiaries

Condensed Consolidated Statements of Cash Flows

(In millions)

Three Months Ended

July 1, 2023 July 2, 2022

Operating

Net earnings
$

373

$

229

Adjustments to reconcile Net earnings to Net cash provided by operating activities:

Depreciation and amortization

87

112

Non-cash other charges (income)

(11

)

17

Share-based compensation expenses

53

44

Loss from the extinguishment of long-term debt

—

6

Changes in assets and liabilities, net of effects of acquisitions, dispositions, and foreign currency translation adjustments:

Accounts receivable

(169

)

(142

)

Inventories

62

(115

)

Other current assets and contract assets

11

(61

)

Accounts payable, accrued liabilities and contract liabilities

(215

)

(111

)

Other assets and liabilities

6

(27

)

Deferred income taxes

(104

)

58

Net cash provided by operating activities

93

10

Investing

Acquisitions and investments, net

(6

)

(59

)

Proceeds from sales of investments and businesses, net

1

2

Capital expenditures

(53

)

(59

)

Net cash used for investing activities

(58

)

(116

)

Financing

Repayments of debt

(1

)

(281

)

Net proceeds from issuance of debt

—

595

Issuances of common stock

10

(1

)

Purchases of common stock

(224

)

(162

)

Payments of dividends

(148

)

(132

)

Payments of dividends to non-controlling interests

(3

)

(6

)

Net cash provided by (used for) financing activities

(366

)

13

Effect of exchange rate changes on total cash and cash equivalents

19

(68

)

Net decrease in total cash and cash equivalents

(312

)

(161

)

Cash and cash equivalents, beginning of period

1,022

878

Cash and cash equivalents, end of period
$

710

$

717

GAAP-5

Motorola Solutions, Inc. and Subsidiaries

Condensed Consolidated Statements of Cash Flows

(In millions)

Six Months Ended

July 1, 2023 July 2, 2022

Operating

Net earnings
$

652

$

497

Adjustments to reconcile Net earnings to Net cash provided by operating activities:

Depreciation and amortization

185

223

Non-cash other charges (income)

(4

)

19

Share-based compensation expenses

108

81

Gain on sales of investments and businesses, net

(1

)

(2

)

Loss from the extinguishment of long-term debt

—

6

Changes in assets and liabilities, net of effects of acquisitions, dispositions, and foreign currency translation adjustments:

Accounts receivable

10

106

Inventories

36

(277

)

Other current assets and contract assets

(29

)

(14

)

Accounts payable, accrued liabilities and contract liabilities

(751

)

(299

)

Other assets and liabilities

(1

)

(57

)

Deferred income taxes

(120

)

(121

)

Net cash provided by operating activities

85

162

Investing

Acquisitions and investments, net

(10

)

(571

)

Proceeds from sales of investments and businesses, net

6

11

Capital expenditures

(107

)

(113

)

Net cash used for investing activities

(111

)

(673

)

Financing

Net proceeds from issuance of debt

—

595

Repayments of debt

(1

)

(283

)

Issuances of common stock

36

51

Purchases of common stock

(364

)

(655

)

Payments of dividends

(296

)

(266

)

Payments of dividends to non-controlling interests

(4

)

(6

)

Net cash used for financing activities

(629

)

(564

)

Effect of exchange rate changes on total cash and cash equivalents

40

(82

)

Net decrease in total cash and cash equivalents

(615

)

(1,157

)

Cash and cash equivalents, beginning of period

1,325

1,874

Cash and cash equivalents, end of period
$

710

$

717

Non-GAAP-1

Motorola Solutions, Inc. and Subsidiaries

Reconciliation of Net Cash Provided by Operating Activities to Free Cash Flow

(In millions)

Three Months Ended Six Months Ended

July 1, 2023 July 2, 2022 July 1, 2023 July 2, 2022

Net cash provided by operating activities
$

93

$

10

$

85

$

162

Capital expenditures

(53

)

(59

)

(107

)

(113

)

Free cash flow
$

40

$

(49

)

$

(22

)

$

49

Non-GAAP-2

Motorola Solutions, Inc. and Subsidiaries

Reconciliation of Net Earnings Attributable to MSI to Non-GAAP Net Earnings Attributable to MSI

(In millions)

Three Months Ended Six Months Ended

Statement Line July 1, 2023 July 2, 2022 July 1, 2023 July 2, 2022

Net earnings attributable to MSI
$

371

$

228

$

649

$

495

Non-GAAP adjustments before income taxes:

Share-based compensation expenses Cost of sales, SG&A and R&D
$

53

$

44

$

108

$

81

Intangible assets amortization expense Intangibles amortization

43

65

98

131

Environmental reserve expense Other charges (income)

15

—

15

—

Hytera-related legal expenses SG&A

7

8

10

10

Reorganization of business charges Cost of sales and Other charges (income)

3

7

16

17

Investment impairments Other (income) expense

3

—

9

1

Operating lease asset impairments Other charges (income)

1

3

4

12

Fixed asset impairments Other charges (income)

1

8

3

11

Acquisition-related transaction fees Other charges (income)

—

4

2

14

Loss from extinguishment of long-term debt Other (income) expense

—

6

—

6

Legal settlements Other charges (Income)

—

—

—

11

Adjustments to uncertain tax positions Interest income, net

—

—

—

(2

)

Gain on Hytera legal settlement Other charges (income)

—

—

—

(13

)

Gain on TETRA Ireland equity method investment Other (income) expense

—

—

—

(21

)

Gain on sales of investments (Gain) or loss on sales of investments and businesses, net

—

—

(1

)

(2

)

Fair value adjustments to equity investments Other (income) expense

(16

)

12

(19

)

30

Total Non-GAAP adjustments before income taxes
$

110

$

157

$

245

$

286

Income tax expense on Non-GAAP adjustments

23

31

52

133

Total Non-GAAP adjustments after income taxes

87

126

193

153

Non-GAAP Net earnings attributable to MSI
$

458

$

354

$

842

$

648

Calculation of Non-GAAP Tax Rate

(In millions)

Three Months Ended Six Months Ended

July 1, 2023 July 2, 2022 July 1, 2023 July 2, 2022

Net earnings before income taxes
$

487

$

300

$

846

$

520

Total Non-GAAP adjustments before income taxes*

110

157

245

286

Non-GAAP Net earnings before income taxes

597

457

1,091

806

Income tax expense

114

71

194

23

Income tax expense on Non-GAAP adjustments**

23

31

52

133

Total Non-GAAP Income tax expense

137

102

246

156

Non-GAAP Tax rate

22.9

%

22.3

%

22.5

%

19.4

%

*See reconciliation on Non-GAAP-2 table above for detail on Non-GAAP adjustments before income taxes

**Income tax impact of highlighted items

Reconciliation of Earnings Per Share to Non-GAAP Earnings Per Share*

Three Months Ended Six Months Ended

Statement Line July 1, 2023 July 2, 2022 July 1, 2023 July 2, 2022

Net earnings attributable to MSI
$

2.15

$

1.33

$

3.76

$

2.88

Non-GAAP adjustments before income taxes:

Share-based compensation expenses Cost of sales, SG&A and R&D
$

0.30

$

0.25

$

0.63

$

0.46

Intangible assets amortization expense Intangibles amortization

0.24

0.38

0.57

0.76

Environmental reserve expense Other charges (income)

0.09

—

0.09

—

Hytera-related legal expenses SG&A

0.04

0.05

0.06

0.06

Reorganization of business charges Cost of sales and Other charges (income)

0.02

0.04

0.09

0.10

Investment impairments Other (income) expense

0.02

—

0.05

0.01

Operating lease asset impairments Other charges (income)

0.01

0.02

0.02

0.07

Fixed asset impairments Other charges (income)

0.01

0.05

0.02

0.06

Acquisition-related transaction fees Other charges (income)

—

0.02

0.01

0.08

Loss from extinguishment of long-term debt Other (income) expense

—

0.04

—

0.04

Legal settlements Other charges (Income)

—

—

—

0.06

Adjustments to uncertain tax positions Interest income, net

—

—

—

(0.01

)

Gain on Hytera legal settlement Other charges (income)

—

—

—

(0.07

)

Gain on TETRA Ireland equity method investment Other (income) expense

—

—

—

(0.12

)

Gain on sales of investments (Gain) or loss on sales of investments and businesses, net

—

—

(0.01

)

(0.01

)

Fair value adjustments to equity investments Other (income) expense

(0.09

)

0.07

(0.11

)

0.17

Total Non-GAAP adjustments before income taxes
$

0.64

$

0.92

$

1.42

$

1.66

Income tax expense on Non-GAAP adjustments

0.14

0.18

0.30

0.77

Total Non-GAAP adjustments after income taxes

0.50

0.74

1.12

0.89

Non-GAAP Net earnings attributable to MSI
$

2.65

$

2.07

$

4.88

$

3.77

Diluted Weighted Average Common Shares

172.6

170.9

172.5

172.0

*Indicates Non-GAAP Diluted EPS

Non-GAAP-3

Motorola Solutions, Inc. and Subsidiaries

Reconciliations of Operating Earnings to Non-GAAP Operating Earnings and Operating Margin to Non-GAAP Operating Margin

(In millions)

Three Months Ended

July 1, 2023 July 2, 2022

Products and Systems Integration Software and Services Total Products and Systems Integration Software and Services Total

Net sales
$

1,437

$

966

$

2,403

$

1,285

$

855

$

2,140

Operating earnings (“OE”)
$

212

$

306

$

518

$

118

$

240

$

358

Above OE non-GAAP adjustments:

Share-based compensation expenses

38

15

53

32

12

44

Intangible assets amortization expense

10

33

43

15

50

65

Environmental reserve expense

10

5

15

—

—

—

Hytera-related legal expenses

7

—

7

8

—

8

Reorganization of business charges

6

(3

)

3

6

1

7

Fixed asset impairments

1

—

1

6

2

8

Operating lease asset impairments

1

—

1

2

1

3

Acquisition-related transaction fees

—

—

—

1

3

4

Total above-OE non-GAAP adjustments

73

50

123

70

69

139

Operating earnings after non-GAAP adjustments
$

285

$

356

$

641

$

188

$

309

$

497

Operating earnings as a percentage of net sales – GAAP

14.8

%

31.7

%

21.6

%

9.2

%

28.1

%

16.7

%

Operating earnings as a percentage of net sales – after non-GAAP adjustments

19.8

%

36.9

%

26.7

%

14.6

%

36.1

%

23.2

%

Non-GAAP-4

Motorola Solutions, Inc. and Subsidiaries

Reconciliations of Operating Earnings to Non-GAAP Operating Earnings and Operating Margin to Non-GAAP Operating Margin

(In millions)

Six Months Ended

July 1, 2023 July 2, 2022

Products and Systems Integration Software and Services Total Products and Systems Integration Software and Services Total

Net sales
$

2,740

$

1,834

$

4,574

$

2,388

$

1,644

$

4,032

Operating earnings (“OE”)
$

388

$

529

$

917

$

157

$

440

$

597

Above OE non-GAAP adjustments:

Share-based compensation expenses

78

30

108

59

22

81

Intangible assets amortization expense

23

75

98

30

101

131

Reorganization of business charges

17

(1

)

16

14

3

17

Environmental reserve expense

10

5

15

—

—

—

Hytera-related legal expenses

10

—

10

10

—

10

Operating lease asset impairments

3

1

4

11

1

12

Fixed asset impairments

2

1

3

9

2

11

Acquisition-related transaction fees

—

2

2

7

7

14

Gain on Hytera legal settlement

—

—

—

(13

)

—

(13

)

Legal settlements

—

—

—

—

11

11

Total above-OE non-GAAP adjustments

143

113

256

127

147

274

Operating earnings after non-GAAP adjustments
$

531

$

642

$

1,173

$

284

$

587

$

871

Operating earnings as a percentage of net sales – GAAP

14.2

%

28.8

%

20.0

%

6.6

%

26.8

%

14.8

%

Operating earnings as a percentage of net sales – after non-GAAP adjustments

19.4

%

35.0

%

25.6

%

11.9

%

35.7

%

21.6

%

Non-GAAP-5

Motorola Solutions, Inc. and Subsidiaries

Reconciliation of Revenue to Non-GAAP Organic Revenue

(In millions)

Three Months Ended

July 1, 2023 July 2, 2022 % Change

Net sales
$

2,403

$

2,140

12

%

Non-GAAP adjustments:

Sales from acquisitions

22

2

Organic revenue
$

2,381

$

2,138

11

%

Six Months Ended

July 1, 2023 July 2, 2022 % Change

Net sales
$

4,574

$

4,032

13

%

Non-GAAP adjustments:

Sales from acquisitions

66

4

Organic revenue
$

4,508

$

4,028

12

%

View source version on businesswire.com: https://www.businesswire.com/news/home/20230803233582/en/

MEDIA CONTACT

Alexandra Reynolds

Motorola Solutions

+1 312-965-3968

[email protected]

INVESTOR CONTACT

Tim Yocum

Motorola Solutions

+1 847-576-6899

[email protected]

KEYWORDS: United States North America Illinois

INDUSTRY KEYWORDS: Data Management Technology Security Public Safety Telecommunications Software Networks Audio/Video Public Policy/Government Mobile/Wireless Hardware

MEDIA:

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Posted on August 4, 2023 6:10 am
TriplePoint Venture Growth BDC Corp. (TPVG) Class Action Lawsuit Filed by Holzer & Holzer, LLC on Behalf of Investors – Nationally Ranked Investors’ Rights Firm Encourages Investors With Significant Losses to Contact the Firm

ATLANTA, Aug. 03, 2023 (GLOBE NEWSWIRE) — Holzer & Holzer, LLC informs investors of a filed class action lawsuit against TriplePoint Venture Growth BDC Corp. (“TriplePoint,” or the “Company”) (NYSE: TPVG). The lawsuit alleges TriplePoint made materially false and/or misleading statements and/or failed to disclose material adverse facts, including: (i) TriplePoint had overstated the strength of its various portfolio companies and loan book, as well as the viability of its overall investment strategy; (ii) the foregoing, once revealed, was likely to have a material negative impact on the Company’s financial position and/or prospects; and (iii) as a result, the Company’s public statements were materially false and misleading at all relevant times.

If you bought shares of TriplePoint between March 4, 2020 and May 1, 2023, and you suffered a significant loss on that investment, you are encouraged to discuss your legal rights by contacting Corey Holzer, Esq. [email protected] or Joshua Karr, Esq. at [email protected], by toll-free telephone at (888) 508-6832 or you may visit the firm’s website www.holzerlaw.com/case/triplepoint/ to learn more.

The deadline to ask the court to be appointed lead plaintiff in the case is August 15, 2023.

Holzer & Holzer, LLC, an ISS top rated securities litigation law firm for 2021 and 2022, dedicates its practice to vigorous representation of shareholders and investors in litigation nationwide, including shareholder class action and derivative litigation. Since its founding in 2000, Holzer & Holzer attorneys have played critical roles in recovering hundreds of millions of dollars for shareholders victimized by fraud and other corporate misconduct. More information about the firm is available through its website, www.holzerlaw.com, and upon request from the firm. Holzer & Holzer, LLC has paid for the dissemination of this promotional communication, and Corey Holzer is the attorney responsible for its content. 

CONTACT:
Corey Holzer, Esq.
(888) 508-6832 (toll-free)
[email protected]

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