Market Newsdesk

May 9, 2023 9:55 pm

Houlihan Lokey Reports Fiscal Year and Fourth Quarter 2023 Financial Results

Houlihan Lokey Reports Fiscal Year and Fourth Quarter 2023 Financial Results

– Fiscal Year 2023 Revenues of $1.81 billion –

– Fiscal Year 2023 Diluted EPS of $3.98 –

– Adjusted Fiscal Year 2023 Diluted EPS of $4.54 –

– Fourth Quarter Fiscal 2023 Revenues of $445 million –

–Fourth Quarter Fiscal 2023 Diluted EPS of $1.10 –

–Adjusted Fourth Quarter Fiscal 2023 Diluted EPS of $1.11 –

–Announces an Increase in the Quarterly Dividend to $0.55 per Share –

LOS ANGELES & NEW YORK–(BUSINESS WIRE)–
Houlihan Lokey, Inc. (NYSE:HLI) (“Houlihan Lokey” or the “Company”) today reported financial results for its fiscal year and fourth quarter ended March 31, 2023. For the fiscal year, revenues declined (20)% to $1.81 billion, compared with$2.27 billion for the fiscal year ended March 31, 2022. For the fourth quarter ended March 31, 2023, revenues declined (6)% to $445 million, compared with $471 million for the fourth quarter ended March 31, 2022.

Net income was $269 million, or $3.98 per diluted share, for the fiscal year ended March 31, 2023, compared with $438 million, or $6.41 per diluted share, for the fiscal year ended March 31, 2022. Adjusted net income for the fiscal year ended March 31, 2023 was $315 million, or $4.54 per diluted share, compared with $485 million, or $7.10 per diluted share, for the fiscal year ended March 31, 2022.

Net income was $75 million, or $1.10 per diluted share, for the fourth quarter ended March 31, 2023, compared with $65 million, or $0.97 per diluted share, for the fourth quarter ended March 31, 2022. Adjusted net income for the fourth quarter ended March 31, 2023 was $77 million, or $1.11 per diluted share, compared with $88 million, or $1.30 per diluted share, for the fourth quarter ended March 31, 2022.

“As we look towards a new fiscal year, we believe that our diversified business model will continue to help us produce solid profitability under the current market environment. Our Corporate Finance business continues to see strong new business activity and some consistency in its quarterly results, notwithstanding the complexities in closing transactions in this market environment. Our Financial Restructuring business had a solid fourth quarter and is poised to deliver strong results in fiscal 2024, and our Financial and Valuation Advisory business modestly grew in fiscal 2023, maintaining its growth profile in a challenging M&A environment,” stated Scott Beiser, Chief Executive Officer of Houlihan Lokey.

Selected Financial Data

(In thousands, except per share data)

U.S. GAAP

Three Months Ended March 31,

Year Ended March 31,

2023

2022

2023

2022

Revenues by segment

Corporate Finance

$

256,425

$

279,019

$

1,127,126

$

1,593,083

Financial Restructuring

120,382

121,586

395,733

392,818

Financial and Valuation Advisory

67,960

70,561

286,588

284,057

Revenues

$

444,767

$

471,166

$

1,809,447

$

2,269,958

Operating expenses:

Employee compensation and benefits

$

282,937

$

293,580

$

1,147,879

$

1,408,634

Non-compensation expenses

71,206

78,977

319,830

248,460

Operating income

90,624

98,609

341,738

612,864

Other (income)/expense, net

(4,678

)

7,921

2,738

8,926

Income before provision for income taxes

95,302

90,688

339,000

603,938

Provision for income taxes

20,642

25,515

69,777

165,614

Net income

74,660

65,173

269,223

438,324

Net income attributable to noncontrolling interest

—

—

—

(573

)

Net income attributable to Houlihan Lokey, Inc.

$

74,660

$

65,173

$

269,223

$

437,751

Diluted earnings per share attributable to Houlihan Lokey, Inc.

$

1.10

$

0.97

$

3.98

$

6.41

Revenues

For the fiscal year ended March 31, 2023, revenues declined to $1.81 billion, compared with $2.27 billion for the fiscal year ended March 31, 2022. For the fiscal year ended March 31, 2023, CF revenues decreased (29)%, Financial Restructuring (“FR”) revenues increased 1%, and Financial and Valuation Advisory (“FVA”) revenues increased 1% when compared with the fiscal year ended March 31, 2022.

For the fourth quarter ended March 31, 2023, revenues declined to $445 million, compared with $471 million for the fourth quarter ended March 31, 2022. For the fourth quarter ended March 31, 2023, CF revenues decreased (8)%, FR revenues decreased (1)%, and FVA revenues decreased (4)% when compared with the fourth quarter ended March 31, 2022.

Expenses

The Company’s employee compensation and benefits expenses, non-compensation expenses, and provision for income taxes during the periods presented and described below are on a GAAP and an adjusted basis.

U.S. GAAP

Adjusted (Non-GAAP) *

Year Ended March 31,

($ in thousands)

2023

2022

2023

2022

Expenses:

Employee compensation and benefits

$

1,147,879

$

1,408,634

$

1,112,809

$

1,396,025

% of Revenues

63.4

%

62.1

%

61.5

%

61.5

%

Non-compensation

$

319,830

$

248,460

$

272,534

$

192,925

% of Revenues

17.7

%

10.9

%

15.1

%

8.5

%

Provision for Income Taxes

$

69,777

$

165,614

$

113,150

$

194,180

% of Pre-Tax Income

20.6

%

27.4

%

26.4

%

28.6

%

*

Adjusted figures represent non-GAAP information. See “Non-GAAP Financial Measures” and the tables at the end of this release for an explanation of the adjustments and reconciliations to the comparable GAAP numbers.

U.S. GAAP

Adjusted (Non-GAAP) *

Three Months Ended March 31,

($ in thousands)

2023

2022

2023

2022

Expenses:

Employee compensation and benefits

$

282,937

$

293,580

$

273,530

$

289,768

% of Revenues

63.6

%

62.3

%

61.5

%

61.5

%

Non-compensation

$

71,206

$

78,977

$

67,991

$

59,377

% of Revenues

16.0

%

16.8

%

15.3

%

12.6

%

Provision for Income Taxes

$

20,642

$

25,515

$

29,964

$

34,011

% of Pre-Tax Income

21.7

%

28.1

%

28.0

%

27.9

%

*

Adjusted figures represent non-GAAP information. See “Non-GAAP Financial Measures” and the tables at the end of this release for an explanation of the adjustments and reconciliations to the comparable GAAP numbers.

Year Ended March 31, 2023 Compared to the Year Ended March 31, 2022

Employee compensation and benefits expenses were $1.15 billion for the fiscal year ended March 31, 2023, compared with $1.41 billion for the fiscal year ended March 31, 2022. This resulted in a GAAP compensation ratio of 63.4% for the fiscal year ended March 31, 2023, compared with 62.1% for the fiscal year ended March 31, 2022. Adjusted employee compensation and benefits expenses were $1.11 billion for the fiscal year ended March 31, 2023, compared with $1.40 billion for the fiscal year ended March 31, 2022. This resulted in an adjusted compensation ratio of 61.5% for both the fiscal year ended March 31, 2023 and the fiscal year ended March 31, 2022. The decrease in GAAP and adjusted employee compensation and benefits expenses was primarily a result of a decline in revenues for the year when compared with the prior year.

Non-compensation expenses were $320 million for the fiscal year ended March 31, 2023, compared with $248 million for the fiscal year ended March 31, 2022. Adjusted non-compensation expenses were $273 million for the fiscal year ended March 31, 2023, compared with $193 million for the fiscal year ended March 31, 2022. The increase in GAAP and adjusted non-compensation expenses was primarily a result of an increase in travel, meals, and entertainment expenses as employees continued to return to travel and an increase in other operating expenses.

The provision for income taxes was $70 million, representing an effective tax rate of 20.6%, for the fiscal year ended March 31, 2023, compared with $166 million, representing an effective tax rate of 27.4%, for the fiscal year ended March 31, 2022. The decrease in the Company’s effective tax rate during the fiscal year ended March 31, 2023 relative to the fiscal year ended March 31, 2022 was primarily the result of increased stock compensation deductions, the release of the provision for an uncertain tax position as a result of the successful closure of a state audit and the release of a valuation allowance. The adjusted provision for income taxes was $113 million, representing an adjusted effective tax rate of 26.4%, for the fiscal year ended March 31, 2023, compared with $194 million, representing an adjusted effective tax rate of 28.6%, for the fiscal year ended March 31, 2022.

Quarter Ended March 31, 2023 Compared to the Quarter Ended March 31, 2022

Employee compensation and benefits expenses were $283 million for the fourth quarter ended March 31, 2023, compared with $294 million for the fourth quarter ended March 31, 2022. This resulted in a GAAP compensation ratio of 63.6% for the fourth quarter ended March 31, 2023, compared with 62.3% for the fourth quarter ended March 31, 2022. Adjusted employee compensation and benefits expenses were $274 million for the fourth quarter ended March 31, 2023, compared with $290 million for the fourth quarter ended March 31, 2022. This resulted in an adjusted compensation ratio of 61.5% for both the fourth quarter ended March 31, 2023 and the fourth quarter ended March 31, 2022. The decrease in GAAP and adjusted employee compensation and benefits expenses was primarily a result of a decline in revenues when compared with the same quarter last year.

Non-compensation expenses were $71 million for the fourth quarter ended March 31, 2023, compared with $79 million for the fourth quarter ended March 31, 2022. The decrease in GAAP non-compensation expenses was primarily a result of a decrease in amortization expense as the intangible assets recognized in connection with the acquisition of GCA became predominantly amortized, and a decrease in other operating expenses. Adjusted non-compensation expenses were $68 million for the quarter ended March 31, 2023, compared with $59 million for the fourth quarter ended March 31, 2022. The increase in adjusted non-compensation expenses was primarily a result of an increase in travel, meals, and entertainment expenses as employees continued to return to travel and an increase in rent expense, partially offset by a decrease in other operating expenses.

The provision for income taxes was $21 million, representing an effective tax rate of 21.7%, for the fourth quarter ended March 31, 2023, compared with $26 million, representing an effective tax rate of 28.1%, for the fourth quarter ended March 31, 2022. The decrease in the Company’s effective tax rate during the quarter ended March 31, 2023 relative to the quarter ended March 31, 2022 was primarily the result of the release of a valuation allowance. The adjusted provision for income taxes was $30 million, representing an adjusted effective tax rate of 28.0%, for the fourth quarter ended March 31, 2023, compared with $34 million, representing an adjusted effective tax rate of 27.9%, for the fourth quarter ended March 31, 2022.

Segment Reporting for the Fourth Quarter

Corporate Finance

CF revenues were $256 million for the fourth quarter ended March 31, 2023, compared with $279 million for the fourth quarter ended March 31, 2022. Revenues decreased primarily due to a decrease in the average transaction fee on closed transactions, which was driven by the size and timing of transactions that closed during the quarter, and does not represent a trend in the average fee on closed transactions.

Three Months Ended March 31,

Year Ended March 31,

($ in thousands)

2023

2022

2023

2022

Corporate Finance

Revenues

$

256,425

$

279,019

$

1,127,126

$

1,593,083

# of Managing Directors

217

202

217

202

# of Closed transactions ⁽¹⁾

140

144

503

600

Financial Restructuring

FR revenues were $120 million for the fourth quarter ended March 31, 2023, compared with $122 million for the fourth quarter ended March 31, 2022. Revenues remained relatively flat primarily due to a decrease in the average transaction fee on closed transactions, offset by an increase in the number of closed transactions. The decrease in the average transaction fee was driven by the size and timing of transactions that closed during the quarter, and does not represent a trend in the average fee on closed transactions. The increase in the number of closed transactions was driven by favorable market conditions for restructuring transactions.

Three Months Ended March 31,

Year Ended March 31,

($ in thousands)

2023

2022

2023

2022

Financial Restructuring

Revenues

$

120,382

$

121,586

$

395,733

$

392,818

# of Managing Directors

57

53

57

53

# of Closed transactions ⁽¹⁾

38

25

106

90

Financial and Valuation Advisory

FVA revenues were $68 million for the quarter ended March 31, 2023, compared with $71 million for the fourth quarter ended March 31, 2022. Revenues decreased primarily due to a decrease in the number of fee events. The decrease in the number of Fee Events was driven by softness in the M&A markets, which affected one or more of the service lines within our FVA business.

Three Months Ended March 31,

Year Ended March 31,

($ in thousands)

2023

2022

2023

2022

Financial and Valuation Advisory

Revenues

$

67,960

$

70,561

$

286,588

$

284,057

# of Managing Directors

39

34

39

34

# of Fee Events ⁽¹⁾

957

999

2,257

2,183

(1)

A Fee Event includes any engagement that involves revenue activity during the measurement period based on a revenue minimum of one thousand dollars. References in this press release to closed transactions should be understood to be the same as transactions that are “effectively closed” as described in our periodic reports on Forms 10-K and 10-Q.

Other Announcements

The Board of Directors of the Company declared a regular quarterly cash dividend of $0.55 per share of Class A and Class B common stock. The dividend will be payable on June 15, 2023 to stockholders of record as of the close of business on June 2, 2023.

Investor Conference Call and Webcast

The Company will host a conference call and live webcast at 5:00 p.m. Eastern Time on Tuesday, May 9, 2023, to discuss its full year and fourth quarter fiscal 2023 results. The number to call is 1-877-226-0954 (domestic) or 1-212-231-2901 (international). A live webcast will be available in the Investor Relations section of the Company’s website. A replay of the conference call will be available from May 9, 2023 through May 16, 2023, by dialing 1-844-512-2921 (domestic) or 1-412-317-6671 (international) and entering the passcode 151918000#. A replay of the webcast will be archived and available on the Company’s website.

Forward-Looking Statements

This press release contains forward-looking statements within the meaning of the federal securities laws. You can identify these statements by our use of the words “assumes,” “believes,” “estimates,” “expects,” “guidance,” “intends,” “plans,” “projects,” and similar expressions that do not relate to historical matters. You should exercise caution in interpreting and relying on forward-looking statements because they involve known and unknown risks, uncertainties, and other factors which are, in some cases, beyond the Company’s control and could materially affect actual results, performance, or achievements. For a further description of such factors, you should read the Company’s filings with the Securities and Exchange Commission. Because forward-looking statements are inherently subject to risks and uncertainties, some of which cannot be predicted or quantified, you should not rely on these forward-looking statements as predictions of future events. The events and circumstances reflected in our forward-looking statements may not be achieved or occur and actual results could differ materially from those projected in the forward-looking statements. The Company does not undertake any obligation to update or revise any forward-looking statement, whether as a result of new information, future events, or otherwise.

Non-GAAP Financial Measures

Adjusted net income, total and on a per share basis, and certain adjusted items used to determine adjusted net income, are presented and discussed in this earnings press release and are non-GAAP measures that management believes, when presented together with comparable GAAP measures, are useful to investors in understanding the Company’s operating results. These adjusted items remove the significant accounting impact of one-time or non-recurring charges associated with the Company’s one-time/non-recurring matters, as set forth in the tables at the end of this release.

The adjusted items included in this earnings press release as calculated by the Company are not necessarily comparable to similarly titled measures reported by other companies. Additionally, these adjusted amounts are not a measurement of financial performance or liquidity under GAAP and should not be considered as an alternative to the Company’s financial information determined under GAAP. For a description of the Company’s use of these adjusted items and a reconciliation with comparable GAAP items, see the section of this press release titled “Reconciliation of GAAP to Adjusted Financial Information.” Please refer to our financial statements, prepared in accordance with GAAP, for purposes of evaluating our financial condition, results of operations, and cash flows.

About Houlihan Lokey

Houlihan Lokey (NYSE:HLI) is a global investment bank with expertise in mergers and acquisitions, capital markets, financial restructuring, and financial and valuation advisory. The firm serves corporations, institutions, and governments worldwide with offices in the Americas, Europe, the Middle East, and the Asia-Pacific region. Independent advice and intellectual rigor are hallmarks of the firm’s commitment to client success across its advisory services. Houlihan Lokey is the No. 1 investment bank for global M&A transactions under $1 billion, the No. 1 M&A advisor for the past eight consecutive years in the U.S., the No. 1 global restructuring advisor for the past nine consecutive years, and the No. 1 global M&A fairness opinion advisor over the past 25 years, all based on number of transactions and according to data provided by Refinitiv.

For more information, please visit www.HL.com.

Appendix

Condensed Consolidated Balance Sheets (Unaudited)

Condensed Consolidated Statements of Income (Unaudited)

Reconciliation of GAAP to Adjusted Financial Information (Unaudited)

HOULIHAN LOKEY, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(UNAUDITED)

(In thousands, except share data and par value)

March 31, 2023

March 31, 2022

Assets

Cash and cash equivalents

$

714,439

$

833,697

Restricted cash

373

373

Investment securities

37,309

109,143

Accounts receivable, net of allowance for credit losses

182,029

144,029

Unbilled work in process, net of allowance for credit losses

115,045

104,751

Income taxes receivable

17,693

—

Deferred income taxes

104,941

95,278

Property and equipment, net

88,345

52,176

Operating lease right-of-use assets

333,877

171,942

Goodwill

1,087,784

1,070,442

Other intangible assets, net

203,370

247,333

Other assets

83,609

57,646

Total assets

$

2,968,814

$

2,886,810

Liabilities and Stockholders’ Equity

Liabilities:

Accrued salaries and bonuses

$

765,877

$

953,604

Accounts payable and accrued expenses

113,421

126,190

Deferred income

40,695

28,753

Income taxes payable

—

61,266

Deferred income taxes

544

789

Loans payable to former shareholders

—

539

Operating lease liabilities

374,869

197,091

Other liabilities

45,111

74,873

Total liabilities

1,340,517

1,443,105

Stockholders’ equity:

Class A common stock, $0.001 par value. Authorized 1,000,000,000 shares; issued and outstanding 50,638,924 and 49,853,564 shares, respectively

51

50

Class B common stock, $0.001 par value. Authorized 1,000,000,000 shares; issued and outstanding 18,048,345 and 17,649,555 shares, respectively

18

18

Additional paid-in capital

642,970

564,761

Retained earnings

1,048,072

922,223

Accumulated other comprehensive loss

(62,814

)

(43,347

)

Total stockholders’ equity

1,628,297

1,443,705

Total liabilities and stockholders’ equity

$

2,968,814

$

2,886,810

HOULIHAN LOKEY, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF INCOME

(UNAUDITED)

Three Months Ended March 31,

Year Ended March 31,

(In thousands, except share and per share data)

2023

2022

2023

2022

Revenues

$

444,767

$

471,166

$

1,809,447

$

2,269,958

Operating expenses:

Employee compensation and benefits

282,937

293,580

1,147,879

1,408,634

Travel, meals, and entertainment

13,391

5,001

51,082

22,465

Rent

17,911

14,120

55,838

47,747

Depreciation and amortization

6,347

19,948

58,221

48,537

Information technology and communications

15,201

13,497

54,125

41,714

Professional fees

9,078

10,361

32,940

38,349

Other operating expenses

9,278

16,050

67,624

49,648

Total operating expenses

354,143

372,557

1,467,709

1,657,094

Operating income

90,624

98,609

341,738

612,864

Other (income)/expense, net

(4,678

)

7,921

2,738

8,926

Income before provision for income taxes

95,302

90,688

339,000

603,938

Provision for income taxes

20,642

25,515

69,777

165,614

Net income

74,660

65,173

269,223

438,324

Net income attributable to noncontrolling interest

—

—

—

(573

)

Net income attributable to Houlihan Lokey, Inc.

$

74,660

$

65,173

$

269,223

$

437,751

Weighted average shares of common stock outstanding:

Basic

63,351,104

64,085,273

63,358,408

64,970,287

Fully diluted

68,107,465

67,461,779

67,586,263

68,259,708

Earnings per share attributable to Houlihan Lokey, Inc.

Basic

$

1.18

$

1.02

$

4.25

$

6.74

Fully diluted

$

1.10

$

0.97

$

3.98

$

6.41

HOULIHAN LOKEY, INC. AND SUBSIDIARIES

RECONCILIATION OF GAAP TO ADJUSTED FINANCIAL INFORMATION

(UNAUDITED)

Three Months Ended March 31,

Year Ended March 31,

(In thousands, except share and per share data)

2023

2022

2023

2022

Revenues

$

444,767

$

471,166

$

1,809,447

$

2,269,958

Employee compensation and benefits expenses

Employee compensation and benefits expenses (GAAP)

$

282,937

$

293,580

$

1,147,879

$

1,408,634

Less: Acquisition related retention payments

(9,407

)

(3,812

)

(35,070

)

(12,609

)

Employee compensation and benefits expenses (adjusted)

273,530

289,768

1,112,809

1,396,025

Non-compensation expenses

Non-compensation expenses (GAAP)

$

71,206

$

78,977

$

319,830

$

248,460

Less: Integration and acquisition related costs

—

(3,793

)

(2,325

)

(21,598

)

Less: Acquisition amortization

(3,215

)

(15,807

)

(44,971

)

(33,937

)

Non-compensation expenses (adjusted)

67,991

59,377

272,534

192,925

Operating income

Operating income (GAAP)

$

90,624

$

98,609

$

341,738

$

612,864

Plus: Adjustments ⁽¹⁾

12,622

23,412

82,366

68,144

Operating income (adjusted)

103,246

122,021

424,104

681,008

Other (income)/expense, net

Other (income)/expense, net (GAAP)

$

(4,678

)

$

7,921

$

2,738

$

8,926

Less: Warrant revaluation

—

—

(2,264

)

—

Less: SPAC wind-down write-off

—

—

(2,742

)

—

Plus/(less): Change in acquisition earnout liability fair value

738

(7,613

)

(2,103

)

(7,613

)

Other (income)/expense, net (adjusted)

(3,940

)

308

(4,371

)

1,313

Provision for income taxes

Provision for income taxes (GAAP)

$

20,642

$

25,515

$

69,777

$

165,614

Plus: Impact of the excess tax benefit for stock vesting

—

—

8,102

6,922

Plus: Release of the provision for an uncertain tax position as a result of the successful closure of a state audit

—

—

5,762

—

Plus: Release of valuation allowance

5,881

—

5,881

—

Adjusted provision for income taxes

26,523

25,515

89,522

172,536

Plus: Resulting tax impact ⁽²⁾

3,441

8,496

23,628

21,644

Provision for income taxes (adjusted)

29,964

34,011

113,150

194,180

Net income

Net income (GAAP)

$

74,660

$

65,173

$

269,223

$

438,324

Plus: Adjustments⁽³⁾

2,562

22,529

46,102

47,191

Net income (adjusted)

77,222

87,702

315,325

485,515

Net income attributable to noncontrolling interest

—

—

—

(573

)

Net income attributable to Houlihan Lokey, Inc. (GAAP)

74,660

65,173

269,223

437,751

Net income attributable to Houlihan Lokey, Inc. (adjusted)

77,222

87,702

315,325

484,942

Fully diluted shares outstanding

Fully diluted shares outstanding (GAAP)

68,107,465

67,461,779

67,586,263

68,259,708

Plus: Impact of unvested GCA retention and deferred share awards

1,591,157

—

1,927,786

—

Fully diluted shares outstanding (adjusted)

69,698,622

67,461,779

69,514,049

68,259,708

Diluted EPS attributable to Houlihan Lokey, Inc. (GAAP)

$

1.10

$

0.97

$

3.98

$

6.41

Diluted EPS attributable to Houlihan Lokey, Inc. (adjusted)

$

1.11

$

1.30

$

4.54

$

7.10

(1)

The aggregate of adjustments from employee compensation and benefits and non-compensation expenses.

(2)

Reflects the tax impact of utilizing the adjusted effective tax rate on the non-tax adjustments identified above.

(3)

Consists of all adjustments identified above net of the associated tax impact.

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Posted on May 9, 2023 9:55 pm
Ormat Technologies Reports First Quarter 2023 Financial Results

Continued Growth in Electricity Segment and Benefits From Inflation Reduction Act Drove Significant Expansion in Earnings and Adjusted EBITDA

HIGHLIGHTS

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ADJUSTED EBITDA GREW BY 14.5% IN LINE WITH FULL YEAR RUN RATE GUIDANCE

NEW CAPACITY OF 50MW IN OUR STORAGE AND ELECTRICITY SEGMENTS

RENO, Nev., May 09, 2023 (GLOBE NEWSWIRE) — Ormat Technologies, Inc. (NYSE: ORA), a leading geothermal, energy storage, solar PV and recovered energy power company, today announced financial results for the first quarter ended March 31, 2023.

KEY FINANCIAL RESULTS

(Dollars in millions, except per share) Q1 2023 Q1 2022 Change (%)

GAAP Measures

Revenues

Electricity 170.3 162.5 4.8%

Product 10.0 14.6 (31.4) %

Energy Storage & Management Services 4.9 6.6 (25.6) %

Total Revenues 185.2 183.7 0.8%

Gross margin (%)

Electricity 44.4% 41.8%

Product 6.9% 6.9%

Energy Storage & Management Services (3.6) % 13.5%

Gross margin (%) 41.1% 38.1%

Operating income 53.2 45.1 17.9%

Net income attributable to the Company’s stockholders 29.0 18.4 57.5%

Diluted EPS ($) 0.51 0.33 54.5%

Non-GAAP Measures ¹

Adjusted Net income attributable to the Company’s stockholders 29.0 19.9 45.8%

Adjusted Diluted EPS ($) 0.51 0.35 45.7%

Adjusted EBITDA¹ 123.5 107.9 14.5%

“Ormat had a strong start to the year, delivering a 57% improvement in net income over the same period last year and record first quarter Adjusted EBITDA. Our Electricity segment led the growth compared to the previous year first quarter, driven by the contributions from capacity additions of our newly built assets. The strategic portfolio expansions at our CD4, Tungsten and Heber 2 plants, which were completed last year, further supports the expected growth of our revenues and operating income,” said Doron Blachar, Ormat’s Chief Executive Officer.

“As we enter the second quarter of the year, we successfully commenced operation at our new 25MW North Valley geothermal power plant and at the new 6MW Brady solar facility. In our storage segment, we have successfully begun operations on 19MW/19MWh battery storage facilities and expect to start operation of additional two projects with a total capacity of 45MW/45MWh in the second quarter. These new projects are expected to support improved storage margin performance for the segment across the remainder of the year and onward. We also plan to commence commercial operation at our newly built Heber 1 power plant by the end of the second quarter, further strengthening our growth trajectory. This expanded portfolio is expected to allow us to generate even stronger Adjusted EBITDA, earnings, and improved net income going forwards, supported by additional Production Tax Credits (PTC) and Investment Tax Credits (ITC).”

Blachar added, “We remain confident in our ability to meet our operating capacity goals and long-term financial targets. We also expect to continue capturing the direct benefits related to the Inflation Reduction Act (IRA) that are expected to meaningfully enhance our net income results. We believe the demand for renewable energy and storage remains strong and we anticipate continued capacity and revenue growth across our operating segments.”

FINANCIAL AND RECENT BUSINESS HIGHLIGHTS

Net income attributable to the Company’s stockholders and diluted EPS for the first quarter of 2023 increased 57.5% and 54.5%, respectively, versus the prior year.

Adjusted EBITDA for the first quarter of 2023 was $123.5 million, an increase of 14.5% compared to $107.9 million in 2022, driven by improved operating income results in the Electricity segment including higher income related to tax equity transactions supported by the recognition of PTCs associated mainly with CD4.

Electricity segment revenues increased 4.8% for the first quarter of 2023, compared to 2022, supported by contributions from Ormat’s portfolio expansion efforts in 2022, including the addition of the CD4, Tungsten, and Heber 2 geothermal power plants.

Product segment revenues decreased by 31.4% for the first quarter of 2023, compared to 2022, due primarily to the timing of revenue recognition compared to the prior year period. Despite this year-over-year top line decline, we expect to see an increase in revenue year-over-year and anticipate improved margins going forward, supported by an improved backlog. As such, the Company expects the Product segment results for the full year to come in near the high end of the guidance range.

Product segment backlog stands at $147 million as of May 9, 2023.

Energy Storage segment revenues decreased 25.6% for the first quarter of 2023, compared to 2022, driven primarily by lower energy rates captured by the PJM facilities.

In addition, since the beginning of the year, the Company:

Commenced commercial operation of the 25MW North Valley project in Nevada. This project is selling energy to NV Energy under a 25-year long term contract.

Commenced commercial operations at two battery storage facilities for 19MW of combined capacity, with these projects becoming eligible for ITCs for the first time which will allow Ormat to reduce its income taxes and meaningfully improve the economics of these projects.

Commenced commercial operation of the 6MW Brady Solar project in Nevada that will be used for the ancillary needs of the geothermal power plant and should allow us to sell more electricity from the nearby geothermal power plant to Southern California Public Power Authority (SCPPA) under the SCPPA portfolio power purchase agreement (PPA).

2023 GUIDANCE

Total revenues of between $823 million and $858 million.

Electricity segment revenues between $670 million and $685 million.

Product segment revenues of between $120 million and $135 million.

Energy Storage revenues of between $33 million and $38 million.

Adjusted EBITDA to be between $480 million and $510 million.

Adjusted EBITDA attributable to minority interest of approximately $36 million.

The Company provides a reconciliation of Adjusted EBITDA, a non-GAAP financial measure for the three months ended March 31, 2023, and 2022. However, the Company does not provide guidance on net income and is unable to provide a reconciliation for its Adjusted EBITDA guidance range to net income without unreasonable efforts due to high variability and complexity with respect to estimating certain forward-looking amounts. These include impairments and disposition and acquisition of business interests, income tax expense, and other non-cash expenses and adjusting items that are excluded from the calculation of Adjusted EBITDA.

DIVIDEND

On May 9, 2023, the Company’s Board of Directors declared, approved, and authorized payment of a quarterly dividend of $0.12 per share pursuant to the Company’s dividend policy. The dividend will be paid on June 6, 2023, to stockholders of record as of the close of business on May 23, 2023. In addition, the Company expects to pay a quarterly dividend of $0.12 per share in each of the next two quarters.

CONFERENCE CALL DETAILS

Ormat will host a conference call to discuss its financial results and other matters discussed in this press release on Wednesday, May 10, 2023, at 9:00 a.m. ET.

Participants within the United States and Canada, please dial 1-888-770-2286, approximately 15 minutes prior to the scheduled start of the call. If you are calling outside of the United States and Canada, please dial +1-646-960-0440. Access code for the call is 9122486. Please request the “Ormat Technologies, Inc. call” when prompted by the conference call operator. The conference call will also be accompanied by a webcast live on the Investor Relations section of the Company’s website.

A replay will be available one hour after the end of the conference call. To access the replay within the United States and Canada, please dial 1-800-770-2030. From outside of the United States and Canada, please dial +1-647-362-9199. Please use the replay access code 9122486. The webcast will also be archived on the Investor Relations section of the Company’s website.

ABOUT ORMAT TECHNOLOGIES

With over five decades of experience, Ormat Technologies, Inc. is a leading geothermal company and the only vertically integrated company engaged in geothermal and recovered energy generation (“REG”), with robust plans to accelerate long-term growth in the energy storage market and to establish a leading position in the U.S. energy storage market. The Company owns, operates, designs, manufactures and sells geothermal and REG power plants primarily based on the Ormat Energy Converter – a power generation unit that converts low-, medium- and high-temperature heat into electricity. The Company has engineered, manufactured and constructed power plants, which it currently owns or has installed for utilities and developers worldwide, totaling approximately 3,200 MW of gross capacity. Ormat leveraged its core capabilities in the geothermal and REG industries and its global presence to expand the Company’s activity into energy storage services, solar Photovoltaic (PV) and energy storage plus Solar PV. Ormat’s current total generating portfolio is 1,208 MW with a 1,101 MW geothermal and solar generation portfolio that is spread globally in the U.S., Kenya, Guatemala, Indonesia, Honduras, and Guadeloupe, and a 107 MW energy storage portfolio that is located in the U.S.

ORMAT’S SAFE HARBOR STATEMENT

Information provided in this press release may contain statements relating to current expectations, estimates, forecasts and projections about future events that are “forward-looking statements” as defined in the Private Securities Litigation Reform Act of 1995. All statements, other than statements of historical facts, included in this press release that address activities, events or developments that we expect or anticipate will or may occur in the future, including such matters as our projections of annual revenues, expenses and debt service coverage with respect to our debt securities, future capital expenditures, business strategy, competitive strengths, goals, development or operation of generation assets, market and industry developments and the growth of our business and operations, are forward-looking statements. When used in this press release, the words “may”, “will”, “could”, “should”, “expects”, “plans”, “anticipates”, “believes”, “estimates”, “predicts”, “projects”, “potential”, or “contemplate” or the negative of these terms or other comparable terminology are intended to identify forward-looking statements, although not all forward-looking statements contain such words or expressions. These forward-looking statements generally relate to Ormat’s plans, objectives and expectations for future operations and are based upon its management’s current estimates and projections of future results or trends. Although we believe that our plans and objectives reflected in or suggested by these forward-looking statements are reasonable, we may not achieve these plans or objectives. Actual future results may differ materially from those projected as a result of certain risks and uncertainties and other risks described under “Risk Factors” as described in Ormat’s Form 10-K filed with the Securities and Exchange Commission (“SEC”) on February 24, 2023, and from time to time, in Ormat’s quarterly reports on Form 10-Q that are filed with the SEC.

These forward-looking statements are made only as of the date hereof, and, except as legally required, we undertake no obligation to update or revise the forward-looking statements, whether as a result of new information, future events or otherwise.

ORMAT TECHNOLOGIES, INC AND SUBSIDIARIES

Condensed Consolidated Statement of Operations

For the Three-Month periods Ended March 31, 2023, and 2022

Three Months Ended March 31,

2023 2022

(Dollars in thousands, except per share data)

Revenues:

Electricity 170,310 162,525

Product 10,042 14,628

Energy storage 4,880 6,557

Total revenues 185,232 183,710

Cost of revenues:

Electricity 94,758 94,521

Product 9,351 13,613

Energy storage 5,054 5,671

Total cost of revenues 109,163 113,805

Gross profit 76,069 69,905

Operating expenses:

Research and development expenses 1,288 1,064

Selling and marketing expenses 3,948 4,365

General and administrative expenses 17,667 17,572

Write-off of Energy Storage projects and assets — 1,826

Operating income 53,166 45,078

Other income (expense):

Interest income 1,851 342

Interest expense, net (23,631) (21,081)

Derivatives and foreign currency transaction gains (losses) (1,937) 260

Income attributable to sale of tax benefits 12,566 7,705

Other non-operating income (expense), net 60 75

Income from operations before income tax and equity in earnings (losses) of investees 42,075 32,379

Income tax (provision) benefit (8,885) (10,163)

Equity in earnings (losses) of investees, net 271 577

Net income 33,461 22,793

Net income attributable to noncontrolling interest (4,432) (4,363)

Net income attributable to the Company’s stockholders 29,029 18,430

Earnings per share attributable to the Company’s stockholders:

Basic: 0.51 0.33

Diluted: 0.51 0.33

Weighted average number of shares used in computation of earnings per share attributable to the Company’s stockholders:

Basic 56,710 56,063

Diluted 57,104 56,366

ORMAT TECHNOLOGIES, INC AND SUBSIDIARIES

Condensed Consolidated Balance Sheet

For the Periods Ended March 31, 2023, and December 31, 2022

March 31, 2023 December 31, 2022

ASSETS

Current assets: (Dollars in thousands)

Cash and cash equivalents 414,856 95,872

Restricted cash and cash equivalents 107,466 130,804

Receivables:

Trade 144,199 128,818

Other 36,409 32,415

Inventories 45,447 22,832

Costs and estimated earnings in excess of billings on uncompleted contracts 17,136 16,405

Prepaid expenses and other 45,474 29,571

Total current assets 810,987 456,717

Investment in unconsolidated companies 119,185 115,693

Deposits and other 36,920 39,762

Deferred income taxes 155,966 161,365

Property, plant and equipment, net 2,541,677 2,493,457

Construction-in-process 905,505 893,198

Operating leases right of use 22,770 23,411

Finance leases right of use 4,277 3,806

Intangible assets, net 327,537 333,845

Goodwill 90,446 90,325

Total assets 5,015,270 4,611,579

LIABILITIES AND EQUITY

Current liabilities:

Accounts payable and accrued expenses 172,751 149,423

Billings in excess of costs and estimated earnings on uncompleted contracts 24,651 8,785

Current portion of long-term debt:

Limited and non-recourse (primarily related to VIEs): 63,465 64,044

Full recourse 110,706 101,460

Financing Liability 15,454 16,270

Operating lease liabilities 2,381 2,347

Finance lease liabilities 1,552 1,581

Total current liabilities 390,960 343,910

Long-term debt, net of current portion:

Limited and non-recourse: 504,460 521,885

Full recourse: 742,222 676,512

Convertible senior notes 421,376 420,805

Financing liability 220,603 225,759

Operating lease liabilities 19,421 19,788

Finance lease liabilities 2,732 2,262

Liability associated with sale of tax benefits 159,305 166,259

Deferred income taxes 78,613 83,465

Liability for unrecognized tax benefits 6,581 6,559

Liabilities for severance pay 12,394 12,833

Asset retirement obligation 99,192 97,660

Other long-term liabilities 11,021 3,317

Total liabilities 2,668,880 2,581,014

Commitments and contingencies

Redeemable noncontrolling interest 9,361 9,590

Equity:

The Company’s stockholders’ equity:

Common stock 60 56

Additional paid-in capital 1,560,445 1,259,072

Treasury stock, at cost (17,964) (17,964)

Retained earnings 646,204 623,907

Accumulated other comprehensive income (loss) (4,209) 2,500

Total stockholders’ equity attributable to Company’s stockholders 2,184,536 1,867,571

Noncontrolling interest 152,493 153,404

Total equity 2,337,029 2,020,975

Total liabilities, redeemable noncontrolling interest and equity 5,015,270 4,611,579

ORMAT TECHNOLOGIES, INC AND SUBSIDIARIES

Reconciliation of EBITDA and Adjusted EBITDA

For the Three-Month Periods ended March 31, 2023, and 2022

We calculate EBITDA as net income before interest, taxes, depreciation, amortization and accretion. We calculate Adjusted EBITDA as net income before interest, taxes, depreciation, amortization and accretion, adjusted for (i) mark-to-market gains or losses from accounting for derivatives, (ii) stock-based compensation, (iii) merger and acquisition transaction costs, (iv) gain or loss from extinguishment of liabilities, (v) cost related to a settlement agreement, (vi) non-cash impairment charges; (vii) write-off of unsuccessful exploration activities; and (viii) other unusual or non-recurring items. We adjust for these factors as they may be non-cash, unusual in nature and/or are not factors used by management for evaluating operating performance. We believe that presentation of these measures will enhance an investor’s ability to evaluate our financial and operating performance. EBITDA and Adjusted EBITDA are not measurements of financial performance or liquidity under accounting principles generally accepted in the United States, or U.S. GAAP, and should not be considered as an alternative to cash flow from operating activities or as a measure of liquidity or an alternative to net earnings as indicators of our operating performance or any other measures of performance derived in accordance with U.S. GAAP. Our Board of Directors and senior management use EBITDA and Adjusted EBITDA to evaluate our financial performance. However, other companies in our industry may calculate EBITDA and Adjusted EBITDA differently than we do.

Starting in the fourth quarter of 2022, we include accretion expenses related to asset retirement obligation in the adjustments to net income when calculating EBITDA and adjusted EBITDA. The presentation of EBITDA and adjusted EBITDA includes accretion expenses for the three months ended March 31, 2023, however, the prior year has not been recast to include accretion expenses as the amounts were immaterial.

The following table reconciles net income to EBITDA and Adjusted EBITDA for the three-month periods ended March 31, 2023, and 2022:

Three Months Ended March 31,

2023 2022

(Dollars in thousands)

Net income 33,461 22,793

Adjusted for:

Interest expense, net (including amortization of deferred financing costs 21,780 20,739

Income tax provision (benefit) 8,885 10,163

Adjustment to investment in an unconsolidated company: our proportionate share in interest expense, tax and depreciation and amortization in Sarulla 2,982 2,124

Depreciation and amortization 52,396 46,769

EBITDA 119,504 102,588

Mark-to-market gains or losses from accounting for derivative 993 277

Stock-based compensation 2,990 2,814

Write-off related to Storage projects and activity — 1,825

Allowance for bad debt — 115

Merger and acquisition transaction costs — 249

Adjusted EBITDA 123,487 107,868

ORMAT TECHNOLOGIES, INC AND SUBSIDIARIES

Reconciliation of Adjusted Net Income attributable to the Company’s stockholders and Adjusted EPS

For the Three-month periods ended March 31, 2023, and 2022

Adjusted Net Income attributable to the Company’s stockholders and Adjusted EPS are adjusted for one-time expense items that are not representative of our ongoing business and operations. The use of Adjusted Net income attributable to the Company’s stockholders and Adjusted EPS is intended to enhance the usefulness of our financial information by providing measures to assess the overall performance of our ongoing business.

The following tables reconciles Net income attributable to the Company’s stockholders and Adjusted EPS for the three-month periods ended March 31, 2023, and 2022.

Three Months Ended March 31,

2023 2022

(in millions, except for EPS)

GAAP Net income attributable to the Company’s stockholders $ 29.0 $ 18.4

Write-off of related to Energy Storage projects and activity $ — 1.4

Adjusted Net income attributable to the Company’s stockholders $ 29.0 $ 19.9

GAAP diluted EPS $ 0.51 $ 0.33

Write-off of related to Energy Storage projects and activity $ — 0.02

Diluted Adjusted EPS $ 0.51 $ 0.35

Ormat Technologies Contact:
Smadar Lavi
VP Head of IR and ESG Planning & Reporting
775-356-9029 (ext. 65726)
[email protected] Investor Relations Agency Contact:
Alec Steinberg or Joseph Caminiti
Alpha IR Group
312-445-2870
[email protected]

Posted on May 9, 2023 9:53 pm
ProAssurance Reports Results for First Quarter 2023

ProAssurance Reports Results for First Quarter 2023

BIRMINGHAM, Ala.–(BUSINESS WIRE)–
ProAssurance Corporation (NYSE: PRA) reports a net loss of $6.2 million, or $0.11 per diluted share, and an operating loss⁽¹⁾ of $8.1 million, or $0.15 per diluted share, for the three months ended March 31, 2023.

Highlights – First Quarter 2023⁽²⁾

Gross premiums written of $316 million (-6%)

Unfavorable prior accident year reserve development of $7 million

Consolidated combined ratio of 113.9%

Consolidated operating ratio of 101.3%

Net investment income of $30 million (+48%)

Net investment income increased by $10 million compared to 2022

Adjusted book value per share⁽¹⁾ of $25.81 as of March 31, 2023. Adjusted book value per share was $25.99 as of December 31, 2022.

⁽¹⁾

Represents a Non-GAAP financial measure. See a reconciliation to its GAAP counterpart under the heading “Non-GAAP Financial Measures” that follows.

⁽²⁾

Comparisons are to the first quarter of 2022.

Management Commentary & Results of Operations

Our first quarter results for 2023 highlight the challenging market dynamics in our core operating segments. The medical professional liability market faces cost pressures driven by social inflation, reinsurance costs, and the weakening of tort reform. These pressures led to a higher net loss ratio in our Specialty P&C segment this quarter and resulted in unfavorable development of prior accident years in the segment.

In the Workers’ Compensation Insurance and Segregated Portfolio Cell Reinsurance segments, competition and lower expected claim costs pressured workers’ compensation rates. Our retention in the Workers’ Compensation Insurance segment declined, though higher new business activity and an increase in audit premium led to higher premium in the segment compared to last year. Unfavorable development on an older claim led to a decline in results compared to last year.

Ned Rand, President and Chief Executive Officer of ProAssurance, commented on the environment: “In this time of uncertainty for medical professionals, it is more important than ever that they have a professional liability carrier who will stand behind them and assist in finding solutions to the challenges they face. At ProAssurance, we are working to develop those solutions and to play a critical role in addressing the issues. Our data science and predictive analytics strategy is one of the areas we will focus on to uncover solutions.”

Rand continued: “The results for the quarter reflect our continued caution in assessing reserves in prior years; in our loss ratio selections for the current year; and in reserve increases on a handful of claims, some of which resulted from excess verdicts against our insureds in the quarter. MPL carriers and their insureds are facing an environment in which in large verdicts are too commonly rendered without regard to the facts of the case regarding liability or a reasonable assessment of damages.”

Net investment income showed substantial growth this quarter, increasing by 48% to $30 million. This continues a trend of higher investment income as a result of higher interest rates. We expect this trend to continue, as reinvestment rates are now considerably higher than the average book yield of maturing investments. In addition, bond prices strengthened over the quarter, leading to an increase in book value.

Our book value per share at quarter end was $21.07, up 3% from the December 31, 2022 book value of $20.46. Adjusted book value per share, which excludes Accumulated Other Comprehensive Income (AOCI), is $25.81 as of March 31, 2023, compared to $25.99 as of December 31, 2022.

CONSOLIDATED INCOME STATEMENT HIGHLIGHTS

Selected consolidated financial data for each period is summarized in the table below.

Three Months Ended March 31

($ in thousands, except per share data)

2023

2022

Change

Revenues

Gross premiums written⁽¹⁾

$

315,794

$

335,607

(5.9

%)

Net premiums written

$

284,909

$

310,915

(8.4

%)

Net premiums earned

$

239,787

$

265,711

(9.8

%)

Net investment income

30,310

20,443

48.3

%

Equity in earnings (loss) of unconsolidated subsidiaries

(1,121

)

7,620

(114.7

%)

Net investment gains (losses)⁽²⁾

2,912

(13,506

)

121.6

%

Other income (loss)⁽¹⁾

787

2,804

(71.9

%)

Total revenues⁽¹⁾

272,675

283,072

(3.7

%)

Expenses

Net losses and loss adjustment expenses

205,296

209,423

(2.0

%)

Underwriting, policy acquisition and operating expenses⁽¹⁾

67,788

71,776

(5.6

%)

SPC U.S. federal income tax expense

532

642

(17.1

%)

SPC dividend expense (income)

1,942

2,367

(18.0

%)

Interest expense

5,463

4,441

23.0

%

Total expenses⁽¹⁾

281,021

288,649

(2.6

%)

Income (loss) before income taxes

(8,346

)

(5,577

)

(49.7

%)

Income tax expense (benefit)

(2,172

)

(2,017

)

(7.7

%)

Net income (loss)

$

(6,174

)

$

(3,560

)

(73.4

%)

Non-GAAP operating income (loss)

$

(8,071

)

$

7,683

(205.1

%)

Weighted average number of common shares outstanding

Basic

53,987

54,012

Diluted

54,117

54,143

Earnings (loss) per share

Net income (loss) per diluted share

$

(0.11

)

$

(0.07

)

$

(0.04

)

Non-GAAP operating income (loss) per diluted share

$

(0.15

)

$

0.14

$

(0.29

)

⁽¹⁾

Consolidated totals include inter-segment eliminations. The eliminations affect individual line items only and have no effect on net income (loss). See Note 11 of the Notes to Condensed Consolidated Financial Statements in our March 31, 2023 report on Form 10-Q for amounts by line item.

⁽²⁾

This line item typically includes both realized and unrealized investment gains and losses, investment impairments losses, and, for the current period, the change in the fair value of the contingent consideration in relation to the NORCAL acquisition. Detailed information regarding the components of net investment gains (losses) are included in Note 3 of the Notes to Condensed Consolidated Financial Statements in our March 31, 2023 report on Form 10-Q.

The abbreviation “nm” indicates that the information or the percentage change is not meaningful.

BALANCE SHEET HIGHLIGHTS

($ in thousands, except per share data)

March 31, 2023

December 31, 2022

Total investments

$

4,381,648

$

4,387,683

Total assets

$

5,747,863

$

5,699,999

Total liabilities

$

4,609,573

$

4,595,981

Common shares (par value $0.01)

$

635

$

634

Retained earnings

$

1,414,411

$

1,423,286

Treasury shares

$

(419,214

)

$

(419,214

)

Shareholders’ equity

$

1,138,290

$

1,104,018

Book value per share

$

21.07

$

20.46

Non-GAAP adjusted book value per share⁽¹⁾

$

25.81

$

25.99

⁽¹⁾

Adjusted book value per share is a Non-GAAP financial measure. See a reconciliation of book value per share to Non-GAAP adjusted book value per share under the heading “Non-GAAP Financial Measures” that follows.

CONSOLIDATED KEY RATIOS

Three Months Ended March 31

2023

2022

Current accident year net loss ratio

82.7

%

80.8

%

Effect of prior accident years’ reserve development

2.9

%

(2.0

%)

Net loss ratio

85.6

%

78.8

%

Underwriting expense ratio⁽²⁾

28.3

%

27.0

%

Combined ratio

113.9

%

105.8

%

Operating ratio

101.3

%

98.1

%

Return on equity⁽¹⁾

(2.5

%)

(0.8

%)

Non-GAAP operating return on equity⁽¹⁾⁽²⁾

(2.9

%)

2.3

%

Combined ratio, excluding transaction-related costs⁽³⁾

113.9

%

105.4

%

⁽¹⁾

Quarterly amounts are annualized. Refer to our March 31, 2023 report on Form 10-Q under the heading “Non-GAAP Operating ROE” in the Executive Summary of Operations section for details on our calculation.

⁽²⁾

See a reconciliation of ROE to Non-GAAP operating ROE under the heading “Non-GAAP Financial Measures” that follows.

⁽³⁾

Our consolidated underwriting expense ratio for the quarter ended March 31, 2022 includes $1.2 million of transaction-related costs included in consolidated operating expenses associated with our acquisition of NORCAL. These costs do not reflect normal operating results.

SPECIALTY P&C SEGMENT RESULTS

Three Months Ended March 31

($ in thousands)

2023

2022

% Change

Gross premiums written

$

238,874

$

257,672

(7.3

%)

Net premiums written

$

214,065

$

234,838

(8.8

%)

Net premiums earned

$

179,344

$

197,967

(9.4

%)

Other income

993

1,019

(2.6

%)

Total revenues

180,337

198,986

(9.4

%)

Net losses and loss adjustment expenses

(164,051

)

(165,958

)

(1.1

%)

Underwriting, policy acquisition and operating expenses

(40,961

)

(42,878

)

(4.5

%)

Total expenses

(205,012

)

(208,836

)

1.8

%

Segment results

$

(24,675

)

$

(9,850

)

(150.5

%)

SPECIALTY P&C SEGMENT KEY RATIOS

Three Months Ended March 31

2023

2022

Current accident year net loss ratio

87.2

%

85.8

%

Effect of prior accident years’ reserve development

4.3

%

(2.0

%)

Net loss ratio

91.5

%

83.8

%

Underwriting expense ratio

22.8

%

21.7

%

Combined ratio

114.3

%

105.5

%

The underwriting loss in the quarter reflects claims severity trends, largely from prior accident years, which adversely impacted the calendar year loss ratio. The loss environment continues to be challenging as a result of social inflation and large jury verdicts in the healthcare professional liability space. 2023 has continued the record-setting pace of excess verdicts across the MPL industry.

Compared to the same period last year, gross written premium and net earned premium decreased 7% and 9% year over year, respectively, primarily as a result of competitive market conditions and our efforts in pursuing needed rate improvements over the past year. However, premium retention in the quarter was 85% compared to 83% in the prior period. The improvement in the retention was driven by our Specialty Healthcare business and also reflects strong results in our in our Standard Physician, Small Business Unit, and Medical Technology Liability businesses of 89%, 87%, and 90%, respectively.

We achieved renewal pricing increases of 6%, compared to 9% in the first quarter of 2022. New business writings improved to $11 million, compared to $8 million in the first quarter of 2022 despite the competitive market.

Excluding the effects of purchase accounting on last year’s results, the segment current accident year net loss ratio was essentially flat compared to the prior year. The benefits of our re-underwriting efforts over the past few years were offset by continued claims severity trends and weakening tort reform in recent quarters within our healthcare liability physician business, primarily in a couple of states.

We recognized net unfavorable prior accident year reserve development of $8 million in the first quarter, compared to $4 million favorable in the same period of 2022. The unfavorable development is attributed to several large verdicts during the quarter, reflecting continued social inflation and higher than anticipated loss severity trends.

The expense ratio of 22.8% was pressured by higher acquisition costs driven by an increase in compensation related expenses and lower earned premium compared to the prior period. This was offset by a one-time benefit of 2.2 percentage points resulting from a $3.8 million payroll tax refund from the Employer Retention Credit program in connection with the CARES act.

WORKERS’ COMPENSATION INSURANCE SEGMENT RESULTS

Three Months Ended March 31

($ in thousands)

2023

2022

% Change

Gross premiums written

$

73,431

$

72,118

1.8

%

Net premiums written

$

47,572

$

45,266

5.1

%

Net premiums earned

$

40,803

$

40,684

0.3

%

Other income

581

682

(14.8

%)

Total revenues

41,384

41,366

0.0

%

Net losses and loss adjustment expenses

(30,844

)

(27,211

)

13.4

%

Underwriting, policy acquisition and operating expenses

(12,980

)

(13,001

)

(0.2

%)

Total expenses

(43,824

)

(40,212

)

9.0

%

Segment results

$

(2,440

)

$

1,154

(311.4

%)

WORKERS’ COMPENSATION INSURANCE SEGMENT KEY RATIOS

Three Months Ended March 31

2023

2022

Current accident year net loss ratio

72.6

%

71.8

%

Effect of prior accident years’ reserve development

3.0

%

(4.9

%)

Net loss ratio

75.6

%

66.9

%

Underwriting expense ratio

31.8

%

32.0

%

Combined ratio

107.4

%

98.9

%

The Workers’ Compensation Insurance segment underwriting results declined in the first quarter of 2023, compared to the same period in 2022, primarily reflecting unfavorable prior accident year reserve development.

Gross premiums increased by $1.3 million in the quarter, compared to the same period of 2022, reflecting higher audit premium and new business written, partially offset by lower renewal premium. In our traditional business, audit premium increased to $2.5 million in the first quarter of 2023, compared to $0.1 million for the same period in 2022. New business writings in our traditional business were $6.6 million in the first quarter of 2023, an increase of $3.1 million compared to the same period in 2022.

Renewal premium results reflected the continuation of competitive market conditions. Renewal rates in our traditional business decreased 6% during the quarter. Renewal retention was 83% in our traditional business for the quarter, compared to 85% for the same period in 2022.

The current accident year net loss ratio increased 0.8 percentage points, primarily reflecting an increase in losses recognized under our reinsurance contract annual aggregate deductible and higher ULAE costs, partially offset by a reduction in reported claim frequency. We recognized unfavorable prior accident year reserve development of $1.2 million in 2023, compared to favorable development of $2.0 million in 2022. The unfavorable reserve development in 2023 was driven primarily by a large claim from the 1997 accident year.

Underwriting expenses and the underwriting expense ratio were relatively flat in the first quarter of 2023, compared to the same period in 2022.

SEGREGATED PORTFOLIO CELL REINSURANCE SEGMENT RESULTS

Three Months Ended March 31

($ in thousands)

2023

2022

% Change

Gross premiums written

$

22,881

$

28,369

(19.3

%)

Net premiums written

$

19,947

$

25,217

(20.9

%)

Net premiums earned

$

15,300

$

19,314

(20.8

%)

Net investment income

420

112

275.0

%

Net investment gains (losses)

1,160

(711

)

263.2

%

Other income

1

1

—

%

Net losses and loss adjustment expenses

(8,423

)

(11,491

)

(26.7

%)

Underwriting, policy acquisition and operating expenses

(5,035

)

(4,369

)

15.2

%

SPC U.S. federal income tax expense⁽¹⁾

(532

)

(642

)

(17.1

%)

SPC net results

2,891

2,214

30.6

%

SPC dividend (expense) income ⁽²⁾

(1,942

)

(2,367

)

(18.0

%)

Segment results ⁽³⁾

$

949

$

(153

)

(720.3

%)

⁽¹⁾

Represents the provision for U.S. federal income taxes for SPCs at Inova Re, which have elected to be taxed as a U.S. corporation under Section 953(d) of the Internal Revenue Code. U.S. federal income taxes are included in the total SPC net results and are paid by the individual SPCs.

⁽²⁾

Represents the net (profit) loss attributable to external cell participants.

⁽³⁾

Represents our share of the net profit (loss) and OCI of the SPCs in which we participate.

SEGREGATED PORTFOLIO CELL REINSURANCE SEGMENT KEY RATIOS

Three Months Ended March 31

2023

2022

Current accident year net loss ratio

64.9

%

64.5

%

Effect of prior accident years’ reserve development

(9.8

%)

(5.0

%)

Net loss ratio

55.1

%

59.5

%

Underwriting expense ratio

32.9

%

22.6

%

Combined ratio

88.0

%

82.1

%

The improvement in the Segregated Portfolio Cell Reinsurance segment results for the first quarter of 2023, compared to the same period of 2022, primarily reflects the impact of net investment gains in the current period.

Gross premiums written decreased in the quarter, driven by lower healthcare professional liability premium due to the prior year impact of the issuance of tail policies under one program. Workers’ compensation premium also declined, driven by lower renewal and audit premium.

Renewal rate decreases were 5% during the first quarter of 2023. Renewal retention was 90% in 2023, compared to 92% for the same period in 2022. Audit premium decreased to $1.2 million in the current period, compared to $1.6 million for the prior year. New business writings in our workers’ compensation programs were $1.2 million in the first quarter of 2023, compared to $1.1 million for the same period in 2022.

The net loss ratio decreased, reflecting higher favorable prior accident year reserve development. We recognized net favorable prior accident year reserve development of $1.5 million and $0.9 million during the first quarters of 2023 and 2022, respectively. The net favorable development related to the workers’ compensation business and reflected overall favorable trends in claim closing patterns primarily in accident years 2016 through 2020.

The underwriting expense ratio increased to 32.9% in 2023 from 22.6% in 2022, primarily reflecting the impact of a decrease in the allowance for credit losses during the 2022 first quarter. Underwriting expenses mostly represent commissions and other expenses charged by the Workers’ Compensation Insurance and Specialty P&C segments.

LLOYD’S SYNDICATES SEGMENT RESULTS

Three Months Ended March 31

($ in thousands)

2023

2022

% Change

Gross premiums written

$

3,489

$

5,817

(40.0

%)

Net premiums written

$

3,325

$

5,594

(40.6

%)

Net premiums earned

$

4,340

$

7,746

(44.0

%)

Net investment income

188

211

(10.9

%)

Net investment gains (losses)

(11

)

(399

)

(97.2

%)

Other income (loss)

(3

)

134

(102.2

%)

Net losses and loss adjustment expenses

(1,978

)

(4,763

)

(58.5

%)

Underwriting, policy acquisition and operating expenses

(1,720

)

(2,709

)

(36.5

%)

Segment results

$

816

$

220

270.9

%

LLOYD’S SYNDICATES SEGMENT KEY RATIOS

Three Months Ended March 31

2023

2022

Current accident year net loss ratio

51.3

%

41.8

%

Effect of prior accident years’ reserve development

(5.7

%)

19.7

%

Net loss ratio

45.6

%

61.5

%

Underwriting expense ratio

39.6

%

35.0

%

Combined ratio

85.2

%

96.5

%

Results of our Lloyd’s Syndicates segment are generally reported on a one-quarter lag and include the results from our current participation in Lloyd’s of London Syndicate 1729. Our participation in the results of Syndicate 1729 for the 2023 underwriting year remains unchanged from the 2022 underwriting year at 5%. We ceased participation in Syndicate 6131 beginning with the 2022 underwriting year. Due to the quarter lag, our ceased participation in Syndicate 6131 was not reflected in our results until the second quarter of 2022. We continue to view our participation at Lloyd’s as an investment outside of our core operations.

The decline in net premiums earned is attributable to our ceased participation in Syndicate 6131 for the 2022 underwriting year. The segment reported a combined ratio of 85.2% for the quarter. The current accident year net loss ratio increased as compared to the prior year quarter, driven by certain property and catastrophe related losses in the current period.

We recognized $0.2 million of favorable prior year development during the three months ended March 31, 2023, compared to unfavorable development of $1.5 million for the same period of 2022. The favorable prior year development for the current period was driven by lower than expected losses and development on certain large claims, primarily catastrophe related losses.

CORPORATE SEGMENT

Three Months Ended March 31

($ in thousands)

2023

2022

% Change

Net investment income

$

29,702

$

20,120

47.6

%

Equity in earnings (loss) of unconsolidated subsidiaries:

All other investments, primarily investment fund LPs/LLCs

(767

)

10,008

(107.7

%)

Tax credit partnerships

(354

)

(2,388

)

(85.2

%)

Total equity in earnings (loss) of unconsolidated subsidiaries:

(1,121

)

7,620

(114.7

%)

Net investment gains (losses)

763

(12,396

)

106.2

%

Other income (loss)

327

2,065

(84.2

%)

Operating expenses

(8,204

)

(8,739

)

(6.1

%)

Interest expense

(5,463

)

(4,441

)

23.0

%

Income tax (expense) benefit

2,172

1,770

(22.7

%)

Segment results

$

18,176

$

5,999

203.0

%

Consolidated effective tax rate

26.0

%

36.2

%

The rise in interest rates continues to add significantly to our net investment income, which increased to $29.7 million in the quarter, driven by higher average book yields on our fixed maturity investments as our reinvestment rate exceeds that of the maturing assets.

Equity in earnings (loss) from our investment in LPs/LLCs, which are typically reported to us on a one-quarter lag, decreased to a loss of $0.8 million in the quarter driven by the performance of one LP which reflected lower market valuations during the fourth quarter of 2022. Partially offsetting the lower earnings from our LP/LLC investments was lower amortization of tax credit partnership operating losses.

The corporate segment results include $0.8 million of net investment gains for the quarter, as unrealized holding gains resulting from changes in the fair value of our equity investments and convertible securities more than offset $2.9 million of credit-related impairment losses related to two corporate bonds in the financial sector.

The decline in other income was driven by the effect of foreign currency exchange rate losses of $1.0 million in the current quarter, compared to foreign currency exchange rate gains of $1.3 million in the prior year period. These foreign currency exchange rate movements are related to foreign currency denominated loss reserves in our Specialty P&C Segment.

Operating expenses decreased by $0.5 million primarily due to a decrease in compensation-related costs and, to a lesser extent, lower share-based compensation expenses.

Non-GAAP Financial Measures

Non-GAAP Operating Income (Loss)

Non-GAAP operating income (loss) is a financial measure that is widely used to evaluate performance within the insurance sector. In calculating Non-GAAP operating income (loss), we have excluded the effects of the items listed in the following table that do not reflect normal results. We believe Non-GAAP operating income (loss) presents a useful view of the performance of our insurance operations, however it should be considered in conjunction with net income (loss) computed in accordance with GAAP. The following table reconciles net income (loss) to Non-GAAP operating income (loss):

RECONCILIATION OF NET INCOME (LOSS) TO NON-GAAP OPERATING INCOME (LOSS)

Three Months Ended March 31

(In thousands, except per share data)

2023

2022

Net income (loss)

$

(6,174

)

$

(3,560

)

Items excluded in the calculation of Non-GAAP operating income (loss):

Net investment (gains) losses ⁽¹⁾

(2,912

)

13,506

Net investment gains (losses) attributable to SPCs which no profit/loss is retained ⁽²⁾

913

(602

)

Transaction-related costs ⁽³⁾

—

1,177

Guaranty fund assessments (recoupments)

(74

)

13

Pre-tax effect of exclusions

(2,073

)

14,094

Tax effect, at 21% ⁽⁴⁾

176

(2,851

)

After-tax effect of exclusions

(1,897

)

11,243

Non-GAAP operating income (loss)

$

(8,071

)

$

7,683

Per diluted common share:

Net income (loss)

$

(0.11

)

$

(0.07

)

Effect of exclusions

(0.04

)

0.21

Non-GAAP operating income (loss) per diluted common share

$

(0.15

)

$

0.14

⁽¹⁾

Net investment gains (losses) in 2023 include a gain of $1.0 million related to the change in the fair value of contingent consideration issued in connection with the NORCAL acquisition. We have excluded this adjustment as it does not reflect normal operating results. See further discussion around the contingent consideration in Note 2 of the Notes to Condensed Consolidated Financial Statements and discussion on our accounting policy in the Critical Accounting Estimates section under the heading “Contingent Consideration” of our March 31, 2023 report on Form 10-Q.

⁽²⁾

Net investment gains (losses) on investments related to SPCs are recognized in our Segregated Portfolio Cell Reinsurance segment. SPC results, including any net investment gain or loss, that are attributable to external cell participants are reflected in the SPC dividend expense (income). To be consistent with our exclusion of net investment gains (losses) recognized in earnings, we are excluding the portion of net investment gains (losses) that is included in the SPC dividend expense (income) which is attributable to the external cell participants.

⁽³⁾

Transaction-related costs associated with our acquisition of NORCAL. We are excluding these costs as they do not reflect normal operating results and are unique and non-recurring in nature.

⁽⁴⁾

The 21% rate is the annual expected statutory tax rate associated with the taxable or tax deductible items listed above. We utilized the estimated annual effective tax rate method for the three months ended March 31, 2023, while we utilized the discrete effective tax rate method for the three months ended March 31, 2022. For the 2023 period our effective tax rate was applied to these items in calculating net income (loss), excluding net investment gains (losses) and related adjustments. The 2023 gain related to the change in the fair value of contingent consideration is non-taxable and therefore had no associated income tax impact. For the 2022 period, our statutory tax rate was applied to these items in calculating net income (loss). Net investment gains (losses) in our Corporate segment are treated as discrete items and are tax effected at the annual expected statutory tax rate (21%) in the period they are included in our consolidated tax provision and net income (loss). The taxes associated with the net investment gains (losses) related to SPCs in our Segregated Portfolio Cell Reinsurance segment are paid by the individual SPCs and are not included in our consolidated tax provision or net income (loss); therefore, both the net investment gains (losses) from our Segregated Portfolio Cell Reinsurance segment and the adjustment to exclude the portion of net investment gains (losses) included in the SPC dividend expense (income) in the table above are not tax effected. See further discussion under the heading “Taxes” in the Executive Summary of Operations section of our March 31, 2023 report on Form 10-Q.

Non-GAAP Operating ROE

The following table is a reconciliation of ROE to Non-GAAP operating ROE for the three months ended March 31, 2023 and 2022:

Three Months Ended

March 31

2023

2022

ROE⁽¹⁾

(2.5

%)

(0.8

%)

Pre-tax effect of items excluded in the calculation of Non-GAAP operating ROE

(0.5

%)

3.9

%

Tax effect, at 21%⁽²⁾

0.1

%

(0.8

%)

Non-GAAP operating ROE

(2.9

%)

2.3

%

⁽¹⁾

Quarterly amounts are annualized. Refer to our March 31, 2023 report on Form 10-Q under the heading “Non-GAAP Operating ROE” in the Executive Summary of Operations section for details on our calculation.

⁽²⁾

The 21% rate is the statutory tax rate associated with the taxable or tax deductible items. See further discussion in footnote 4 in this section under the heading “Non-GAAP Operating Income.”

Non-GAAP Adjusted Book Value per Share

The following table is a reconciliation of our book value per share to Non-GAAP adjusted book value per share at March 31, 2023 and December 31, 2022:

Book Value Per Share

Book Value Per Share at December 31, 2022

$

20.46

Less: AOCI Per Share⁽¹⁾

(5.53

)

Non-GAAP Adjusted Book Value Per Share at December 31, 2022

25.99

Increase (decrease) to Adjusted Book Value Per Share during the three months ended March 31, 2023 attributable to:

Dividends declared

(0.05

)

Net income (loss)

(0.11

)

Other⁽²⁾

(0.02

)

Non-GAAP Adjusted Book Value Per Share at March 31, 2023

25.81

Add: AOCI Per Share⁽¹⁾

(4.74

)

Book Value Per Share at March 31, 2023

$

21.07

⁽¹⁾

Primarily the impact of accumulated unrealized investment gains (losses) on our available-for-sale fixed maturity investments. See Note 8 of the Notes to Condensed Consolidated Financial Statements in our March 31, 2023 report on Form 10-Q for additional information.

⁽²⁾

Includes the impact of share-based compensation.

Conference Call Information

ProAssurance management will discuss first quarter 2023 results during a conference call at 10:00 a.m. ET on Wednesday, May 10, 2023. US-based investors may access the call by dialing either (833) 470-1428 (toll free) or (404) 975-4839 (local). International investors may find a toll-free number here: https://www.netroadshow.com/events/globalnumbers?confId=49320. The access code for all attendees is 881898. We will webcast the call at investor.proassurance.com.

A replay will be available by telephone for at least 7 days after the call date. US-based investors may access the replay by dialing (866) 813-9403 (toll free) or (929) 458-6194, and international investors may dial +44 (204) 525-0658. The access code for all attendees is 514298. A replay will also be available for at least one year at investor.proassurance.com. Investors may follow @ProAssurance on Twitter to be notified of the latest news about ProAssurance.

About ProAssurance

ProAssurance Corporation is an industry-leading specialty insurer with extensive expertise in healthcare professional liability, products liability for medical technology and life sciences, legal professional liability, and workers’ compensation insurance.

ProAssurance Group is rated “A” (Excellent) by AM Best; NORCAL Group is rated “A-” (Excellent) by AM Best. ProAssurance and its operating subsidiaries (excluding NORCAL Group) are rated “A-” (Strong) by Fitch Ratings. For the latest on ProAssurance and its industry-leading suite of products and services, cutting-edge risk management and practice enhancement programs, follow @ProAssurance on Twitter or LinkedIn. ProAssurance’s YouTube channel regularly presents thought-provoking, insightful videos that communicate effective practice management, patient safety and risk management strategies.

Caution Regarding Forward-Looking Statements

Any statements in this news release that are not historical facts are specifically identified as forward-looking statements. These statements are based upon our estimates and anticipation of future events and are subject to significant risks, assumptions and uncertainties that could cause actual results to differ materially from the expected results described in the forward-looking statements. Forward-looking statements are identified by words such as, but not limited to, “anticipate,” “believe,” “estimate,” “expect,” “hope,” “hopeful,” “intend,” “likely,” “may,” “optimistic,” “possible,” “potential,” “preliminary,” “project,” “should,” “will,” and other analogous expressions.

Although it is not possible to identify all of these risks and factors, they include, among others, the following: inadequate loss reserves to cover the Company’s actual losses; inherent uncertainty of models resulting in actual losses that are materially different than the Company’s estimates; adverse economic factors; a decline in the Company’s financial strength rating; loss of one or more key executives; loss of a group of agents or brokers that generate significant portions of the Company’s business; failure of any of the loss limitations or exclusions the Company employs, or change in other claims or coverage issues; adverse performance of the Company’s investment portfolio; adverse market conditions that affect its excess and surplus lines insurance operations; and other risks described in the Company’s filings with the Securities and Exchange Commission. These forward-looking statements speak only as of the date of this release and the Company does not undertake and specifically declines any obligation to update or revise any forward-looking information to reflect changes in assumptions, the occurrence of unanticipated events, or otherwise.

View source version on businesswire.com: https://www.businesswire.com/news/home/20230509006051/en/

Jason Gingerich

VP, Investor Relations

800-282-6242 • 512-879-5101

[email protected]

KEYWORDS: Alabama United States North America

INDUSTRY KEYWORDS: Professional Services Health Insurance Health Insurance Finance General Health

MEDIA:

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Posted on May 9, 2023 9:51 pm
Presto to Participate at Needham Technology & Media Conference

SAN CARLOS, Calif., May 09, 2023 (GLOBE NEWSWIRE) — Presto Automation Inc. (NASDAQ: PRST), one of the largest drive-thru automation technology providers in the hospitality industry, today announced its participation at the 18th Annual Needham Technology & Media Conference in New York City.

Krishna Gupta, interim CEO at Presto Automation, is scheduled to present on May 17, 2023 at 12:45 p.m. Eastern Time.

Mr. Gupta will be discussing the rise of artificial intelligence (AI) in the hospitality industry, the power of Presto Voice™, and our recently announced partnership with CKE Restaurants, the parent company of Carl’s Jr and Hardee’s.

The presentation will be webcast live, and an archive of the live presentation will be available for a limited time under the “Events” section on the Company’s investor relations website at www.presto.com.

About Presto Automation Inc.

Presto (NASDAQ: PRST) provides enterprise-grade Voice, Vision, and Touch™ technologies to help hospitality businesses thrive while delighting guests. With over 380 million transactions processed, Presto is one of the largest labor automation technology providers in the industry. Founded out of MIT in 2008, Presto is headquartered in Silicon Valley in San Carlos, California and counts among its customers several of the largest restaurant chains in the United States.

Contact

Investors:
Adam Rogers
VP Investor Relations
[email protected]

Media:
Justin Foster & Brian Ruby
[email protected]

Posted on May 9, 2023 9:50 pm
Cadre Holdings Reports First Quarter 2023 Financial Results

Cadre Holdings Reports First Quarter 2023 Financial Results

Achieved Revenue, Net Income and Adjusted EBITDA Growth; Expanded Gross and Adjusted EBITDA Margins

Reaffirms 2023 Full-Year Guidance

JACKSONVILLE, Fla.–(BUSINESS WIRE)–
Cadre Holdings, Inc. (NYSE: CDRE) (“Cadre” or “the Company”), a global leader in the manufacturing and distribution of safety and survivability equipment for first responders, announced today its consolidated operating results for the three months ended March 31, 2023.

Net sales of $111.7 million for the first quarter

Gross profit margin of 41.7% for the first quarter

Net income of $7.0 million, or $0.19 per diluted share, for the first quarter

Adjusted EBITDA of $18.6 million for the first quarter

Adjusted EBITDA margin of 16.6% for the first quarter

Declared quarterly cash dividend of $0.08 per share in April 2023

“Following a record year of net sales and adjusted EBITDA, our strong first quarter results reflect continued strategic execution and sustained demand for our mission-critical safety and survivability equipment,” said Warren Kanders, CEO and Chairman. “Driven by our entrenched positions in law enforcement, first responder and military markets, as well as our commitment to innovation, we have exceeded our pricing growth target every quarter since going public. In addition to generating year-over-year adjusted EBITDA growth of 31% in the first quarter, we have maintained a focus on margin expansion, as we further implemented our resilient and proven operating model. Notably, gross profit and adjusted EBITDA margins increased 320 and 300 basis points, respectively.”

Mr. Kanders added, “Supported by macro tailwinds related to increasing public safety budgets and favorable industry dynamics, we have reaffirmed our guidance and believe we are ideally positioned to execute strategic objectives focused on accelerating growth and further enhancing our market leadership over the long-term. While the current M&A environment has not allowed for deal making thus far in 2023, we remain confident that attractive opportunities in line with our key criteria will materialize this year. We have a decades-long track record taking a patient and disciplined approach to M&A and will continue to actively evaluate potential transactions, complementing our core organic growth initiatives.”

First Quarter 2023 Operating Results

For the quarter ended March 31, 2023, Cadre generated net sales of $111.7 million, as compared to $104.4 million for the quarter ended March 31, 2022. The increase was mainly driven by recent acquisitions, armor and duty gear products demand, and agency demand for hard goods through our Distribution segment, partially offset by shipment timing for our EOD products.

For the quarter ended March 31, 2023, Cadre generated gross profit of $46.6 million, as compared to $40.2 million for the quarter ended March 31, 2022.

Gross profit margin was 41.7% for the quarter ended March 31, 2023, as compared to 38.5% for the quarter ended March 31, 2022, mainly driven by favorable pricing above material inflation, productivity and product mix.

Net income was $7.0 million for the quarter ended March 31, 2023, as compared to a net loss of $10.2 million for the quarter ended March 31, 2022. The increase resulted primarily from the change in year over year revenue and a decrease in stock-based compensation expense.

Cadre generated $18.6 million of Adjusted EBITDA for the quarter ended March 31, 2023, as compared to $14.2 million for the quarter ended March 31, 2022. Adjusted EBITDA margin was 16.6% for the quarter ended March 31, 2023, as compared to 13.6% for the prior year period.

Product segment gross profit margin was 43.6% for the first quarter compared to 40.1% for the prior year period.

Distribution segment gross profit margin was 24.2% for the first quarter compared to 24.6% for the prior year period.

Liquidity, Cash Flows and Capital Allocation

Cash and cash equivalents increased by $3.0 million from $45.3 million as of December 31, 2022 to $48.3 million as of March 31, 2023.

Total debt decreased by $3.5 million from $149.7 million as of December 31, 2022, to $146.2 million as of March 31, 2023.

Net debt (total debt net of cash and cash equivalents) decreased by $6.5 million from $104.4 million as of December 31, 2022 to $97.9 million as of March 31, 2023.

Capital expenditures totaled $1.0 million for the three months ended March 31, 2023 compared with $1.1 million for the three months ended March 31, 2022.

Dividend

On April 25, 2023, the Company announced that its Board of Directors declared a quarterly cash dividend of $0.08 per share, or $0.32 per share on an annualized basis. Cadre’s dividend payment will be made on May 19, 2023, to shareholders of record as of the close of business on the record date of May 5, 2023. The declaration of any future dividend is subject to the discretion of the Company’s Board of Directors.

2023 Outlook

For the full year 2023, Cadre expects to generate net sales in the range of $463 million to $493 million and Adjusted EBITDA in the range of $76 million to $82 million. We expect capital expenditures to be in the range of $8.5 million to $9.5 million.

Conference Call

Cadre management will host a conference call on Tuesday, May 9, 2023, at 5:00 PM EST to discuss the latest corporate developments and financial results. The dial-in number for callers in the US is (888)-510-2553 and the dial-in number for international callers is (646)-960-0473. The access code for all callers is 1410384. A live webcast will also be available on the Company’s website at https://www.cadre-holdings.com/.

A replay of the call will be available through May 23, 2023. To access the replay, please dial (800)-770-2030 in the U.S. or +1-647-362-9199 if outside the U.S., and then enter the access code 1410384.

About Cadre

Headquartered in Jacksonville, Florida, Cadre is a global leader in the manufacturing and distribution of safety and survivability products for first responders. Cadre’s equipment provides critical protection to allow users to safely and securely perform their duties and protect those around them in hazardous or life-threatening situations. The Company’s core products include body armor, explosive ordnance disposal equipment, and duty gear. Our highly engineered products are utilized in over 100 countries by federal, state and local law enforcement, fire and rescue professionals, explosive ordnance disposal teams, and emergency medical technicians. Our key brands include Safariland® and Med-Eng®, amongst others.

Use of Non-GAAP Measures

The Company reports its financial results in accordance with U.S. generally accepted accounting principles (“GAAP”). The press release contains the non-GAAP measures: (i) earnings before interest, taxes, other income or expense, depreciation and amortization (“EBITDA”), (ii) adjusted EBITDA and (iii) adjusted EBITDA margin. The Company believes the presentation of these non-GAAP measures provides useful information for the understanding of its ongoing operations and enables investors to focus on period-over-period operating performance, and thereby enhances the user’s overall understanding of the Company’s current financial performance relative to past performance and provides, along with the nearest GAAP measures, a baseline for modeling future earnings expectations. Non-GAAP measures are reconciled to comparable GAAP financial measures within this press release. The Company cautions that non-GAAP measures should be considered in addition to, but not as a substitute for, the Company’s reported GAAP results. Additionally, the Company notes that there can be no assurance that the above referenced non-GAAP financial measures are comparable to similarly titled financial measures used by other publicly traded companies.

Forward-Looking Statements

Except for historical information, certain matters discussed in this press release may be forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements include but are not limited to all projections and anticipated levels of future performance. Forward-looking statements involve risks, uncertainties and other factors that may cause our actual results to differ materially from those discussed herein. Any number of factors could cause actual results to differ materially from projections or forward-looking statements in this press release, including, but not limited to, those risks and uncertainties more fully described from time to time in the Company’s public reports filed with the Securities and Exchange Commission, including under the section titled “Risk Factors” in the Company’s Annual Report on Form 10-K, and/or Quarterly Reports on Form 10-Q, as well as in the Company’s Current Reports on Form 8-K. All forward-looking statements included in this press release are based upon information available to the Company as of the date of this press release and speak only as of the date hereof. We assume no obligation to update any forward-looking statements to reflect events or circumstances after the date of this press release.

CADRE HOLDINGS, INC.

CONSOLIDATED BALANCE SHEETS

(Unaudited)

(In thousands, except share and per share amounts)

March 31, 2023

December 31, 2022

Assets

Current assets

Cash and cash equivalents

$

48,294

$

45,286

Accounts receivable, net of allowance for doubtful accounts of $930 and $924, respectively

55,704

64,557

Inventories

76,343

70,273

Prepaid expenses

11,782

10,091

Other current assets

6,376

6,811

Total current assets

198,499

197,018

Property and equipment, net of accumulated depreciation and amortization of $44,840 and $42,694, respectively

45,095

45,285

Operating lease assets

7,691

8,489

Deferred tax assets, net

2,289

2,255

Intangible assets, net

48,761

50,695

Goodwill

81,292

81,576

Other assets

5,348

6,634

Total assets

$

388,975

$

391,952

Liabilities, Mezzanine Equity and Shareholders’ Equity

Current liabilities

Accounts payable

$

27,313

$

23,406

Accrued liabilities

32,899

38,720

Income tax payable

4,086

4,584

Liabilities held for sale

—

—

Current portion of long-term debt

11,119

12,211

Total current liabilities

75,417

78,921

Long-term debt

135,098

137,476

Long-term operating lease liabilities

4,204

4,965

Deferred tax liabilities

3,606

3,508

Other liabilities

1,200

1,192

Total liabilities

219,525

226,062

Mezzanine equity

Preferred stock ($0.0001 par value, 10,000,000 shares authorized, no shares issued and outstanding as of March 31, 2023 and December 31, 2022)

—

—

Shareholders’ equity

Common stock ($0.0001 par value, 190,000,000 shares authorized, 37,586,031 and 37,332,271 shares issued and outstanding as of March 31, 2023 and December 31, 2022, respectively)

4

4

Additional paid-in capital

206,451

206,540

Accumulated other comprehensive income

1,720

2,087

Accumulated deficit

(38,725

)

(42,741

)

Total shareholders’ equity

169,450

165,890

Total liabilities, mezzanine equity and shareholders’ equity

$

388,975

$

391,952

CADRE HOLDINGS, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited)

(In thousands, except share and per share amounts)

Three Months Ended March 31,

2023

2022

Net sales

$

111,748

$

104,406

Cost of goods sold

65,130

64,217

Gross profit

46,618

40,189

Operating expenses

Selling, general and administrative

35,250

53,950

Restructuring and transaction costs

—

599

Related party expense

148

122

Total operating expenses

35,398

54,671

Operating income (loss)

11,220

(14,482

)

Other expense

Interest expense

(1,641

)

(1,490

)

Other expense, net

364

(205

)

Total other expense, net

(1,277

)

(1,695

)

Income (loss) before provision for income taxes

9,943

(16,177

)

(Provision) benefit for income taxes

(2,941

)

6,012

Net income (loss)

$

7,002

$

(10,165

)

Net income (loss) per share:

Basic

$

0.19

$

(0.30

)

Diluted

$

0.19

$

(0.30

)

Weighted average shares outstanding:

Basic

37,373,529

34,446,318

Diluted

37,629,498

34,446,318

CADRE HOLDINGS, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

(In thousands)

Three Months Ended March 31,

2023

2022

Cash Flows From Operating Activities:

Net income (loss)

$

7,002

$

(10,165

)

Adjustments to reconcile net income (loss) to net cash provided by operating activities:

Depreciation and amortization

4,261

3,544

Amortization of original issue discount and debt issue costs

64

111

Deferred income taxes

183

(6,951

)

Stock-based compensation

2,747

23,588

Gain on sale of fixed assets

(103

)

—

Provision for losses on accounts receivable

40

45

Foreign exchange (gain) loss

(213

)

253

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

Accounts receivable

9,075

(1,693

)

Inventories

(5,830

)

(2,956

)

Prepaid expenses and other assets

(556

)

3,158

Accounts payable and other liabilities

(3,948

)

(18

)

Net cash provided by operating activities

12,722

8,916

Cash Flows From Investing Activities:

Purchase of property and equipment

(781

)

(950

)

Proceeds from disposition of property and equipment

201

—

Business acquisitions, net of cash acquired

—

(19,787

)

Net cash used in investing activities

(580

)

(20,737

)

Cash Flows From Financing Activities:

Principal payments on term loans

(2,500

)

(2,506

)

Principal payments on insurance premium financing

(1,092

)

(1,474

)

Payment of capital leases

—

(11

)

Taxes paid in connection with employee stock transactions

(2,725

)

(6,216

)

Dividends distributed

(2,986

)

(2,750

)

Net cash used in financing activities

(9,303

)

(12,957

)

Effect of foreign exchange rates on cash and cash equivalents

169

798

Change in cash and cash equivalents

3,008

(23,980

)

Cash and cash equivalents, beginning of period

45,286

33,857

Cash and cash equivalents, end of period

$

48,294

$

9,877

Supplemental Disclosure of Cash Flows Information:

Cash paid (received) for income taxes, net

$

3,141

$

(100

)

Cash paid for interest

$

2,359

$

1,282

Supplemental Disclosure of Non-Cash Investing and Financing Activities:

Accruals and accounts payable for capital expenditures

$

238

$

119

CADRE HOLDINGS, INC.

SEGMENT INFORMATION

(Unaudited)

(In thousands)

Three months ended March 31, 2023

Reconciling

Product

Distribution

Items⁽¹⁾

Total

Net sales

$

93,194

$

24,660

$

(6,106

)

$

111,748

Cost of goods sold

52,608

$

18,697

$

(6,175

)

65,130

Gross profit

$

40,586

$

5,963

$

69

$

46,618

Three months ended March 31, 2022

Reconciling

Product

Distribution

Items⁽¹⁾

Total

Net sales

$

85,386

$

24,096

$

(5,076

)

$

104,406

Cost of goods sold

51,120

18,172

(5,075

)

64,217

Gross profit

$

34,266

$

5,924

$

(1

)

$

40,189

_________________

(1)

Reconciling items consist primarily of intercompany eliminations and items not directly attributable to operating segments.

CADRE HOLDINGS, INC.

RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL MEASURES

(Unaudited)

(In thousands)

Year ended

Three Months Ended

Last Twelve

December 31,

March 31,

Months

2022

2023

2022

March 31, 2023

Net income (loss)

$

5,820

$

7,002

$

(10,165

)

$

22,987

Add back:

Depreciation and amortization

15,651

4,261

3,544

16,368

Interest expense

6,206

1,641

1,490

6,357

Provision (benefit) for income taxes

3,553

2,941

(6,012

)

12,506

EBITDA

$

31,230

$

15,845

$

(11,143

)

$

58,218

Add back:

Restructuring and transaction costs⁽¹⁾

5,355

—

599

4,756

Other general income⁽²⁾

(159

)

—

—

(159

)

Other expense, net⁽³⁾

1,137

(364

)

205

568

Stock-based compensation expense⁽⁴⁾

32,239

2,747

23,723

11,263

Stock-based compensation payroll tax expense⁽⁵⁾

305

220

298

227

LTIP bonus⁽⁶⁾

1,369

144

384

1,129

Amortization of inventory step-up⁽⁷⁾

4,255

—

153

4,102

Adjusted EBITDA

$

75,731

$

18,592

$

14,219

$

80,104

Adjusted EBITDA margin⁽⁸⁾

16.5

%

16.6

%

13.6

%

_________________

(1)

Reflects the “Restructuring and transaction costs” line item on our consolidated statement of operations, which primarily includes transaction costs composed of legal and consulting fees, and $1.0 million paid to Kanders & Company, Inc., a company controlled by our Chief Executive Officer, for services related to the acquisition of Cyalume, which is included in related party expense in the Company’s consolidated statements of operations for the year ended December 31, 2022.

(2)

Reflects the “Other general income” line item on our consolidated statement of operations and includes a gain from a long-lived asset sale.

(3)

Reflects the “Other expense, net” line item on our consolidated statement of operations and primarily includes gains and losses on foreign currency transactions.

(4)

Reflects compensation expense related to equity and liability classified stock-based compensation plans.

(5)

Reflects payroll taxes associated with vested stock-based compensation awards.

(6)

Reflects the cost of a cash-based long-term incentive plan awarded to employees that vests over three years.

(7)

Reflects amortization expense related to the step-up inventory adjustment recorded as a result of our recent acquisitions.

(8)

Reflects Adjusted EBITDA / Net Sales for the relevant periods.

View source version on businesswire.com: https://www.businesswire.com/news/home/20230509006077/en/

Gray Hudkins

Cadre Holdings, Inc.

203-550-7148

[email protected]

Investor Relations:

The IGB Group

Leon Berman / Matt Berkowitz

212-477-8438 / 212-227-7098

[email protected] / [email protected]

Media Contact:

Jonathan Keehner / Andrew Siegel

Joele Frank, Wilkinson Brimmer Katcher

212-355-4449

KEYWORDS: Florida United States North America

INDUSTRY KEYWORDS: Chemicals/Plastics Health Manufacturing Other Health General Health Other Manufacturing

MEDIA:

Posted on May 9, 2023 9:48 pm
Arcosa, Inc. Declares Quarterly Dividend

Arcosa, Inc. Declares Quarterly Dividend

DALLAS–(BUSINESS WIRE)–
Arcosa, Inc. (NYSE: ACA) (“Arcosa” or the “Company”), a provider of infrastructure-related products and solutions, today announced that its Board of Directors has declared a regular quarterly cash dividend of $0.05 per share on its $0.01 par value common stock. The quarterly cash dividend is payable July 31, 2023 to stockholders of record as of July 14, 2023.

About Arcosa

Arcosa, Inc. (NYSE:ACA), headquartered in Dallas, Texas, is a provider of infrastructure-related products and solutions with leading positions in construction, engineered structures, and transportation markets. Arcosa reports its financial results in three principal business segments: Construction Products, Engineered Structures, and Transportation Products. For more information, visit www.arcosa.com.

View source version on businesswire.com: https://www.businesswire.com/news/home/20230509006134/en/

INVESTOR CONTACTS

Gail M. Peck

Chief Financial Officer

T 972.942.6500

[email protected]

Erin Drabek

Director of Investor Relations

David Gold

ADVISIRY Partners

T 212.661.2220

[email protected]

MEDIA CONTACT

[email protected]

KEYWORDS: Texas United States North America

INDUSTRY KEYWORDS: Other Transport Commercial Building & Real Estate Construction & Property Engineering Transport Manufacturing Architecture Other Construction & Property Residential Building & Real Estate

MEDIA:

Posted on May 9, 2023 9:46 pm
MBIA Inc. Reports First Quarter 2023 Financial Results

MBIA Inc. Reports First Quarter 2023 Financial Results

PURCHASE, N.Y.–(BUSINESS WIRE)–
MBIA Inc. (NYSE:MBI) today posted its first quarter 2023 financial results on its website at https://investor.mbia.com/investor-relations/financial-information/default.aspx. The financial results will also be furnished to the Securities and Exchange Commission (SEC) on a Current Report on Form 8-K available at sec.gov.

As previously announced, the Company will host a webcast and conference call for investors on Wednesday, May 10 at 8:00 a.m. (ET) to discuss its financial results and other issues related to the Company. The conference call webcast will be available on MBIA’s website at https://investor.mbia.com/investor-relations/events-and-presentations/default.aspx.

MBIA Inc., headquartered in Purchase, New York, is a holding company whose subsidiaries provide financial guarantee insurance for the public and structured finance markets. Please visit MBIA’s website at www.mbia.com.

View source version on businesswire.com: https://www.businesswire.com/news/home/20230509006138/en/

MBIA Inc.

Greg Diamond, 914-765-3190

Managing Director

Head of Investor and Media Relations

[email protected]

KEYWORDS: New York United States North America

INDUSTRY KEYWORDS: Finance Banking Professional Services Other Professional Services Insurance

MEDIA:

Logo

Posted on May 9, 2023 9:45 pm
FreightCar America, Inc. Reports First Quarter 2023 Results

Company reaffirms fiscal 2023 revenue, Adjusted EBITDA, and delivery outlook

Strong order intake with backlog extending into 2024

CHICAGO, May 09, 2023 (GLOBE NEWSWIRE) — FreightCar America, Inc. (NASDAQ: RAIL) (“FreightCar America” or the “Company”), a diversified manufacturer of railroad freight cars, today reported results for the first quarter ended March 31, 2023.

First Quarter 2023 Highlights

Revenues of $81.0 million on deliveries of 738 railcars, compared to revenues of $129.0 million on deliveries of 1,150 railcars in the prior quarter and revenues of $93.2 million on deliveries of 783 railcars in the first quarter of 2022

Gross margin of 9.2% with gross profit of $7.5 million, compared to gross margin of 3.6% with gross profit of $4.6 million in the prior quarter and gross margin of 10.8% with gross profit of $10.1 million in the first quarter of 2022

Net loss of ($5.0) million, or ($0.19) per share and Adjusted Net Loss of ($5.7) million, or ($0.21) per share, accounting primarily for non-cash income associated with the change in fair market value of warrant liability

Adjusted EBITDA of $2.1 million, compared to Adjusted EBITDA of $1.2 million in the prior quarter and Adjusted EBITDA of $3.3 million in the first quarter of 2022

Railcar orders of 1,960 in the first quarter, with quarter-end backlog totaling 3,667 railcars for an aggregate value of approximately $413 million

Signed deal to issue non-convertible preferred stock with financial partner to reduce debt and provide additional growth capital

2023 revenue, Adjusted EBITDA, and delivery outlook reaffirmed

Jim Meyer, President and Chief Executive Officer of FreightCar America, commented, “We were pleased with our first quarter results, which were in line with our expectations. As anticipated, we experienced sequential improvement in gross margin and profitability as a result of the continued ramp-up of the Castaños, Mexico factory and actions taken to mitigate previously discussed supply chain challenges. We continue to feel confident in our ability to approximately double Adjusted EBITDA this year while continuing to expand the new manufacturing campus.”

Meyer continued, “Our production schedule is essentially full for 2023, and we are now heavily focused on next year. We remain committed to positioning FreightCar America as the best-in-class manufacturer in the industry.”

Fiscal Year 2023 Outlook

The Company has reaffirmed its outlook for fiscal year 2023 as follows:

Fiscal 2023
Outlook Year-over-Year
Growth at Midpoint

Revenue $400 – $430 million 13.8%

Adjusted EBITDA $15 – $20 million 108.1%

Railcar Deliveries 3,400 – 3,700 Railcars 11.5%

Mike Riordan, Chief Financial Officer of FreightCar America, added, “Given our strengthening order backlog, we are increasingly confident in our outlook and are reaffirming our full year revenue, Adjusted EBITDA, and railcar deliveries guidance ranges. Going forward, our organization is focused on executing and delivering the business in-hand, continuing to build backlog for next year, and creating opportunity for further improvement in our capital structure.”

First Quarter 2023 Conference Call & Webcast Information

The Company will host a conference call and live webcast on Wednesday, May 10, 2023 at 11:00 a.m. (Eastern Time) to discuss its first quarter 2023 financial results. Investors, analysts, and members of the media interested in listening to the live presentation are encouraged to join a webcast of the call, available at:

Event URL: https://viavid.webcasts.com/starthere.jsp?ei=1610696&tp_key=685a03b758

Please note that the webcast is listen-only and webcast participants will not be able to participate in the question and answer portion of the conference call. Interested parties may also participate in the call by dialing (877) 407-0789 or (201) 689-8562 and entering the passcode 13738212. Interested parties are asked to dial in approximately 10 to 15 minutes prior to the start time of the call.

An audio replay of the conference call will be available beginning at 2:00 p.m. (Eastern Time) on Wednesday May 10, 2023, until 12:00 a.m. (Eastern Time) on Thursday May 25, 2023. To access the replay, please dial (844) 512-2921 or (412) 317-6671. The replay passcode is 13738212. An archived version of the webcast will also be available on the FreightCar America Investor Relations website.

About FreightCar America

FreightCar America, Inc. is a diversified manufacturer of railroad freight cars that also supplies railcar parts and leases freight cars through its FreightCar America Leasing Company subsidiaries. FreightCar America designs and builds high-quality railcars, including open top hopper cars, covered hopper cars, intermodal and non-intermodal flat cars, mill gondola cars, coil steel cars, boxcars and coal cars, and also specializes in the conversion of railcars for repurposed use. FreightCar America is headquartered in Chicago, Illinois and has facilities in the following locations: Castaños, Mexico; Johnstown, Pennsylvania; and Shanghai, People’s Republic of China. More information about FreightCar America is available on its website at www.freightcaramerica.com.

Forward-Looking Statements

This press release may contain statements relating to our expected financial performance and/or future business prospects, events and plans that are “forward-looking statements” as defined under the Private Securities Litigation Reform Act of 1995. Forward-looking statements represent our estimates and assumptions only as of the date of this press release. Our actual results may differ materially from the results described in or anticipated by our forward-looking statements due to certain risks and uncertainties. These potential risks and uncertainties include, among other things: risks relating to the cyclical nature of our business; adverse economic and market conditions; fluctuating costs of raw materials, including steel and aluminum, and delays in the delivery of raw materials; our ability to maintain relationships with our suppliers of railcar components; our reliance upon a small number of customers that represent a large percentage of our sales; the variable purchase patterns of our customers and the timing of completion, delivery and customer acceptance of orders; potential financial and operational impacts of the COVID-19 pandemic; the highly competitive nature of our industry; the risk of lack of acceptance of our new railcar offerings by our customers; and other competitive factors. We expressly disclaim any duty to provide updates to any forward-looking statements made in this press release, whether as a result of new information, future events or otherwise.

INVESTOR & MEDIA CONTACT Lisa Fortuna or Stephen Poe

E-MAIL [email protected]

TELEPHONE 312-445-2870

FreightCar America, Inc.

Consolidated Balance Sheets

(In thousands, except for share data)

(Unaudited)

March 31,

2023 December 31,

2022

Assets

Current assets

Cash, cash equivalents and restricted cash equivalents $ 27,799 $ 37,912

Accounts receivable, net of allowance for doubtful accounts of $146 and $126 respectively 8,667 9,571

VAT receivable 1,653 4,682

Inventories, net 80,861 64,317

Assets held for sale 3,675 3,675

Related party asset 1,815 3,261

Prepaid expenses 7,178 5,470

Total current assets 131,648 128,888

Property, plant and equipment, net 24,783 23,248

Railcars available for lease, net 11,216 11,324

Right of use asset operating lease 1,331 1,596

Right of use asset finance lease 32,626 33,093

Other long-term assets 1,065 1,589

Total assets $ 202,669 $ 199,738

Liabilities and Stockholders’ Equity

Current liabilities

Accounts and contractual payables $ 55,766 $ 48,449

Related party accounts payable 1,430 3,393

Accrued payroll and other employee costs 3,281 4,081

Reserve for workers’ compensation 840 841

Accrued warranty 1,933 1,940

Current portion of long-term debt 40,548 40,742

Other current liabilities 8,281 6,539

Total current liabilities 112,079 105,985

Long-term debt, net of current portion 53,773 51,494

Warrant liability 30,415 31,028

Accrued pension costs 1,112 1,040

Lease liability operating lease, long-term 1,737 1,780

Lease liability finance lease, long-term 33,080 33,245

Other long-term liabilities 2,987 3,750

Total liabilities 235,183 228,322

Stockholders’ deficit

Preferred stock, $0.01 par value, 2,500,000 shares authorized (100,000 shares each
designated as Series A voting and Series B non-voting, 0 shares issued and outstanding
at March 31, 2023 and December 31, 2022) — —

Common stock, $0.01 par value, 50,000,000 shares authorized, 17,702,459 and 17,223,306
shares issued and outstanding at March 31, 2023 and December 31, 2022, respectively 208 203

Additional paid-in capital 90,165 89,104

Accumulated other comprehensive income 1,063 1,022

Accumulated deficit (123,950 ) (118,913 )

Total stockholders’ deficit (32,514 ) (28,584 )

Total liabilities and stockholders’ deficit $ 202,669 $ 199,738

FreightCar America, Inc.

Consolidated Statements of Operations

(In thousands, except for share and per share data)

(Unaudited)

Three Months

Three Months Ended

March 31, Ended

December 31,

2023 2022 2022

Revenues $ 80,999 $ 93,236 $ 128,989

Cost of sales 73,514 83,178 124,367

Gross profit 7,485 10,058 4,622

Selling, general and administrative expenses 6,388 10,713 6,349

Impairment on leased railcars — — 4,515

Operating income (loss) 1,097 (655 ) (6,242 )

Interest expense (6,600 ) (5,705 ) (7,874 )

Gain (loss) on change in fair market value of Warrant liability 613 (20,730 ) 4,744

Other (expense) income (36 ) 1,496 79

Loss before income taxes (4,926 ) (25,594 ) (9,293 )

Income tax provision 111 253 440

Net loss $ (5,037 ) $ (25,847 ) $ (9,733 )

Net loss per common share – basic $ (0.19 ) $ (1.11 ) $ (0.37 )

Net loss per common share – diluted $ (0.19 ) $ (1.11 ) $ (0.37 )

Weighted average common shares outstanding – basic 26,545,463 23,218,647 26,117,377

Weighted average common shares outstanding – diluted 26,545,463 23,218,647 26,117,377

FreightCar America, Inc.

Segment Data

(In thousands)

(Unaudited)

Three Months Ended Three Months Ended

March 31, December 31,

2023 2022 2022

Revenues:

Manufacturing $ 77,599 $ 90,124 $ 126,279

Corporate and Other 3,400 3,112 2,710

Consolidated revenues $ 80,999 $ 93,236 $ 128,989

Operating income (loss):

Manufacturing $ 5,628 $ 8,516 $ (1,670 )

Corporate and Other (4,531 ) (9,171 ) (4,572 )

Consolidated operating income (loss) $ 1,097 $ (655 ) $ (6,242 )

FreightCar America, Inc.

Consolidated Statements of Cash Flows

(In thousands)

(Unaudited)

Three Months Ended March 31,

2023 2022

Cash flows from operating activities

Net loss $ (5,037 ) $ (25,847 )

Adjustments to reconcile net loss to net cash flows used in operating activities:

Depreciation and amortization 1,072 1,024

Non-cash lease expense on right-of-use assets 731 316

Recognition of deferred income from state and local incentives — (1,858 )

(Gain) loss on change in fair market value for Warrant liability (613 ) 20,730

Stock-based compensation recognized (91 ) 4,244

Non-cash interest expense 4,264 3,721

Other non-cash items, net (1 ) —

Changes in operating assets and liabilities, net of acquisitions:

Accounts receivable 904 (12,517 )

VAT receivable 2,960 (1,853 )

Inventories (19,698 ) (2,154 )

Related party asset, net (362 ) 1,366

Accounts and contractual payables 9,695 4,798

Lease liability (1,191 ) (476 )

Customer deposits — 18,706

Other assets and liabilities (337 ) (2,555 )

Net cash flows (used in) provided by operating activities (7,704 ) 7,645

Cash flows from investing activities

Purchase of property, plant and equipment (1,960 ) (960 )

Net cash flows used in investing activities (1,960 ) (960 )

Cash flows from financing activities

Borrowings on revolving line of credit 31,688 10,013

Repayments on revolving line of credit (31,884 ) (1,910 )

Employee stock settlement (106 ) (13 )

Payment for stock appreciation rights exercised — (4 )

Financing lease payments (147 ) —

Net cash flows (used in) provided by financing activities (449 ) 8,086

Net (decrease) increase in cash and cash equivalents (10,113 ) 14,771

Cash, cash equivalents and restricted cash equivalents at beginning of period 37,912 26,240

Cash, cash equivalents and restricted cash equivalents at end of period $ 27,799 $ 41,011

Supplemental cash flow information

Interest paid $ 2,340 $ 1,984

Non-cash transactions

Change in unpaid construction in process $ 539 $ 190

Accrued PIK interest paid through issuance of PIK Note $ 1,658 $ 364

Issuance of equity fee $ 535 $ 1,000

FreightCar America, Inc.

Reconciliation of loss before taxes to EBITDA
⁽¹⁾
and Adjusted EBITDA
⁽²⁾

(In thousands)

(Unaudited)

Three Months

Three Months Ended

March 31, Ended

December 31,

2023 2022 2022

Income (Loss) before income taxes $ (4,926 ) $ (25,594 ) $ (9,293 )

Depreciation & Amortization 1,072 1,024 1,025

Interest Expense, net 6,600 5,705 7,874

EBITDA 2,746 (18,865 ) (394 )

Change in Fair Value of Warrant^(a) (613 ) 20,730 (4,744 )

Impairment on leased railcars^(b) – – 4,515

Alabama Grant Amortization^(c) – (1,857 ) –

Mexican Permanent VAT^(d) – – 1,861

Transaction Costs^(e) – – 37

Startup Costs^(f) – – 164

Consulting Costs^(g) – 350 85

Corporate Realignment^(h) – 185 –

Stock Based Compensation (91 ) 4,244 (201 )

Other, net 36 (1,496 ) (79 )

Adjusted EBITDA $ 2,078 $ 3,291 $ 1,244

(1) EBITDA represents earnings before interest, taxes, depreciation and amortization. We believe EBITDA is useful to investors in evaluating our operating performance compared to that of other companies in our industry. In addition, our management uses EBITDA to evaluate our operating performance. The calculation of EBITDA eliminates the effects of financing, income taxes and the accounting effects of capital spending. These items may vary for different companies for reasons unrelated to the overall performance of the company’s business. EBITDA is not a financial measure presented in accordance with U.S. GAAP. Accordingly, when analyzing our operating performance, investors should not consider EBITDA in isolation or as a substitute for net income, cash flows from operating activities or other statements of operations or statements of cash flow data prepared in accordance with U.S. GAAP. Our calculation of EBITDA is not necessarily comparable to that of other similar titled measures reported by other companies.

(2) Adjusted EBITDA represents EBITDA before the following charges:

a) This adjustment removes the non-cash (income) expense associated with the change in fair market value of the Company’s warrant liability.

b) During the fourth quarter of 2022, the Company recorded a non-cash impairment charge on its leased railcar fleet.

c) The Company amortized deferred grant income to cost of goods sold in 2022 that represents a non-cash reduction to its gross margin (loss).

d) The Company transitioned to tolling manufacturing structure in the third quarter of 2022 and as a result incurred permanent VAT costs.

e) The Company incurred certain costs during 2022 for nonrecurring professional services associated with its financing arrangements.

f) The Company incurred certain costs during 2022 related to new production lines.

g) The Company incurred certain non-recurring consulting costs during the first quarter of 2022.

h) The Company incurred certain non-recurring corporate realignment costs in 2022.

We believe that Adjusted EBITDA is useful to investors evaluating our operating performance compared to that of other companies in our industry because it eliminates the impact of certain non-cash charges and other special items that affect the comparability of results in past quarters. Adjusted EBITDA is not a financial measure presented in accordance with U.S. GAAP. Accordingly, when analyzing our operating performance, investors should not consider Adjusted EBITDA in isolation or as a substitute for net income, cash flows from operating activities or other statements of operations or statements of cash flow data prepared in accordance with U.S. GAAP. Our calculation of Adjusted EBITDA is not necessarily comparable to that of other similarly titled measures reported by other companies.

FreightCar America, Inc.

Reconciliation of Net loss and Adjusted Net loss
⁽
¹
⁾

(In thousands)

(Unaudited)

Three Months

Three Months Ended

March 31, Ended

December 31,

2023 2022 2022

Net income (loss) $ (5,037 ) $ (25,847 ) $ (9,733 )

Change in Fair Value of Warrant^(a) (613 ) 20,730 (4,744 )

Impairment on leased railcars^(b) – – 4,515

Alabama Grant Amortization^(c) – (1,857 ) –

Mexican Permanent VAT^(d) – – 1,861

Transaction Costs^(e) – – 37

Startup Costs^(f) – – 164

Consulting Costs^(g) – 350 85

Corporate Realignment^(h) – 185 –

Stock Based Compensation (91 ) 4,244 (201 )

Other, net 36 (1,496 ) (79 )

Total non-GAAP adjustments (668 ) 22,156 1,638

Income tax impact on non-GAAP adjustments⁽ⁱ⁾ – (22 ) (5 )

Adjusted Net loss $ (5,705 ) $ (3,713 ) $ (8,100 )

⁽
¹
⁾ Adjusted Net Loss represents net loss before the following charges:

a) This adjustment removes the non-cash (income) expense associated with the change in fair market value of the Company’s warrant liability.

b) During the fourth quarter of 2022, the Company recorded a non-cash impairment charge on its leased railcar fleet.

c) The Company amortized deferred grant income to cost of goods sold in 2022 that represents a non-cash reduction to its gross margin (loss).

d) The Company transitioned to tolling manufacturing structure in the third quarter of 2022 and as a result incurred permanent VAT costs.

e) The Company incurred certain costs during 2022 for nonrecurring professional services associated with its financing arrangements.

f) The Company incurred certain costs during 2022 related to new production lines.

g) The Company incurred certain non-recurring consulting costs during the first quarter of 2022.

h) The Company incurred certain non-recurring corporate realignment costs in 2022.

i) Income tax impact on non-GAAP adjustments per share represents the tax impact of adjustments specific to Mexico using the effective tax rate. Given the Company’s US based NOLs and Valuation Allowances result in an effective tax rate of about % for the US, all US based adjustments above are not tax affected.

We believe that Adjusted Net Loss is useful to investors evaluating our operating performance compared to that of other companies in our industry because it eliminates the impact of certain non-cash charges and other special items that affect the comparability of results in past quarters. Adjusted Net Loss is not a financial measure presented in accordance with U.S. GAAP. Accordingly, when analyzing our operating performance, investors should not consider Adjusted Net Loss in isolation or as a substitute for net income, cash flows from operating activities or other statements of operations or statements of cash flow data prepared in accordance with U.S. GAAP. Our calculation of Adjusted Net Loss is not necessarily comparable to that of other similarly titled measures reported by other companies.

FreightCar America, Inc.

Reconciliation of EPS and Adjusted EPS
⁽
¹
⁾

(Unaudited)

Three Months

Three Months Ended

March 31, Ended

December 31,

2023 2022 2022

EPS $ (0.19 ) $ (1.11 ) $ (0.37 )

Change in Fair Value of Warrant^(a) (0.02 ) 0.89 (0.18 )

Impairment on leased railcars^(b) – – 0.17

Alabama Grant Amortization^(c) – (0.08 ) –

Mexican Permanent VAT^(d) – – 0.07

Startup Costs^(e) – – 0.01

Consulting Costs^(f) – 0.02 –

Corporate Realignment^(g) – 0.01 –

Stock Based Compensation – 0.18 (0.01 )

Other, net – (0.06 ) –

Total non-GAAP adjustments pre-tax per-share (0.02 ) 0.96 0.06

Income tax impact on non-GAAP adjustments per share^(h) – – –

Adjusted EPS $ (0.21 ) $ (0.15 ) $ (0.31 )

(1) Adjusted EPS represents basic EPS before the following charges:

a) This adjustment removes the non-cash (income) expense associated with the change in fair market value of the Company’s warrant liability.

b) During the fourth quarter of 2022, the Company recorded a non-cash impairment charge on its leased railcar fleet.

c) The Company amortized deferred grant income to cost of goods sold in 2022 that represents a non-cash reduction to its gross margin (loss).

d) The Company transitioned to tolling manufacturing structure in the third quarter of 2022 and as a result incurred permanent VAT costs.

e) The Company incurred certain costs during 2022 for nonrecurring professional services associated with its financing arrangements.

f) The Company incurred certain costs during 2022 related to new production lines.

g) The Company incurred certain non-recurring consulting costs during the first quarter of 2022.

h) The Company incurred certain non-recurring corporate realignment costs in 2022.

i) Income tax impact on non-GAAP adjustments per share represents the tax impact of adjustments specific to Mexico using the effective tax rate. Given the Company’s US based NOLs and Valuation Allowances result in an effective tax rate of about % for the US, all US based adjustments above are not tax affected.

We believe that Adjusted EPS is useful to investors evaluating our operating performance compared to that of other companies in our industry because it eliminates the impact of certain non-cash charges and other special items that affect the comparability of results in past quarters. Adjusted EPS is not a financial measure presented in accordance with U.S. GAAP. Accordingly, when analyzing our operating performance, investors should not consider Adjusted EPS in isolation or as a substitute for net income, cash flows from operating activities or other statements of operations or statements of cash flow data prepared in accordance with U.S. GAAP. Our calculation of Adjusted EPS is not necessarily comparable to that of other similarly titled measures reported by other companies.

Posted on May 9, 2023 9:43 pm
Integrated Rail and Resources Acquisition Corp. Announces Extension

Integrated Rail and Resources Acquisition Corp. Announces Extension

WINTER PARK, Fla.–(BUSINESS WIRE)–
Pursuant to the Investment Management Trust Agreement between Integrated Rail and Resources Acquisition Corp. (“Company”) and American Stock Transfer & Trust Company, LLC, dated as of November 11, 2021, as amended on February 8, 2023 (the “Trust Agreement”), the Company received notice from the Company’s sponsor, DHIP Natural Resources Investments, LLC, at least five (5) days prior to May 15, 2023, that the Company intends to extend the time available in order to consummate a Business Combination with the Target Businesses from May 15, 2023 to June 15, 2023.

The Company is a blank check company formed for the purpose of effecting a merger, share exchange, asset acquisition, stock purchase, reorganization, or similar business combination with one or more businesses. While the Company may pursue an initial business combination target in any business or industry, it intends to focus its search on natural resources, railroads and/or railroad logistics companies, or any combinations thereof.

This press release does not constitute an offer to sell or the solicitation of an offer to buy any securities. Any offers, solicitations or offers to buy, or any sales of securities will be made in accordance with the registration requirements of the Securities Act of 1933, as amended (“Securities Act”). This announcement is being issued in accordance with Rule 135 under the Securities Act.

View source version on businesswire.com: https://www.businesswire.com/news/home/20230509005986/en/

William Lane

[email protected]

KEYWORDS: Florida United States North America

INDUSTRY KEYWORDS: Professional Services Rail Other Natural Resources Business Transport Natural Resources Finance

MEDIA:

Posted on May 9, 2023 9:41 pm
CBL Properties Declares Second Quarter Common Stock Dividend

CBL Properties Declares Second Quarter Common Stock Dividend

CHATTANOOGA, Tenn.–(BUSINESS WIRE)–
CBL Properties (NYSE:CBL) today announced that its Board of Directors has declared a cash dividend of $0.375 per common share for the quarter ending June 30, 2023. The dividend, which equates to an annual dividend payment of $1.50 per common share, is payable on June 30, 2023, to shareholders of record as of June 14, 2023.

About CBL Properties

Headquartered in Chattanooga, TN, CBL Properties owns and manages a national portfolio of market-dominant properties located in dynamic and growing communities. CBL’s owned and managed portfolio is comprised of 94 properties totaling 58.5 million square feet across 22 states, including 56 high-quality enclosed malls, outlet centers and lifestyle retail centers as well as more than 30 open-air centers and other assets. CBL seeks to continuously strengthen its company and portfolio through active management, aggressive leasing and profitable reinvestment in its properties. For more information visit cblproperties.com.

Information included herein contains “forward-looking statements” within the meaning of the federal securities laws. Such statements are inherently subject to risks and uncertainties, many of which cannot be predicted with accuracy and some of which might not even be anticipated. Future events and actual events, financial and otherwise, may differ materially from the events and results discussed in the forward-looking statements. The reader is directed to the Company’s various filings with the Securities and Exchange Commission, including without limitation the Company’s Annual Report on Form 10-K and the “Management’s Discussion and Analysis of Financial Condition and Results of Operations” included therein, for a discussion of such risks and uncertainties.

CBL_Corp

View source version on businesswire.com: https://www.businesswire.com/news/home/20230509006076/en/

Investor Contact: Katie Reinsmidt, Executive Vice President & Chief Investment Officer, 423.490.8301, [email protected]

KEYWORDS: Tennessee United States North America

INDUSTRY KEYWORDS: Retail Restaurant/Bar Other Retail Department Stores Commercial Building & Real Estate Construction & Property Building Systems

MEDIA:

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