Market Newsdesk

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

TOTAL NET INCOME GREW BY 57.5% AND OPERATING INCOME INCREASED BY 17.9% SUPPORTED BY IRA BENEFITS AND CONTRIBUTION FROM NEW ASSETS
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]

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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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]

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:

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:

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

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.

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:

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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May 9, 2023 9:40 pm

JBG SMITH Announces First Quarter 2023 Results

JBG SMITH Announces First Quarter 2023 Results

BETHESDA, Md.–(BUSINESS WIRE)–
JBG SMITH (NYSE: JBGS), a leading owner and developer of high-quality, mixed-use properties in the Washington, DC market, today filed its Form 10-Q for the quarter ended March 31, 2023 and reported its financial results.

Additional information regarding our results of operations, properties, and tenants can be found in our First Quarter 2023 Investor Package, which is posted in the Investor Relations section of our website at www.jbgsmith.com. We encourage investors to consider the information presented here with the information in that document.

First Quarter 2023 Highlights

Net income, Funds From Operations (“FFO”) and Core FFO attributable to common shareholders were:

FIRST QUARTER COMPARISON
in millions, except per share amounts	Three Months Ended
	March 31, 2023				March 31, 2022
	Amount		Per Diluted Share		Amount		Per Diluted Share
Net income	$	21.2	$	0.19	$	–	$	–
FFO	$	33.0	$	0.29	$	51.3	$	0.40
Core FFO	$	37.2	$	0.33	$	42.7	$	0.34

Annualized Net Operating Income (“NOI”) for the three months ended March 31, 2023 was $327.5 million, compared to $322.3 million for the three months ended December 31, 2022, at our share.
- The slight increase in Annualized NOI was substantially attributable to (i) a decrease in bad debt, partially offset by higher real estate taxes and utilities in our commercial portfolio and (ii) higher rents across the multifamily portfolio.
Same Store NOI (“SSNOI”) at our share decreased 0.7% year-over-year to $76.1 million for the three months ended March 31, 2023.
- The decrease in SSNOI was substantially attributable to (i) increased abatement and higher utilities, partially offset by an increase in parking revenue in our commercial portfolio and (ii) higher occupancy and rents in our multifamily portfolio.

Operating Portfolio

The operating commercial portfolio was 87.6% leased and 85.2% occupied as of March 31, 2023, compared to 88.5% and 85.1% as of December 31, 2022, at our share.
The operating multifamily portfolio was 95.0% leased and 92.9% occupied as of March 31, 2023, compared to 94.5% and 93.6% as of December 31, 2022, at our share.
Executed approximately 114,000 square feet of office leases at our share during the three months ended March 31, 2023, comprising approximately 20,000 square feet of first-generation leases and approximately 94,000 square feet of second-generation leases, which generated a 4.5% rental rate increase on a GAAP basis and a 0.3% rental rate increase on a cash basis.

Development Portfolio

Under-Construction

As of March 31, 2023, we had two multifamily assets under construction consisting of 1,583 units at our share.

Development Pipeline

As of March 31, 2023, we had 20 assets in the development pipeline consisting of 9.8 million square feet of estimated potential development density at our share.

Third-Party Asset Management and Real Estate Services Business

For the three months ended March 31, 2023, revenue from third-party real estate services, including reimbursements, was $22.8 million. Excluding reimbursements and service revenue from our interests in real estate ventures, revenue from our third-party asset management and real estate services business was $10.6 million, primarily driven by $5.8 million of property and asset management fees, $2.0 million of development fees, $1.3 million of leasing fees and $1.1 million of other service revenue.

Balance Sheet

As of March 31, 2023, our total enterprise value was approximately $4.1 billion, comprising 128.4 million common shares and units valued at $1.9 billion, and debt (net of premium / (discount) and deferred financing costs) at our share of $2.4 billion, less cash and cash equivalents at our share of $291.8 million.
As of March 31, 2023, we had $279.6 million of cash and cash equivalents ($291.8 million of cash and cash equivalents at our share), and $1.0 billion of capacity under our credit facility inclusive of our capacity under the term loan.
Net Debt to annualized Adjusted EBITDA at our share for the three months ended March 31, 2023 was 7.8x, and our Net Debt / total enterprise value was 52.5% as of March 31, 2023.

Investing and Financing Activities

In March 2023, we sold $201.5 million of assets, which included an 80.0% pari-passu interest in 4747 Bethesda Avenue and a development parcel.
As previously announced, in January 2023, we entered into a $187.6 million loan facility, collateralized by The Wren and F1RST Residences. The loan has a seven-year term and a fixed interest rate of 5.13%. This loan is the initial advance under a Fannie Mae multifamily credit facility which provides flexibility for collateral substitutions, future advances tied to performance, ability to mix fixed and floating rates, and staggered maturities. Proceeds from the loan were used, in part, to repay the $131.5 million mortgage loan on 2121 Crystal Drive, which had a fixed interest rate of 5.51%.
As previously announced, in February 2023, we acquired the remaining 0.3% ownership interest in The Wren, a multifamily asset that was owned by a consolidated real estate venture, for $0.6 million.
We repurchased and retired 1.2 million common shares for $20.1 million, a weighted average purchase price per share of $16.66.

Subsequent to March 31, 2023:

We repurchased and retired 2.8 common shares for $40.1 million, a weighted average purchase price per share of $14.16, pursuant to a repurchase plan under Rule 10b5-1 of the Securities Exchange Act of 1934, as amended.

Dividends

On May 4, 2023, our Board of Trustees declared a quarterly dividend of $0.225 per common share, payable on June 30, 2023 to shareholders of record as of June 23, 2023.

About JBG SMITH

JBG SMITH owns, operates, invests in, and develops mixed-use properties in high growth and high barrier-to-entry submarkets in and around Washington, DC. Through an intense focus on placemaking, JBG SMITH cultivates vibrant, amenity-rich, walkable neighborhoods throughout the Washington, DC metropolitan area. Approximately two-thirds of JBG SMITH’s holdings are in the National Landing submarket in Northern Virginia, which is anchored by four key demand drivers: Amazon’s new headquarters; Virginia Tech’s under-construction $1 billion Innovation Campus; the submarket’s proximity to the Pentagon; and JBG SMITH’s deployment of next-generation public and private 5G digital infrastructure. JBG SMITH’s dynamic portfolio currently comprises 15.0 million square feet of high-growth office, multifamily, and retail assets at share, 98% of which are Metro-served. It also maintains a development pipeline encompassing 9.8 million square feet of mixed-use, primarily multifamily, development opportunities. JBG SMITH is committed to the operation and development of green, smart, and healthy buildings and plans to maintain carbon neutral operations annually. For more information on JBG SMITH please visit www.jbgsmith.com.

Forward-Looking Statements

Certain statements contained herein may constitute “forward-looking statements” as such term is defined in Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Forward-looking statements are not guarantees of performance. They represent our intentions, plans, expectations and beliefs and are subject to numerous assumptions, risks and uncertainties. Consequently, the future results, financial condition and business of JBG SMITH Properties (“JBG SMITH”, the “Company”, “we”, “us”, “our” or similar terms) may differ materially from those expressed in these forward-looking statements. You can find many of these statements by looking for words such as “approximate”, “hypothetical”, “potential”, “believes”, “expects”, “anticipates”, “estimates”, “intends”, “plans”, “would”, “may” or similar expressions in this earnings release. We also note the following forward-looking statements: changes to the amount and manner in which tenants use space; our annual dividend per share and dividend yield; whether in the case of our under-construction assets and assets in the development pipeline, estimated square feet, estimated number of units and estimated potential development density are accurate; expected timing, completion, modifications and delivery dates for the projects we are developing for Amazon; the ability of any or all of our demand drivers to materialize and their effect on economic impact, job growth, expansion of public transportation and related demand in the National Landing submarket; planned infrastructure and educational improvements related to Amazon’s additional headquarters and the Virginia Tech Innovation Campus; our development plans related to National Landing; whether we will be able to successfully shift the majority of our portfolio to multifamily; and whether the allocation of capital to our share repurchase plan has any impact on our share price.

Many of the factors that will determine the outcome of these and our other forward-looking statements are beyond our ability to control or predict. These factors include, among others: adverse economic conditions in the Washington, DC metropolitan area, the timing of and costs associated with development and property improvements, financing commitments, and general competitive factors. For further discussion of factors that could materially affect the outcome of our forward-looking statements and other risks and uncertainties, see “Risk Factors,” “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and the Cautionary Statement Concerning Forward-Looking Statements in the Company’s Annual Report on Form 10‑K for the year ended December 31, 2022 and other periodic reports the Company files with the Securities and Exchange Commission. For these statements, we claim the protection of the safe harbor for forward-looking statements contained in the Private Securities Litigation Reform Act of 1995. You are cautioned not to place undue reliance on our forward-looking statements. All subsequent written and oral forward-looking statements attributable to us or any person acting on our behalf are expressly qualified in their entirety by the cautionary statements contained or referred to in this section. We do not undertake any obligation to release publicly any revisions to our forward-looking statements to reflect events or circumstances occurring after the date hereof.

Pro Rata Information

We present certain financial information and metrics in this release “at JBG SMITH Share,” which refers to our ownership percentage of consolidated and unconsolidated assets in real estate ventures (collectively, “real estate ventures”) as applied to these financial measures and metrics. Financial information “at JBG SMITH Share” is calculated on an asset-by-asset basis by applying our percentage economic interest to each applicable line item of that asset’s financial information. “At JBG SMITH Share” information, which we also refer to as being “at share,” “our pro rata share” or “our share,” is not, and is not intended to be, a presentation in accordance with GAAP. Given that a substantial portion of our assets are held through real estate ventures, we believe this form of presentation, which presents our economic interests in the partially owned entities, provides investors valuable information regarding a significant component of our portfolio, its composition, performance and capitalization.

We do not control the unconsolidated real estate ventures and do not have a legal claim to our co-venturers’ share of assets, liabilities, revenue and expenses. The operating agreements of the unconsolidated real estate ventures generally allow each co-venturer to receive cash distributions to the extent there is available cash from operations. The amount of cash each investor receives is based upon specific provisions of each operating agreement and varies depending on certain factors including the amount of capital contributed by each investor and whether any investors are entitled to preferential distributions.

With respect to any such third-party arrangement, we would not be in a position to exercise sole decision-making authority regarding the property, real estate venture or other entity, and may, under certain circumstances, be exposed to economic risks not present were a third-party not involved. We and our respective co-venturers may each have the right to trigger a buy-sell or forced sale arrangement, which could cause us to sell our interest, or acquire our co-venturers’ interests, or to sell the underlying asset, either on unfavorable terms or at a time when we otherwise would not have initiated such a transaction. Our real estate ventures may be subject to debt, and the repayment or refinancing of such debt may require equity capital calls. To the extent our co-venturers do not meet their obligations to us or our real estate ventures or they act inconsistent with the interests of the real estate venture, we may be adversely affected. Because of these limitations, the non-GAAP “at JBG SMITH Share” financial information should not be considered in isolation or as a substitute for our financial statements as reported under GAAP.

Occupancy, non-GAAP financial measures, leverage metrics, operating assets and operating metrics presented in our investor package exclude our 10.0% subordinated interest in one commercial building, our 33.5% subordinated interest in four commercial buildings, and our 49.0% interest in three commercial buildings, as well as the associated non-recourse mortgage loans, held through unconsolidated real estate ventures, as our investment in each real estate venture is zero, we do not anticipate receiving any near-term cash flow distributions from the real estate ventures, and we have not guaranteed their obligations or otherwise committed to providing financial support.

Non-GAAP Financial Measures

This release includes non-GAAP financial measures. For these measures, we have provided an explanation of how these non-GAAP measures are calculated and why JBG SMITH’s management believes that the presentation of these measures provides useful information to investors regarding JBG SMITH’s financial condition and results of operations. Reconciliations of certain non-GAAP measures to the most directly comparable GAAP financial measure are included in this earnings release. Our presentation of non-GAAP financial measures may not be comparable to similar non-GAAP measures used by other companies. In addition to “at share” financial information, the following non-GAAP measures are included in this release:

Earnings Before Interest, Taxes, Depreciation and Amortization (“EBITDA”), EBITDA for Real Estate (“EBITDAre”) and “Adjusted EBITDA” are non-GAAP financial measures. EBITDA and EBITDAre are used by management as supplemental operating performance measures, which we believe help investors and lenders meaningfully evaluate and compare our operating performance from period-to-period by removing from our operating results the impact of our capital structure (primarily interest charges from our outstanding debt and the impact of our interest rate swaps) and certain non-cash expenses (primarily depreciation and amortization expense on our assets). EBITDAre is computed in accordance with the definition established by the National Association of Real Estate Investment Trusts (“Nareit”). Nareit defines EBITDAre as GAAP net income (loss) adjusted to exclude interest expense, income taxes, depreciation and amortization expense, gains and losses on sales of real estate and impairment write-downs of certain real estate assets and investments in entities when the impairment is directly attributable to decreases in the value of depreciable real estate held by the entity, including our share of such adjustments of unconsolidated real estate ventures. These supplemental measures may help investors and lenders understand our ability to incur and service debt and to make capital expenditures. EBITDA and EBITDAre are not substitutes for net income (loss) (computed in accordance with GAAP) and may not be comparable to similarly titled measures used by other companies.

Adjusted EBITDA represents EBITDAre adjusted for items we believe are not representative of ongoing operating results, such as Transaction and Other Costs, impairment write-downs of right-of-use assets associated with leases in which we are a lessee,gain (loss) on the extinguishment of debt, earnings (losses) and distributions in excess of our investment in unconsolidated real estate ventures, lease liability adjustments, income from investments, business interruption insurance proceeds and share-based compensation expense related to the Formation Transaction and special equity awards. We believe that adjusting such items not considered part of our comparable operations, provides a meaningful measure to evaluate and compare our performance from period-to-period.

Because EBITDA, EBITDAre and Adjusted EBITDA have limitations as analytical tools, we use EBITDA, EBITDAre and Adjusted EBITDA to supplement GAAP financial measures. Additionally, we believe that users of these measures should consider EBITDA, EBITDAre and Adjusted EBITDA in conjunction with net income (loss) and other GAAP measures in understanding our operating results.

Funds from Operations (“FFO”), “Core FFO” and Funds Available for Distribution (“FAD”) are non-GAAP financial measures. FFO is computed in accordance with the definition established by Nareit in the Nareit FFO White Paper – 2018 Restatement. Nareit defines FFO as net income (loss) (computed in accordance with GAAP), excluding depreciation and amortization expense related to real estate, gains and losses from the sale of certain real estate assets, gains and losses from change in control and impairment write-downs of certain real estate assets and investments in entities when the impairment is directly attributable to decreases in the value of depreciable real estate held by the entity, including our share of such adjustments for unconsolidated real estate ventures.

Core FFO represents FFO adjusted to exclude items which we believe are not representative of ongoing operating results, such as Transaction and Other Costs, impairment write-downs of right-of-use assets associated with leases in which we are a lessee, gain (loss) on the extinguishment of debt, earnings (losses) and distributions in excess of our investment in unconsolidated real estate ventures, share-based compensation expense related to the Formation Transaction and special equity awards, lease liability adjustments, income from investments, business interruption insurance proceeds, amortization of the management contracts intangible and the mark-to-market of derivative instruments, including our share of such adjustments for unconsolidated real estate ventures.

FAD represents Core FFO less recurring tenant improvements, leasing commissions and other capital expenditures, net deferred rent activity, third-party lease liability assumption (payments) refunds, recurring share-based compensation expense, accretion of acquired below-market leases, net of amortization of acquired above-market leases, amortization of debt issuance costs and other non-cash income and charges, including our share of such adjustments for unconsolidated real estate ventures. FAD is presented solely as a supplemental disclosure that management believes provides useful information as it relates to our ability to fund dividends.

We believe FFO, Core FFO and FAD are meaningful non‑GAAP financial measures useful in comparing our levered operating performance from period-to-period and as compared to similar real estate companies because these non‑GAAP measures exclude real estate depreciation and amortization expense, which implicitly assumes that the value of real estate diminishes predictably over time rather than fluctuating based on market conditions, and other non-comparable income and expenses. FFO, Core FFO and FAD do not represent cash generated from operating activities and are not necessarily indicative of cash available to fund cash requirements and should not be considered as an alternative to net income (loss) (computed in accordance with GAAP) as a performance measure or cash flow as a liquidity measure. FFO, Core FFO and FAD may not be comparable to similarly titled measures used by other companies.

“Net Debt” is a non-GAAP financial measurement. Net Debt represents our total consolidated and unconsolidated indebtedness less cash and cash equivalents at our share. Net Debt is an important component in the calculations of Net Debt to Annualized Adjusted EBITDA and Net Debt / total enterprise value. We believe that Net Debt is a meaningful non-GAAP financial measure useful to investors because we review Net Debt as part of the management of our overall financial flexibility, capital structure and leverage. We may utilize a considerable portion of our cash and cash equivalents at any given time for purposes other than debt reduction. In addition, cash and cash equivalents at our share may not be solely controlled by us. The deduction of cash and cash equivalents at our share from consolidated and unconsolidated indebtedness in the calculation of Net Debt, therefore, should not be understood to mean that it is available exclusively for debt reduction at any given time.

Net Operating Income (“NOI”) and “Annualized NOI” are non-GAAP financial measures management uses to assess an asset’s performance. The most directly comparable GAAP measure is net income (loss) attributable to common shareholders. We use NOI internally as a performance measure and believe NOI provides useful information to investors regarding our financial condition and results of operations because it reflects only property related revenue (which includes base rent, tenant reimbursements and other operating revenue, net of Free Rent and payments associated with assumed lease liabilities) less operating expenses and ground rent for operating leases, if applicable. NOI also excludes deferred rent, related party management fees, interest expense, and certain other non-cash adjustments, including the accretion of acquired below-market leases and the amortization of acquired above-market leases and below-market ground lease intangibles. Management uses NOI as a supplemental performance measure of our assets and believes it provides useful information to investors because it reflects only those revenue and expense items that are incurred at the asset level, excluding non-cash items. In addition, NOI is considered by many in the real estate industry to be a useful starting point for determining the value of a real estate asset or group of assets. However, because NOI excludes depreciation and amortization expense and captures neither the changes in the value of our assets that result from use or market conditions, nor the level of capital expenditures and capitalized leasing commissions necessary to maintain the operating performance of our assets, all of which have real economic effect and could materially impact the financial performance of our assets, the utility of NOI as a measure of the operating performance of our assets is limited. NOI presented by us may not be comparable to NOI reported by other REITs that define these measures differently. We believe to facilitate a clear understanding of our operating results, NOI should be examined in conjunction with net income (loss) attributable to common shareholders as presented in our financial statements. NOI should not be considered as an alternative to net income (loss) attributable to common shareholders as an indication of our performance or to cash flows as a measure of liquidity or our ability to make distributions. Annualized NOI, for all assets except Crystal City Marriott, represents NOI for the three months ended March 31, 2023 multiplied by four. Due to seasonality in the hospitality business, Annualized NOI for Crystal City Marriott represents the trailing 12‑month NOI as of March 31, 2023. Management believes Annualized NOI provides useful information in understanding our financial performance over a 12‑month period, however, investors and other users are cautioned against attributing undue certainty to our calculation of Annualized NOI. Actual NOI for any 12‑month period will depend on a number of factors beyond our ability to control or predict, including general capital markets and economic conditions, any bankruptcy, insolvency, default or other failure to pay rent by one or more of our tenants and the destruction of one or more of our assets due to terrorist attack, natural disaster or other casualty, among others. We do not undertake any obligation to update our calculation to reflect events or circumstances occurring after the date of this earnings release. There can be no assurance that the Annualized NOI shown will reflect our actual results of operations over any 12‑month period.

Definitions

“Development Pipeline” refers to assets that have the potential to commence construction subject to receipt of full entitlements, completion of design and market conditions where we (i) own land or control the land through a ground lease or (ii) are under a long-term conditional contract to purchase, or enter into, a leasehold interest with respect to land.

“Estimated Potential Development Density” reflects management’s estimate of developable gross square feet based on our current business plans with respect to real estate owned or controlled as of March 31, 2023. Our current business plans may contemplate development of less than the maximum potential development density for individual assets. As market conditions change, our business plans, and therefore, the Estimated Potential Development Density, could change accordingly. Given timing, zoning requirements and other factors, we make no assurance that Estimated Potential Development Density amounts will become actual density to the extent we complete development of assets for which we have made such estimates.

“First-generation” is a lease on space that had been vacant for at least nine months or a lease on newly delivered space.

“Formation Transaction” refers collectively to the spin-off on July 17, 2017 of substantially all of the assets and liabilities of Vornado Realty Trust’s Washington, DC segment, which operated as Vornado / Charles E. Smith, and the acquisition of the management business and certain assets and liabilities of The JBG Companies.

“Free Rent” means the amount of base rent and tenant reimbursements that are abated according to the applicable lease agreement(s).

“GAAP” means accounting principles generally accepted in the United States of America.

“In-Service” refers to commercial or multifamily operating assets that are at or above 90% leased or have been operating and collecting rent for more than 12 months as of March 31, 2023.

“Non-Same Store” refers to all operating assets excluded from the same store pool.

“Same Store” refers to the pool of assets that were in-service for the entirety of both periods being compared, except for assets for which significant redevelopment, renovation, or repositioning occurred during either of the periods being compared.

“Second-generation” is a lease on space that had been vacant for less than nine months.

“Transaction and Other Costs” include pursuit costs related to completed, potential and pursued transactions, demolition costs, severance and other costs.

“Under-Construction” refers to assets that were under construction during the three months ended March 31, 2023.

CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited)

in thousands	March 31, 2023			December 31, 2022

ASSETS
Real estate, at cost:
Land and improvements	$	1,267,022		$	1,302,569
Buildings and improvements		4,157,110			4,310,821
Construction in progress, including land		619,111			544,692
		6,043,243			6,158,082
Less: accumulated depreciation		(1,355,655	)		(1,335,000	)
Real estate, net		4,687,588			4,823,082
Cash and cash equivalents		279,553			241,098
Restricted cash		42,339			32,975
Tenant and other receivables		46,241			56,304
Deferred rent receivable		159,287			170,824
Investments in unconsolidated real estate ventures		312,651			299,881
Intangible assets, net		149,243			162,246
Other assets, net		158,118			117,028
TOTAL ASSETS	$	5,835,020		$	5,903,438

LIABILITIES, REDEEMABLE NONCONTROLLING INTERESTS AND EQUITY
Liabilities:
Mortgage loans, net	$	1,802,051		$	1,890,174
Revolving credit facility		—			—
Unsecured term loans, net		547,256			547,072
Accounts payable and accrued expenses		124,268			138,060
Other liabilities, net		164,627			132,710
Total liabilities		2,638,202			2,708,016
Commitments and contingencies
Redeemable noncontrolling interests		457,778			481,310
Total equity		2,739,040			2,714,112
TOTAL LIABILITIES, REDEEMABLE NONCONTROLLING INTERESTS AND EQUITY	$	5,835,020		$	5,903,438

_________________
Note: For complete financial statements, please refer to our Quarterly Report on Form 10-Q for the quarter ended March 31, 2023.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited)

in thousands, except per share data	Three Months Ended March 31,
	2023			2022
REVENUE
Property rental	$	124,033		$	131,598
Third-party real estate services, including reimbursements		22,784			23,970
Other revenue		6,145			6,397
Total revenue		152,962			161,965
EXPENSES
Depreciation and amortization		53,431			58,062
Property operating		35,612			40,644
Real estate taxes		15,224			18,186
General and administrative:
Corporate and other		16,123			15,815
Third-party real estate services		23,823			27,049
Share-based compensation related to Formation Transaction and special equity awards		351			2,244
Transaction and other costs		2,472			899
Total expenses		147,036			162,899
OTHER INCOME (EXPENSE)
Income from unconsolidated real estate ventures, net		433			3,145
Interest and other income, net		4,077			14,246
Interest expense		(26,842	)		(16,278	)
Gain (loss) on the sale of real estate, net		40,700			(136	)
Loss on the extinguishment of debt		—			(591	)
Total other income (expense)		18,368			386
INCOME (LOSS) BEFORE INCOME TAX BENEFIT		24,294			(548	)
Income tax benefit		16			471
NET INCOME (LOSS)		24,310			(77	)
Net income attributable to redeemable noncontrolling interests		(3,363	)		(10	)
Net loss attributable to noncontrolling interests		224			55
NET INCOME (LOSS) ATTRIBUTABLE TO COMMON SHAREHOLDERS	$	21,171		$	(32	)
EARNINGS (LOSS) PER COMMON SHARE – BASIC AND DILUTED	$	0.19		$	—
WEIGHTED AVERAGE NUMBER OF COMMON SHARES OUTSTANDING – BASIC AND DILUTED		114,052			126,682

_________________
Note: For complete financial statements, please refer to our Quarterly Report on Form 10-Q for the quarter ended March 31, 2023.

EBITDA, EBITDAre AND ADJUSTED EBITDA RECONCILIATIONS (NON-GAAP) (Unaudited)

dollars in thousands	Three Months Ended March 31,
	2023			2022

EBITDA, EBITDAre and Adjusted EBITDA
Net income (loss)	$	24,310		$	(77	)
Depreciation and amortization expense		53,431			58,062
Interest expense		26,842			16,278
Income tax benefit		(16	)		(471	)
Unconsolidated real estate ventures allocated share of above adjustments		3,664			9,829
EBITDA attributable to noncontrolling interests		30			(26	)
EBITDA	$	108,261		$	83,595
(Gain) loss on the sale of real estate, net		(40,700	)		136
Gain on the sale of unconsolidated real estate assets		—			(5,243	)

EBITDAre	$	67,561		$	78,488
Transaction and other costs, net of noncontrolling interests ⁽¹⁾		2,472			865
Income from investments, net		(1,861	)		(14,071	)
Loss on the extinguishment of debt		—			591
Share-based compensation related to Formation Transaction and special equity awards		351			2,244
Earnings and distributions in excess of our investment in unconsolidated real estate venture		(167	)		(441	)
Unconsolidated real estate ventures allocated share of above adjustments		2			204

Adjusted EBITDA	$	68,358		$	67,880

Net Debt to Annualized Adjusted EBITDA ⁽²⁾		7.8	x		9.6	x

	March 31, 2023			March 31, 2022
Net Debt (at JBG SMITH Share)
Consolidated indebtedness ⁽³⁾	$	2,344,304		$	2,464,640
Unconsolidated indebtedness ⁽³⁾		87,832			362,861
Total consolidated and unconsolidated indebtedness		2,432,136			2,827,501
Less: cash and cash equivalents		291,799			207,568
Net Debt (at JBG SMITH Share)	$	2,140,337		$	2,619,933

_________________
Note: All EBITDA measures as shown above are attributable to common limited partnership units (“OP Units”) and certain fully-vested incentive equity awards that are convertible into OP Units.
(1)		Includes pursuit costs related to completed, potential and pursued transactions, demolition costs, severance and other costs.
(2)		Quarterly Adjusted EBITDA is annualized by multiplying by four.
(3)		Net of premium/discount and deferred financing costs.

FFO, CORE FFO AND FAD RECONCILIATIONS (NON-GAAP) (Unaudited)

in thousands, except per share data	Three Months Ended March 31,
	2023			2022

FFO and Core FFO
Net income (loss) attributable to common shareholders	$	21,171		$	(32	)
Net income attributable to redeemable noncontrolling interests		3,363			10
Net loss attributable to noncontrolling interests		(224	)		(55	)
Net income (loss)		24,310			(77	)
(Gain) loss on the sale of real estate, net of tax		(40,700	)		136
Gain on the sale of unconsolidated real estate assets		—			(5,243	)
Real estate depreciation and amortization		51,611			55,517
Pro rata share of real estate depreciation and amortization from unconsolidated real estate ventures		2,760			6,870
FFO attributable to noncontrolling interests		224			(26	)
FFO Attributable to OP Units	$	38,205		$	57,177
FFO attributable to redeemable noncontrolling interests		(5,203	)		(5,877	)
FFO Attributable to Common Shareholders	$	33,002		$	51,300

FFO attributable to OP Units	$	38,205		$	57,177
Transaction and other costs, net of tax and noncontrolling interests ⁽¹⁾		2,373			843
Income from investments, net		(1,405	)		(10,538	)
Loss (gain) from mark-to-market on derivative instruments, net of noncontrolling interests		2,541			(3,367	)
Loss on the extinguishment of debt		—			591
Earnings and distributions in excess of our investment in unconsolidated real estate venture		(167	)		(441	)
Share-based compensation related to Formation Transaction and special equity awards		351			2,244
Amortization of management contracts intangible, net of tax		1,106			1,105
Unconsolidated real estate ventures allocated share of above adjustments		36			(48	)
Core FFO Attributable to OP Units	$	43,040		$	47,566
Core FFO attributable to redeemable noncontrolling interests		(5,862	)		(4,889	)
Core FFO Attributable to Common Shareholders	$	37,178		$	42,677
FFO per common share – diluted	$	0.29		$	0.40
Core FFO per common share – diluted	$	0.33		$	0.34
Weighted average shares – diluted (FFO and Core FFO)		114,062			126,688

See footnotes under table below.

FFO, CORE FFO AND FAD RECONCILIATIONS (NON-GAAP) (Unaudited)

in thousands, except per share data	Three Months Ended March 31,
	2023			2022

FAD
Core FFO attributable to OP Units	$	43,040		$	47,566
Recurring capital expenditures and Second-generation tenant improvements and leasing commissions ⁽²⁾		(7,794	)		(13,702	)
Straight-line and other rent adjustments ⁽³⁾		(8,377	)		(1,791	)
Third-party lease liability assumption (payments) refunds		95			—
Share-based compensation expense		9,348			10,493
Amortization of debt issuance costs		1,307			1,176
Unconsolidated real estate ventures allocated share of above adjustments		402			(648	)
Non-real estate depreciation and amortization		355			1,068
FAD available to OP Units (A)	$	38,376		$	44,162
Distributions to common shareholders and unitholders^(B)	$	29,619		$	32,603
FAD Payout Ratio (B÷A) ⁽⁴⁾		77.2	%		73.8	%

Capital Expenditures
Maintenance and recurring capital expenditures	$	2,973		$	4,820
Share of maintenance and recurring capital expenditures from unconsolidated real estate ventures		—			82
Second-generation tenant improvements and leasing commissions		4,742			8,594
Share of Second-generation tenant improvements and leasing commissions from unconsolidated real estate ventures		79			206
Recurring capital expenditures and Second-generation tenant improvements and leasing commissions		7,794			13,702
Non-recurring capital expenditures		9,693			12,810
Share of non-recurring capital expenditures from unconsolidated real estate ventures		2			12
First-generation tenant improvements and leasing commissions		3,125			4,450
Share of First-generation tenant improvements and leasing commissions from unconsolidated real estate ventures		313			473
Non-recurring capital expenditures		13,133			17,745
Total JBG SMITH Share of Capital Expenditures	$	20,927		$	31,447

_________________
(1)		Includes pursuit costs related to completed, potential and pursued transactions, demolition costs, severance and other costs.
(2)		Includes amounts, at JBG SMITH Share, related to unconsolidated real estate ventures.
(3)		Includes straight-line rent, above/below market lease amortization and lease incentive amortization.
(4)		The quarterly FAD payout ratio is not necessarily indicative of an amount for the full year due to fluctuation in the timing of capital expenditures, the commencement of new leases and the seasonality of our operations.

NOI RECONCILIATIONS (NON-GAAP) (Unaudited)

dollars in thousands	Three Months Ended March 31,
	2023			2022

Net income (loss) attributable to common shareholders	$	21,171		$	(32	)
Add:
Depreciation and amortization expense		53,431			58,062
General and administrative expense:
Corporate and other		16,123			15,815
Third-party real estate services		23,823			27,049
Share-based compensation related to Formation Transaction and special equity awards		351			2,244
Transaction and other costs		2,472			899
Interest expense		26,842			16,278
Loss on the extinguishment of debt		—			591
Income tax benefit		(16	)		(471	)
Net income attributable to redeemable noncontrolling interests		3,363			10
Net loss attributable to noncontrolling interests		(224	)		(55	)
Less:
Third-party real estate services, including reimbursements revenue		22,784			23,970
Other revenue		1,726			2,196
Income from unconsolidated real estate ventures, net		433			3,145
Interest and other income, net		4,077			14,246
Gain (loss) on the sale of real estate, net		40,700			(136	)

Consolidated NOI		77,616			76,969
NOI attributable to unconsolidated real estate ventures at our share		4,429			6,967
Non-cash rent adjustments ⁽¹⁾		(8,377	)		(1,791	)
Other adjustments ⁽²⁾		6,845			8,760
Total adjustments		2,897			13,936
NOI	$	80,513		$	90,905
Less: out-of-service NOI loss ⁽³⁾		(710	)		(1,448	)
Operating Portfolio NOI	$	81,223		$	92,353
Non-Same Store NOI ⁽⁴⁾		5,114			15,716
Same Store NOI ⁽⁵⁾	$	76,109		$	76,637

Change in Same Store NOI		(0.7	)%
Number of properties in Same Store pool		49

_________________
(1)		Adjustment to exclude straight-line rent, above/below market lease amortization and lease incentive amortization.
(2)		Adjustment to include other revenue and payments associated with assumed lease liabilities related to operating properties and to exclude commercial lease termination revenue and allocated corporate general and administrative expenses to operating properties.
(3)		Includes the results of our Under-Construction assets and assets in the Development Pipeline.
(4)		Includes the results of properties that were not In-Service for the entirety of both periods being compared, including disposed properties, and properties for which significant redevelopment, renovation or repositioning occurred during either of the periods being compared.
(5)		Includes the results of the properties that are owned, operated and In-Service for the entirety of both periods being compared.

View source version on businesswire.com: https://www.businesswire.com/news/home/20230509005929/en/

Barbat Rodgers

Senior Vice President, Investor Relations

(240) 333‑3805

[email protected]

KEYWORDS: Maryland United States North America

INDUSTRY KEYWORDS: Residential Building & Real Estate Commercial Building & Real Estate Construction & Property

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