Kaiser Aluminum Corporation Reports Fourth Quarter and Full Year 2020 Financial Results


Full Year 2020:

  • Solid Execution Under Very Challenging Business Conditions

    • Net Sales $1,173 Million; Value Added Revenue $697 Million, Down 19% Year-over-Year
    • Net Income $29 Million; Net Income per Diluted Share $1.81
    • Adjusted Net Income $48 Million; Adjusted Earnings per Diluted Share $3.01
    • Adjusted EBITDA $154 Million; Adjusted EBITDA Margin 22.1%
  • Significant Decline in Commercial Aerospace Demand; Strong Defense, Auto and GE Demand
  • Aggressively Flexed Costs to Align With Lower Volume
  • Executed Definitive Agreement for Transformative Acquisition of Alcoa Warrick LLC
  • Increased Quarterly Dividend 12% to $0.67/share in 2020; Increased 7.5% to $0.72/share in 2021

FOOTHILL RANCH, Calif., Feb. 24, 2021 (GLOBE NEWSWIRE) — Kaiser Aluminum Corporation (NASDAQ:KALU), a leading producer of semi-fabricated specialty aluminum products, serving customers worldwide with highly-engineered solutions for aerospace and high-strength, custom automotive, general engineering, and other industrial applications, today announced fourth quarter and full year 2020 results.

“Our results for the fourth quarter and full year 2020 reflect solid execution under very challenging business conditions, as we navigated the significant decline in commercial aerospace demand during the second half of the year while managing strong demand for our defense, general engineering and automotive applications,” said Keith A. Harvey, President and Chief Executive Officer. “For the full year 2020, value added revenue of $697 million declined approximately 19%, reflecting a strong first quarter, followed by significant COVID-19 related disruptions to our operations and end markets during the remainder of the year. Despite the decline in value added revenue, we reported a solid 22.1% adjusted EBITDA margin, reflecting our ability to quickly flex costs and operating levels in response to rapidly changing business conditions. These results were achieved with record safety performance for the entire year, a significant accomplishment and a testament to our people,” stated Mr. Harvey.

“Our business model is to always be well-prepared for economic adversity, and the strength of our balance sheet and financial flexibility served us well, facilitating our ability to maintain our quarterly dividend and to opportunistically pursue further growth with our pending acquisition of Alcoa Warrick LLC, a leading producer of high margin beverage and food can stock for the North American packaging industry. With financial strength and continued confidence in the long-term outlook for our business, in early 2021 we increased our quarterly dividend by 7.5% to $0.72 per share, up from the 12% increase in early 2020, marking the tenth consecutive year we have increased the quarterly dividend,” stated Mr. Harvey.



Full Year 2020 Management Summary

For the full year 2020, Aero/HS demand declined sharply from the record 2019 levels reflecting the COVID-19 impact on commercial airline travel, delays in recertification of the Boeing 737 MAX and destocking within the supply chain. While commercial aerospace demand fell sharply in the second half, the Company experienced strong demand throughout the year for its defense related applications, specifically from the F-35 Joint Strike Fighter program and other legacy military aircraft programs. Automotive extrusion demand regained strength following significant but temporary COVID-19 related supply chain shutdowns in the second quarter. Planned program launches for multiple new platforms ramped up during the second half, and new programs were awarded during the year reflecting the continued trend for aluminum content growth. Demand for the Company’s general engineering products reflected steady underlying demand driven in part by strength in semi-conductor and automotive applications, restocking in the supply chain and strong customer preference for KaiserSelect® plate.



2021 Outlook

“For the full year 2021, we anticipate total value added revenue up 5% to 10% year-over-year and an adjusted EBITDA margin comparable to 2020 driven by strong growth in automotive, defense and general engineering applications,” stated Mr. Harvey.

The Company anticipates value added revenue for the Company’s aerospace/high strength applications to be down 5% to 8% year-over-year on slightly lower shipments compared to 2020, which reflected strong demand for our commercial aerospace applications during the first half of 2020. Commercial aerospace demand continues to reflect weak airline travel impacted by the pandemic and destocking in the supply chain. The Company continues to anticipate full recovery of commercial aerospace in 2023-2024.

Lower commercial aerospace demand in 2021 is expected to be mitigated in part by continued strength in demand for defense applications as build rates for the F-35 Joint Strike Fighter are expected to increase 20% to 30% compared to the prior year while business and regional jet demand continues to improve.

Value added revenue and shipments for the Company’s automotive extrusion applications are anticipated to increase 35% to 45% year-over-year as North American build rates are expected to increase more than 25% to approximately 16 million units in 2021 from 13 million units in 2020, and numerous new product launches in 2020 and 2021 increase the Company’s aluminum content on vehicles.

General engineering value added revenue and shipments are anticipated to increase 10% to 15% year-over-year reflecting solid service center and end market demand driven by continued growth in semi-conductor and automotive demand. In addition, reshoring continues as many North American OEM’s secure domestic supply for their raw material needs to minimize risk of supply chain disruption.

“Our planned acquisition of Alcoa Warrick LLC provides an opportunity for further value creation with strong secular growth in the non-cyclic packaging business,” stated Mr. Harvey. “The transaction is anticipated to close on March 31, 2021 and is expected to be immediately accretive to earnings and cash flow. The outlook for the beverage and food packaging markets is strong with favorable demand and industry dynamics driving growth. North American can demand was up 5% year-over-year in 2020 and is projected to increase an additional 3% to 5% in 2021. The Warrick rolling mill is one of only four dedicated can sheet mills in North America and we expect to become a significant participant in the supply chain solution in meeting the growing North American demand. We will provide a further update on our consolidated full year outlook for 2021 during our first quarter earnings call in April 2021,” concluded Mr. Harvey.

 
 
Fourth Quarter and Full Year 2020 Consolidated Results
(Unaudited)*

(In millions of dollars, except shipments, realized price and per share amounts)

    Quarterly     December 31,  
    4Q20     3Q20     4Q19     2020     2019  
Shipments (millions of lbs.)     119       109       153       502       625  
                                         
Net sales   $ 272     $ 256     $ 369     $ 1,173     $ 1,514  
Less hedged cost of alloyed metal1     (121 )     (101 )     (156 )     (476 )     (658 )
Value added revenue   $ 152     $ 154     $ 213     $ 697     $ 856  
                                         
Realized price per pound ($/lb.)                                        
Net sales   $ 2.28     $ 2.35     $ 2.42     $ 2.33     $ 2.42  
Less hedged cost of alloyed metal     (1.01 )     (0.93 )     (1.02 )     (0.94 )     (1.05 )
Value added revenue   $ 1.27     $ 1.42     $ 1.40     $ 1.39     $ 1.37  
                                         
As reported                                        
Operating income   $ 19     $ 12     $ 10     $ 81     $ 126  
Net income (loss)   $ 6     $ 0.4     $ (11 )   $ 29     $ 62  
Net income per share, diluted2   $ 0.37     $ 0.02     $ (0.66 )   $ 1.81     $ 3.83  
                                         
Adjusted3                                        
Operating income   $ 15     $ 19     $ 40     $ 102     $ 164  
EBITDA4   $ 29     $ 32     $ 52     $ 154     $ 213  
EBITDA margin5     18.8 %     20.4 %     24.5 %     22.1 %     24.9 %
Net income   $ 6     $ 6     $ 29     $ 48     $ 111  
EPS, diluted2   $ 0.35     $ 0.39     $ 1.79     $ 3.01     $ 6.85  

1 Hedged cost of alloyed metal is our Midwest transaction price of aluminum plus the price of alloying elements plus any realized gains and/or losses on settled hedges, related to the metal sold in the referenced period.
2 Diluted shares for EPS are calculated using the treasury stock method.
3 Adjusted numbers exclude non-run-rate items. Adjusted 3Q20 results recast to reflect $1.3 million of Warrick acquisition related costs as non-run-rate items (for all Adjusted numbers and EBITDA refer to Reconciliation of Non-GAAP Measures).
4 Adjusted EBITDA = Consolidated operating income, excluding operating non-run-rate items, plus Depreciation and amortization.
5 Adjusted EBITDA margin = Adjusted EBITDA as a percent of Value Added Revenue.
   
* Please refer to GAAP financial statements.
  Totals may not sum due to rounding.
   


Fourth Quarter 2020

Net sales for the fourth quarter 2020 were $272 million compared to $369 million in the prior year period, reflecting a 22% decrease in shipments and a 6% decrease in average selling price. The decrease in average selling price reflected an approximately 9% decrease in value added revenue per pound and a 1% decrease in underlying contained metal costs.

Value added revenue for the fourth quarter 2020 decreased to $152 million from $213 million in the prior year period, primarily driven by the decline in commercial aerospace demand. Value added revenue for the Company’s aerospace/high strength applications decreased 54% to $64 million and shipments decreased 58% reflecting the impact of the COVID-19 pandemic on commercial aerospace demand, while demand for defense applications remained strong. Value added revenue for automotive extrusions increased 16% to $26 million, on a 14% increase in shipments, reflecting continued strength in demand. Value added revenue for general engineering applications increased approximately 18% to $61 million on a 14% increase in shipments reflecting solid underlying demand and stable pricing.

Adjusted EBITDA of $29 million in the fourth quarter 2020 decreased $24 million compared to the prior year period reflecting the total sales impact of approximately $30 million, offset by lower costs flexed with the reduction in volume. Adjusted EBITDA as a percentage of value added revenue was 18.8% in the fourth quarter 2020 as compared to 24.5% in the prior year period.

Reported operating income for the fourth quarter 2020 was approximately $19 million. Adjusting for approximately $3 million of non-run-rate benefits, operating income for the fourth quarter 2020 was approximately $15 million, compared to $40 million in the prior year quarter.

Reported net income for the fourth quarter 2020 was $6 million, or $0.37 per diluted share, compared to net loss and diluted loss per share of $11 million and $0.66, respectively, for the prior year period. Excluding the impact of non-run-rate items, adjusted net income was $6 million or $0.35 per diluted share for the fourth quarter 2020, compared to adjusted net income of $29 million or $1.79 per diluted share for the fourth quarter 2019, reflecting the impact of the lower operating income as discussed above and approximately $5 million of additional pre-tax interest expense related to senior notes issued earlier in the year.


Full Year 2020

Net sales for the full year 2020 were $1,173 million compared to $1,514 million in the prior year period, reflecting a 20% decrease in shipments and a 4% decrease in average selling price. The decrease in average selling price reflected an approximately 1% increase in value added revenue per pound and a 10% decrease in underlying contained metal costs.

Value added revenue for the full year 2020 decreased to $697 million from $856 million in the prior year period, reflecting a 20% decrease in shipments primarily reflecting the COVID-19 impact on demand for the Company’s aerospace/high strength applications in the second half 2020 due to a significant decline in commercial airline travel, delays in recertification of the Boeing 737 MAX and destocking within the supply chain. Value added revenue for the Company’s aerospace/high strength applications decreased 28% to $369 million on a 37% decrease in shipments reflecting the significant decline in commercial aerospace compared to the strong demand levels in the prior year, mitigated in part by strong demand for the Company’s defense applications as previously mentioned and $15 million related to modifications to 2020 customer declarations under multi-year contracts. Value added revenue for automotive extrusions decreased 11% to $83 million, on an 11% decrease in shipments, reflecting strong first quarter shipments and a sharp recovery following the temporary shutdown of the North American supply chain during the second quarter, and higher industry build rates than initially forecast. Value added revenue for general engineering applications increased approximately 3% to $239 million on relatively flat shipments compared to the prior year period reflecting solid underlying demand and stable pricing throughout the year.

Adjusted EBITDA of $154 million in the full year 2020 decreased $59 million compared to the prior year period reflecting the negative sales impact of $74 million and $14 million of manufacturing cost inefficiencies, partially offset by a $17 million reduction in plant and corporate overhead costs, and approximately $12 million of lower planned major maintenance and incentive costs. Adjusted EBITDA as a percentage of value added revenue was 22.1% in the full year 2020, compared to 24.9% in the prior year period reflecting strong execution in flexing costs and operations with changes in market dynamics.

Reported operating income for the full year 2020 was $81 million. Adjusting for approximately $21 million of non-run-rate charges, operating income for the full year 2020 was $102 million, compared to $164 million in the prior year period due to the items previously mentioned and approximately $3 million of higher depreciation expense. The $21 million of non-run-rate charges primarily reflected an $8 million restructuring charge for severance and benefit costs, a $5 million reserve increase for on-going legacy environmental clean-up projects and $6 million related to diligence and legal fees associated with the pending acquisition of Alcoa Warrick LLC.

Reported net income for the full year 2020 was $29 million, or $1.81 per diluted share, compared to net income and diluted earnings per share of $62 million and $3.83, respectively, for the prior year period. Excluding the impact of non-run-rate items, adjusted net income was $48 million or $3.01 per diluted share for the full year 2020, compared to adjusted net income of $111 million or $6.85 per diluted share for the full year 2020, reflecting the impact of lower operating income and $16 million of additional pre-tax interest expense.


Cash Flow and Balance Sheet

In the full year 2020, adjusted EBITDA of $154 million funded approximately $52 million of capital investments, $29 million of interest payments and $56 million of cash returned to shareholders through dividends and share repurchases.

As of December 31, 2020, the Company had cash and cash equivalents of approximately $780 million, and borrowing availability under the Company’s revolving credit facility of approximately $252 million providing total liquidity of $1 billion. There were no borrowings under the revolving credit facility during the year and the facility remains undrawn.

The Company anticipates capital spending for the full year 2021 of $50 million to $60 million, primarily focused on sustaining capital investment. The Company will provide further updates regarding capital spending for 2021 following completion of the pending acquisition of Alcoa Warrick LLC.

The acquisition of Alcoa Warrick LLC is expected to close on March 31, 2021. The Company intends to fund the purchase price with $587 million of existing cash on hand, and the assumption of $83 million of other post-employment benefits (“OPEB”) liabilities, and other customary post-closing adjustments.


Conference Call

Kaiser Aluminum Corporation will host a conference call on Thursday, February 25, 2021, at 10:00am (Pacific Time); 12:00pm (Central Time); 1:00pm (Eastern Time), to discuss fourth quarter and full year 2020 results. To participate, the conference call can be directly accessed from the U.S. and Canada at (800) 697-5978, and accessed internationally at (630) 691-2750. The conference call ID number is 7722827. A link to the simultaneous webcast can be accessed on the Company’s website at http://investors.kaiseraluminum.com/events.cfm. A copy of a presentation will be available for download prior to the call and an audio archive will be available on the Company’s website following the call.


Company Description

Kaiser Aluminum Corporation, headquartered in Foothill Ranch, Calif., is a leading producer of semi-fabricated specialty aluminum products, serving customers worldwide with highly-engineered solutions for aerospace and high-strength, custom automotive, general engineering, and other industrial applications. The Company’s North American facilities produce value-added sheet, plate, extrusions, rod, bar, tube, and wire products, adhering to traditions of quality, innovation, and service that have been key components of the culture since the Company was founded in 1946. The Company’s stock is included in the Russell 2000® index and the S&P Small Cap 600® index.


Available Information

For more information, please visit the Company’s website at www.kaiseraluminum.com. The website includes a section for investor relations under which the Company provides notifications of news or announcements regarding its financial performance, including Securities and Exchange Commission (SEC) filings, investor events, and earnings and other press releases. In addition, all Company filings submitted to the SEC are available through a link to the section of the SEC’s website at www.sec.gov, which includes: Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K and Proxy Statements for the Company’s annual stockholders’ meetings, and other information statements as filed with the SEC. In addition, the Company provides a webcast of its quarterly earnings calls and certain events in which management participates or hosts with members of the investment community.


Non-GAAP Financial Measures

This earnings release contains certain non-GAAP financial measures. A “non-GAAP financial measure” is defined as a numerical measure of a company’s financial performance that excludes or includes amounts so as to be different than the most directly comparable measure calculated and presented in accordance with GAAP in the statements of income, balance sheets, or statements of cash flow of the Company. Pursuant to the requirements of Regulation G, the Company has provided a reconciliation of non-GAAP financial measures to the most directly comparable financial measure in the accompanying tables.

The non-GAAP financial measures used within this earnings release are value added revenue, adjusted operating income, adjusted EBITDA, adjusted net income, and adjusted earnings per diluted share which exclude non-run-rate items and ratios related thereto. As more fully described in these reports, “non-run-rate” items are items that, while they may occur from period to period, are particularly material to results, impact costs primarily as a result of external market factors and may not occur in future periods if the same level of underlying performance were to occur. These measures are presented because management uses this information to monitor and evaluate financial results and trends and believes this information to also be useful for investors. Reconciliations of certain forward looking non-GAAP financial measures to comparable GAAP measures are not provided because certain items required for such reconciliations are outside of our control and/or cannot be reasonably predicted or provided without unreasonable effort.


Forward-Looking Statements

This press release contains statements which constitute “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. These statements are based on the beliefs and assumptions of management based on information available to it at the time such statements are made. Kaiser Aluminum cautions that any forward-looking statements are not guarantees of future performance and involve significant risks and uncertainties, and that actual results may vary materially from those in the forward-looking statements as a result of various factors. These factors include: (a) the effectiveness of management’s strategies and decisions, including capital spending strategies and decisions; (b) general economic and business conditions, including the impact of the global outbreak of Coronavirus Disease 2019 and governmental and other actions taken in response, cyclicality, reshoring and other conditions in the aerospace, defense, automotive, general engineering, packaging and other end markets the Company serves; (c) demand drivers and the Company’s ability to participate in mature and anticipated new automotive programs expected to launch in the future and successfully launch new automotive programs; (d) changes or shifts in defense spending due to competing national priorities; (e) pricing, market conditions and the Company’s ability to effectively flex costs in response to changing economic conditions; (f) developments in technology; (g) the impact of the Company’s future earnings, cash flows, financial condition, capital requirements and other factors on its financial strength, flexibility, ability to pay or increase future dividends and any decision by the Company’s board of directors in that regard; (h) new or modified statutory or regulatory requirements; (i) the completion of the audit of the financial statements as of and for the year ended December 31, 2020; (j) the satisfaction of closing conditions in connection with the Company’s acquisition of Alcoa Warrick LLC, (k) the successful integration of the acquired operations and technologies, and (l) other risk factors summarized in the Company’s reports filed with the Securities and Exchange Commission, including the Company’s Form 10-K for the year ended December 31, 2020. The Company undertakes no duty to update any forward-looking statement to conform the statement to actual results or changes in the Company’s expectations.


Investor Relations and Public Relations Contact:
Melinda C. Ellsworth
Kaiser Aluminum Corporation
(949) 614-1757
 
 

KAISER ALUMINUM CORPORATION AND SUBSIDIARY COMPANIES

STATEMENTS OF CONSOLIDATED INCOME

(1)

       
    Year Ended  
    December 31,  
    2020     2019  
     
    (In millions of dollars, except share and per
share amounts)
Net sales   $ 1,172.7     $ 1,514.1  
Costs and expenses:                
Cost of products sold, excluding depreciation and amortization and other items     941.3       1,215.2  
Depreciation and amortization     52.2       49.1  
Selling, general, administrative, research and development     91.2       98.0  
Goodwill impairment           25.2  
Restructuring costs     7.5        
Other operating (income) charges, net     (0.6 )     0.9  
Total costs and expenses     1,091.6       1,388.4  
Operating income     81.1       125.7  
Other expense:                
Interest expense     (40.9 )     (24.6 )
Other expense, net     (1.4 )     (20.7 )
Income before income taxes     38.8       80.4  
Income tax provision     (10.0 )     (18.4 )
Net income   $ 28.8     $ 62.0  
                 
Net income per common share:                
Basic   $ 1.82     $ 3.88  
Diluted2   $ 1.81     $ 3.83  
Weighted-average number of common shares outstanding (in thousands):                
Basic     15,802       15,997  
Diluted2     15,913       16,203  

1 Please refer to the Company’s Form 10-K for the year ended December 31, 2020 for detail regarding the items in the table.
2 Diluted shares for EPS are calculated using the treasury stock method.
   
   

KAISER ALUMINUM CORPORATION AND SUBSIDIARY COMPANIES

CONSOLIDATED BALANCE SHEETS

(1)

 
    December 31, 2020     December 31, 2019  
       
    (In millions of dollars, except share and per

share amounts)
 
ASSETS                
Current assets:                
Cash and cash equivalents   $ 780.3     $ 264.3  
Short-term investments           78.7  
Receivables:                
Trade receivables, net     112.8       167.1  
Other     11.6       18.1  
Contract assets     36.1       54.6  
Inventories     152.0       177.6  
Prepaid expenses and other current assets     28.6       19.4  
Total current assets     1,121.4       779.8  
Property, plant and equipment, net     627.2       622.0  
Operating lease assets     26.5       25.8  
Deferred tax assets, net           11.8  
Intangible assets, net     26.7       29.6  
Goodwill     18.8       18.8  
Other assets     44.1       38.4  
Total   $ 1,864.7     $ 1,526.2  
LIABILITIES AND STOCKHOLDERS’ EQUITY                
Current liabilities:                
Accounts payable   $ 86.1     $ 92.0  
Accrued salaries, wages and related expenses     30.8       34.4  
Other accrued liabilities     41.4       44.0  
Total current liabilities     158.3       170.4  
Long-term portion of operating lease liabilities     25.6       25.2  
Net liabilities of Salaried VEBA     17.8       32.6  
Deferred tax liabilities     13.9       4.5  
Long-term liabilities     78.6       67.0  
Long-term debt     838.1       492.6  
Total liabilities     1,132.3       792.3  
Commitments and contingencies                
Stockholders’ equity:                
Preferred stock, 5,000,000 shares authorized at both December 31, 2020 and December 31, 2019; no shares were issued and outstanding at December 31, 2020 and December 31, 2019            
Common stock, par value $0.01, 90,000,000 shares authorized at both December 31, 2020 and December 31, 2019; 22,647,455 shares issued and 15,812,169 shares outstanding at December 31, 2020; 22,550,827 shares issued and 15,868,304 shares outstanding at December 31, 2019     0.2       0.2  
Additional paid in capital     1,068.6       1,062.9  
Retained earnings     158.2       172.8  
Treasury stock, at cost, 6,835,286 shares at December 31, 2020 and 6,682,523 shares at December 31, 2019, respectively     (475.9 )     (463.4 )
Accumulated other comprehensive loss     (18.7 )     (38.6 )
Total stockholders’ equity     732.4       733.9  
Total   $ 1,864.7     $ 1,526.2  

1 Please refer to the Company’s Form 10-K for the year ended December 31, 2020 for detail regarding the items in the table.
   
   

Reconciliation of Non-GAAP Measures – Consolidated

(Unaudited)

(In millions of dollars, except share and per share amounts)

           
  Quarter Ended     Year Ended  
  December 31,     December 31,  
  2020     2019     2020     2019  
GAAP net income (loss) $ 5.9     $ (10.6 )   $ 28.8     $ 62.0  
Interest expense   12.2       7.3       40.9       24.6  
Other expense, net   0.6       20.3       1.4       20.7  
Income tax (benefit) provision   (0.2 )     (7.4 )     10.0       18.4  
GAAP operating income   18.5       9.6       81.1       125.7  
Mark-to-market (gain) loss 1   (1.5 )     0.8       (2.6 )     5.8  
Restructuring (benefits) charges   (4.9 )           7.5        
Acquisition costs   4.2             5.5        
Goodwill impairment         25.2             25.2  
Other operating NRR loss 2,3   (0.9 )     3.9       10.1       6.9  
Operating income, excluding operating NRR items   15.4       39.5       101.6       163.6  
Depreciation and amortization   13.1       12.8       52.2       49.1  
Adjusted EBITDA 4 $ 28.5     $ 52.3     $ 153.8     $ 212.7  
                               
GAAP net income (loss) $ 5.9     $ (10.6 )   $ 28.8     $ 62.0  
Operating NRR Items   (3.1 )     29.9       20.5       37.9  
Non-operating NRR Items 5   1.2       22.0       4.7       26.9  
Tax impact of above NRR Items   1.6       (12.5 )     (6.2 )     (15.8 )
Adjusted net income $ 5.6     $ 28.8     $ 47.8     $ 111.0  
                               
Net income (loss) per share, diluted 6 $ 0.37     $ (0.66 )   $ 1.81     $ 3.83  
Adjusted earnings per diluted share 6 $ 0.35     $ 1.79     $ 3.01     $ 6.85  

1 Mark-to-market (gain) loss on derivative instruments for 2020 and 2019 represents: (i) the reversal of mark-to-market (gain) loss on hedges entered into prior to the adoption of Accounting Standards Update No. 2017-12, Derivatives and Hedging (Topic 815): Targeted Improvements to Accounting for Hedging Activities and settled in the periods presented above; (ii) (gain) loss on non-designated commodity hedges; and (iii) reclassifications out of Accumulated other comprehensive loss due to forecasted transactions no longer probable of occurring. Adjusted EBITDA reflects the realized (gain) loss of such settlements.
2 NRR is an abbreviation for Non-Run-Rate; NRR items are pre-tax.
3 Other operating NRR items primarily represent the impact of non-cash service cost related to the Salaried VEBA, adjustments to plant-level LIFO, impairment loss, environmental expenses and workers’ compensation cost (benefit) due to discounting.
4 Adjusted EBITDA = Consolidated operating income, excluding operating NRR items, plus Depreciation and amortization.
5 Non-operating NRR items represents the impact of non-cash net periodic benefit cost related to the Salaried VEBA excluding service cost for all periods presented and loss on extinguishment of our senior notes during the quarter and year ended December 31, 2019.
6 Diluted shares for EPS are calculated using the treasury stock method.
   



Ryman Hospitality Properties, Inc. to Present Virtually at the J.P. Morgan Gaming, Lodging, Restaurant & Leisure Management Access Forum – Friday, March 12, 2021, at 11:45 a.m. ET

NASHVILLE, Tenn., Feb. 24, 2021 (GLOBE NEWSWIRE) — Ryman Hospitality Properties, Inc. (NYSE:RHP), a lodging real estate investment trust (“REIT”) specializing in group-oriented, destination hotel assets in urban and resort markets, today announced that it will present virtually to investors attending the J.P. Morgan Gaming, Lodging, Restaurant & Leisure Management Access Forum, on Friday, March 12, at 11:45 a.m. ET. Mark Fioravanti, president and chief financial officer will participate in an analyst-led fireside chat. 

The presentation will be webcast and can be accessed on Ryman Hospitality Properties’ website at www.rymanhp.com. To listen to the webcast, please visit the investor relations section of the website at least 15 minutes prior to the beginning of the scheduled presentation to register, download and install necessary multimedia streaming software. For those who cannot listen to the live broadcast, a replay will be available after the presentation and will run for 30 days.

About Ryman Hospitality Properties, Inc.

Ryman Hospitality Properties, Inc. (NYSE: RHP) is a leading lodging and hospitality real estate investment trust that specializes in upscale convention center resorts and country music entertainment experiences. The Company’s core holdings* include a network of five of the top 10 largest non-gaming convention center hotels in the United States based on total indoor meeting space. These convention center resorts operate under the Gaylord Hotels brand and are managed by Marriott International. The Company also owns two adjacent ancillary hotels and a small number of attractions managed by Marriott International for a combined total of 10,110 rooms and more than 2.7 million square feet of total indoor and outdoor meeting space in top convention and leisure destinations across the country. The Company’s Entertainment segment includes a growing collection of iconic and emerging country music brands, including the Grand Ole Opry; Ryman Auditorium, WSM 650 AM; Ole Red and Circle, a country lifestyle media network the Company owns in a joint-venture partnership with Gray Television. For more details about Circle and how to watch Saturday’s Grand Ole Opry, please visit circleplus.com. The Company operates its Entertainment segment as part of a taxable REIT subsidiary.

*The Company is the sole owner of Gaylord Opryland Resort & Convention Center; Gaylord Palms Resort & Convention Center; Gaylord Texan Resort & Convention Center; and Gaylord National Resort & Convention Center. It is the majority owner and managing member of the joint venture that owns Gaylord Rockies Resort & Convention Center.


Investor Relations Contacts:

Media Contacts:
Mark Fioravanti, President & Chief Financial Officer Shannon Sullivan, Vice President Corporate and Brand Communications
Ryman Hospitality Properties, Inc. Ryman Hospitality Properties, Inc.
615-316-6588 (615) 316-6725
[email protected] [email protected]

~or~

~or~
Todd Siefert, Senior Vice President of Corporate Finance & Treasurer Robert Winters
Ryman Hospitality Properties, Inc. Alpha IR Group
615-316-6344 (929) 266-6315
[email protected] [email protected]



Clearway Provides Update Regarding Recent Texas Weather Events

PRINCETON, N.J., Feb. 24, 2021 (GLOBE NEWSWIRE) — Clearway Energy, Inc. (NYSE: CWEN, CWEN.A) (“CWEN”, “Company”) is today announcing an update regarding the impact related to the extreme winter weather experienced recently in Texas. Certain of the Company’s wind projects were unable to operate and experienced outages due to the weather conditions. These projects are now operating within expectations. The Company continues to assess the full financial exposure related to the circumstances, including potential mitigants, ongoing discussions with contractual counterparties, any potential disputes which may result and any state sponsored solutions to address the financial impacts caused by the circumstances. Based on available information, the Company currently estimates a direct cash impact between $20 million and $30 million in 2021.

Despite this event, the Company continues to target a long-term annual dividend growth target of 5-8% and expects to meet the upper end of this range through 2021. The Company will provide further updates in connection with the release of its financial results for the year ended December 31, 2020, which is scheduled on March 1, 2021.

About Clearway Energy, Inc.

Clearway Energy, Inc. is a leading publicly-traded energy infrastructure investor focused on modern, sustainable and long-term contracted assets across North America. Clearway Energy’s environmentally-sound asset portfolio includes over 7,000 megawatts of wind, solar and natural gas-fired power generation facilities, as well as district energy systems. Through this diversified and contracted portfolio, Clearway Energy endeavors to provide its investors with stable and growing dividend income. Clearway Energy’s Class C and Class A common stock are traded on the New York Stock Exchange under the symbols CWEN and CWEN.A, respectively. Clearway Energy, Inc. is sponsored by its controlling investor Global Infrastructure Partners III (GIP), an independent infrastructure fund manager that invests in infrastructure and businesses in both OECD and select emerging market countries, through GIP’s portfolio company, Clearway Energy Group.

Safe Harbor Disclosure

This news release contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. Such forward-looking statements are subject to certain risks, uncertainties and assumptions, and typically can be identified by the use of words such as “expect,” “estimate,” “target,” “anticipate,” “forecast,” “plan,” “outlook,” “believe” and similar terms.  Such forward-looking statements include, but are not limited to, statements regarding the estimated impact of recent weather events on the Company, its operations, its facilities and its financial results, the Company’s response to such weather events, impacts related to COVID-19 or any other pandemic, the benefits of the relationship with Global Infrastructure Partners III (GIP) and GIP’s expertise, the Company’s future relationship and arrangements with GIP and Clearway Energy Group, as well as the Company’s dividend expectations, Net Income, Adjusted EBITDA, Cash from Operating Activities, Cash Available for Distribution, the Company’s future revenues, income, indebtedness, capital structure, strategy, plans, expectations, objectives, projected financial performance and/or business results and other future events, and views of economic and market conditions.

Although Clearway Energy, Inc. believes that the expectations are reasonable, it can give no assurance that these expectations will prove to be correct, and actual results may vary materially. Factors that could cause actual results to differ materially from those contemplated above include, among others, impacts related to COVID-19 or any other pandemic, general economic conditions, hazards customary in the power industry, weather conditions, including wind and solar performance, competition in wholesale power markets, the volatility of energy and fuel prices, failure of customers to perform under contracts, changes in the wholesale power markets, changes in government regulations, the condition of capital markets generally, the Company’s ability to access capital markets, cyber terrorism and inadequate cybersecurity, the ability to engage in successful acquisitions activity, unanticipated outages at its generation facilities, adverse results in current and future litigation, failure to identify, execute or successfully implement acquisitions (including receipt of third party consents and regulatory approvals), the Company’s ability to enter into new contracts as existing contracts expire, risk relating to the Company’s relationships with GIP and Clearway Energy Group, the Company’s ability to acquire assets from GIP, Clearway Energy Group or third parties, the Company’s ability to close drop down transactions, and the Company’s ability to maintain and grow its quarterly dividends. Furthermore, any dividends are subject to available capital, market conditions, and compliance with associated laws and regulations.

Clearway Energy, Inc. undertakes no obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise. The dividend expectations are estimates as of today’s date and are based on assumptions believed to be reasonable as of this date. Clearway Energy, Inc. expressly disclaims any current intention to update such guidance. The foregoing review of factors that could cause Clearway Energy, Inc.’s actual results to differ materially from those contemplated in the forward-looking statements included in this news release should be considered in connection with information regarding risks and uncertainties that may affect Clearway Energy, Inc.’s future results included in Clearway Energy, Inc.’s filings with the Securities and Exchange Commission at www.sec.gov. In addition, Clearway Energy, Inc. makes available free of charge at www.clearwayenergy.com copies of materials it files with, or furnishes to, the Securities Exchange Commission.

# # #



Contacts:

Investors:
Akil Marsh
[email protected]
609-608-1500

Media:
Zadie Oleksiw
[email protected]
202-836-5754

Ormat Technologies Reports Fourth Quarter and Year-End 2020 Financial Results

NET INCOME ATTRIBUTABLE TO THE COMPANY’S STOCKHOLDERS FOR THE FOURTH QUARTER INCREASED 64.2% YEAR OVER YEAR

COMPANY INCREASES ITS QUARTERLY DIVIDEND BY 9% TO $0.12 PER SHARE

RENO, Nev., Feb. 24, 2021 (GLOBE NEWSWIRE) — Ormat Technologies, Inc. (NYSE: ORA) today announced financial results for the fourth quarter and full year ended December 31, 2020.

KEY FINANCIAL RESULTS

(Dollars in millions, except per share) Q4 2020 Q4 2019 Change (%) FY 2020 FY 2019 Change (%)
GAAP Measures            
Revenues            
Electricity 146.2   144.4   1.3 % 541.4   540.3   0.2 %
Product 27.4   43.8   (37.5 )% 148.1   191.0   (22.5 )%
Energy Storage 5.8   4.3   36.2 % 15.8   14.7   7.6 %
Total Revenues 179.4   192.4   (6.8 )% 705.3   746.0   (5.5 )%
                         
Gross margin (%)                        
Electricity 45.2 % 43.6 % +160 bps   44.6 % 42.1 % +250 bps  
Product 29.8 % 28.2 % +160 bps   22.4 % 23.6 % -120 bps  
Energy Storage 13.0 % (19.0 )%     11.1 % (21.8 )%    
Gross margin (%) 41.8 % 38.7 % +310 bps   39.2 % 36.1 % +310 bps  
               
Operating income 53.2   54.5   -2.3 % 214.0   193.8   10.4 %
Net income attributable to the Company’s stockholders 20.7   12.6   64.2 % 85.5   88.1   -3.0 %
Diluted EPS ($) 0.39   0.24   62.5 % 1.65   1.72   (4.1 )%
                     
Non-GAAP Measures 1                    
Adjusted Net income attributable to the Company’s stockholders 20.7   12.6   64.2 % 85.5   74.8   14.3 %
Adjusted Diluted EPS ($) 0.39   0.24   62.5 % 1.65   1.46   13.0 %
Adjusted EBITDA1 109.2   102.2   6.9 % 420.2   384.3   9.3 %
                         

“This was a solid end to a strong year for Ormat, despite unprecedented global challenges,” commented Doron Blachar, Chief Executive Officer. “For the year, we met our Adjusted EBITDA guidance, supported by improved gross margin within our electricity and storage segments. Of a particular note, our energy storage segment is growing and is now profitable. We also strengthened our balance sheet through a combination of long-term debt and an equity offering. Finally, in the fourth quarter, we restarted operations at Puna and successfully resolved all pending Kenya tax assessments.”

“Most importantly, this year we laid the foundation to accelerate the growth of our electricity and storage segments,” added Blachar. “With the tail wind of governments’ support around the world for renewable energy, we are increasing our capital expenditures for 2021 as we are confident with our solid growth plans aiming to increase our combined geothermal, energy storage and solar generating portfolio to approximately 1.5 GW by 2023 with a significant contribution coming from our energy storage business. We are targeting to reach an annual run-rate of $500 million in Adjusted EBITDA towards the end of 2022 that we expect to continue to grow as we move forward with our plans in 2023 and onwards.”

FINANCIAL AND RECENT BUSINESS HIGHLIGHTS

  • Net income attributable to the Company’s stockholders was $85.5 million, or $1.65 per diluted share, compared to $88.1 million, or $1.72 per diluted share in 2019, representing a decrease of 3% and 4.1%, respectively, mainly impacted by a non-recurring tax benefit recorded in 2019. Excluding this tax benefit, Net income attributable to the Company’s stockholders and diluted share in 2020 over 2019 increased by 14.3% and 13%, respectively;
  • Adjusted EBITDA increased 9.3% to $420.2 million, up from $384.3 million in 2019;
  • Electricity segment revenues slightly increased compared to 2019, supported by a contribution from newly added capacity at our Steamboat Complex and partially offset by curtailments in the Olkaria power plant in Kenya due to COVID-19;
  • Product segment backlog stand at $33 million as of February 24, 2021;
  • During the fourth quarter the Puna Geothermal Power Plant resumed operation and partial generation, two and a half years after the eruption of the Kilauea Volcano disrupted operations. The Company continues the field development work and expects to increase the current 13 MW capacity to full operation by mid-2021;
  • In Kenya, the Company concluded an audit related to the three tax assessments totaling approximately to the $200 million issued by the Kenya Revenue Authority (KRA) in 2019 and reached a favorable settlement during the fourth quarter;
  • We completed a public offering of 4,772,500 shares resulting in net proceeds to the Company of approximately $340 million;
  • Completed the acquisition of a shovel-ready energy storage asset in Upton County, Texas. This acquisition follows the acquisition we announced in July of the operating Pomona energy storage facility in California that increased our energy storage portfolio to 73 MW; and
  • We plan to provide further details on our long-term growth plans and targets at an Analyst Day to be conducted in May 2021.

_______________
1 Reconciliation is set forth below in this release

FOURTH QUARTER 2020 FINANCIAL RESULTS (COMPARING THE QUARTER ENDED DECEMBER 31, 2020 TO THE QUARTER ENDED DECEMBER 31, 2019)

Total revenues for the quarter were $179.4 million, down 6.8% compared to the same quarter last year. Electricity segment revenues increased 1.3% to $146.2 million, up from $144.4 million last year. The increase was mainly attributable to Steamboat Hills enhancement and repowering plant in Ormesa offset by curtailments in Olkaria. Product segment revenues decreased 37.5% to $27.4 million, down from $43.8 million in the same quarter last year due to lower backlog impacted mainly by COVID-19. Energy Storage segment revenues were $5.8 million compared to $4.3 million in the same quarter last year. The increase was mainly driven by the addition of the Rabbit Hill project in Texas and the acquired Pomona asset in California.

Net income attributable to the Company’s shareholders was $20.7 million, or $0.39 per diluted share, compared to $12.6 million, or $0.24 per diluted share, an increase of 64.2%.

Adjusted EBITDA was $109.2 million in the fourth quarter of 2020 compared to $102.2 million in the fourth quarter of 2019. The increase in Adjusted EBITDA is mainly related to the improved performance of our Electricity segment. A reconciliation of GAAP net income to EBITDA and Adjusted EBITDA is set forth below in this release.

FULL-YEAR 2020 FINANCIAL RESULTS (COMPARING THE YEAR ENDED DECEMBER 31, 2020 TO THE YEAR ENDED DECEMBER 31, 2019)

For the year ended December 31, 2020, total revenues were $705.3 million, down 5.5% from $746.0 million for the year ended December 31, 2019. Electricity segment revenues increased 0.2% to $541.4 million for the year ended December 31, 2020, up from $540.3 million for 2019. Product segment revenues decreased 22.5% to $148.1 million for the year, down from $191.0 million last year. Energy Storage segment revenues were $15.8 million for the year ended December 31, 2020 compared to $14.7 million in 2019.

Net income attributable to the Company’s stockholders was $85.5 million, or $1.65 per diluted share, compared to $88.1 million, or $1.72 per diluted share, for the same period a year ago.

Adjusted EBITDA for the year ended December 31, 2020 was $420.2 million compared to $384.3 million for 2019, an increase of 9.3%. A reconciliation of GAAP Net income to EBITDA and Adjusted EBITDA is set forth below in this release.

2021 GUIDANCE

  • Total revenues of between $640 million and $675 million
  • Electricity segment revenues between $570 million and $580 million
    • The electricity segment guidance includes $33 million from the Puna power plant in Hawaii, assuming we will meet our plans to bring it close to full operation in mid-2021.
  • Product segment revenues of between $50 million and $70 million
  • Energy Storage revenues of between $20 million and $25 million
  • Adjusted EBITDA to be between $400 million and $410 million
    • Adjusted EBITDA attributable to minority interest of approximately $32 million.

The Company provides a reconciliation of Adjusted EBITDA, a Non-GAAP financial measure for the three months and year ended December 31, 2020. However, the Company is unable to provide a reconciliation for its Adjusted EBITDA guidance range due to high variability and complexity with respect to estimating forward looking amounts for 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 February 24, 2021, 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 March 29, 2021 to stockholders of record as of the close of business on March 11, 2021. In addition, the Company expects to pay a quarterly dividend of $0.12 per share in each of the next three quarters.

CONFERENCE CALL DETAILS

Ormat will host a conference call to discuss its financial results and other matters discussed in this press release on Thursday, February 25th, at 9 a.m. ET. The call will be available as a live, listen-only webcast at investor.ormat.com. During the webcast, management will refer to slides that will be posted on the website. The slides and accompanying webcast can be accessed through the News & Events in the Investor Relations section of Ormat’s website.

An archive of the webcast will be available approximately 60 minutes after the conclusion of the live call.

Investors may access the call by dialing:

Participant dial in (toll free):   1-877-511-6790
Participant international dial-in:   1-412-902-4141
     
Conference replay    
US Toll Free:   1-877-344-7529
International Toll:   1-412-317-0088
Replay Access Code:   10151868
     

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 plan to accelerate long-term growth in the energy segment market to establish 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 to 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 activity into the energy storage services, solar Photovoltaic (PV) and energy storage plus Solar PV. Ormat’s current 932 MW of geothermal and Solar generating portfolio is spread globally in the U.S., Kenya, Guatemala, Indonesia, Honduras, and Guadeloupe and its 73 MW energy storage portfolio 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. 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. Actual future results may differ materially from those projected as a result of certain risks and uncertainties.

For a discussion of such risks and uncertainties, see “Risk Factors” as described in Ormat’s Form 10-K filed with the Securities and Exchange Commission (“SEC”) on March 2, 2020 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 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 and Twelve-Month Periods Ended December 31, 2020 and 2019

  Three Months Ended December 31, Twelve-Months Ended December 31,
  2020 2019 2020 2019
  (Dollars in thousands, except per share data)
Revenues:        
Electricity 146,192   144,368   541,393   540,333  
Product 27,388   43,814   148,125   191,009  
Energy storage 5,802   4,260   15,824   14,702  
Total revenues 179,382   192,442   705,342   746,044  
Cost of revenues:        
Electricity 80,071   81,393   300,059   312,835  
Product 19,224   31,479   114,948   145,974  
Energy storage 5,046   5,068   14,060   17,912  
Total cost of revenues 104,341   117,940   429,067   476,721  
Gross profit 75,041   74,502   276,275   269,323  
Operating expenses:        
Research and development expenses 1,114   1,875   5,395   4,647  
Selling and marketing expenses 3,660   4,123   17,384   15,047  
General and administrative expenses 17,072   14,032   60,226   55,833  
Business interruption insurance income     (20,743 )  
Operating income 53,195   54,472   214,013   193,796  
Other income (expense):        
Interest income 248   320   1,717   1,515  
Interest expense, net (19,139 ) (17,568 ) (77,953 ) (80,384 )
Derivatives and foreign currency transaction gains (losses) 1,691   (72 ) 3,802   624  
Income attributable to sale of tax benefits 8,902   4,415   25,720   20,872  
Other non-operating income (expense), net 75   (482 ) 1,418   880  
Income from operations before income tax and equity in earnings (losses) of investees 44,972   41,085   168,717   137,303  
Income tax provision (21,728 ) (25,477 ) (67,003 ) (45,613 )
Equity in earnings (losses) of investees, net 288   (1,481 ) 92   1,853  
Net income 23,532   14,127   101,806   93,543  
Net income attributable to noncontrolling interest (2,834 ) (1,521 ) (16,350 ) (5,448 )
Net income attributable to the Company’s stockholders 20,698   12,606   85,456   88,095  
Earnings per share attributable to the Company’s stockholders:        
Basic:        
Net income 0.39   0.25   1.66   1.73  
Diluted:        
Net income 0.39   0.24   1.65   1.72  
Weighted average number of shares used in computation of earnings per share attributable to the Company’s stockholders:        
Basic 53,106   51,017   51,567   50,867  
Diluted 53,551   51,511   51,937   51,227  
                 

ORMAT TECHNOLOGIES, INC AND SUBSIDIARIES
Condensed Consolidated Balance Sheet
For the Periods Ended December 31, 2020 and December 31, 2019

  December 31,
2020
  December 31,
2019
  (Dollars in thousands)

ASSETS
Current assets:      
Cash and cash equivalents 448,252     71,173  
Restricted cash and cash equivalents 88,526     81,937  
Receivables:      
Trade 149,170     154,525  
Other 17,987     22,048  
Inventories 35,321     34,949  
Costs and estimated earnings in excess of billings on uncompleted contracts 24,544     38,365  
Prepaid expenses and other 15,354     12,667  
Total current assets 779,154     415,664  
Investment in unconsolidated companies 98,217     81,140  
Deposits and other 66,989     38,284  
Deferred income taxes 119,299     129,510  
Property, plant and equipment, net 2,099,046     1,971,415  
Construction-in-process 479,315     376,555  
Operating leases right of use 16,347     17,405  
Finance leases right of use 11,633     14,161  
Intangible assets, net 194,421     186,220  
Goodwill 24,566     20,140  
Total assets 3,888,987     3,250,494  
       

LIABILITIES AND EQUITY
Current liabilities:      
Accounts payable and accrued expenses 152,763     141,857  
Short term revolving credit lines with banks (full recourse)     40,550  
Commercial paper     50,000  
Billings in excess of costs and estimated earnings on uncompleted contracts 11,179     2,755  
Current portion of long-term debt:      
Senior secured notes 24,949     24,473  
Other loans 35,897     34,458  
Full recourse 17,768     76,572  
Operating lease liabilities 2,922     2,743  
Finance lease liabilities 3,169     3,068  
Total current liabilities 248,647     376,476  
Long-term debt, net of current portion:      
Limited and non-recourse:      
Senior secured notes 315,195     339,336  
Other loans 284,928     317,395  
Senior unsecured bonds 717,534     286,453  
Other loans 59,556     68,747  
Operating lease liabilities 12,897     14,008  
Finance lease liabilities 9,104     11,209  
Liability associated with sale of tax benefits 111,476     123,468  
Deferred income taxes 87,972     97,126  
Liability for unrecognized tax benefits 1,970     14,643  
Liabilities for severance pay 18,749     18,751  
Asset retirement obligation 63,457     50,183  
Other long-term liabilities 6,235     8,039  
Total liabilities 1,937,720     1,725,834  
       
       
Redeemable noncontrolling interest 9,830     9,250  
       
Equity:      
The Company’s stockholders’ equity:      
Common stock 56     51  
Additional paid-in capital 1,262,446     913,150  
Retained earnings 550,103     487,873  
Accumulated other comprehensive income (loss) (6,620 )   (8,654 )
Total stockholders’ equity attributable to Company’s stockholders 1,805,985     1,392,420  
Noncontrolling interest 135,452     122,990  
Total equity 1,941,437     1,515,410  
Total liabilities, redeemable noncontrolling interest and equity 3,888,987     3,250,494  
           

ORMAT TECHNOLOGIES, INC AND SUBSIDIARIES
Reconciliation of EBITDA and Adjusted EBITDA
For the Three and Twelve-Month Periods Ended December 31, 2020 and 2019

We calculate EBITDA as net income before interest, taxes, depreciation and amortization. We calculate Adjusted EBITDA as net income before interest, taxes, depreciation and amortization, adjusted for (i) termination fees, (ii) impairment of long-lived assets, (iii) write-off of unsuccessful exploration activities, (iv) any mark-to-market gains or losses from accounting for derivatives, (v) merger and acquisition transaction costs, (vi) stock-based compensation, (vii) gain or loss from extinguishment of liabilities, (viii) gain or loss on sale of subsidiary and property, plant and equipment and (ix) other unusual or non-recurring items. 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.

The following table reconciles net income to EBITDA and Adjusted EBITDA for the three and Twelve-Month periods ended December 31, 2020 and 2019.

  Three Months Ended December 31, Twelve-Months Ended December 31,
  2020 2019 2020 2019
  (Dollars in thousands) (Dollars in thousands)
Net income 23,532   14,127   101,806   93,543  
Adjusted for:        
Interest expense, net (including amortization of deferred financing costs) 18,891   17,248   76,236   78,869  
Income tax provision (benefit) 21,728   25,477   67,003   45,613  
Adjustment to investment in an unconsolidated company: our proportionate share in interest expense, tax and depreciation and amortization in Sarulla 1,278   5,205   11,549   13,089  
Depreciation and amortization 39,643   36,260   151,371   143,242  
EBITDA 105,072   98,317   407,965   374,356  
Mark-to-market gains or losses from accounting for derivative 420   507   (1,192 ) (1,402 )
Stock-based compensation 2,770   2,127   9,830   9,358  
Loss from extinguishment of liability   468     468  
Merger and acquisition transaction costs 910   733   2,279   1,483  
Settlement expenses     1,277    
Adjusted EBITDA 109,172   102,152   420,159   384,263  
                 

ORMAT TECHNOLOGIES, INC AND SUBSIDIARIES
Reconciliation of Adjusted Net Income and Adjusted EPS
For the Three and Twelve-Month Periods Ended December 31, 2020 and 2019

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 and 12-month periods ended December 31, 2020 and 2019.

    Three Months Ended December 31   Twelve Months Ended December 31
    2020 2019   2020   2019
    (Dollars in millions, except per share)
                 
Net income attributable to the Company’s stockholders ($ million)   20.7 12.6   $ 85.5   88.1  
One-time tax items ($ million)         (13.3 )
Adjusted Net income attributable to the Company’s stockholders ($ million)   20.7 12.6   $ 85.5   74.8  
Weighted average number of shares diluted used in computation of earnings per share attributable to the Company’s stockholders (million)   53.6 51.5     51.9   51.2  
Diluted Adjusted EPS ($)   0.39 0.24     1.65   1.46  
                 

Ormat Technologies Contact:
Smadar Lavi
VP Corporate Finance and Head of Investor Relations
775-356-9029 (ext. 65726)
[email protected]
Investor Relations Agency Contact:
Rob Fink
FNK IR
646-415-8972
[email protected]
   



Whitestone REIT Reports Fourth Quarter and Full Year 2020 Results & Provides COVID-19 Update

-Net Income Per Diluted Share Attributable to Whitestone REIT of $0.07 for the Fourth Quarter and $0.14 for the Full Year-
-Leading the Shopping Center Industry in Foot Traffic Recovery at its Properties(1)

HOUSTON, Feb. 24, 2021 (GLOBE NEWSWIRE) — Whitestone REIT (NYSE: WSR) (“Whitestone” or the “Company”) today announced its operating and financial results for the fourth quarter and full year of 2020 with an update on its business activities in light of the ongoing COVID-19 pandemic. Whitestone is a community-centered shopping center REIT that acquires, owns, manages, develops and redevelops high-quality open-air neighborhood centers primarily in the largest, fastest-growing and most affluent markets in the Sunbelt. Whitestone seeks to create communities that thrive through creating local connections between consumers in the surrounding communities. This is accomplished by providing a well-crafted mix of national, regional and local tenants that provide daily necessities, needed services, entertainment and experiences at each of our centers. Whitestone has consistently paid a monthly dividend since its public commencement. Whitestone’s strong balanced and well-managed capital structure provides stability and flexibility to support it through a multitude of economic cycles.

Fourth Quarter Operating and Full Year Operating and Financial Highlights:

All per share amounts are on a diluted per common share and operating partnership (“OP”) unit basis unless stated otherwise.

Included in fourth quarter and full year net income attributable to common shareholders and funds from operations is a $1.7 million gain from PPP Loan forgiveness. 

  • Full Year Net Income attributable to common shareholders of $0.14 per diluted share
  • Full Year 2020 Funds from Operations (“FFO”), as defined by the National Association of Real Estate Investment Trusts (“NAREIT”), was $0.83 per share
  • Full Year FFO Core was $0.93 per share
  • Fourth Quarter Net Income attributable to common shareholders of $0.07 per diluted share
  • Fourth Quarter FFO of $0.23 per share
  • Fourth Quarter FFO Core of $0.24 per share
  • Comparable GAAP-based leasing spreads of 6.8% for the quarter and 8.9% for the year
  • Same-store Net Operating Income (“NOI”) decreased 4.2% and 4.4% for the three and twelve month periods, respectively
  • Bad debt/uncollectable revenue for the quarter was $1.3 million, or $0.03 per share, primarily due to COVID-19 pandemic and included $151,000 of non-cash straight-line rent
  • Total Net Debt, defined as outstanding debt plus pro rata share of outstanding debt of real estate partnership less cash and pro rata share of cash of real estate partnership, reduced $12.0 Million, or 2% from prior year

COVID-19 Update Summary (as of February 23, 2021)

  • All 53 community centers are open and have remained open throughout the pandemic
  • 99% of tenants are open and operating (based on ABR)
  • 95% of fourth quarter 2020 contractual rents have been collected
  • 96% of total January contractual rents have been collected to date
  • Entered into rent deferral agreements representing 3% of fourth quarter 2020 revenue
  • Grew cash and cash equivalents by $10.2 million from prior year

Jim Mastandrea, Chairman and Chief Executive Officer of Whitestone REIT, commented, “Whitestone’s strong performance and operating trends throughout the pandemic, achieving near-or-top-of-the-industry’s quarterly cash rental collections, and leading the shopping center industry in foot traffic recovery at our properties, sets it apart. Our focus since the pandemic started was to protect our employees, tenants, and the value of our properties so we can continue to produce stable cash flows. Through the sheer dedication and unyielding efforts of our associates, we were able to stabilize our properties and produce stellar rental collection results, while also continuing to lease space. As exemplified by our recent dividend increase, our cash flow remains strong and we remain firmly committed to serving all of our stakeholders by continuing to outperform.”

(1) Source: S&P Global Market Intelligence (S&P), December 7,2020. Whitestone REIT (NYSE: WSR) ranked first in year-over-year recovery in Black Friday foot traffic. The analysis by S&P, which sourced data from
AirSage
, reveals that the foot traffic in Whitestone centers has recovered to 80.4% of the previous year’s foot traffic levels as compared to the overall public shopping center industry average of a 48%
recovery. Includes properties owned by Acadia Realty Trust,
Brixmor
Property Group Inc., Cedar Realty Trust, Inc., SITE Center Corp, Federal Realty Investment Trust, Kimco Realty Corporation, Kite Realty Group Trust, RPT Realty, Regency Centers Corporation, Retail Opportunity Investments Corp., Retail Properties of America, Inc., Retail Value Inc., Saul Centers, Inc., Urban Edge Properties,
Urstadt
Biddle Properties Inc., Weingarten Realty Investors, Wheeler Real Estate Investment Trust Inc. and Whitestone REIT.


Financial Results

Reconciliations of Net Income Attributable to Whitestone REIT to FFO, FFO Core and NOI are included herein.

Net income attributable to common shareholders for the quarter ended December 31, 2020 was $3.1 million, or $0.07 per diluted share, inclusive of $1.3 million or $0.03 per share, related to credit loss and straight-line rent reserve, primarily due to the impact of the COVID-19 pandemic. Net income attributable to common shareholders for the quarter ended December 31, 2019 was $15.8 million, or $0.37 per share.

FFO for the quarter ended December 31, 2020 was $10.2 million, or $0.23 per share, as compared to $8.9 million, or $0.21 per share for the quarter ended December 31, 2019. FFO Core for the quarter ended December 31, 2020 was $10.4 million or $0.24 per share, compared to $11.1 million, or $0.26 per share for the quarter ended December 31, 2019. The change in FFO is primarily the result of a $1.7 million gain from PPP loan forgiveness offset by $1.3 million of bad debt/uncollectable revenue primarily related to the impact of the COVID-19 pandemic. FFO Core excludes the $1.7 million PPP loan forgiveness and the change is primarily the result of $1.3 million of bad debt/uncollectable revenue primarily related to the impact of the COVID-19 pandemic.


Operating Results

For the periods ending December 31, 2020, the Company’s operating highlights were as follows:

  Q4-2020 YTD 2020
Occupancy:    
Wholly Owned Properties   88.2 %   88.2 %
Same Store Property Net Operating Income Change(1)   (4.2 )%   (4.4 )%
     
Rental Rate Growth – Total (GAAP Basis):   6.8 %   8.9 %
New Leases   (5.4 )%   (0.4 )%
Renewal Leases   10.1 %   11.1 %
     
Leasing Transactions:    
Number of New Leases   28     105  
New Leases – Annualized Revenue (millions) $ 6.5   $ 27.6  
Number of Renewal Leases   56     201  
Renewal Leases – Annualized Revenue (millions) $ 12.5   $ 47.9  

(1) Excludes straight-line rent, amortization of above/below market rates and lease termination fees in both periods.


Real Estate Portfolio Update


Community Centered Properties™


 Portfolio Statistics:

As of December 31, 2020, Whitestone wholly owned 58 Community Centered Properties™ with 5.0 million square feet of gross leasable area (“GLA”). Five of the 58 Community Centered Properties™ are land parcels held for future development. The portfolio is comprised of 30 properties in Texas, 27 in Arizona and one in Illinois. Whitestone’s Community Centered Properties™ are located in Austin (4), San Antonio (3), Chicago (1), Dallas-Fort Worth (8), Houston (15) and the greater Phoenix metropolitan area (27). In addition to being business friendly, these are six of the top markets in the country in terms of size, economic strength and population growth. 2017 estimates show the projected 5-year population growth rates for both Austin and Dallas-Fort Worth to be 9.7%, San Antonio to be 8.6%, Houston to be 8.0%, and Phoenix to be 6.6% (2). The Company’s properties in these markets are generally located on the best retail corners embedded in affluent communities. The Company also owns an 81.4% equity interest in and manages eight properties containing 0.9 million square feet of GLA through its investment in Pillarstone OP.

At the end of the fourth quarter, the Company’s diversified tenant base was comprised of 1,391 tenants, with the largest tenant accounting for only 2.8% of annualized base rental revenues. Lease terms range from less than one year for smaller tenants to over 15 years for larger tenants. Whitestone’s leases generally include minimum monthly lease payments and tenant reimbursements for payment of taxes, insurance and maintenance, and typically exclude restrictive lease clauses.

(2) Source: Claritas, as of April 2017.


COVID-19 Update Summary

During the fourth quarter of 2020, the COVID-19 pandemic continued to impact the Company’s operations. As of February 23, 2021, approximately 99% (% of ABR) of the Company’s tenants were open for business. Cash collections for the quarter totaled 95% of contractual rents, up from 90% in the prior quarter. These strong collections are a result of the Company’s strategic locations, well-crafted tenant mix and the efforts of its team members in proactively working with tenants to assist them through these difficult times. Cash collections in January 2021 are 96% collected to date.


Balance Sheet and Liquidity

At December 31, 2020, Whitestone had $25.8 million in cash and cash equivalents, $18.4 million of availability and $130.5 million of capacity under its credit facility.

On March 24, 2020, to enhance its liquidity, Whitestone drew $30.0 million on its credit facility. During 2020, Whitestone repaid $12.2 million in mortgage debt and repaid $20 million of borrowings under its credit facility, fully repaying all liquidity borrowings by year-end. Whitestone has no real estate debt maturing until 2022.

The Company has undepreciated real estate assets of $1.1 billion at December 31, 2020.

At December 31, 2020, 51 of the Company’s wholly owned 58 properties were unencumbered by mortgage debt, with an undepreciated cost basis of $825.6 million. At December 31, 2020, the Company had total real estate debt, net of cash, of $619.4 million, of which approximately 85% was subject to fixed interest rates. The Company’s weighted average interest rate on all fixed rate debt as of the end of the fourth quarter was 4.1% and the weighted average remaining term was 4.4 years.


Dividend

On December 10, 2020, the Company declared a quarterly cash distribution of $0.105 per common share and OP unit for the first quarter of 2021, to be paid in three equal installments of $0.035 in January, February, and March of 2021. On February 10, 2021, the Company raised its quarterly distribution to $0.1075 per common share and OP units, equal to a monthly distribution of $0.035833, beginning with the March 2021 distribution.


Conference Call Information

In conjunction with the issuance of its financial results, the Company invites you to listen to the its earnings release conference call to be broadcast live on Thursday, February 25, 2021 at 8:00 A.M. Central Time. The call will be led by James C. Mastandrea, Chairman and Chief Executive Officer, and David K. Holeman, Chief Financial Officer. Conference call access information is as follows:

Dial-in number for domestic participants:
Dial-in number for international participants:
      (877) 407-4018
(201) 689-8471
     

The conference call will be recorded, and a telephone replay will be available through Thursday, March 11, 2021. Replay access information is as follows:

Replay number for domestic participants:
Replay number for international participants:
Passcode (for all participants):
     (844) 512-2921
(412) 317-6671
13715688
     

To listen to a webcast of the conference call, click on the Investor Relations tab of the Company’s website, www.whitestonereit.com, and then click on the webcast link. A replay of the call will be available on Whitestone’s website via the webcast link until the Company’s next earnings release. Additional information about Whitestone can be found on the Company’s website.

The fourth quarter and full year earnings release and supplemental data package will be located in the Investor Relations section of the Company’s website. For those without internet access, the earnings release and supplemental data package will be available by mail upon request. To receive a copy, please call the Company’s Investor Relations line at (713) 435-2219.


Supplemental Financial Information

Supplemental materials and details regarding Whitestone’s results of operations, communities and tenants are available on the Company’s website at www.whitestonereit.com.


About Whitestone REIT

Whitestone is a community-centered shopping center REIT that acquires, owns, manages, develops and redevelops high-quality open-air neighborhood centers primarily in the largest, fastest-growing and most affluent markets in the Sunbelt. Whitestone seeks to create communities that thrive through creating local connections between consumers in the surrounding communities and a well-crafted mix of national, regional and local tenants that provide daily necessities, needed services, entertainment and experiences. Whitestone is a monthly dividend paying stock and has consistently paid dividends for over 15 years. Whitestone’s strong, balanced and managed capital structure provides stability and flexibility for growth and positions Whitestone to perform well through economic cycles. For additional information, please visit www.whitestonereit.com.


Forward-Looking Statements

Certain statements contained in this press release constitute forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended (the “Securities Act”) and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). The Company intends for all such forward-looking statements to be covered by the safe-harbor provisions for forward-looking statements contained in Section 27A of the Securities Act and Section 21E of the Exchange Act, as applicable. Such information is subject to certain risks and uncertainties, as well as known and unknown risks, which could cause actual results to differ materially from those projected or anticipated. Therefore, such statements are not intended to be a guarantee of our performance in future periods. Such forward-looking statements include statements about our earnings guidance, future liquidity, performance growth and expectations and other matters and can generally be identified by the Company’s use of forward-looking terminology, such as “may,” “will,” “plan,” “expect,” “intend,” “anticipate,” “believe,” “continue,” “goals” or similar words or phrases that are predictions of future events or trends and which do not relate solely to historical matters.

The following are additional factors that could cause the Company’s actual results and its expectations to differ materially from those described in the Company’s forward-looking statements: uncertainties related to the COVID-19 pandemic, including the unknown duration and economic, operational and financial impacts of the COVID-19 pandemic, and the actions taken or contemplated by U.S. and local governmental authorities or others in response to the pandemic on the Company’s business, employees and tenants, including, among others, (a) changes in tenant demand for the Company’s properties, (b) financial challenges confronting major tenants, including as a result of decreased customers’ willingness to frequent, and mandated stay in place orders that have prevented customers from frequenting, some of Company’s tenants’ businesses and the impact of these issues on the Company’s ability to collect rent from its tenants; (c) operational changes implemented by the Company, including remote working arrangements, which may put increased strain on IT systems and create increased vulnerability to cybersecurity incidents, (d) significant reduction in the Company’s liquidity due to the lack of further availability under its revolving credit facility and limited ability to access the capital markets and other sources of financing on attractive terms or at all, and (e) prolonged measures to contain the spread of COVID-19 or the premature easing of government-imposed restrictions implemented to contain the spread of COVID-19; adverse economic or real estate developments or conditions in Texas or Arizona, Houston and Phoenix in particular, including as a result of a surge in COVID-19 cases in such areas and the impact on our tenants’ ability to pay their rent, which could result in bad debt allowances or straight-line rent reserve adjustments; the imposition of federal income taxes if we fail to qualify as a real estate investment trust (“REIT”) in any taxable year or forego an opportunity to ensure REIT status; the Company’s ability to meet its long-term goals, including its ability to execute effectively its acquisition and disposition strategy, to continue to execute its development pipeline on schedule and at the expected costs, and its ability to grow its NOI as expected, which could be impacted by a number of factors, including, among other things, its ability to continue to renew leases or re-let space on attractive terms and to otherwise address its leasing rollover; its ability to successfully identify, finance and consummate suitable acquisitions, and the impact of such acquisitions, including financing developments, capitalization rates and internal rates of return; the Company’s ability to reduce or otherwise effectively manage its general and administrative expenses; the Company’s ability to fund from cash flows or otherwise distributions to its shareholders at current rates or at all; current adverse market and economic conditions including, but not limited to, the significant volatility and disruption in the global financial markets caused by the COVID-19 pandemic and potential volatility as a result of the U.S. presidential election; lease terminations or lease defaults; the impact of competition on the Company’s efforts to renew existing leases; changes in the economies and other conditions of the specific markets in which the Company operates; economic, legislative and regulatory changes, including changes to laws governing REITs and the impact of the legislation commonly known as the Tax Cuts and Jobs Act; the success of the Company’s real estate strategies and investment objectives; the Company’s ability to continue to qualify as a REIT under the Internal Revenue Code of 1986, as amended; and other factors detailed in the Company’s most recent Annual Report on Form 10-K, Quarterly Reports on Form 10-Q and other documents the Company files with the Securities and Exchange Commission from time to time.


Non-GAAP Financial Measures

This release contains supplemental financial measures that are not calculated pursuant to U.S. generally accepted accounting principles (“GAAP”) including EBITDAre, EBITDAre-Adjusted, FFO, FFO Core, and NOI. Following are explanations and reconciliations of these metrics to their most comparable GAAP metric.

EBITDAre: NAREIT defines EBITDAre as net income computed in accordance with GAAP, plus interest expense, income tax expense, depreciation and amortization and impairment write-downs of depreciable property and of investments in unconsolidated affiliates caused by a decrease in value of depreciable property in the affiliate, plus, or minus losses and gains on the disposition of depreciable property, including losses/gains on change in control and adjustments to reflect the entity’s share of EBITDAre of the unconsolidated affiliates and consolidated affiliates with non-controlling interests. The Company calculates EBITDAre in a manner consistent with the NAREIT definition. Management believes that EBITDAre will represent a supplemental non-GAAP performance measure that will provide investors with a relevant basis for comparing REITs. There can be no assurance the EBITDAre as presented by the Company is comparable to similarly titled measures of other REITs. EBITDAre should not should not be considered as alternatives to net income or other measurements under GAAP as indicators of operating performance or to cash flows from operating, investing or financing activities as measures of liquidity. EBITDAre does not reflect working capital changes, cash expenditures for capital improvements or principal payments on indebtedness.

EBITDAre-Adjusted: The Company also presents EBITDAre-Adjusted as an additional supplemental measure as we believe it is reflective of the core operating performance of our portfolio of properties. EBITDAre-Adjusted is defined as NAREIT EBITDAre excluding charges and gains related to non-cash and non-operating transactions and other events that could affect the comparability of operating results. Specific examples of items excluded from EBITDAre-Adjusted include, but are not limited to, share-based compensation, proxy contest costs and management fees, net of related costs. There can be no assurance that EBITDAre-Adjusted as presented by the Company is comparable to similarly titled measures of other REITs. EBITDAre-Adjusted should not be considered an alternative to net income or other measurements under GAAP as indicators of operating performance or to cash flows from operating, investing or financing activities as measures of liquidity. EBITDAre-Adjusted does not reflect working capital changes, cash expenditures for capital improvements or principal payments on indebtedness.

FFO: Funds From Operations: Management believes that FFO is a useful measure of the Company’s operating performance. The Company computes FFO as defined by NAREIT, which states that FFO should represent net income (loss) (calculated in accordance with GAAP), excluding depreciation and amortization related to real estate, gains or 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. FFO does not represent cash flows from operating activities determined in accordance with GAAP and should not be considered an alternative to net income as an indication of the Company’s performance or to cash flow from operations as a measure of liquidity or ability to make distributions and service debt.

Management considers FFO a useful additional measure of performance for an equity REIT because it facilitates an understanding of the operating performance of its properties without giving effect to real estate depreciation and amortization, which assumes that the value of real estate assets diminishes predictably over time. Since real estate values have historically risen or fallen with market conditions, management believes that FFO provides a more meaningful and accurate indication of the Company’s performance and useful information for the investment community to compare Whitestone to other REITs since FFO is generally recognized as the industry standard for reporting the operations of REITs.

Other REITs may use different methodologies for calculating FFO, and accordingly, the Company’s FFO may not be comparable to other REITs. The Company presents FFO per diluted share calculations that are based on the outstanding dilutive common shares plus the outstanding OP units for the periods presented.

FFO Core: Funds From Operations Core: Management believes that the computation of FFO in accordance with NAREIT’s definition includes certain non-cash and non-comparable items that affect the Company’s period-over-period performance. These items include, but are not limited to, legal settlements, proxy contest fees, debt extension costs, non-cash share-based compensation expense and rent support agreement payments received from sellers on acquired assets. In addition, the Company believes that FFO Core is a useful supplemental measure for the investing community to use in comparing the Company to other REITs as many REITs provide some form of adjusted or modified FFO. However, other REITs may use different adjustments, and the Company’s FFO Core may not be comparable to the adjusted or modified FFO of other REITs.

NOI: Net Operating Income: Management believes that NOI is a useful measure of the Company’s property operating performance. The Company defines NOI as operating revenues (rental and other revenues) less property and related expenses (property operation and maintenance and real estate taxes). Because NOI excludes general and administrative expenses, depreciation and amortization, involuntary conversion, interest expense, interest income, provision for income taxes, gain or loss on sale or disposition of assets, pro rata share of NOI of unconsolidated entities and capital expenditures and leasing costs, it provides a performance measure that, when compared year over year, reflects the revenues and expenses directly associated with owning and operating commercial real estate properties and the impact to operations from trends in occupancy rates, rental rates and operating costs, providing perspective not immediately apparent from net income. The Company uses NOI to evaluate its operating performance since NOI allows the Company to evaluate the impact of factors, such as occupancy levels, lease structure, lease rates and tenant base, have on the Company’s results, margins and returns. In addition, management believes that NOI provides useful information to the investment community about the Company’s property and operating performance when compared to other REITs since NOI is generally recognized as a standard measure of property performance in the real estate industry. However, NOI should not be viewed as a measure of the Company’s overall financial performance since it does not reflect general and administrative expenses, depreciation and amortization, involuntary conversion, interest expense, interest income, provision for income taxes, gain or loss on sale or disposition of assets, and the level of capital expenditures and leasing costs necessary to maintain the operating performance of the Company’s properties. Other REITs may use different methodologies for calculating NOI, and accordingly, the Company’s NOI may not be comparable to that of other REITs.

Same Store NOI: Management believes that Same Store NOI is a useful measure of the Company’s property operating performance because it includes only the properties that have been owned for the entire period being compared, and that it is frequently used by the investment community. Same Store NOI assists in eliminating differences in NOI due to the acquisition or disposition of properties during the period being presented, providing a more consistent measure of the Company’s performance. The Company defines Same Store NOI as operating revenues (rental and other revenues, excluding straight-line rent adjustments, amortization of above/below market rents, and lease termination fees) less property and related expenses (property operation and maintenance and real estate taxes), Non-Same Store NOI, and NOI of our investment in Pillarstone OP (pro rata). We define “Non-Same Stores” as properties that have been acquired since the beginning of the period being compared and properties that have been sold, but not classified as discontinued operations. Other REITs may use different methodologies for calculating Same Store NOI, and accordingly, the Company’s Same Store NOI may not be comparable to that of other REITs.

Investors Contact:

Kevin Reed, Director of Investor Relations
Whitestone REIT
(713) 435-2219
[email protected]

Whitestone REIT and Subsidiaries
CONSOLIDATED BALANCE SHEETS
(in thousands, except share and per share data)
         
    December 31, 2020     December 31, 2019  
             
ASSETS
Real estate assets, at cost            
Property   $ 1,106,426     $ 1,099,955  
Accumulated depreciation   (163,712 )   (137,933 )
Total real estate assets   942,714     962,022  
Investment in real estate partnership   33,979     34,097  
Cash and cash equivalents   25,777     15,530  
Restricted cash   179     113  
Escrows and acquisition deposits   9,274     8,388  
Accrued rents and accounts receivable, net of allowance for doubtful accounts (1)   23,009     22,854  
Receivable due from related party   335     477  
Unamortized lease commissions, legal fees and loan costs   7,686     8,960  
Prepaid expenses and other assets(2)   2,049     3,819  
Total assets   $ 1,045,002     $ 1,056,260  
                 
LIABILITIES AND EQUITY
Liabilities:            
Notes payable   $ 644,185     $ 644,699  
Accounts payable and accrued expenses(3)   50,918     39,336  
Payable due to related party   125     307  
Tenants’ security deposits   6,916     6,617  
Dividends and distributions payable   4,532     12,203  
Total liabilities   706,676     703,162  
Commitments and contingencies:        
Equity:            
Preferred shares, $0.001 par value per share; 50,000,000 shares authorized; none issued and outstanding as of December 31, 2020 and December 31, 2019        
Common shares, $0.001 par value per share; 400,000,000 shares authorized; 42,391,316 and 41,492,117 issued and outstanding as of December 31, 2020 and December 31, 2019, respectively   42     41  
Additional paid-in capital   562,250     554,816  
Accumulated deficit   (215,809 )   (204,049 )
Accumulated other comprehensive loss   (14,400 )   (5,491 )
Total Whitestone REIT shareholders’ equity   332,083     345,317  
Noncontrolling interest in subsidiary   6,243     7,781  
Total equity   338,326     353,098  
Total liabilities and equity   $ 1,045,002     $ 1,056,260  
             

Whitestone REIT and Subsidiaries 
CONSOLIDATED BALANCE SHEETS
(in thousands)
             
    December 31, 2020     December 31, 2019  
             
(1)
Accrued rents and accounts receivable, net of allowance for doubtful accounts
           
Tenant receivables   $                                22,956     $                                16,741  
Accrued rents and other recoveries   16,348     16,983  
Allowance for doubtful accounts   (16,426 )   (11,173 )
Other receivables   131     303  
Total accrued rents and accounts receivable, net of allowance for doubtful accounts   $                                23,009     $                                22,854  
             
(2) Operating lease right of use assets (net)   $                                     592     $                                  1,328  
(3) Operating lease liabilities   $                                     603     $                                  1,331  

Whitestone REIT and Subsidiaries
CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS)
(in thousands)
                   
  Three Months Ended December 31,     Year Ended December 31,  
   2020       2019       2020       2019   
Revenues                      
Rental(1) $                               28,968     $                               29,487     $                             115,084     $                             117,014  
Management, transaction, and other fees 866     613     2,831     2,237  
Total revenues 29,834     30,100     117,915     119,251  
                       
Operating expenses                      
Depreciation and amortization 7,191     6,875     28,303     26,740  
Operating and maintenance 5,542     5,851     20,563     20,611  
Real estate taxes 4,424     3,819     18,015     16,293  
General and administrative 5,699     5,147     21,303     21,661  
Total operating expenses 22,856     21,692     88,184     85,305  
                       
Other expenses (income)                      
Interest expense 6,209     6,547     25,770     26,285  
Loss (gain) on sale or disposal of assets, net (518 )   (753 )   364     (638 )
Gain on loan forgiveness (1,734 )       (1,734 )    
Interest, dividend and other investment income (72 )   (109 )   (278 )   (659 )
Total other expense 3,885     5,685     24,122     24,988  
                       
Income before equity investment in real estate partnership and income tax 3,093     2,723     5,609     8,958  
                       
Equity in earnings of real estate partnership 169     13,596     921     15,076  
Provision for income tax (91 )   (76 )   (379 )   (400 )
Income from continuing operations 3,171     16,243     6,151     23,634  
                       
Loss (gain) on sale of property from discontinued operations     (107 )       594  
Income from discontinued operations     (107 )       594  
                       
Net income 3,171     16,136     6,151     24,228  
                       
Less: Net income attributable to noncontrolling interests 59     360     117     545  
                       
Net income attributable to Whitestone REIT $                                 3,112     $                               15,776     $                                 6,034     $                               23,683  

Whitestone REIT and Subsidiaries
CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS)
(in thousands)
                     
  Three Months Ended December 31,     Year Ended December 31,  
   2020   2019       2020       2019   
Basic Earnings Per Share:                  
Income from continuing operations attributable to Whitestone REIT, excluding amounts attributable to unvested restricted shares $ 0.07     $ 0.39     $ 0.14     $ 0.57  
Income from discontinued operations attributable to Whitestone REIT 0.00 0.00     0.00     0.02  
Net income attributable to common shareholders, excluding amounts attributable to unvested restricted shares $ 0.07     $ 0.39     $ 0.14     $ 0.59  
Diluted Earnings Per Share:                  
Income from continuing operations attributable to Whitestone REIT, excluding amounts attributable to unvested restricted shares $ 0.07     $ 0.38     $ 0.14     $ 0.56  
Income from discontinued operations attributable to Whitestone REIT 0.00 (0.01 )   0.00     0.01  
Net income attributable to common shareholders, excluding amounts attributable to unvested restricted shares $ 0.07     $ 0.37     $ 0.14     $ 0.57  
                     
Weighted average number of common shares outstanding:                  
Basic 42,368 40,614     42,244     40,184  
Diluted 43,337 42,090     42,990     41,462  
                   
Consolidated Statements of Comprehensive Income (Loss)                  
                   
Net income $ 3,171     $ 16,136     $ 6,151     $ 24,228  
                   
Other comprehensive income (loss)                  
                   
Unrealized gain (loss) on cash flow hedging activities 1,333 1,912     (9,062 )   (9,828 )
                   
Comprehensive income (loss) 4,504 18,048     (2,911 )   14,400  
                   
Less: Net income attributable to noncontrolling interests 59 360     117     545  
Less: Comprehensive income (loss) attributable to noncontrolling interests 30 43     (173 )   (221 )
                   
Comprehensive income (loss) attributable to Whitestone REIT $ 4,415     $ 17,645     $ (2,855 )   $ 14,076  

Whitestone REIT and Subsidiaries
CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS)
(in thousands)
                       
  Three Months Ended December 31,     Year Ended December 31,  
   2020      2019      2020      2019  
              December 31,  
(1) Rental                      
Rental revenues $ 21,700     $ 21,998     $ 87,291     $ 86,750  
Recoveries 8,466     8,047     33,442     31,748  
Bad debt (1,198 )   (558 )   (5,649 )   (1,484 )
Total rental $ 28,968     $ 29,487     $ 115,084     $ 117,014  

Whitestone REIT and Subsidiaries CONSOLIDATED STATEMENTS OF CASH FLOWS (in thousands)
             
    Year Ended December 31,  
     2020       2019   
Cash flows from operating activities:            
Net income from continuing operations   $                                  6,151     $                                23,634  
Net income from discontinued operations       594  
Net income   6,151     24,228  
Adjustments to reconcile net income to net cash provided by operating activities:            
Depreciation and amortization   28,303     26,740  
Amortization of deferred loan costs   1,113     1,095  
Gain on sale or disposal of assets and loan forgiveness, net   (1,370 )   (638 )
Bad debt   5,649     1,484  
Share-based compensation   6,063     6,483  
Equity in earnings of real estate partnership   (921 )   (15,076 )
Changes in operating assets and liabilities:            
Escrows and acquisition deposits   (885 )   (177 )
Accrued rents and accounts receivable   (6,055 )   (2,998 )
Receivable due from related party   142     (83 )
Distributions from real estate partnership   1,039     6,926  
Unamortized lease commissions, legal fees and loan costs   (1,343 )   (1,824 )
Prepaid expenses and other assets   2,255     (4,163 )
Accounts payable and accrued expenses   2,518     5,609  
Payable due to related party   (182 )   249  
Tenants’ security deposits   299     487  
Net cash provided by operating activities   42,776     47,748  
Cash flows from investing activities:            
Acquisitions of real estate       (34,804 )
Additions to real estate   (7,362 )   (13,243 )
Proceeds from note receivable   922      
Proceeds from financed receivable due from related party       5,661  
Net cash used in investing activities   (6,440 )   (42,386 )
Net cash provided by investing activities of discontinued operations       594  
Cash flows from financing activities:            
Distributions paid to common shareholders   (25,203 )   (45,627 )
Distributions paid to OP unit holders   (511 )   (1,055 )
Proceeds from issuance of common shares, net of offering costs   2,241     21,244  
Payments of exchange offer costs   (43 )   (120 )
Proceeds from bonds and notes payable   1,734     100,000  
Net proceeds from (payments of) credit facility   10,000     (66,700 )
Repayments of notes payable   (12,164 )   (8,095 )
Payments of loan origination costs       (2,970 )
Repurchase of common shares   (2,077 )   (776 )
Net cash used in financing activities   (26,023 )   (4,099 )
Net increase in cash, cash equivalents and restricted cash   10,313     1,857  
Cash, cash equivalents and restricted cash at beginning of period   15,643     13,786  
Cash, cash equivalents and restricted cash at end of period (1)   $                                25,956     $                                15,643  
             
(1) For a reconciliation of cash, cash equivalents and restricted cash, see supplemental disclosures below.    

Whitestone REIT and Subsidiaries
CONSOLIDATED STATEMENTS OF CASH FLOWS
Supplemental Disclosures
(in thousands)
             
    Year Ended December 31,  
     2020       2019   
Supplemental disclosure of cash flow information:            
Cash paid for interest   $ 24,741     $ 25,360  
Cash paid for taxes   $ 353     $ 396  
Non cash investing and financing activities:            
Disposal of fully depreciated real estate   $ 88     $ 234  
Financed insurance premiums   $ 1,431     $ 1,238  
Value of shares issued under dividend reinvestment plan   $ 89     $ 137  
Value of common shares exchanged for OP units   $ 1,162     $ 186  
Change in fair value of cash flow hedge   $ (9,062 )   $ (9,828 )
Reallocation of ownership percentage between parent and subsidiary   $ (20 )   $  
Property received as termination fee   $ 251     $  
             
    December 31,  
     2020       2019   
Cash, cash equivalents and restricted cash            
Cash and cash equivalents   $ 25,777     $ 15,530  
Restricted cash   179     113  
Total cash, cash equivalents and restricted cash   $ 25,956     $ 15,643  

  Three Months Ended     Year Ended  
  December 31,     December 31,  
FFO (NAREIT) AND FFO CORE  2020       2019       2020       2019   
Net income attributable to Whitestone REIT $                                  3,112     $                                15,776     $                                  6,034     $                                23,683  
Adjustments to reconcile to FFO:                      
Depreciation and amortization of real estate assets 7,153     6,811     28,096     26,468  
Depreciation and amortization of real estate assets of real estate partnership (pro rata) 411     441     1,673     2,362  
Loss (gain) on sale or disposal of assets (518 )   (753 )   364     (638 )
Loss (gain) on sale of property from discontinued operations     107         (594 )
Loss (gain) on sale or disposal of properties or assets of real estate partnership (pro rata) 13     (13,820 )   91     (13,800 )
Net income attributable to noncontrolling interests 59     360     117     545  
FFO (NAREIT) 10,230     8,922     36,375     38,026  
Adjustments to reconcile to FFO Core:                      
Share-based compensation expense 1,896     1,713     6,063     6,483  
Early debt extinguishment costs of real estate partnership     426         426  
Gain on loan forgiveness (1,734 )       (1,734 )    
FFO Core $                                10,392     $                                11,061     $                                40,704     $                                44,935  
                       
FFO PER SHARE AND OP UNIT CALCULATION                      
Numerator:                      
FFO $                                10,230     $                                  8,922     $                                36,375     $                                38,026  
Distributions paid on unvested restricted common shares             (41 )
FFO excluding amounts attributable to unvested restricted common shares $                                10,230     $                                  8,922     $                                36,375     $                                37,985  
FFO Core excluding amounts attributable to unvested restricted common shares $                                10,392     $                                11,061     $                                40,704     $                                44,894  
Denominator:                      
Weighted average number of total common shares – basic 42,368     40,614     42,244     40,184  
Weighted average number of total noncontrolling OP units – basic 773     922     821     924  
Weighted average number of total common shares and noncontrolling OP units – basic 43,141     41,536     43,065     41,108  
                       
Effect of dilutive securities:                      
Unvested restricted shares 969     1,476     746     1,278  
Weighted average number of total common shares and noncontrolling OP units – diluted 44,110     43,012     43,811     42,386  
                       
FFO per common share and OP unit – basic $                                    0.24     $                                    0.21     $                                    0.84     $                                    0.92  
FFO per common share and OP unit – diluted $                                    0.23     $                                    0.21     $                                    0.83     $                                    0.90  
                       
FFO Core per common share and OP unit – basic $                                    0.24     $                                    0.27     $                                    0.95     $                                    1.09  
FFO Core per common share and OP unit – diluted $                                    0.24     $                                    0.26     $                                    0.93     $                                    1.06  
                       
                       
  Three Months Ended     Year Ended  
  December 31,     December 31,  
PROPERTY NET OPERATING INCOME  2020       2019       2020       2019   
Net income attributable to Whitestone REIT $                                  3,112     $                                15,776     $                                  6,034     $                                23,683  
General and administrative expenses 5,699     5,147     21,303     21,661  
Depreciation and amortization 7,191     6,875     28,303     26,740  
Equity in earnings of real estate partnership (169 )   (13,596 )   (921 )   (15,076 )
Interest expense 6,209     6,547     25,770     26,285  
Interest, dividend and other investment income (72 )   (109 )   (278 )   (659 )
Provision for income taxes 91     76     379     400  
Loss (gain) on sale of property from discontinued operations     107         (594 )
Management fee, net of related expenses 88     22     334     (42 )
Loss (gain) on sale or disposal of assets, net (518 )   (753 )   364     (638 )
Gain on loan forgiveness (1,734 )       (1,734 )    
NOI of real estate partnership (pro rata) 982     1,121     4,232     6,273  
Net income attributable to noncontrolling interests 59     360     117     545  
NOI 20,938     21,573     83,903     88,578  
Non-Same Store NOI  (1) (257 )   (267 )   (1,691 )   (155 )
NOI of real estate partnership (pro rata) (982 )   (1,121 )   (4,232 )   (6,273 )
NOI less Non-Same Store NOI and NOI of real estate partnership (pro rata) 19,699     20,185     77,980     82,150  
Same Store straight-line rent adjustments (8 )   (192 )   632     (1,110 )
Same Store amortization of above/below market rents (198 )   (72 )   (787 )   (761 )
Same Store lease termination fees (585 )   (176 )   (1,613 )   (576 )
Same Store NOI (2) $                                18,908     $                                19,745     $                                76,212     $                                79,703  
                       
  Three Months Ended     Year Ended  
  December 31,     December 31,  
EARNINGS BEFORE INTEREST, TAX, DEPRECIATION AND AMORTIZATION FOR REAL ESTATE (EBITDAre)  2020       2019       2020       2019   
                       
Net income attributable to Whitestone REIT $                                  3,112     $                                15,776     $                                  6,034     $                                23,683  
Depreciation and amortization 7,191     6,875     28,303     26,740  
Interest expense 6,209     6,547     25,770     26,285  
Provision for income taxes 91     76     379     400  
Net income attributable to noncontrolling interests 59     360     117     545  
Equity in earnings of real estate partnership (169 )   (13,596 )   (921 )   (15,076 )
EBITDAre adjustments for real estate partnership 794     1,039     3,484     5,939  
Loss (gain) on sale of property from discontinued operations     107         (594 )
Loss (gain) on sale or disposal of assets, net (518 )   (753 )   364     (638 )
Gain on loan forgiveness (1,734 )       (1,734 )    
EBITDAre                                 15,035                                     16,431                                     61,796                                     67,284  
Management fee, net of related expenses 88     22     334     (42 )
Share-based compensation expense 1,896     1,713     6,063     6,483  
EBITDAre-Adjusted $                              17,019     $                              18,166     $                              68,193     $                              73,725  



Tastemaker Acquisition Corp. Announces the Separate Trading of its Class A Common Stock and Warrants, Commencing March 1, 2021

NEW YORK, Feb. 24, 2021 (GLOBE NEWSWIRE) — Tastemaker Acquisition Corp. (NASDAQ: TMKRU) (the “Company”) announced that, commencing March 1, 2021, holders of the units sold in the Company’s initial public offering may elect to separately trade shares of the Company’s Class A common stock and warrants included in the units. No fractional warrants will be issued upon separation of the units and only whole warrants will trade. The shares of Class A common stock and warrants that are separated will trade on the Nasdaq Capital Market under the symbols “TMKR” and “TMKRW,” respectively. Those units not separated will continue to trade on the Nasdaq Capital Market under the symbol “TMKRU.” Holders of units will need to have their brokers contact Continental Stock Transfer & Trust Company, the Company’s transfer agent, in order to separate the units into shares of Class A common stock and warrants.

This press release shall not constitute an offer to sell or the solicitation of an offer to buy the securities of the Company, nor shall there be any sale of these securities in any state or jurisdiction in which such offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of any such state or jurisdiction.

About Tastemaker Acquisition Corp.

Tastemaker Acquisition Corp., led by David Pace, Co-Chief Executive Officer; Andrew Pforzheimer, Co-Chief Executive Officer; Gregory Golkin, President; and Christopher Bradley, Chief Financial Officer, is a blank check company formed for the purpose of effecting a merger, capital stock exchange, asset acquisition, stock purchase, reorganization or similar business combination with one or more businesses. While we may pursue an initial business combination target in any stage of its corporate evolution or in any industry, sector or geographic location, we intend to focus our search for a target business operating in the restaurant, hospitality and related technology and service sectors. Please visit our corporate website at https://www.tastemakeracq.com/

Forward-Looking Statements

This press release may include, and oral statements made from time to time by representatives of the Company may include, “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. All statements other than statements of historical fact included in this press release are forward-looking statements. When used in this press release, words such as “anticipate,” “believe,” “continue,” “could,” “estimate,” “expect,” “intend,” “may,” “might,” “plan,” “possible,” “potential,” “predict,” “project,” “should,” “would” and similar expressions, as they relate to the Company or its management team, identify forward-looking statements. Such forward-looking statements are based on the beliefs of management, as well as assumptions made by, and information currently available to, the Company’s management. Actual results could differ materially from those contemplated by the forward-looking statements as a result of certain factors detailed in the Company’s filings with the Securities and Exchange Commission (“SEC”). All subsequent written or oral forward-looking statements attributable to the Company or persons acting on its behalf are qualified in their entirety by this paragraph. Forward-looking statements are subject to numerous conditions, many of which are beyond the control of the Company, including those set forth in the Risk Factors section of the Company’s registration statement for the Company’s initial public offering filed with the SEC. The Company undertakes no obligation to update these statements for revisions or changes after the date of this release, except as required by law.

Contacts 

Media Relations

Keil Decker
ICR
(646) 677-1854
[email protected]

Investor Contact:

Raphael Gross
ICR
(203) 682-8253
[email protected]



Enviva Partners, LP Reports Financial Results for the Fourth Quarter and Full Year of 2020 and Announces Commitment to “Net Zero”

Enviva Partners, LP Reports Financial Results for the Fourth Quarter and Full Year of 2020 and Announces Commitment to “Net Zero”

BETHESDA, Md.–(BUSINESS WIRE)–
Enviva Partners, LP (NYSE: EVA) (“Enviva,” the “Partnership,” or “we”) today reported financial and operating results for the fourth quarter and full year of 2020.

Highlights:

  • The Partnership reported a net loss of $0.4 million, adjusted net income of $11.1 million, and adjusted EBITDA of $69.3 million for the fourth quarter, and net income of $17.1 million, adjusted net income of $46.0 million, and adjusted EBITDA of $190.3 million for the full year, of 2020
  • For the fourth quarter of 2020, the Partnership declared a distribution of $0.78 per common unit, a 15.6% increase over the same quarter of 2019, bringing distributions for full-year 2020 to $3.00 per common unit, a 13.2% increase over 2019
  • The Partnership provided full-year 2021 guidance for net income in the range of $42.3 million to $62.3 million and adjusted EBITDA in the range of $230.0 million to $250.0 million, and expects to distribute at least $3.17 per common unit for full-year 2021, before considering the benefit of any acquisitions or drop-down transactions
  • Following successful completion of construction of the Mid-Atlantic Expansions, the Partnership announced $50.0 million in new expansion projects expected to generate $20.0 million of incremental run rate adjusted EBITDA
  • In addition to new take-or-pay off-take agreements, the Partnership’s sponsor executed an MOU with a major trading house for up to 1 million MTPY of deliveries to combined heat and power plants, an emerging segment of the Japanese biomass energy market
  • The Partnership and our sponsor announced a commitment and plan to become “net-zero” in our operations by 2030

“We are very proud of our accomplishments in 2020. Despite the challenges presented by COVID-19, we operated our plant and terminal assets stably and reliably, we made uninterrupted deliveries to our customers, we completed two transformative acquisitions, we met our increased guidance expectations for adjusted EBITDA, distributable cash flow, and full-year distributions, and we delivered a 30% total return to our unitholders, all while keeping our people safe and healthy,” said John Keppler, Chairman and Chief Executive Officer of Enviva. “As we turn the page to 2021, our ability to generate stable cash flows that grow over time is poised to be more robust than ever, fueled both by organic growth as we look to replicate the highly accretive expansion projects in our existing portfolio and, against the backdrop of the forthcoming start-up of our sponsor’s fully-contracted Lucedale plant and Pascagoula terminal, coupled with existing and new long-term take-or-pay off-take energy supply contracts with large customers around the world, through additional drop-downs.”

Fourth-Quarter and Annual Financial Results

For the fourth quarter of 2020, we generated net revenue of $277.3 million, as compared to $200.5 million for the corresponding quarter of 2019. The $76.8 million increase in net revenue was primarily attributable to a $65.6 million increase in product sales on sale volumes that were 29.4 percent higher and an $11.2 million increase in other revenue. Included in other revenue for the fourth quarter of 2020 were $15.4 million in payments to the Partnership for adjusting deliveries under our take-or-pay off-take contracts, which otherwise would have been included in product sales.

For the fourth quarter of 2020, we generated gross margin of $26.6 million, as compared to $28.2 million for the corresponding quarter of 2019. Adjusted gross margin was $72.8 million for the fourth quarter of 2020, as compared to $55.0 million for the fourth quarter of 2019, an increase of $17.8 million, or 32.3 percent. Adjusted gross margin per metric ton was $54.02 for the fourth quarter of 2020, as compared to adjusted gross margin per metric ton of $52.83 for the fourth quarter of 2019. The increase in adjusted gross margin is primarily attributable to higher sales volumes and higher pricing due to customer contract mix, partially offset by a corresponding increase in cost of goods sold.

For the fourth quarter of 2020, net loss and adjusted net income were $0.4 million and $11.1 million, respectively. For the fourth quarter of 2019, net income and adjusted net income were $0.9 million and $17.2 million, respectively.

Adjusted EBITDA for the fourth quarter of 2020 was $69.3 million, as compared to $53.3 million for the corresponding quarter of 2019. The increase of $16.0 million, or 30.1 percent, was primarily due to the same factors that increased adjusted gross margin. Distributable cash flow, prior to any distributions attributable to incentive distribution rights paid to our general partner, was $54.8 million for the fourth quarter of 2020, an increase of $15.5 million, or 39.4 percent, as compared to the corresponding quarter of 2019.

For full-year 2020, we generated net revenue of $875.1 million, as compared to net revenue of $684.4 million for 2019. The $190.7 million increase in net revenue was primarily attributable to a $156.3 million increase in product sales revenue on sales volumes that were 21.5 percent higher and a $34.4 million increase in other revenue. Included in other revenue for full-year 2020 were $32.5 million in payments to the Partnership for adjusting deliveries under our take-or-pay off-take contracts, which otherwise would have been included in product sales.

Gross margin was $107.1 million for full-year 2020, as compared to $81.1 million for 2019, an increase of $26.1 million. Adjusted gross margin was $204.9 million for full-year 2020, as compared to $151.6 million for 2019, an increase of $53.2 million, or 35.1 percent. Adjusted gross margin per metric ton was $47.29 for full-year 2020, as compared to $42.54 for full-year 2019. Gross margin and adjusted gross margin increased primarily due to higher sales volumes and higher pricing due to customer contract mix, partially offset by a corresponding increase in cost of goods sold.

For full-year 2020, net income and adjusted net income were $17.1 million and $46.0 million, respectively. For full-year 2019, net loss and adjusted net income were $2.9 million and $39.0 million, respectively.

Adjusted EBITDA for full-year 2020 was $190.3 million, as compared to $141.3 million for full-year 2019. The increase of $49.0 million, or 34.7 percent, was primarily due to the same factors that increased adjusted gross margin. Distributable cash flow, prior to any distributions attributable to incentive distribution rights paid to our general partner, was $141.6 million for full-year 2020, an increase of $43.1 million, or 43.8 percent, as compared to full-year 2019.

As of December 31, 2020, the Partnership’s liquidity, which includes cash on hand and availability under our $350.0 million revolving credit facility, was $239.7 million.

The integration of the wood pellet production plants in Greenwood, South Carolina (the “Greenwood plant”) and Waycross, Georgia (the “Waycross plant”) into the Partnership is progressing as expected. The Partnership has received the necessary permits to expand the Greenwood plant’s production capacity to 600,000 metric tons per year (“MTPY”). Construction is ongoing and the expansion is on track for completion by the end of 2021. Performance at the Waycross plant has consistently met or exceeded our expectations prior to the acquisition.

The Partnership continues to report that, to date, our operating and financial results have not been materially impacted by the outbreak of a novel strain of coronavirus (“COVID-19”) and all of our customers have performed in accordance with their contracts with us. Although the full implications of COVID-19 are not yet known, we have contingency and business continuity plans in place that we believe would mitigate the impact of potential business disruptions if necessary.

Distribution

As announced on January 27, 2021, the board of directors of our general partner (the “Board”) declared a distribution of $0.78 per common unit for the fourth quarter of 2020, an increase of 15.6% over the same quarter of 2019. This distribution represents the twenty-second consecutive distribution increase since the Partnership’s initial public offering. The Partnership’s distributable cash flow, net of amounts attributable to incentive distribution rights paid to our general partner, of $46.7 million for the fourth quarter of 2020 covered the distribution for the quarter at 1.50 times. With its fourth-quarter distribution, the Partnership has declared aggregate distributions of $3.00 per common unit for full-year 2020, an increase of 13.2% over the aggregate distributions per common unit for 2019. The quarterly distribution will be paid on Friday, February 26, 2021, to unitholders of record as of the close of business on Monday, February 15, 2021.

Outlook and Guidance

The Partnership expects full-year 2021 net income to be in the range of $42.3 million to $62.3 million, adjusted EBITDA to be in the range of $230.0 million to $250.0 million, and distributable cash flow to be in the range of $160.0 million to $180.0 million, prior to any distributions attributable to incentive distribution rights paid to our general partner. The Partnership expects to distribute at least $3.17 per common unit for full-year 2021, before considering the benefit of any acquisitions or drop-down transactions, and target a distribution coverage ratio of 1.20 times on a forward-looking annual basis.

The guidance amounts provided above do not include the impact of any additional acquisitions by the Partnership from our sponsor or third parties. The Partnership’s quarterly income and cash flow are subject to seasonality and the mix of customer shipments made, which vary from period to period. Similar to previous years, the Partnership expects net income, adjusted EBITDA, and distributable cash flow for the second half of 2021 to be significantly higher than for the first half of the year.

“The solid financial results we delivered for full-year 2020 set the stage for a strong 2021 during which we expect to continue our track record of organic growth and accretive drop-down transactions, which has enabled us to consistently and durably increase per-unit distributions since our initial public offering,” said Shai Even, Chief Financial Officer of Enviva. “We expect our fully contracted business model, combined with conservative financial policies, to put us in a position to stably and reliably grow the Partnership in size and scale.”

Market and Contracting Update

In one of the new administration’s first actions, President Joe Biden signed an executive order recommitting the United States to the Paris Agreement, the international accord designed to avert catastrophic global warming. This action caps a landmark twelve-month period during which the global community, including many of the regulators, policymakers, academics, and businesses in the jurisdictions where our existing and prospective customers are located, made unprecedented commitments and significant progress to phase out coal, cut greenhouse gas (“GHG”) emissions, and achieve “net-zero” by 2050 in order to limit the impact of climate change.

In December 2020, the European Union (the “EU”) took another decisive step towards legislating the 2050 “net-zero” target into the European Climate Law, when EU leaders from all 27 member states, including heavily coal-dependent countries such as Poland and the Czech Republic, agreed to raise the EU’s 2030 GHG emissions reduction target from 40 percent to 55 percent, as compared to 1990 levels. EU leaders also reached agreement on an economic recovery package that included over 110 billion euros of grants dedicated to climate and environmental purposes. The European Council, Parliament, and Commission have now entered into the “trilogue” in order to formally adopt this law.

The United Kingdom (the “UK”), which has been at the forefront of the renewable energy transition, recently raised its GHG emissions reduction commitment under the Paris Agreement to at least 68 percent by 2030, up from the previous target of 53 percent, as compared to 1990 levels. Furthermore, through a series of important energy policy publications, including the Prime Minister’s Ten Point Plan for a Green Industrial Revolution, the Energy White Paper “Powering Our Net Zero Future,” and the Committee on Climate Change’s Sixth Carbon Budget, the UK government underlined its continued commitment to bioenergy as a source of heat and power and outlined its intention to support Bioenergy with Carbon Capture and Storage (BECCS) as a key negative carbon emissions solution and explore bioenergy’s role in hydrogen production.

In Japan, following Prime Minister Yoshihide Suga’s “net-zero” pledge in October 2020, the country’s Ministry of Economy, Trade and Industry recently unveiled a “Green Growth Strategy Towards 2050 Carbon Neutrality.” The strategy sets the target for renewable energy sources to make up 50 percent to 60 percent of the nation’s power supply by 2050 and proposes tax incentives and other support to achieve this goal, including a 2 trillion yen ($19 billion) “Green Innovation Fund.”

The continued favorable climate change policy declarations, complemented by the recent execution of several new agreements by our sponsor, reinforce our conviction in the long-term growth profile of the Partnership.

In addition to the approximately 3.5 million MTPY of long-term off-take contracts with Japanese counterparties the Partnership and our sponsor previously announced, our sponsor recently executed several agreements with Japanese counterparties, including:

  • A new contract with a major Japanese trading house regarding 20-year, take-or-pay off-take supply for a new biomass power plant. The contract is subject to certain conditions precedent, which our sponsor expects to be met during 2021. Sales related to this contract are expected to commence in 2024 with annual deliveries of 240,000 MTPY of wood pellets.
  • An amendment to increase the volume from 400,000 MTPY to 420,000 MTPY under an existing 20-year, take-or-pay off-take contract with a major Japanese trading house to supply a new biomass power plant. Deliveries under this contract are expected to commence in 2024. This contract is subject to certain conditions precedent, which the sponsor expects to be met during the first half of 2021.
  • A memorandum of understanding (“MOU”) with a major trading house in Japan outlining the terms under which we and our sponsor would supply up to 1 million MPTY to an emerging segment of the Japanese renewable energy market, combined heat and power plants that could be converted from fossil fuels to co-fired or dedicated biomass plants. These facilities are most often co-located with major manufacturing complexes in Japan. The decarbonization of the industrial sector is increasingly important for countries to meet net-zero targets.

As of February 1, 2021, the Partnership’s current production capacity is matched with a portfolio of firm, take-or-pay off-take contracts that has a total weighted-average remaining term of 12.8 years and a total product sales backlog of $14.6 billion. Assuming all volumes under the firm and contingent off-take contracts held by our sponsor were included, our total weighted-average remaining term and product sales backlog would increase to 14.0 years and $19.9 billion, respectively. The Partnership expects to have the opportunity to acquire off-take contracts from our sponsor.

Sustainability

Consistent with our mission to displace coal, grow more trees, and fight climate change, we and our sponsor recently announced our commitment to become “net-zero” in GHG emissions from our operations by 2030. Although the product we manufacture helps reduce the lifecycle GHG emissions of our customers, we believe we must also do our part within our operations to mitigate the impacts of climate change. In order to deliver “net-zero” emissions by 2030, we have committed to the following:

  • We will reduce, eliminate, or offset all of our direct emissions. We will immediately begin to minimize the emissions from fossil fuels used directly in our operations—our Scope 1 emissions. As our efforts to minimize the use of fossil fuels, adopt lower-carbon processes, and improve the efficiency of our operations will take time and continue to mature, in the interim we will offset 100 percent of our residual emissions through investments in projects that result in real, additional, and third-party-verified net-carbon reductions. We will focus on forest offsets created in the U.S. Southeast as part of our relationships with Finite Carbon and others, building on our experience working directly with private landowners. We plan to work with key stakeholders and others who are investing in such high-quality offsets, prioritizing those created from forest management, afforestation, and reforestation projects.
  • To reduce the emissions arising from our electricity purchases in our operations—our Scope 2 emissions—we pledge to source 100 percent renewable energy for our operations by no later than 2030, with a target of at least 50 percent by 2025.

    • Today, all of the fuel utilized in our drying operations is already provided by 100 percent renewable resources, but we still use electricity from the grid.
    • Our manufacturing operations are located in the U.S. Southeast, where electricity generation relies heavily on coal and natural gas and where market structures make renewable energy supply more difficult than in many other parts of the United States. We recognize that efforts are underway to transition the grid in our operating regions to lower-emissions sources and we intend to play a positive role in accelerating these trends. We will work with renewable energy suppliers to generate zero-carbon renewable energy for our operations.
    • We will seek to both maximize the use of on-site renewable energy generation at our facilities, as well as to develop new off-site renewable energy resources physically located in our operating regions where possible.
  • We will seek to drive innovative improvements in our supply chain. To address emissions generated as part of our upstream and downstream supply chain—our Scope 3 emissions—we commit to proactively engage with our partners and other key stakeholders to adopt clean energy solutions.

    • Given the durability and consistency of our operations, particularly with respect to transportation logistics, we believe our business provides a unique opportunity to test innovative approaches for supply-chain decarbonization. We commit to work with our stakeholders to improve the environmental emissions intensity of trucking, rail, and shipping logistics, and we commit further to take steps to accelerate and advocate for the development of new solutions and to work with our stakeholders to bring these solutions to market.
  • We will transparently track and report on our progress. We will annually report on all emissions: Scope 1 (direct emissions from our manufacturing), Scope 2 (indirect emissions from energy we purchase), and Scope 3 (indirect emissions in our value chain). We also commit to disclosing climate-relevant data and risks through CDP (formerly the Carbon Disclosure Project) by the end of 2022.

We plan to accomplish these goals in partnership with our key stakeholders, including through direct engagement with our customers, who share our commitment to achieving immediate and measurable atmospheric GHG emissions reductions and in many cases are pursuing not only net-zero carbon emissions strategies, but also projects including innovations like BECCS, where we believe Enviva can help pioneer a carbon-negative solution.

“Enviva and the sustainable and renewable fuel we supply to our customers are part of an all-in solution to climate change,” said Keppler. “It’s essential that we act right now to do our part to mitigate rising temperatures. Our plan to achieve net-zero in our operations by 2030, with critical near-term milestones, is just the latest expression of our commitment to be a leader in the fight against climate change.”

Partnership Development Activities

The Partnership continues to commission certain assets and ramp production from the existing expansion projects (the “Mid-Atlantic Expansions”) at its wood pellet production plants in Northampton, North Carolina and Southampton, Virginia. The Partnership expects both plants to reach a nameplate production capacity of approximately 750,000 MTPY at each plant by the end of 2021.

Following the successful completion of construction at the Mid-Atlantic Expansions, the Partnership has commenced a series of projects (the “Multi-Plant Expansions”) at our wood pellet production plants in Sampson, North Carolina (the “Sampson plant”), Hamlet, North Carolina (the “Hamlet plant”), and Cottondale, Florida (the “Cottondale plant”), subject to receiving the necessary permits. The Partnership expects to invest approximately $50.0 million in connection with the Multi-Plant Expansions to de-bottleneck manufacturing processes, eliminate certain costs, and increase production capacity, while reducing GHG emissions at the same time. Upon completion and ramp-up, the Partnership expects the Multi-Plant Expansions to generate approximately $20.0 million in total incremental annual adjusted EBITDA. The Partnership expects to fund the Multi-Plant Expansions using our 50/50 equity/debt capital structure and to complete the Multi-Plant Expansions by the end of 2022.

Sponsor Development Activities

Our sponsor recently closed a $325.0 million senior secured green term loan facility (the “Holdings Green Term Loan”), using a portion of the proceeds to purchase its joint venture partner’s interest (the “JV Buyout”) in the sponsor’s development joint venture. With the benefit of the Holdings Green Term Loan, which we do not expect to affect the Partnership’s credit ratings, the associated JV Buyout, and the $300.0 million in undrawn equity capital raised during our sponsor’s previously announced recapitalization transaction in July 2020, our sponsor has materially reduced its cost of capital associated with the development and construction of renewable energy infrastructure assets, including:

  • The construction of the fully contracted wood pellet production plant in Lucedale, Mississippi (the “Lucedale plant”) and the deep-water marine terminal in Pascagoula, Mississippi (the “Pascagoula terminal”).
  • The development and construction of a fully contracted wood pellet production plant in Epes, Alabama, where our sponsor has completed the purchase of the project site and commenced certain pre-construction activities.
  • The evaluation of additional sites for wood pellet production plants across the Southeastern United States, which would be exported through the Partnership’s existing terminals and the Pascagoula terminal, to serve the balance of the $5.3 billion in current long-term contracted demand at the sponsor, which is complemented by material contract volumes under negotiation with utilities and power generators in current and evolving markets around the globe.

Conference Call

We will host a conference call with executive management related to our fourth-quarter and full-year 2020 results and a more detailed market update at 10:00 a.m. (Eastern Time) on Thursday, February 25, 2021. Information on how interested parties may listen to the conference call is available on the Investor Relations page of our website (www.envivabiomass.com). A replay of the conference call will be available on our website after the live call concludes.

Requests for Audited Financial Statements

The Partnership’s Annual Reports on Form 10-K are available through its website at https://ir.envivapartners.com/sec-filings, as well as on the U.S. Securities and Exchange Commission’s website at https://www.sec.gov/. The Partnership’s security holders are entitled to receive, free of charge, copies of its complete audited financial statements by sending a request to Investor Relations, Enviva Partners, LP, 7200 Wisconsin Ave., Suite 1000, Bethesda, Maryland 20814, or by telephone at (240) 482-3856.

About Enviva Partners, LP

Enviva Partners, LP (NYSE: EVA) is a publicly traded master limited partnership that aggregates a natural resource, wood fiber, and processes it into a transportable form, wood pellets. The Partnership sells a significant majority of its wood pellets through long-term, take-or-pay off-take contracts with creditworthy customers in the United Kingdom, Europe, and increasingly in Japan. The Partnership owns and operates nine plants with a combined production capacity of approximately 5.3 million MTPY in Virginia, North Carolina, South Carolina, Georgia, Florida, and Mississippi. In addition, the Partnership exports wood pellets through its marine terminals at the Port of Chesapeake, Virginia and the Port of Wilmington, North Carolina and from third-party marine terminals in Savannah, Georgia, Mobile, Alabama, and Panama City, Florida.

To learn more about Enviva Partners, LP, please visit our website at www.envivabiomass.com and follow us on social media @Enviva.

Notice

This press release is intended to be a qualified notice under Treasury Regulation Section 1.1446-4(b)(4). Brokers and nominees should treat 100 percent of the Partnership’s distributions to non-U.S. investors as being attributable to income that is effectively connected with a United States trade or business. Accordingly, the Partnership’s distributions to non-U.S. investors are subject to federal income tax withholding at the highest applicable effective tax rate.

ENVIVA PARTNERS, LP AND SUBSIDIARIES

Consolidated Balance Sheets

December 31, 2020 and 2019

(In thousands, except number of units)

(Unaudited)

 

2020

 

 

2019

 

Assets

 

 

 

Current assets:

 

 

 

Cash and cash equivalents

$

10,004

 

 

 

$

9,053

 

 

Accounts receivable

124,212

 

 

 

72,421

 

 

Related-party receivables, net

2,414

 

 

 

 

 

Inventories

42,364

 

 

 

32,998

 

 

Prepaid expenses and other current assets

16,457

 

 

 

5,617

 

 

Total current assets

195,451

 

 

 

120,089

 

 

Property, plant and equipment, net

1,071,819

 

 

 

751,780

 

 

Operating lease right-of-use assets

51,434

 

 

 

32,830

 

 

Goodwill

99,660

 

 

 

85,615

 

 

Other long-term assets

11,248

 

 

 

4,504

 

 

Total assets

$

1,429,612

 

 

 

$

994,818

 

 

Liabilities and Partners’ Capital

 

 

 

Current liabilities:

 

 

 

Accounts payable

$

15,208

 

 

 

$

18,985

 

 

Related-party payables, net

 

 

 

304

 

 

Deferred consideration for drop-downs due to related-party

 

 

 

40,000

 

 

Accrued and other current liabilities

108,976

 

 

 

59,066

 

 

Current portion of interest payable

24,642

 

 

 

3,427

 

 

Current portion of long-term debt and finance lease obligations

13,328

 

 

 

6,590

 

 

Total current liabilities

162,154

 

 

 

128,372

 

 

Long-term debt and finance lease obligations

912,721

 

 

 

596,430

 

 

Long-term operating lease liabilities

50,074

 

 

 

33,469

 

 

Deferred tax liabilities, net

13,217

 

 

 

 

 

Other long-term liabilities

15,419

 

 

 

3,971

 

 

Total liabilities

1,153,585

 

 

 

762,242

 

 

Commitments and contingencies

 

 

 

Partners’ capital:

 

 

 

Limited partners:

 

 

 

Common unitholders—public (26,209,862 and 19,870,436 units issued and outstanding at December 31, 2020 and 2019, respectively)

424,825

 

 

 

300,184

 

 

Common unitholder—sponsor (13,586,375 and 13,586,375 units issued and outstanding at December 31, 2020 and 2019, respectively)

41,816

 

 

 

82,300

 

 

General partner (no outstanding units)

(142,404

)

 

 

(101,739

)

 

Accumulated other comprehensive (loss) income

(18

)

 

 

23

 

 

Total Enviva Partners, LP partners’ capital

324,219

 

 

 

280,768

 

 

Noncontrolling interest

(48,192

)

 

 

(48,192

)

 

Total partners’ capital

276,027

 

 

 

232,576

 

 

Total liabilities and partners’ capital

$

1,429,612

 

 

 

$

994,818

 

 

ENVIVA PARTNERS, LP AND SUBSIDIARIES

Consolidated Statements of Operations

(In thousands, except per unit amounts)

(Unaudited)

 

Three Months Ended

 

Year Ended

 

December 31,

 

December 31,

 

2020

 

 

2019

 

 

2020

 

 

2019

 

Product sales

$

260,837

 

 

 

$

195,262

 

 

 

$

830,528

 

 

 

$

674,251

 

 

Other revenue

16,473

 

 

 

5,278

 

 

 

44,551

 

 

 

10,142

 

 

Net revenue

277,310

 

 

 

200,540

 

 

 

875,079

 

 

 

684,393

 

 

Cost of goods sold

219,750

 

 

 

154,402

 

 

 

684,863

 

 

 

549,701

 

 

Loss on disposal of assets

3,742

 

 

 

2,541

 

 

 

6,978

 

 

 

3,103

 

 

Depreciation and amortization

27,252

 

 

 

15,409

 

 

 

76,115

 

 

 

50,521

 

 

Total cost of goods sold

250,744

 

 

 

172,352

 

 

 

767,956

 

 

 

603,325

 

 

Gross margin

26,566

 

 

 

28,188

 

 

 

107,123

 

 

 

81,068

 

 

General and administrative expenses

2,516

 

 

 

1,263

 

 

 

12,800

 

 

 

6,932

 

 

Related-party management services agreement fee

11,713

 

 

 

6,459

 

 

 

32,545

 

 

 

29,457

 

 

Total general and administrative expenses

14,229

 

 

 

7,722

 

 

 

45,345

 

 

 

36,389

 

 

Income from operations

12,337

 

 

 

20,466

 

 

 

61,778

 

 

 

44,679

 

 

Other income (expense):

 

 

 

 

 

 

 

Interest expense

(12,434

)

 

 

(10,643

)

 

 

(44,902

)

 

 

(39,344

)

 

Early retirement of debt obligation

 

 

 

(9,042

)

 

 

 

 

 

(9,042

)

 

Other income

6

 

 

 

148

 

 

 

273

 

 

 

764

 

 

Total other expense, net

(12,428

)

 

 

(19,537

)

 

 

(44,629

)

 

 

(47,622

)

 

Net (loss) income before income tax expense

(91

)

 

 

929

 

 

 

17,149

 

 

 

(2,943

)

 

Income tax expense

344

 

 

 

 

 

 

69

 

 

 

 

 

Net (loss) income

$

(435

)

 

 

$

929

 

 

 

$

17,080

 

 

 

$

(2,943

)

 

Net loss per limited partner common unit:

 

 

 

 

 

 

 

Basic and diluted

$

(0.24

)

 

 

$

(0.10

)

 

 

$

(0.36

)

 

 

$

(0.54

)

 

Weighted-average number of limited partner units outstanding:

 

 

 

 

 

 

 

Common—basic and diluted

39,785

 

 

 

33,457

 

 

 

36,813

 

 

 

31,791

 

 

 

 

 

 

 

 

 

 

Distributions declared per common unit

$

0.7800

 

 

 

$

0.6750

 

 

 

$

3.0000

 

 

 

$

2.6500

 

 

ENVIVA PARTNERS, LP AND SUBSIDIARIES

Consolidated Statements of Cash Flows

Years ended December 31, 2020 and 2019

(In thousands)

(Unaudited)

 

2020

 

 

2019

 

Cash flows from operating activities:

 

 

 

Net income (loss)

$

17,080

 

 

 

$

(2,943

)

 

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

 

 

 

Depreciation and amortization

77,471

 

 

 

51,581

 

 

MSA Fee Waivers

23,400

 

 

 

22,600

 

 

Amortization of debt issuance costs, debt premium and original issue discounts

1,905

 

 

 

1,243

 

 

Early retirement of debt obligation

 

 

 

9,042

 

 

Loss on disposal of assets

6,978

 

 

 

3,103

 

 

Unit-based compensation

12,848

 

 

 

5,410

 

 

Fair value changes in derivatives

5,294

 

 

 

3,701

 

 

Unrealized gains on foreign currency transactions, net

54

 

 

 

177

 

 

Change in operating assets and liabilities:

 

 

 

Accounts and insurance receivables

(60,235

)

 

 

(16,330

)

 

Related-party receivables

2,722

 

 

 

1,392

 

 

Prepaid expenses and other current and long-term assets

(13,819

)

 

 

(358

)

 

Inventories

825

 

 

 

(1,889

)

 

Derivatives

(249

)

 

 

1,770

 

 

Accounts payable, accrued liabilities and other current liabilities

35,189

 

 

 

9,287

 

 

Related-party payables and accrued liabilities

 

 

 

(27,933

)

 

Deferred revenue

780

 

 

 

3,887

 

 

Accrued interest

15,343

 

 

 

(5,148

)

 

Operating lease liabilities

(5,828

)

 

 

(4,826

)

 

Other long-term liabilities

(423

)

 

 

94

 

 

Net cash provided by operating activities

119,335

 

 

 

53,860

 

 

Cash flows from investing activities:

 

 

 

Purchases of property, plant and equipment

(100,106

)

 

 

(111,269

)

 

Payments in relation to the Greenwood Drop-Down, net of cash acquired

(129,631

)

 

 

 

 

Payments in relation to the Georgia Biomass Acquisition, net of cash acquired

(163,299

)

 

 

 

 

Payment in relation to the Hamlet Drop-Down

 

 

 

(74,700

)

 

Other

(3,769

)

 

 

8,486

 

 

Net cash used in investing activities

(396,805

)

 

 

(177,483

)

 

Cash flows from financing activities:

 

 

 

Proceeds from senior secured revolving credit facility

755,500

 

 

 

453,000

 

 

Principal payments on senior secured revolving credit facility

(635,500

)

 

 

(526,000

)

 

Proceeds from debt issuance

155,625

 

 

 

601,777

 

 

Principal payments on other long-term debt and finance lease obligations

(5,571

)

 

 

(358,311

)

 

Cash paid related to debt issuance costs and deferred offering costs

(3,949

)

 

 

(7,560

)

 

Proceeds from common unit issuances, net

190,529

 

 

 

96,822

 

 

Payment of deferred consideration for Wilmington Drop-Down

 

 

 

(24,300

)

 

Distributions to unitholders, distribution equivalent rights and incentive distribution rights holder

(133,217

)

 

 

(95,659

)

 

Payment for withholding tax associated with Long-Term Incentive Plan vesting

(4,996

)

 

 

(1,910

)

 

Payments in relation to the Hamlet Drop-Down

(40,000

)

 

 

(99

)

 

Cash paid for redemption premium from early retirement of debt

 

 

 

(7,544

)

 

Net cash provided by financing activities

278,421

 

 

 

130,216

 

 

Net increase in cash, cash equivalents and restricted cash

951

 

 

 

6,593

 

 

Cash, cash equivalents and restricted cash, beginning of period

9,053

 

 

 

2,460

 

 

Cash, cash equivalents and restricted cash, end of period

$

10,004

 

 

 

$

9,053

 

 

ENVIVA PARTNERS, LP AND SUBSIDIARIES

Consolidated Statements of Cash Flows (continued)

Years ended December 31, 2020 and 2019

(In thousands)

(Unaudited)

 

2020

 

2019

Non-cash investing and financing activities:

 

 

 

Common unit issuance for deferred consideration for Wilmington Drop-Down

$

 

 

$

49,700

 

Common unit issuance for the Hamlet Drop-Down

 

 

50,000

 

Property, plant and equipment acquired included in accounts payable and accrued liabilities

16,197

 

 

3,421

 

Property, plant and equipment acquired under finance leases

12,487

 

 

6,493

 

Deferred consideration to sponsor included in related-party payable

 

 

40,000

 

Supplemental information:

 

 

 

Interest paid, net of capitalized interest

$

22,150

 

 

$

41,190

 

Non-GAAP Financial Measures

In addition to presenting our financial results in accordance with accounting principles generally accepted in the United States (“GAAP”), we use adjusted net income, adjusted gross margin, adjusted gross margin per metric ton, adjusted EBITDA, and distributable cash flow to measure our financial performance.

Adjusted Net Income

We define adjusted net income as net income excluding interest expense associated with incremental borrowings related to a fire that occurred in February 2018 at the Chesapeake terminal (the “Chesapeake Incident”) and Hurricanes Florence and Michael (the “Hurricane Events”), early retirement of debt obligation, and acquisition and integration costs, adjusting for the effect of certain sales and marketing, scheduling, sustainability, consultation, shipping, and risk management services (collectively, “Commercial Services”), and including certain non-cash waivers of fees for management services provided to us by our sponsor (collectively, “MSA Fee Waivers”). We believe that adjusted net income enhances investors’ ability to compare the past financial performance of our underlying operations with our current performance separate from certain items of gain or loss that we characterize as unrepresentative of our ongoing operations.

Adjusted Gross Margin and Adjusted Gross Margin per Metric Ton

We define adjusted gross margin as gross margin excluding asset impairments and disposals, depreciation and amortization, changes in unrealized derivative instruments related to hedged items included in gross margin, non-cash unit compensation expenses, and acquisition and integration costs, adjusting for the effect of Commercial Services, and including MSA Fee Waivers. We define adjusted gross margin per metric ton as adjusted gross margin per metric ton of wood pellets sold. We believe adjusted gross margin and adjusted gross margin per metric ton are meaningful measures because they compare our revenue-generating activities to our operating costs for a view of profitability and performance on a total-dollar and a per-metric ton basis. Adjusted gross margin and adjusted gross margin per metric ton will primarily be affected by our ability to meet targeted production volumes and to control direct and indirect costs associated with procurement and delivery of wood fiber to our wood pellet production plants and our production and distribution of wood pellets.

Adjusted EBITDA

We define adjusted EBITDA as net income excluding depreciation and amortization, interest expense, income tax expense (benefit), early retirement of debt obligations, non-cash unit compensation expense, asset impairments and disposals, changes in unrealized derivative instruments related to hedged items included in gross margin and other income and expense, and acquisition and integration costs, adjusting for the effect of Commercial Services, and including MSA Fee Waivers. Adjusted EBITDA is a supplemental measure used by our management and other users of our financial statements, such as investors, commercial banks and research analysts, to assess the financial performance of our assets without regard to financing methods or capital structure.

Distributable Cash Flow

We define distributable cash flow as adjusted EBITDA less maintenance capital expenditures, cash income tax expenses, and interest expense net of amortization of debt issuance costs, debt premium, original issue discounts, interest expense associated with the redemption of the $355.0 million of aggregate principal amount of 6.5% senior unsecured notes due 2021 (the “2021 Notes”), and the impact from incremental borrowings related to the Chesapeake Incident and Hurricane Events. We use distributable cash flow as a performance metric to compare our cash-generating performance from period to period and to compare the cash-generating performance for specific periods to the cash distributions (if any) that are expected to be paid to our unitholders. We do not rely on distributable cash flow as a liquidity measure.

Limitations of Non-GAAP Financial Measures

Adjusted net income, adjusted gross margin, adjusted gross margin per metric ton, adjusted EBITDA, and distributable cash flow are not financial measures presented in accordance with GAAP. We believe that the presentation of these non-GAAP financial measures provides useful information to investors in assessing our financial condition and results of operations. Our non-GAAP financial measures should not be considered as alternatives to the most directly comparable GAAP financial measures. Each of these non-GAAP financial measures has important limitations as an analytical tool because they exclude some, but not all, items that affect the most directly comparable GAAP financial measures. You should not consider adjusted net income, adjusted gross margin, adjusted gross margin per metric ton, adjusted EBITDA, or distributable cash flow in isolation or as substitutes for analysis of our results as reported under GAAP.

Our definitions of these non-GAAP financial measures may not be comparable to similarly titled measures of other companies, thereby diminishing their utility.

The estimated incremental adjusted EBITDA that can be expected from the Multi-Plant Expansions is based on an internal financial analysis of the anticipated benefit from the incremental production capacity and cost savings at the Sampson, Hamlet, and Cottondale plants and is based on numerous assumptions that are subject to significant risks and uncertainties. Those assumptions are inherently uncertain and subject to significant business, economic, financial, regulatory, and competitive risks and uncertainties that could cause actual results and amounts to differ materially from such estimate. A reconciliation of the estimated incremental adjusted EBITDA expected to be generated by the Multi-Plant Expansions to the closest GAAP financial measure, net income, is not provided because net income expected to be generated by the expansions is not available without unreasonable effort, in part because the amount of estimated incremental interest expense related to the financing of the expansions and depreciation is not available at this time.

The following tables present a reconciliation of adjusted net income, adjusted gross margin, adjusted gross margin per metric ton, adjusted EBITDA, and distributable cash flow to the most directly comparable GAAP financial measures, as applicable, for each of the periods indicated.

 

 

Three Months Ended

December 31,

 

Year Ended

December 31,

 

 

2020

 

 

2019

 

 

2020

 

 

2019

 

 

 

(in thousands)

Reconciliation of net (loss) income to adjusted net income:

 

 

 

 

 

 

 

 

Net (loss) income

 

$

(435

)

 

 

$

929

 

 

 

$

17,080

 

 

 

$

(2,943

)

 

Acquisition and integration costs and other

 

1,542

 

 

 

(1,210

)

 

 

7,407

 

 

 

4,411

 

 

MSA Fee Waivers

 

9,437

 

 

 

3,851

 

 

 

23,400

 

 

 

22,600

 

 

Interest expense from incremental borrowings related to Chesapeake Incident and Hurricane Events

 

539

 

 

 

446

 

 

 

2,211

 

 

 

1,705

 

 

Early retirement of debt obligation

 

 

 

 

9,042

 

 

 

 

 

 

9,042

 

 

Commercial Services

 

 

 

 

4,139

 

 

 

(4,139

)

 

 

4,139

 

 

Adjusted net income

 

$

11,083

 

 

 

$

17,197

 

 

 

$

45,959

 

 

 

$

38,954

 

 

 

 

Three Months Ended

December 31,

 

Year Ended

December 31,

 

 

2020

 

2019

 

 

2020

 

 

2019

 

 

(in thousands)

Reconciliation of gross margin to adjusted gross margin and adjusted gross margin per metric ton:

 

 

 

 

 

 

 

 

Gross margin

 

$

26,566

 

 

$

28,188

 

 

 

$

107,123

 

 

 

$

81,068

 

Asset impairments and disposals

 

3,742

 

 

2,541

 

 

 

6,978

 

 

 

3,103

 

Non-cash unit compensation expense

 

609

 

 

 

 

 

2,024

 

 

 

 

Depreciation and amortization

 

27,252

 

 

15,409

 

 

 

76,115

 

 

 

50,521

 

Changes in unrealized derivative instruments

 

8,386

 

 

5,940

 

 

 

4,328

 

 

 

4,588

 

MSA Fee Waivers

 

5,448

 

 

 

 

 

10,913

 

 

 

5,000

 

Acquisition and integration costs and other

 

759

 

 

(1,216

)

 

 

1,510

 

 

 

3,211

 

Commercial Services

 

 

 

4,139

 

 

 

(4,139

)

 

 

4,139

 

Adjusted gross margin

 

$

72,762

 

 

$

55,001

 

 

 

$

204,852

 

 

 

$

151,630

 

Metric tons sold

 

1,347

 

 

1,041

 

 

 

4,332

 

 

 

3,564

 

Adjusted gross margin per metric ton

 

$

54.02

 

 

$

52.83

 

 

 

$

47.29

 

 

 

$

42.54

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended

December 31,

 

Year Ended

December 31,

 

 

2020

 

 

2019

 

 

2020

 

 

2019

 

 

 

(in thousands)

Reconciliation of net (loss) income to adjusted EBITDA:

 

 

 

 

 

 

 

 

Net (loss) income

 

$

(435

)

 

 

$

929

 

 

 

$

17,080

 

 

 

$

(2,943

)

 

Add:

 

 

 

 

 

 

 

 

Depreciation and amortization

 

27,669

 

 

 

15,834

 

 

 

77,471

 

 

 

51,581

 

 

Interest expense

 

12,434

 

 

 

10,643

 

 

 

44,902

 

 

 

39,344

 

 

Early retirement of debt obligation

 

 

 

 

9,042

 

 

 

 

 

 

9,042

 

 

Non-cash unit compensation expense

 

6,195

 

 

 

1,575

 

 

 

12,798

 

 

 

5,410

 

 

Income tax expense

 

344

 

 

 

 

 

 

69

 

 

 

 

 

Asset impairments and disposals

 

3,742

 

 

 

2,541

 

 

 

6,978

 

 

 

3,103

 

 

Changes in unrealized derivative instruments

 

8,386

 

 

 

5,940

 

 

 

4,328

 

 

 

4,588

 

 

MSA Fee Waivers

 

9,437

 

 

 

3,851

 

 

 

23,400

 

 

 

22,600

 

 

Acquisition and integration costs and other

 

1,542

 

 

 

(1,210

)

 

 

7,407

 

 

 

4,411

 

 

Commercial Services

 

 

 

 

4,139

 

 

 

(4,139

)

 

 

4,139

 

 

Adjusted EBITDA

 

69,314

 

 

 

53,284

 

 

 

190,294

 

 

 

141,275

 

 

Less:

 

 

 

 

 

 

 

 

Interest expense, net of amortization of debt issuance costs, debt premium, original issue discount, interest expense on the redemption of the 2021 Notes in 2019, and impact from incremental borrowings related to Chesapeake Incident and Hurricane Events

 

11,461

 

 

 

9,351

 

 

 

40,786

 

 

 

35,893

 

 

Maintenance capital expenditures

 

3,008

 

 

 

4,579

 

 

 

7,952

 

 

 

6,922

 

 

Distributable cash flow attributable to Enviva Partners, LP

 

54,845

 

 

 

39,354

 

 

 

141,556

 

 

 

98,460

 

 

Less: Distributable cash flow attributable to incentive distribution rights

 

8,119

 

 

 

3,289

 

 

 

26,917

 

 

 

11,439

 

 

Distributable cash flow attributable to Enviva Partners, LP limited partners

 

$

46,726

 

 

 

$

36,065

 

 

 

$

114,639

 

 

 

$

87,021

 

 

 

 

 

 

 

 

 

 

 

Cash distributions declared attributable to Enviva Partners, LP limited partners

 

$

31,218

 

 

 

$

22,683

 

 

 

$

115,318

 

 

 

$

88,761

 

 

 

 

 

 

 

 

 

 

 

Distribution coverage ratio

 

1.50

 

 

 

1.59

 

 

 

0.99

 

 

 

0.98

 

 

 

 

 

 

 

 

 

 

 

The following table provides a reconciliation of the estimated range of adjusted EBITDA to the estimated range of net income, in each case for the twelve months ending December 31, 2021 (in millions):

 

Twelve Months Ending

December 31, 2021

Estimated net income

$42.3 – 62.3

Add:

 

Depreciation and amortization

89.6

Interest expense

58.7

Income tax expenses

0.9

Non-cash unit compensation expense

11.0

Asset impairments and disposals

5.0

MSA Fee Waivers1

19.0

Acquisition and integration costs

1.5

Other non-cash expenses

2.0

Estimated adjusted EBITDA

$230.0 – 250.0

Less:

 

Interest expense net of amortization of debt issuance costs, debt premium, and original issue discount

57.0

Maintenance capital expenditures

13.0

Estimated distributable cash flow

$160.0 – 180.0

  1. Includes expected $19.0 million of MSA Fee Waivers associated with the acquisition of the Greenwood plant

Cautionary Note Concerning Forward-Looking Statements

Certain statements and information in this press release may constitute “forward-looking statements.” The words “believe,” “expect,” “anticipate,” “plan,” “intend,” “foresee,” “should,” “would,” “could,” or other similar expressions are intended to identify forward-looking statements, which are generally not historical in nature. These forward-looking statements are based on our current expectations and beliefs concerning future developments and their potential effect on us. Although management believes that these forward-looking statements are reasonable as and when made, there can be no assurance that future developments affecting us will be those that we anticipate. All comments concerning our expectations for future revenues and operating results are based on our forecasts for our existing operations and do not include the potential impact of any future acquisitions. Our forward-looking statements involve significant risks and uncertainties (some of which are beyond our control) and assumptions that could cause actual results to differ materially from our historical experience and our present expectations or projections. Important factors that could cause actual results to differ materially from those in the forward-looking statements include, but are not limited to: (i) the volume and quality of products that we are able to produce or source and sell, which could be adversely affected by, among other things, operating or technical difficulties at our wood pellet production plants or deep-water marine terminals; (ii) the prices at which we are able to sell our products; (iii) our ability to successfully negotiate, complete, and integrate drop-down or third-party acquisitions, including the associated contracts, or to realize the anticipated benefits of such acquisitions; (iv) failure of our customers, vendors, and shipping partners to pay or perform their contractual obligations to us; (v) our inability to successfully execute our project development, expansion, and construction activities on time and within budget; (vi) the creditworthiness of our contract counterparties; (vii) the amount of low-cost wood fiber that we are able to procure and process, which could be adversely affected by, among other things, disruptions in supply or operating or financial difficulties suffered by our suppliers; (viii) changes in the price and availability of natural gas, coal, or other sources of energy; (ix) changes in prevailing economic conditions; (x) unanticipated ground, grade or water conditions; (xi) inclement or hazardous environmental conditions, including extreme precipitation, temperatures, and flooding; (xii) fires, explosions, or other accidents; (xiii) changes in domestic and foreign laws and regulations (or the interpretation thereof) related to renewable or low-carbon energy, the forestry products industry, the international shipping industry, or power, heat, and combined heat and power generators; (xiv) changes in the regulatory treatment of biomass in core and emerging markets; (xv) our inability to acquire or maintain necessary permits or rights for our production, transportation, or terminaling operations; (xvi) changes in the price and availability of transportation; (xvii) changes in foreign currency exchange or interest rates, and the failure of our hedging arrangements to effectively reduce our exposure to the risks related thereto; (xviii) risks related to our indebtedness; (xix) our failure to maintain effective quality control systems at our wood pellet production plants and deep-water marine terminals, which could lead to the rejection of our products by our customers; (xx) changes in the quality specifications for our products that are required by our customers; (xxi) labor disputes, unionization or similar collective actions; (xxii) our inability to hire, train or retain qualified personnel to manage and operate our business and newly acquired assets; (xxiii) the effects of the exit of the UK from the EU on our and our customers’ businesses; (xxiv) our inability to borrow funds and access capital markets; and (xxv) viral contagions or pandemic diseases, such as the recent outbreak of a novel strain of coronavirus known as COVID-19.

For additional information regarding known material factors that could cause the Partnership’s actual results to differ from projected results, please read our filings with the U.S. Securities and Exchange Commission, including the Annual Report on Form 10-K and the Quarterly Reports on Form 10-Q most recently filed with the SEC. Readers are cautioned not to place undue reliance on forward-looking statements, which speak only as of the date thereof. The Partnership undertakes no obligation to publicly update or revise any forward-looking statements after the date they are made, whether as a result of new information or future events or otherwise.

Investor:

Wushuang Ma

[email protected]
+1 (240) 482-3856

KEYWORDS: United States North America Maryland

INDUSTRY KEYWORDS: Natural Resources Manufacturing Other Manufacturing Other Natural Resources Forest Products

MEDIA:

Rent-A-Center, Inc. Reports Fourth Quarter 2020 Results

Rent-A-Center, Inc. Reports Fourth Quarter 2020 Results

Consolidated Revenues of $716M, up 7.3%

Diluted EPS $1.00; Non-GAAP Diluted EPS $1.03, up 77.2%

Provides 2021 Guidance Reflecting Approximately 30% Anticipated Accretion from Acima Acquisition

PLANO, Texas–(BUSINESS WIRE)–
Rent-A-Center, Inc. (the “Company” or “Rent-A-Center”) (NASDAQ/NGS: RCII) today announced results for the quarter ended December 31, 2020.

“This past year was pivotal for Rent-A-Center,” said Mitch Fadel, Chief Executive Officer. “Strong performance in our Rent-A-Center business and growth in the retail partner channel drove record revenues and earnings despite operational challenges from the COVID-19 pandemic. We made important investments to support our digital strategy, and ended the year with the announcement of our acquisition of Acima, which we believe can significantly accelerate long-term growth and profitability.”

“We expect Acima to drive significant accretion to non-GAAP Diluted EPS in 2021 and 2022,” continued Mr. Fadel. “The acquisition dramatically increases our growth profile, and we believe we can achieve $6 billion in consolidated total revenue with mid-teens consolidated EBITDA margins in 2023 as we benefit from scale, profitability, and free cash flow generation. Acima’s approach to origination, decisioning, servicing and collections is best in class, and its platform should support more opportunities to drive invoice volume growth and pursue new retail partner relationships.”

“We’re similarly confident that our omni-channel strategy can maintain strong long-term growth for Rent-A-Center,” continued Mr. Fadel. “E-commerce and digital payments are enhancing our engagement with our customers, and we have a strategic advantage compared to other firms competing in the virtual lease-to-own (‘LTO’) industry to further leverage our last-mile capabilities.”

“We believe there is a substantial opportunity in front of us, and our two platforms allow us to serve customers across multiple touchpoints as the LTO industry experiences broad based adoption via digital technology and growing popularity with a younger generation.”

“The hurdles we overcame in 2020 underscored the dedication of our co-workers throughout the organization to serve our customers and our ability to perform across economic cycles, and we could not be more excited about our prospects to drive the business forward,” concluded Mr. Fadel.

Consolidated Results

On a consolidated basis, total revenues increased in the fourth quarter of 2020 to $716.5 million, or by 7.3 percent compared to the same period in 2019, primarily due to an increase in same store sales revenue of 13.7 percent in the Rent-A-Center Business segment and a 4.8 percent increase in total revenues in the Preferred Lease segment, partially offset by a lower store count in the Rent-A-Center Business as a result of our refranchising efforts and the rationalization of our Rent-A-Center Business store base.

On a GAAP basis, the Company generated $54.6 million in operating profit in the fourth quarter of 2020 compared to $67.8 million in the fourth quarter of 2019, with the decrease primarily due to the gain on the sale-leaseback of our corporate headquarters in 2019. Net earnings and diluted earnings per share, on a GAAP basis, were $56.3 million and $1.00 respectively in the fourth quarter of 2020 compared to net earnings and diluted earnings per share of $40.5 million and $0.72 respectively in the fourth quarter of 2019 representing increases in net earnings and diluted earnings per share of 39.0 percent and 38.9 percent, respectively.

Special items in the fourth quarter of $28.8 million were primarily related to the loss incurred upon the sale of our Rent-A-Center Business stores in California to a franchisee, service costs related to the execution of the definitive merger agreement to acquire Acima Holdings LLC, and legal settlement reserves. These impacts were offset by the release of approximately $19.2 million in domestic and foreign tax valuation allowances.

The Company’s Non-GAAP fourth quarter 2020 diluted earnings per share were $1.03 compared to $0.58 in the fourth quarter of 2019, an increase of 77.2 percent. Adjusted EBITDA in the fourth quarter was $97.0 million compared to $63.7 million in the fourth quarter of 2019, an increase of 52.2 percent. Adjusted EBITDA margin as a percentage of total revenues in the fourth quarter was 13.5 percent, an increase of 400 basis points compared to the fourth quarter of 2019.

For the twelve months ended December 31, 2020, the Company generated $236.5 million of cash from operations. The Company ended the fourth quarter of 2020 with $159.4 million of cash and cash equivalents and $197.5 million of outstanding indebtedness. The Company’s net debt to Adjusted EBITDA ratio ended the fourth quarter at 0.1 compared to 0.7 times as of the end of the fourth quarter 2019. The Company ended the fourth quarter of 2020 with $369 million of liquidity which included $209 million of remaining availability on its previous revolving credit facility.

Acima Holdings, LLC Acquisition

On February 17, 2021, the Company completed its previously announced acquisition of Acima Holdings. The acquisition combines Acima’s capabilities with Rent-A-Center’s Preferred Dynamix platform creating flexible LTO solutions across e-commerce, digital and mobile channels. The Company engaged AlixPartners to advise on the integration and synergy identification processes, and integration is currently underway and proceeding on schedule with internal timelines.

In connection with the acquisition of Acima, on February 17, 2021, the Company refinanced its prior debt facilities, entering into credit agreements providing for a five year asset-based revolving credit facility with commitments of $550 million (which commitments may be increased by up to an additional $125 million in the aggregate, subject to certain conditions), and a seven-year term loan in the amount of $875 million, which was fully drawn at the closing of the Acima acquisition. On such date, the Company also issued in an unregistered offering $450 million aggregate principal amount of 6.375% Senior Unsecured Notes due 2029, which will mature on February 15, 2029 unless earlier redeemed in accordance with their terms.

Recent Dividend

As previously announced, the Rent-A-Center Board of Directors declared on December 2, 2020 a cash dividend of $0.31 per share for the first quarter of 2021, which was paid on January 12, 2021 to stockholders of record at the close of business on December 15, 2020. The cash dividend of $0.31 per share represents an increase of 6.9% over the fourth quarter of 2020.

Preferred Lease Segment

Fourth quarter 2020 revenues increased 4.8 percent to $201.1 million as compared to the fourth quarter of 2019 and were driven primarily by virtual retail partner growth partially offset by challenges with availability of products at many retail partners. Preferred Lease invoice volume increased approximately 25 percent as compared to the fourth quarter of 2019 through new virtual retail partner additions and organic growth in virtual and staffed locations. As a percent of revenue, skip/stolen losses were 11.6 percent, 260 basis points lower than in the fourth quarter of 2019. Skip/stolen losses benefited by approximately 130 basis points as a result of reversing our remaining incremental merchandise loss reserve created earlier in the year to address potential COVID-19 losses. On a GAAP basis, segment operating profit was $17.3 million in the fourth quarter, representing an increase of $0.3 million versus the prior year. Adjusted EBITDA was $18.3 million, representing an increase of $0.7 million versus the prior year, driven by higher revenue, partially offset by lower gross profit margin due to a higher mix of virtual and merchandise sales, and lower operating expenses.

Beginning in Q1 2021, the Preferred Lease Segment will include the results of the acquired Acima operations from the date of acquisition and will be referred to as the Acima Segment.

Rent-A-Center Business Segment

Fourth quarter 2020 revenues of $464.3 million increased 5.8 percent as compared to the fourth quarter of 2019, primarily due to an increase in same store sales revenue of 13.7 percent driven by 53 percent growth in e-commerce sales, and despite the impact of refranchising approximately 100 stores in California which are no longer reflected in the Rent-A-Center Business segment revenues. Skip/stolen losses as a percent of revenue were 2.6 percent, 150 basis points lower than in the fourth quarter of 2019. Lower skip/stolen losses are partially due to the increased adoption of digital payments which has resulted in improved collections. On a GAAP basis, segment operating profit was $80.4 million in the fourth quarter, representing an increase of $14.8 million versus the prior year. Adjusted EBITDA was $102.9 million, representing an increase of $30.8 million versus the prior year. Both the segment operating profit and Adjusted EBITDA increases were driven primarily by increased operating leverage as a result of higher revenues and lower operating expenses due, in part, to a lower store count. At December 31, 2020, the Rent-A-Center Business segment had 1,845 company-operated locations.

Franchising Segment

Fourth quarter 2020 revenues of $36.8 million increased 57.0 percent compared to the fourth quarter of 2019, primarily due to a higher store count, resulting from the refranchising of approximately 100 California stores during 2020 and higher inventory purchases by franchisees. On a GAAP basis, segment operating profit was $3.9 million in the fourth quarter, representing an increase of $1.4 million versus the prior year. Adjusted EBITDA was $3.9 million, representing an increase of $1.4 million versus the prior year. At December 31, 2020, there were 462 franchise-operated locations.

Mexico Segment

Fourth quarter 2020 revenues of $14.3 million represent an increase of 11.4 percent on a constant currency basis compared to the fourth quarter of 2019. On a GAAP basis, segment operating profit was $2.1 million in the fourth quarter, representing an increase of $0.6 million versus the prior year. Adjusted EBITDA was $2.2 million, representing an increase of $0.6 million versus the prior year. At December 31, 2020, the Mexico business had 121 company-operated locations.

Corporate Segment

Fourth quarter 2020 expenses decreased by $1.5 million, or approximately 3.8 percent, versus the prior year.

 

SAME STORE SALES

(Unaudited)

 

 

 

Table 1

 

Period

 

Rent-A-Center

Business

 

 

Mexico

 

Three Months Ended December 31, 2020 (1)

 

13.7

%

 

 

10.5

%

 

Three Months Ended September 30, 2020 (1)

 

12.9

%

 

 

4.3

%

 

Three Months Ended December 31, 2019

 

1.2

%

 

 

7.6

%

 

Note:  Same store sale methodology – Same store sales generally represents revenue earned in stores that were operated by us for 13 months or more and are reported on a constant currency basis as a percentage of total revenue earned in stores of the segment during the indicated period. The Company excludes from the same store sales base any store that receives a certain level of customer accounts from closed stores or acquisitions. The receiving store will be eligible for inclusion in the same store sales base in the 30th full month following account transfer.

(1) Due to the COVID-19 pandemic and related temporary store closures, all 32 stores in Puerto Rico were excluded starting in March 2020 and will remain excluded for 18 months.

 

2021 Guidance

Beginning in Q1 2021, the Preferred Lease Segment will include the results of the acquired Acima operations from the date of acquisition and will be referred to as the Acima Segment. Acima’s corporate related expense will be reflected in the Corporate Segment.

Consolidated(1)

  • Revenues of $4.305 to $4.455 billion
  • Adjusted EBITDA of $570 to $620 million(2)
  • Non-GAAP diluted earnings per share of $5.00 to $5.55(2)(4)
  • Free cash flow of $145 to $195 million(2)

Acima Segment (3)

  • Revenues of $2.290 to $2.390 billion
  • Adjusted EBITDA of $320 to $350(2) million

Rent-A-Center Business Segment

  • Revenues of $1.830 to $1.880 billion
  • Adjusted EBITDA of $375 to $395(2) million

(1) Consolidated includes Acima (referred to as Preferred Lease through Q1 2021), Rent-A-Center Business, Franchising, Mexico and Corporate Segments.

(2) Non-GAAP financial measure. See descriptions below in this release. Because of the inherent uncertainty related to the special items identified in the tables below, management does not believe it is able to provide a meaningful forecast of the comparable GAAP measures or reconciliation to any forecasted GAAP measure without unreasonable effort.

(3) Acima Segment refers to the historical Preferred Lease Segment and newly acquired Acima business as of the acquisition date.

(4) Non-GAAP diluted earnings per share excludes the impact of intangible amortization assets created as a result of the Acima acquisition.

 

Webcast Information

Rent-A-Center, Inc. will host a conference call to discuss the fourth quarter results, guidance and other operational matters on the morning of Thursday, February 25, 2021, at 10:00 a.m. ET. For a live webcast of the call, visit https://investor.rentacenter.com. Certain financial and other statistical information that will be discussed during the conference call will also be provided on the same website. Residents of the United States and Canada can listen to the call by dialing (800) 399-0012. International participants can access the call by dialing (404) 665-9632.

About Rent-A-Center, Inc.

Rent-A-Center, Inc. (NASDAQ: RCII) is an industry leading omni-channel lease-to-own provider for the cash and credit constrained customer. The Company focuses on improving the quality of life for its customers by providing access and the opportunity to obtain ownership of high-quality, durable products via small payments over time under a flexible lease-purchase agreement and no long-term debt obligation. Preferred Lease (which, beginning in Q1 2021, will include the Acima business) provides virtual and staffed lease-to-own solutions to retail partners in stores and online enabling our partners to grow sales by expanding their customer base utilizing our differentiated offering. The Rent-A-Center Business and Mexico segments provide lease-to-own options on products such as furniture, appliances, consumer electronics, and computers in approximately 1,970 Rent-A-Center stores in the United States, Mexico, and Puerto Rico and on its e-commerce platform, Rentacenter.com. The Franchising segment is a national franchiser of approximately 460 franchise locations. Rent-A-Center is headquartered in Plano, Texas. For additional information about the Company, please visit our website at Rentacenter.com or Investor.rentacenter.com.

Forward Looking Statements

This press release and the guidance above and the Company’s related conference call contain forward-looking statements that involve risks and uncertainties. These statements are made under the “safe harbor” provisions of the U.S. Private Securities Litigation Reform Act of 1995. Such forward-looking statements generally can be identified by the use of forward-looking terminology such as “may,” “will,” “expect,” “intend,” “could,” “estimate,” “predict,” “continue,” “maintain,” “should,” “anticipate,” “believe,” or “confident,” or the negative thereof or variations thereon or similar terminology and including, among others, statements concerning (i) the potential effects of the COVID-19 pandemic on the Company’s business operations, financial performance, and prospects, (ii) the future business prospects and financial performance of our Company following the closing of the Company’s merger with Acima (the “Merger”), (iii) cost and revenue synergies and other benefits expected to result from the Merger, (iv) the Company’s guidance and expected financial results for 2021 and future periods, (v) other statements regarding the Company’s strategy and plans and other statements that are not historical facts. However, there can be no assurance that such expectations will occur. The Company’s actual future performance could differ materially and adversely from such statements. Factors that could cause or contribute to these differences include, but are not limited to: (1) risks relating to the Merger, including (i) the possibility that the anticipated benefits from the Merger may not be fully realized or may take longer to realize than expected, (ii) the possibility that costs, difficulties or disruptions related to the integration of Acima operations into the Company’s other operations will be greater than expected, (iii) the Company’s ability to (A) effectively adjust to changes in the composition of the Company’s offerings and product mix as a result of the Merger and continue to maintain the quality of existing offerings and (B) successfully introduce other new product or service offerings on a timely and cost-effective basis, (iv) changes in the Company’s future cash requirements as a result of the Merger, whether caused by unanticipated increases in capital expenditures or working capital needs, unanticipated liabilities or otherwise, and (v) the impacts of the Company’s additional debt incurred to finance the Merger; (2) the Company’s ability to identify potential acquisition candidates, complete acquisitions and successfully integrate acquired companies; (3) the impact of the COVID-19 pandemic and related government and regulatory restrictions issued to combat the pandemic, including adverse changes in such restrictions, and impacts on (i) demand for the Company’s lease-to-own products offered in the Company’s operating segments, (ii) the Company’s Preferred Lease retail partners, (iii) the Company’s customers and their willingness and ability to satisfy their lease obligations, (iv) the Company’s suppliers’ ability to satisfy its merchandise needs, (v) the Company’s employees, including the ability to adequately staff its operating locations, (vi) the Company’s financial and operational performance, and (vii) the Company’s liquidity; (4) the general strength of the economy and other economic conditions affecting consumer preferences and spending, including the availability of credit to the Company’s target consumers; (5) factors affecting the disposable income available to the Company’s current and potential customers; (6) changes in the unemployment rate; (7) capital market conditions, including availability of funding sources for the Company; (8) changes in the Company’s credit ratings; (9) difficulties encountered in improving the financial and operational performance of the Company’s business segments; (10) risks associated with pricing changes and strategies being deployed in the Company’s businesses; (11) the Company’s ability to continue to realize benefits from its initiatives regarding cost-savings and other EBITDA enhancements, efficiencies and working capital improvements; (12) the Company’s ability to continue to effectively execute its strategic initiatives, including mitigating risks associated with any potential mergers and acquisitions, or refranchising opportunities; (13) failure to manage the Company’s store labor and other store expenses, including merchandise losses; (14) disruptions caused by the operation of the Company’s store information management systems; (15) risks related to the Company’s virtual lease-to-own business, including the Company’s ability to continue to develop and successfully implement the necessary technologies; (16) the Company’s ability to achieve the benefits expected from its integrated virtual and staffed retail partner offering and to successfully grow this business segment; (17) exposure to potential operating margin degradation due to the higher cost of merchandise in the Company’s Preferred Lease offering and potential for higher merchandise losses; (18) the Company’s transition to more-readily scalable, “cloud-based” solutions; (19) the Company’s ability to develop and successfully implement digital or E-commerce capabilities, including mobile applications; (20) the Company’s ability to protect its proprietary intellectual property; (21) disruptions in the Company’s supply chain; (22) limitations of, or disruptions in, the Company’s distribution network; (23) rapid inflation or deflation in the prices of the Company’s products; (24) the Company’s ability to execute and the effectiveness of store consolidations, including the Company’s ability to retain the revenue from customer accounts merged into another store location as a result of a store consolidation; (25) the Company’s available cash flow and its ability to generate sufficient cash flow to continue paying dividends; (26) increased competition from traditional competitors, virtual lease-to-own competitors, online retailers and other competitors, including subprime lenders; (27) the Company’s ability to identify and successfully market products and services that appeal to its current and future targeted customer segments; (28) consumer preferences and perceptions of the Company’s brands; (29) the Company’s ability to retain the revenue associated with acquired customer accounts and enhance the performance of acquired stores; (30) the Company’s ability to enter into new, and collect on, its rental or lease purchase agreements; (31) changes in the enforcement of existing laws and regulations and the enactment of new laws and regulations adversely affecting the Company’s business, including any legislative or regulatory enforcement efforts that seek to re-characterize store-based or virtual lease-to-own transactions as credit sales and to apply consumer credit laws and regulations to the Company’s business; (32) the Company’s compliance with applicable statutes or regulations governing its businesses; (33) the impact of any additional social unrest such as that experienced in 2020 or otherwise, and resulting damage to the Company’s inventory or other assets and potential lost revenues; (34) changes in interest rates; (35) changes in tariff policies; (36) adverse changes in the economic conditions of the industries, countries or markets that the Company serves; (37) information technology and data security costs; (38) the impact of any breaches in data security or other disturbances to the Company’s information technology and other networks and the Company’s ability to protect the integrity and security of individually identifiable data of its customers, employees and retail partners; (39) changes in estimates relating to self-insurance liabilities and income tax and litigation reserves; (40) changes in the Company’s effective tax rate; (41) fluctuations in foreign currency exchange rates; (42) the Company’s ability to maintain an effective system of internal controls, including in connection with the integration of Acima; (43) litigation or administrative proceedings to which the Company is or may be a party to from time to time; and (44) the other risks detailed from time to time in the Company’s SEC reports, including but not limited to, its Annual Report on Form 10-K for the year ended December 31, 2019, its Annual Report on Form 10-K for the year ended December 31, 2020 (when filed) and in its subsequent Quarterly Reports on Form 10-Q and Current Reports on Form 8-K. You are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date of this press release. Except as required by law, the Company is not obligated to publicly release any revisions to these forward-looking statements to reflect the events or circumstances after the date hereof or to reflect the occurrence of unanticipated events.

 
 
 
 

Rent-A-Center, Inc. and Subsidiaries

 

CONSOLIDATED STATEMENTS OF EARNINGS – UNAUDITED

 

Table 2

Three Months Ended December 31,

 

Twelve Months Ended December 31,

 

(In thousands, except per share data)

2020

 

2019

 

2020

 

2019

 

Revenues

 

 

 

 

 

 

 

 

Store

 

 

 

 

 

 

 

 

Rentals and fees

$

580,781

 

 

$

558,573

 

 

$

2,263,091

 

 

$

2,224,402

 

 

Merchandise sales

78,024

 

 

63,766

 

 

378,717

 

 

304,630

 

 

Installment sales

19,530

 

 

20,776

 

 

68,500

 

 

70,434

 

 

Other

1,504

 

 

1,833

 

 

3,845

 

 

4,795

 

 

Total store revenues

679,839

 

 

644,948

 

 

2,714,153

 

 

2,604,261

 

 

Franchise

 

 

 

 

 

 

 

 

Merchandise sales

30,470

 

 

18,828

 

 

80,023

 

 

49,135

 

 

Royalty income and fees

6,182

 

 

4,086

 

 

20,015

 

 

16,456

 

 

Total revenues

716,491

 

 

667,862

 

 

2,814,191

 

 

2,669,852

 

 

Cost of revenues

 

 

 

 

 

 

 

 

Store

 

 

 

 

 

 

 

 

Cost of rentals and fees

166,006

 

 

161,877

 

 

655,612

 

 

634,878

 

 

Cost of merchandise sold

85,288

 

 

69,006

 

 

382,182

 

 

319,006

 

 

Cost of installment sales

7,281

 

 

7,250

 

 

24,111

 

 

23,383

 

 

Total cost of store revenues

258,575

 

 

238,133

 

 

1,061,905

 

 

977,267

 

 

Franchise cost of merchandise sold

30,502

 

 

18,591

 

 

80,134

 

 

48,514

 

 

Total cost of revenues

289,077

 

 

256,724

 

 

1,142,039

 

 

1,025,781

 

 

Gross profit

427,414

 

 

411,138

 

 

1,672,152

 

 

1,644,071

 

 

Operating expenses

 

 

 

 

 

 

 

 

Store expenses

 

 

 

 

 

 

 

 

Labor

144,909

 

 

156,875

 

 

579,125

 

 

630,096

 

 

Other store expenses

146,078

 

 

153,721

 

 

609,370

 

 

617,106

 

 

General and administrative expenses

39,414

 

 

36,812

 

 

153,108

 

 

142,634

 

 

Depreciation and amortization

13,587

 

 

15,316

 

 

56,658

 

 

61,104

 

 

Other charges and (gains)

28,787

 

 

(19,420

)

 

36,555

 

 

(60,728

)

 

Total operating expenses

372,775

 

 

343,304

 

 

1,434,816

 

 

1,390,212

 

 

Operating profit

54,639

 

 

67,834

 

 

237,336

 

 

253,859

 

 

Debt refinancing charges

 

 

 

 

 

 

2,168

 

 

Interest expense

3,367

 

 

4,817

 

 

15,325

 

 

31,031

 

 

Interest income

(207

)

 

(167

)

 

(768

)

 

(3,123

)

 

Earnings before income taxes

51,479

 

 

63,184

 

 

222,779

 

 

223,783

 

 

Income tax (benefit) expense

(4,821

)

 

22,693

 

 

14,664

 

 

50,237

 

 

Net earnings

$

56,300

 

 

$

40,491

 

 

$

208,115

 

 

$

173,546

 

 

Basic weighted average shares

54,190

 

 

54,730

 

 

54,187

 

 

54,325

 

 

Basic earnings per common share

$

1.04

 

 

$

0.74

 

 

$

3.84

 

 

$

3.19

 

 

Diluted weighted average shares

56,028

 

 

56,571

 

 

55,754

 

 

55,955

 

 

Diluted earnings per common share

$

1.00

 

 

$

0.72

 

 

$

3.73

 

 

$

3.10

 

 

 
 
 
 
 

Rent-A-Center, Inc. and Subsidiaries

 

SELECTED BALANCE SHEET HIGHLIGHTS – UNAUDITED

 

Table 3

December 31,

 

(In thousands)

2020

 

2019

 

Cash and cash equivalents

$

159,449

 

 

$

70,494

 

 

Receivables, net

90,003

 

 

84,123

 

 

Prepaid expenses and other assets

50,006

 

 

46,043

 

 

Rental merchandise, net

 

 

 

 

On rent

762,886

 

 

697,270

 

 

Held for rent

146,266

 

 

138,418

 

 

Operating lease right-of-use assets

283,422

 

 

281,566

 

 

Goodwill

70,217

 

 

70,217

 

 

Total assets

1,750,980

 

 

1,582,798

 

 

 

 

 

 

 

Operating lease liabilities

$

285,354

 

 

$

285,041

 

 

Senior debt, net

190,490

 

 

230,913

 

 

Total liabilities

1,158,900

 

 

1,123,835

 

 

Stockholders’ equity

592,080

 

 

458,963

 

 

 
 
 
 
 

Rent-A-Center, Inc. and Subsidiaries

 

SEGMENT INFORMATION HIGHLIGHTS – UNAUDITED

 

Table 4

Three Months Ended December 31,

 

Twelve Months Ended December 31,

 

(In thousands)

2020

 

2019

 

2020

 

2019

 

Revenues

 

 

 

 

 

 

 

 

Rent-A-Center Business

$

464,261

 

 

$

438,836

 

 

$

1,852,641

 

 

$

1,800,486

 

 

Preferred Lease

201,122

 

 

191,863

 

 

810,151

 

 

749,260

 

 

Mexico

14,267

 

 

13,694

 

 

50,583

 

 

53,960

 

 

Franchising

36,841

 

 

23,469

 

 

100,816

 

 

66,146

 

 

Total revenues

$

716,491

 

 

$

667,862

 

 

$

2,814,191

 

 

$

2,669,852

 

 

 
 

Table 5

Three Months Ended December 31,

 

Twelve Months Ended December 31,

 

(In thousands)

2020

 

2019

 

2020

 

2019

 

Gross profit

 

 

 

 

 

 

 

 

Rent-A-Center Business

$

328,348

 

 

$

309,761

 

 

$

1,294,695

 

 

$

1,255,153

 

 

Preferred Lease

82,677

 

 

86,977

 

 

321,110

 

 

333,798

 

 

Mexico

10,050

 

 

9,522

 

 

35,665

 

 

37,488

 

 

Franchising

6,339

 

 

4,878

 

 

20,682

 

 

17,632

 

 

Total gross profit

$

427,414

 

 

$

411,138

 

 

$

1,672,152

 

 

$

1,644,071

 

 

 
 

Table 6

Three Months Ended December 31,

 

Twelve Months Ended December 31,

 

(In thousands)

2020

 

2019

 

2020

 

2019

 

Operating profit

 

 

 

 

 

 

 

 

Rent-A-Center Business

$

80,354

 

 

$

65,553

 

 

$

333,379

 

 

$

235,964

 

 

Preferred Lease

17,319

 

 

16,989

 

 

57,847

 

 

83,066

 

 

Mexico

2,055

 

 

1,451

 

 

5,798

 

 

5,357

 

 

Franchising

3,876

 

 

2,489

 

 

12,570

 

 

7,205

 

 

Total segments

103,604

 

 

86,482

 

 

409,594

 

 

331,592

 

 

Corporate

(48,965

)

 

(18,648

)

 

(172,258

)

 

(77,733

)

 

Total operating profit

$

54,639

 

 

$

67,834

 

 

$