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Southside Bancshares, Inc. Declares Cash Dividend

Orion Engineered Carbons S.A. Announces Second Quarter Financial Results

August 5, 2021 4:33 pm

TYLER, Texas, Aug. 05, 2021 (GLOBE NEWSWIRE) — The Board of Directors of Southside Bancshares, Inc., (NASDAQ:SBSI), parent company of Southside Bank, declared a regular quarterly cash dividend of $0.33 per common share. The cash dividend is scheduled for payment on September 2, 2021, to common stock shareholders of record on August 19, 2021.

About Southside Bancshares, Inc.

Southside Bancshares, Inc. is a bank holding company headquartered in Tyler, Texas, with approximately $7.18 billion in assets as of June 30, 2021, that wholly-owns Southside Bank. Southside Bank currently operates 55 branches and a network of 76 ATMs/ITMs throughout East Texas, Southeast Texas and the greater Dallas/Fort Worth, Austin and Houston areas. Serving customers since 1960, Southside Bank is a community-focused financial institution that offers a full range of financial products and services to individuals and businesses. These products and services include consumer and commercial loans, mortgages, deposit accounts, safe deposit boxes, treasury management, wealth management, trust services, brokerage services and an array of online and mobile services.

To learn more about Southside Bancshares, Inc., please visit our investor relations website at https://investors.southside.com. Our investor relations site provides a detailed overview of our activities, financial information and historical stock price data. To receive e-mail notification of company news, events and stock activity, please register on the E-mail Notification portion of the website. Questions or comments may be directed to Lindsey Bailes at (903) 630-7965, or [email protected].

Forward-Looking Statements

Certain statements of other than historical fact that are contained in this press release and in other written materials, documents and oral statements issued by or on behalf of the Company may be considered to be “forward-looking statements” within the meaning of and subject to the safe harbor protections of the Private Securities Litigation Reform Act of 1995. These forward-looking statements are not guarantees of future performance, nor should they be relied upon as representing management’s views as of any subsequent date. These statements may include words such as “expect,” “estimate,” “project,” “anticipate,” “appear,” “believe,” “could,” “should,” “may,” “might,” “will,” “would,” “seek,” “intend,” “probability,” “risk,” “goal,” “target,” “objective,” “plans,” “potential,” and similar expressions. Forward-looking statements are statements with respect to the Company’s beliefs, plans, expectations, objectives, goals, anticipations, assumptions, estimates, intentions and future performance and are subject to significant known and unknown risks and uncertainties, which could cause the Company’s actual results to differ materially from the results discussed in the forward-looking statements. For example, discussions of the effect of our expansion, benefits of the Share Repurchase Plan, trends in asset quality, capital, liquidity, the Company’s ability to sell nonperforming assets, expense reductions, planned operational efficiencies and earnings from growth and certain market risk disclosures, including the impact of interest rates, tax reform, inflation and other economic factors are based upon information presently available to management and are dependent on choices about key model characteristics and assumptions and are subject to various limitations. By their nature, certain of the market risk disclosures are only estimates and could be materially different from what actually occurs in the future. Accordingly, our results could materially differ from those that have been estimated. The most recent factor that could cause future results to differ materially from those anticipated by our forward-looking statements include the negative impact of the COVID-19 pandemic on our business, financial position, operations and prospects, including our ability to continue our business activities in certain communities we serve, the duration of the pandemic and its continued effects on financial markets, a reduction in financial transactions and business activities resulting in decreased deposits and reduced loan originations, increases in unemployment rates impacting our borrowers’ ability to repay their loans, our ability to manage liquidity in a rapidly changing and unpredictable market, additional interest rate changes by the Federal Reserve and other government actions in response to the pandemic, including regulations or laws enacted to counter the effects of the COVID-19 pandemic on the economy.
Additional information concerning the Company and its business, including additional factors that could materially affect the Company’s financial results, is included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2020, under “Part I – Item 1. Forward Looking Information” and in the Company’s other filings with the Securities and Exchange Commission. The Company disclaims any obligation to update any factors or to announce publicly the result of revisions to any of the forward-looking statements included herein to reflect future events or developments.

For further information:
Lindsey Bailes
(903) 630-7965

August 5, 2021 4:33 pm

U.S. Toll Free:

1-844-512-2921

International:

1-412-317-6671

Conference ID:

Orion Engineered Carbons S.A. Announces Second Quarter Financial Results

HOUSTON–(BUSINESS WIRE)–
Orion Engineered Carbons S.A. (NYSE: OEC), a global supplier of specialty and high-performance carbon black, today announced financial results for the second quarter of 2021.

Second Quarter 2021 Highlights

Achieved second highest Adjusted EBITDA since IPO.
Positioned the company to complete EPA investments, capture growth in differentiated markets and generate substantial free cash flow in 2023.
Received cash payment of $79.5 million, resolving longstanding dispute with Evonik, substantially bolstering financial position.
Net sales of $401.0 million, up $198.4 million, year over year.
Net income of $89.1 million, up $106.9 million, year over year.
Basic EPS of $1.47, up $1.77, year over year.
Adjusted EPS¹ of $0.62, up $0.76, year over year.
Adjusted EBITDA¹of $78.8 million, up $63.6 million, year over year.
Adjusted EBITDA margin¹ of 19.7%, up 1,220 basis points, year over year.

¹ The reconciliations of Non-GAAP measures to the respective most comparable GAAP measures are provided in the section titled Reconciliation of Non-GAAP Financial Measures below.

“This quarter we delivered Adjusted EBITDA representing the second highest level since our IPO in 2014, four times higher than year ago levels and ten percent higher than the second quarter of 2019. Our outstanding financial performance demonstrates the strong resilience and operating leverage inherent to our business and the agility of our team to capitalize on robust economic conditions during the period. We also substantially bolstered our financial standing during the quarter by successfully settling the longstanding Evonik dispute. Overall, the Orion team remains focused on maximizing long term shareholder value by advancing select growth investments, driving sustainability, executing the remaining EPA installations safely and positioning the company to generate considerable free cash flow in 2023,” said Corning Painter, chief executive officer.

Second Quarter 2021 Overview:

(In millions, except per share data or stated otherwise)	Q2 2021	Q2 2020	Y/Y Change
Volume (kmt)	250.3	156.9	93.4
Net sales	401.0	202.6	198.4
Income (loss) from operations	132.5	(12.9)	145.4
Net (loss) income	89.1	(17.8)	106.9
Contribution margin	153.6	74.3	79.3
Contribution margin per metric ton	613.9	473.6	140.3
Adjusted EBITDA⁽¹⁾	78.8	15.2	63.6
Adjusted EBITDA margin⁽¹⁾	19.7%	7.5%	1220bps
Basic EPS	1.47	(0.30)	1.77
Diluted EPS	1.47	(0.29)	1.76
Adjusted EPS⁽¹⁾	0.62	(0.14)	0.76

(1)

The reconciliations of these non-GAAP measures to the respective most comparable GAAP measures are provided in the section titled Reconciliation of Non-GAAP Financial Measures.

Volumes increased by 93.4 kmt or 59.5%, year over year, with higher demand in both segments, across all applications and geographies, primarily driven by a sharp global recovery from the COVID-19 induced economic downturn.

Net sales increased by $198.4 million, or 97.9%, year over year, driven primarily by higher sales volume, favorable product mix and the impact of passing through higher feedstock costs.

Income from operations increased to $132.5 million, compared to a $12.9 million loss from operations in the prior year, an increase of $145.4 million. The increase was primarily driven by favorable operating leverage associated with substantially higher sales volume, favorable product mix and the Evonik legal settlement related gain, partially offset by higher selling, general and administrative costs.

Net income increased to $89.1 million, compared to a net loss of $17.8 million in the second quarter of the prior year, up $106.9 million. The increase was driven primarily by higher sales volume, and the Evonik legal settlement related gain.

Contribution margin increased by $79.3 million to $153.6 million, year over year, primarily due to favorable operating leverage associated with substantially higher sales volume.

Adjusted EBITDA increased by $63.6 million, from $15.2 million to $78.8 million, year over year, primarily due to favorable operating leverage associated with substantially higher sales volume and favorable product mix.

Quarterly Business Segment Results

SPECIALTY CARBON BLACK
(In millions, unless stated otherwise)	Q2 2021	Q2 2020	Y/Y Change
Volume (kmt)	68.1	49.5	18.6
Net sales	156.3	94.4	61.9
Gross profit	53.0	24.2	28.8
Gross profit per metric ton	779.2	489.4	289.8
Adjusted EBITDA	39.3	16.5	22.8
Adjusted EBITDA/metric ton	578.3	333.1	245.2
Adjusted EBITDA Margin (%)	25.2%	17.5%	770bps

Net sales rose by $61.9 million, or 65.6% to $156.3 million, year over year, primarily driven by a 18.6 kmt, or 37.6%, to 68.1, volume increase, favorable product mix, and passing through higher feedstock costs. Volume gains across all regions reflected a broad-based demand increase across all applications reflecting a sharp global recovery from the COVID-19 induced economic downturn.

Specialty Adjusted EBITDA rose by $22.8 million to $39.3 million, year over year, primarily due to favorable operating leverage associated with substantially higher sales volume, and favorable product mix. Year over year, Adjusted EBITDA margin rose 770 basis points to 25.2%.

RUBBER CARBON BLACK
(In millions, unless stated otherwise)	Q2 2021	Q2 2020	Y/Y Change
Volume (kmt)	182.2	107.4	74.8
Net sales	244.7	108.2	136.5
Gross profit	57.1	9.7	47.4
Gross profit per metric ton	313.0	90.7	222.3
Adjusted EBITDA	39.5	(1.3)	40.8
Adjusted EBITDA/metric ton	216.5	(11.5)	228.0
Adjusted EBITDA Margin (%)	16.1%	(1.1)%	1720bps

Rubber Carbon Black volumes increased by 74.8 kmt, or 69.6%, year over year, reflecting the broader global economic recovery across all regions.

Net sales increased by $136.5 million to $244.7 million, year over year, primarily reflecting higher sales volume, favorable product mix, and passing through higher feedstock costs.

Rubber Adjusted EBITDA increased by $40.8 million to $39.5 million, year over year, primarily due to favorable operating leverage associated with substantially higher sales volume and favorable product mix. Adjusted EBITDA margin rose 1,720 basis points to 16.1%, year over year.

Balance Sheet and Cash Flows

As of June 30, 2021, the company had total liquidity of $364.0 million, including cash and equivalents of $74.1 million, $252.2 million under our revolving credit facility capacity, including ancillary lines, and $37.7 million of capacity under other available credit lines. Net debt was $640.7 million and net leverage was 2.37x.

Cash Flow

Cash inflows from operating activities amounted to $85.1 million down $5.5 million, year over year, primarily driven by higher working capital, partially offset by higher income from operations.

Cash outflows from investing activities were $58.3 million, down $31.1 million, year over year, primarily driven by the timing of EPA-related capital expenditures.

Net cash used by financing activities of $16.6 million, compared to cash provided by financing activities of $81.7 million in the prior year. Cash outflows during 2021 were primarily related to repayments under our senior secured revolving credit facilities, and scheduled debt repayments, partially offset by drawings under our local bank loan facilities. In the prior year, management bolstered its cash position in preparation to successfully manage through the pandemic.

Outlook

We are raising our Adjusted EBITDA guidance to $265 million to $285 million primarily reflecting improved second half Specialty pricing and mix versus our prior outlook. While there are many bullish signals for the global economy, we continue to expect that our second half financial results, though strong, will not match the robust level of our first half, due to planned outages at several plants, including our Ivanhoe, Louisiana site where we are completing our EPA work, and typical Rubber Carbon Black end-of-year seasonality,” Mr. Painter concluded.

Conference Call

As previously announced, Orion will hold a conference call tomorrow, Friday, August 6, 2021, at 8:30 a.m. (EDT). The dial-in details for the live conference call are as follow:


U.S. Toll Free:				1-877-407-4018
International:				1-201-689-8471

A replay of the conference call may be accessed by phone at the following numbers through August 20, 2021:

Additionally, an archived webcast of the conference call will be available on the Investor Relations section of the company’s website at www.orioncarbons.com.

To learn more about Orion, visit the company’s website at www.orioncarbons.com, where we regularly post information including notification of events, news, financial performance, investor presentations and webcasts, non-GAAP reconciliations, SEC filings and other information regarding our company, its businesses and the markets it serves.

About Orion Engineered Carbons

Orion Engineered Carbons (NYSE:OEC) is a global supplier of carbon black products including high-performance specialty gas blacks, acetylene blacks, furnace blacks, lamp blacks, thermal blacks, and other carbon blacks that tint, colorize and enhance the performance of polymers, plastics, paints and coatings, inks and toners, textile fibers, adhesives and sealants, batteries, tires, and mechanical rubber goods, such as automotive belts and hoses. The company has over 125 years of history providing customized solutions from a network of 14 global production sites and is dedicated to responsible business practices that emphasize reliability, innovation and sustainability. For more information, please visit orioncarbons.com.

Forward-Looking Statements

This document contains and refers to certain forward-looking statements with respect to our financial condition, results of operations and business, including those in the “Outlook” and “Quarterly Business Segment Results” sections above. These statements constitute forward-looking statements within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). Forward-looking statements are statements of future expectations that are based on management’s current expectations and assumptions and involve known and unknown risks and uncertainties that could cause actual results, performance or events to differ materially from those expressed or implied in these statements. Forward-looking statements include, among others, statements concerning the potential exposure to market risks, statements expressing management’s expectations, beliefs, estimates, forecasts, projections and assumptions and statements that are not limited to statements of historical or present facts or conditions. You should not place undue reliance on forward looking statements. Forward-looking statements are typically identified by words such as “anticipate,” “assume,” “assure,” “believe,” “confident,” “could,” “estimate,” “expect,” “intend,” “may,” “plan,” “objectives,” “outlook,” “probably,” “project,” “will,” “seek,” “target” “to be,” and other words of similar meaning.

These forward-looking statements include, without limitation, statements about the following matters: • our strategies for (i) strengthening our position in specialty carbon blacks and rubber carbon blacks, (ii) increasing our rubber carbon black margins and (iii) strengthening the competitiveness of our operations; • the ability to pay dividends at historical dividend levels or at all; • cash flow projections; • the installation of pollution control technology in our U.S. manufacturing facilities pursuant to the EPA consent decree; • the outcome of any in-progress, pending or possible litigation or regulatory proceedings; and • our expectation that the markets we serve will continue to grow.

All these forward-looking statements are based on estimates and assumptions that, although believed to be reasonable, are inherently uncertain. Therefore, undue reliance should not be placed upon any forward-looking statements. There are important factors that could cause actual results to differ materially from those contemplated by such forward-looking statements. These factors include, among others: the effects of the COVID-19 pandemic on our business and results of operations; • negative or uncertain worldwide economic conditions; • volatility and cyclicality in the industries in which we operate; • operational risks inherent in chemicals manufacturing, including disruptions as a result of severe weather conditions and natural disasters; • our dependence on major customers and suppliers; • our ability to compete in the industries and markets in which we operate; • our ability to address changes in the nature of future transportation and mobility concepts which may impact our customers and our business; • our ability to develop new products and technologies successfully and the availability of substitutes for our products; • our ability to implement our business strategies; • volatility in the costs and availability of raw materials (including but not limited to any and all effects from restrictions imposed by the MARPOL convention and respective International Maritime Organization (IMO) regulations in particular to reduce sulfur oxides (SOx) emissions from ships) and energy; • our ability to respond to changes in feedstock prices and quality; • our ability to realize benefits from investments, joint ventures, acquisitions or alliances; • our ability to realize benefits from planned plant capacity expansions and site development projects and the potential delays to such expansions and projects; • information technology systems failures, network disruptions and breaches of data security; • our relationships with our workforce, including negotiations with labor unions, strikes and work stoppages; • our ability to recruit or retain key management and personnel; • our exposure to political or country risks inherent in doing business in some countries; • geopolitical events in the European Union, and in particular the ultimate future relations between the European Union and the United Kingdom resulting from the “Brexit” which may impact the Euro; • environmental, health and safety regulations, including nanomaterial and greenhouse gas emissions regulations, and the related costs of maintaining compliance and addressing liabilities; • possible future investigations and enforcement actions by governmental or supranational agencies; • our operations as a company in the chemical sector, including the related risks of leaks, fires and toxic releases; • market and regulatory changes that may affect our ability to sell or otherwise benefit from co-generated energy; • litigation or legal proceedings, including product liability and environmental claims; • our ability to protect our intellectual property rights and know-how; • our ability to generate the funds required to service our debt and finance our operations; • fluctuations in foreign currency exchange and interest rates; • the availability and efficiency of hedging; • changes in international and local economic conditions, including with regard to the Euro, dislocations in credit and capital markets and inflation or deflation; • potential impairments or write-offs of certain assets; • required increases in our pension fund contributions; • the adequacy of our insurance coverage; • changes in our jurisdictional earnings mix or in the tax laws or accepted interpretations of tax laws in those jurisdictions; • challenges to our decisions and assumptions in assessing and complying with our tax obligations; and • potential difficulty in obtaining or enforcing judgments or bringing actions against us in the United States.

You should not place undue reliance on forward-looking statements. We present certain financial measures that are not prepared in accordance with U.S. GAAP and may not be comparable to other similarly titled measures of other companies. These non-U.S. GAAP measures are Contribution Margin, Contribution Margin per Metric Ton, Adjusted EBITDA, Adjusted EPS, Net Working Capital and Capital Expenditures. Adjusted EBITDA, Adjusted EPS, Contribution Margin and Net Working Capital are not measures of performance under U.S. GAAP and should not be considered in isolation or construed as substitutes for net sales, consolidated profit (loss) for the period, income from operations, gross profit or other U.S. GAAP measures as an indicator of our operations in accordance with U.S. GAAP. For a reconciliation of these non-U.S. GAAP financial measures to the most directly comparable U.S. GAAP measures, see table titled Reconciliation of Non-GAAP to GAAP Financial Measures.

Factors that could cause our actual results to differ materially from those expressed or implied in such forward-looking statements include those factors detailed under the captions “Note Regarding Forward-Looking Statements” and “Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2020 and in Note S, Commitments and Contingencies.to our audited consolidated financial statements regarding contingent liabilities, including litigation. You should not place undue reliance on forward-looking statements. Each forward-looking statement speaks only as of the date of the particular statement. New risk factors and uncertainties emerge from time to time and it is not possible for our management to predict all risk factors and uncertainties, nor can we assess the impact of all factors on our business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in any forward-looking statements. We undertake no obligation to publicly update or revise any forward-looking statement – including those in the “2021 Outlook” and “Quarterly Business Segment Results” sections above – as a result of new information, future events or other information, other than as required by applicable law.

Reconciliation of Non-GAAP Financial Measures

In this release we refer to Adjusted EBITDA, Contribution Margin, Adjusted Net Income/(Loss) and Adjusted EPS, which are financial measures that have not been prepared in accordance with U.S. GAAP. We refer to these measures as “non-GAAP” financial measures. Adjusted EBITDA is defined as income from operations before depreciation and amortization, restructuring expenses, consulting fees related to group strategy, share of profit or loss of joint venture, gain related to litigation settlement, and certain other items. Adjusted EBITDA is used by our management to evaluate our operating performance and make decisions regarding allocation of capital because it excludes the effects of certain items that have less bearing on the performance of our underlying core business. Our use of Adjusted EBITDA has limitations as an analytical tool, and you should not consider it in isolation or as a substitute for analysis of our financial results as reported under U.S. GAAP. Some of these limitations are: (a) although Adjusted EBITDA excludes the impact of depreciation and amortization, the assets being depreciated and amortized may have to be replaced in the future and thus the cost of replacing assets or acquiring new assets, which will affect our operating results over time, is not reflected; (b) Adjusted EBITDA does not reflect interest or certain other costs that we will continue to incur over time and will adversely affect our profit or loss, which is the ultimate measure of our financial performance and (c) other companies, including companies in our industry, may calculate Adjusted EBITDA or similarly titled measures differently. Because of these and other limitations, you should consider Adjusted EBITDA alongside our other U.S. GAAP-based financial performance measures, such as consolidated profit or loss for the period.

Contribution Margin is calculated by subtracting variable costs (such as raw materials, packaging, utilities and distribution costs) from our net sales. We believe that Contribution Margin and Contribution Margin per Metric Ton are useful because we see these measures as indicating the portion of net sales that is not consumed by such variable costs and therefore contributes to the coverage of all other costs and profits.

Adjusted Net Income/(Loss) is defined as profit or loss for the period adjusted for acquisition related expenses, restructuring expenses, consulting fees related to group strategy, certain other items (such as amortization expenses related to intangible assets acquired from our predecessor and foreign currency revaluation impacts) and assumed taxes and Adjusted EPS is defined as Adjusted Net Income divided by the weighted number of shares outstanding. Adjusted Net Income/(Loss) and Adjusted EPS provide guidance with respect to our underlying business performance without regard to the effects of (a) foreign currency fluctuations, and (b) the amortization of intangible assets which other companies may record as goodwill having an indefinite lifetime and thus no amortization. Other companies may use a similarly titled financial measure that is calculated differently from the way we calculate Adjusted Net Income/(Loss) and Adjusted EPS.

We define Net Working Capital as the total of inventories and current trade receivables, less trade payables. Net Working Capital is as well a non-GAAP financial measure, and other companies may use a similarly titled financial measure that is calculated differently from the way we calculate Net Working Capital.

We have not provided a reconciliation of forward-looking Adjusted EBITDA to the most comparable GAAP measure of net income. Providing net income guidance is potentially misleading and not practical given the difficulty of projecting event-driven transactions and other non-core operating items that are included in net income. Reconciliations of this non-GAAP measure with the most comparable GAAP measure for historic periods are indicative of the reconciliation that will be presented upon completion of the periods covered by the non-GAAP guidance.

Reconciliation of Non-GAAP to GAAP Financial Measures

The following tables present a reconciliation of each of Adjusted EBITDA and Adjusted EPS to the most directly comparable GAAP measure:

Reconciliation of profit (loss)

Second Quarter

Six Months Ended June 30,

(In thousands)

2021

2020

2021

2020

Net income (loss)

$

89,058

$

(17,780

)

$

112,596

$

253

Add back income tax expense

33,490

(5,879

)

41,764

1,756

Add back equity in earnings of affiliated companies, net of tax

(247

)

(151

)

(393

)

(285

)

Pre-tax income (loss) before earnings in affiliated companies and income taxes

122,301

(23,810

)

153,967

1,724

Add back interest and other financial expense, net

8,951

8,277

18,910

17,888

Add back reclassification of actuarial losses from AOCI

1,224

2,654

2,452

5,052

Income (loss) from operations

132,476

(12,879

)

175,329

24,664

Add back depreciation and amortization of intangible assets, right of use assets, and property, plant and equipment

25,173

21,877

50,800

45,722

EBITDA

157,649

8,998

226,129

70,386

Equity in earnings of affiliated companies, net of tax

247

151

393

285

Evonik legal settlement:

Cash settlement

(79,499

)

—

(79,499

)

—

Release of legal reserve, net

(3,359

)

—

(3,359

)

—

Long term incentive plan

1,216

1,199

2,276

60

EPA-related expenses

469

977

2,200

3,566

Extraordinary expense items related to COVID-19

—

2,725

—

2,725

Other adjustments¹

2,092

1,187

1,526

2,060

Adjusted EBITDA

$

78,815

$

15,237

$

149,666

$

79,082

The following table reconciles Contribution Margin and Contribution Margin per Metric Ton to gross profit:

Second Quarter

Six Months Ended June 30,

(In millions, unless otherwise indicated)

2021

2020

2021

2020

Net sales

$

401.0

$

202.6

$

761.1

$

538.7

Variable costs

(247.4

)

(128.3

)

(460.4

)

(332.5

)

Contribution Margin

153.6

74.3

300.7

206.2

Freight

24.0

11.6

46.5

30.8

Fixed costs

(67.5

)

(52.0

)

(134.6

)

(112.9

)

Gross profit

$

110.1

$

33.9

$

212.6

$

124.1

Volume (in kmt)

250.3

156.9

504.4

392.0

Contribution margin per metric ton

$

613.9

$

473.6

$

596.2

$

525.9

Gross profit per metric ton

$

439.8

$

216.3

$

421.5

$

316.6

Adjusted EPS

Second Quarter

Six Months Ended June 30,

(In thousands, except per share amounts)

2021

2020

2021

2020

Net income (loss)

$

89,058

$

(17,780

)

$

112,596

$

253

add back long term incentive plan

1,216

1,199

2,276

60

add back EPA-related expenses

469

977

2,200

3,566

add back extraordinary expense items related COVID-19

—

2,725

—

2,725

add back other adjustment items

2,092

1,187

1,526

2,060

add back reclassification of actuarial losses from AOCI

1,224

2,654

2,452

5,052

add back amortization

2,019

1,843

4,037

3,688

less gain related to legal settlement

(82,858

)

—

(82,858

)

—

add back foreign exchange rate impacts

1,263

2,099

4,486

7,308

add back amortization of transaction costs

537

500

1,076

1,001

Tax effect on add back items at estimated tax rate

22,212

(3,954

)

19,442

(7,637

)

Adjusted net income (loss)

$

37,232

$

(8,550

)

$

67,233

$

18,076

Total add back items

$

(51,826

)

$

9,230

$

(45,363

)

$

17,823

Impact add back items per share

$

(0.85

)

$

0.16

$

(0.75

)

$

0.30

Earnings per share (basic)

$

1.47

$

(0.30

)

$

1.86

$

—

Adjusted EPS

$

0.62

$

(0.14

)

$

1.11

$

0.30

Condensed Consolidated Statements of Operations (Unaudited)

Three Months Ended June 30,

Six Months Ended June 30,

(In thousands, except per share amounts)

2021

2020

2021

2020

Net sales

$

400,976

$

202,648

$

761,053

$

538,655

Cost of sales

290,899

168,704

548,456

414,518

Gross profit

110,077

33,944

212,597

124,137

Selling, general and administrative expenses

55,064

38,547

107,417

83,066

Research and development costs

5,942

4,449

10,702

9,405

Gain related to litigation settlement

(82,858

)

—

(82,858

)

—

Other expenses (income),net

(547

)

3,827

2,007

7,002

Income (loss) from operations

132,476

(12,879

)

175,329

24,664

Interest and other financial expense, net

8,951

8,277

18,910

17,888

Reclassification of actuarial losses from AOCI

1,224

2,654

2,452

5,052

Pre-tax income (loss) before earnings in affiliated companies and income taxes

122,301

(23,810

)

153,967

1,724

Income tax expense (benefit)

33,490

(5,879

)

41,764

1,756

Equity in earnings of affiliated companies, net of tax

247

151

393

285

Net income (loss)

$

89,058

$

(17,780

)

$

112,596

$

253

Weighted-average shares outstanding:

Basic

60,652

60,487

60,649

60,361

Diluted

60,743

61,263

60,721

61,307

Earnings per share:

Basic

$

1.47

$

(0.30

)

$

1.86

$

—

Diluted

$

1.47

$

(0.29

)

$

1.85

$

—

Condensed Consolidated Statements of Financial Position (Unaudited)

(In thousands, except share amounts)

June 30, 2021

December 31, 2020

ASSETS

Current assets

Cash and cash equivalents

$

74,053

$

64,869

Accounts receivable, net

303,164

234,796

Other current financial assets

3,067

3,630

Inventories, net

186,163

141,461

Income tax receivables

12,215

11,249

Prepaid expenses and other current assets

41,857

44,451

Total current assets

620,519

500,456

Property, plant and equipment, net

632,939

610,530

Right-of-use assets

92,913

85,639

Goodwill

81,815

84,480

Intangible assets, net

41,667

46,772

Investment in equity method affiliates

5,247

5,637

Deferred income tax assets

60,008

52,563

Other financial assets

741

761

Other assets

2,609

2,955

Total non-current assets

917,939

889,337

Total assets

$

1,538,458

$

1,389,793

LIABILITIES AND STOCKHOLDERS’ EQUITY

Current liabilities

Accounts payable

$

151,702

$

131,250

Current portion of long term debt and other financial liabilities

70,110

82,618

Current portion of employee benefit plan obligation

1,083

1,118

Accrued liabilities

43,130

49,176

Income taxes payable

57,110

23,906

Other current liabilities

41,628

36,677

Total current liabilities

364,763

324,745

Long-term debt, net

640,342

655,826

Employee benefit plan obligation

81,094

83,310

Deferred income tax liabilities

46,066

38,770

Other liabilities

104,083

106,129

Total non-current liabilities

871,585

884,035

Stockholders’ Equity

Common stock

Authorized 65,035,579 and 65,035,579 shares with no par value

Issued 60,992,259 and 60,992,259 shares with no par value

Outstanding 60,590,526 and 60,487,117 shares

85,323

85,323

Less 401,733 and 505,142 cost of shares of common treasury stock

(7,345

)

(8,515

)

Additional paid-in capital

69,572

68,502

Retained earnings

197,003

84,407

Accumulated other comprehensive loss

(42,443

)

(48,704

)

Total stockholders’ equity

302,110

181,013

Total liabilities and stockholders’ equity

$

1,538,458

$

1,389,793

Condensed Consolidated Statements of Cash Flows (Unaudited)

Six Months Ended June 30,

(In thousands)

2021

2020

Cash flows from operating activities:

Net income

$

112,596

$

253

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

Depreciation of property, plant and equipment and amortization of intangible assets and right of use assets

50,800

45,722

Amortization of debt issuance costs

1,076

1,001

Share-based incentive compensation

2,276

60

Deferred tax (benefit) provision

(1,683

)

(6,499

)

Foreign currency transactions

(7,400

)

231

Reclassification of actuarial losses from AOCI

2,452

5,052

Other operating non-cash items, net

(3,020

)

908

Changes in operating assets and liabilities, net:

Trade receivables

(71,014

)

59,471

Inventories

(46,188

)

25,201

Trade payables

10,801

(45,742

)

Other provisions

(1,277

)

(7,532

)

Income tax liabilities

32,456

8,624

Other assets and liabilities, net

3,192

3,865

Net cash provided by operating activities

85,067

90,615

Cash flows from investing activities:

Acquisition of intangible assets and property, plant and equipment

(58,308

)

(89,401

)

Net cash used in investing activities

(58,308

)

(89,401

)

Cash flows from financing activities:

Repayments of long-term debt

(4,157

)

(4,022

)

Cash inflows related to current financial liabilities

36,421

151,351

Cash outflows related to current financial liabilities

(48,780

)

(52,359

)

Dividends paid to shareholders

—

(12,045

)

Taxes paid for shares issued under net settlement feature

(36

)

(1,202

)

Net cash provided by (used in) financing activities

(16,552

)

81,723

Increase (decrease) in cash, cash equivalents and restricted cash

10,207

82,937

Cash, cash equivalents and restricted cash at the beginning of the period

67,865

68,231

Effect of exchange rate changes on cash

(1,117

)

(5,060

)

Cash, cash equivalents and restricted cash at the end of the period

76,955

146,108

Less restricted cash at the end of the period

2,902

2,734

Cash and cash equivalents at the end of the period

$

74,053

$

143,374

View source version on businesswire.com: https://www.businesswire.com/news/home/20210805006042/en/

INVESTOR CONTACT:

Wendy Wilson

Investor Relations

+1 281-974-0155

KEYWORDS: United States North America Texas

INDUSTRY KEYWORDS: Other Manufacturing Textiles Packaging Automotive General Automotive Chemicals/Plastics Automotive Manufacturing Manufacturing Tires & Rubber

MEDIA:

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Posted on August 5, 2021 4:33 pm
Victory Capital Reports Very Strong Second-Quarter 2021 Financial Results

Victory Capital Reports Very Strong Second-Quarter 2021 Financial Results

Second Quarter 2021 Highlights

Total Assets Under Management (AUM) of $161.9 billion

Quarterly long-term gross flows of $10.0 billion; long-term net inflows of $0.3 billion

GAAP operating margin of 42.9% and adjusted EBITDA margin of 50.6%¹

GAAP net income of $0.93 per diluted share

Adjusted net income with tax benefit of $1.18 per diluted share¹

Board authorizes 25% increase in regular quarterly cash dividend

SAN ANTONIO, Texas–(BUSINESS WIRE)–
Victory Capital Holdings, Inc. (NASDAQ: VCTR) (“Victory Capital” or “the Company”) today reported financial results for the quarter ended June 30, 2021.

“During the second quarter and first half, we generated excellent investment performance for our clients and very strong financial results for our shareholders,” said David Brown, Chairman and Chief Executive Officer. “More than 70% of our AUM outperformed respective benchmarks for the 3-, 5-, and 10-year periods, and we recorded the fourth consecutive quarter of revenue and earnings growth, as well as adjusted EBITDA margin of greater than 50%.

“Our organic growth also improved quarter-over-quarter for the fourth quarter in a row reflecting healthy investor demand for our investment products. This led to record high gross sales during the second quarter and resulted in positive long-term net flows.

“Cash flow generated from operations remained robust. The cash dividend increase announced today marks the fifth consecutive quarterly increase and reflects our view of the strength of our business. Over the course of the last five quarters, we have tripled the cash dividend payable to shareholders. At the same time, we still allocated the majority of our excess cash flow to reducing debt as we paid down an additional $57 million of outstanding debt in the quarter. This was 14% more than in the first quarter of the year and resulted in our leverage ratio decreasing to 1.4 times at the end of the quarter.

“Our evaluation of acquisition targets continues and, with the strength of our balance sheet, we are financially well positioned to execute on a strategic transaction.

“We continue to make investments in the areas of technology, data, and distribution which are continuing to yield positive results. As always, serving our clients remains our top priority.”

¹The Company reports its financial results in accordance with generally accepted accounting principles (“GAAP”). Adjusted EBITDA and Adjusted Net Income are not defined by GAAP and should not be regarded as an alternative to any measurement under GAAP. Please refer to the section “Information Regarding Non-GAAP Financial Measures” at the end of this press release for an explanation of Non-GAAP financial measures and a reconciliation to the nearest GAAP financial measure.

The table below presents AUM, and certain GAAP and non-GAAP (“adjusted”) financial results. Due to rounding, AUM values and other amounts in this press release may not add up precisely to the totals provided.

(in millions except per share amounts or as otherwise noted)

For the Three Months Ended

For the Six Months Ended

June 30,

March 31,

June 30,

June 30,

June 30,

2021

2021

2020

2021

2020

Assets Under Management⁽²⁾

Ending $
161,936

$
154,331

$
129,070

$
161,936

$
129,070

Average
158,471

151,090

128,927

154,781

136,519

Long-term Flows⁽³⁾

Long-term Gross $
9,973

$
6,726

$
5,166

$
16,698

$
12,439

Long-term Net
302

(983

)

(3,466

)

(681

)

(6,568

)

Money Market/Short-term Flows

Money Market/Short-term Gross $
102

$
108

$
4,411

$
209

$
12,063

Money Market/Short-term Net
(126

)

(191

)

(8,416

)

(317

)

(8,214

)

Total Flows

Total Gross $
10,074

$
6,833

$
9,577

$
16,908

$
24,502

Total Net
176

(1,174

)

(11,882

)

(998

)

(14,782

)

Consolidated Financial Results (GAAP)

Revenue $
221.9

$
212.9

$
181.9

$
434.9

$
386.3

Revenue realization (in bps)
56.2

57.2

56.7

56.7

56.9

Operating expenses
126.6

123.2

116.1

249.8

229.9

Income from operations
95.3

89.8

65.8

185.0

156.4

Operating margin
42.9

%

42.1

%

36.2

%

42.5

%

40.5

%

Net income
69.3

65.2

44.7

134.5

101.9

Earnings per diluted share $
0.93

$
0.88

$
0.61

$
1.81

$
1.38

Cash flow from operations
84.5

79.6

69.0

164.2

120.9

Adjusted Performance Results (Non-GAAP)⁽¹⁾

Adjusted EBITDA $
112.2

$
106.8

$
86.3

$
219.1

$
177.8

Adjusted EBITDA margin
50.6

%

50.2

%

47.5

%

50.4

%

46.0

%

Adjusted net income
80.3

76.7

58.3

157.0

120.0

Tax benefit of goodwill and acquired intangible assets
6.9

6.9

6.7

13.8

13.5

Adjusted net income with tax benefit
87.2

83.6

65.1

170.8

133.5

Adjusted net income with tax benefit per diluted share $
1.18

$
1.13

$
0.89

$
2.30

$
1.81

¹The Company reports its financial results in accordance with GAAP. Adjusted EBITDA and Adjusted Net Income are not defined by GAAP and should not be regarded as an alternative to any measurement under GAAP. Please refer to the section “Information Regarding Non-GAAP Financial Measures” at the end of this press release for an explanation of Non-GAAP financial measures and a reconciliation to the nearest GAAP financial measure.

²The three months ended June 30, 2021 includes $250 million of seed capital that USAA liquidated and $25 million related to Victory’s closure of two mutual funds and an ETF. The three months ended March 31, 2021 includes the transfer in of $547 million of assets associated with the THB Asset Management acquisition, which closed on March 1, 2021.

³Long-term AUM is defined as total AUM excluding Money Market and Short-term assets.

AUM, Flows and Investment Performance

Victory Capital’s total AUM increased by 4.9%, or $7.6 billion, to $161.9 billion at June 30, 2021, compared with $154.3 billion at March 31, 2021. The increase was primarily attributable to market action and positive net flows, partially offset by liquidated seed capital. Total gross flows reached a record $10.1 billion for the second quarter and $16.9 billion for the year-to-date period. Long-term AUM increased by 5.1%, or $7.7 billion, to $158.7 billion at June 30, 2021, compared with $151.0 billion at March 31, 2021. For the second quarter, the Company reported long-term gross flows of $10.0 billion and net long-term inflows of $0.3 billion. For the year-to-date period, the Company reported long-term gross flows of $16.7 billion and net long-term outflows of $0.7 billion.

At June 30, 2021, Victory Capital offered 124 investment strategies through its 10 autonomous Investment Franchises and Solutions Platform. The table below presents outperformance against benchmarks by AUM as of June 30, 2021.

Percentage of AUM Outperforming Benchmark

Trailing

Trailing

Trailing

Trailing

1-Year

3-Years

5-Years

10-Years

64%

71%

72%

71%

Second Quarter 2021 Compared with First Quarter 2021

Revenue increased 4.2% to $221.9 million, in the second quarter, compared with $212.9 million in the first quarter, primarily due to higher average AUM. GAAP operating margin expanded 80 basis points in the second quarter to 42.9%, up from 42.1% in the first quarter primarily due to seasonally higher compensation and benefit related items in the first quarter. Second quarter GAAP net income increased 6.2% to $69.3 million, up from $65.2 million in the prior quarter. On a per-share basis, GAAP net income increased 5.7% to $0.93 per diluted share in the second quarter, versus $0.88 per diluted share in the first quarter.

Adjusted net income with tax benefit increased 4.3% to $87.2 million in the second quarter, up from $83.6 million in the first quarter. On a per-share basis, adjusted net income with tax benefit increased 4.4% to $1.18 per diluted share in the second quarter, from $1.13 per diluted share in the prior quarter. Adjusted EBITDA increased 5.1% to $112.2 million in the second quarter, versus $106.8 million in the first quarter. Adjusted EBITDA margin expanded 40 basis points in the second quarter of 2021 to 50.6% compared with 50.2% in the prior quarter.

Second Quarter 2021 Compared with Second Quarter 2020

Revenue for the three months ended June 30, 2021, rose 22.0% to $221.9 million, compared with $181.9 million in the same quarter of 2020. The increase was primarily due to higher average AUM.

Illustrating the inherent operating leverage in the Company’s business model, operating expenses increased just 9.1% to $126.6 million, compared with $116.1 million in last year’s second quarter, reflecting variable operating expenses that rose as a result of the higher average AUM and earnings as well as continued investments to support future growth. Due to this improved operating leverage and a $2.2 million reduction in restructuring and integration costs in the current year, GAAP operating margin expanded 670 basis points to 42.9% in the second quarter, from 36.2% in the same quarter of 2020. GAAP net income rose 54.9% to $69.3 million, or $0.93 per diluted share, in the second quarter compared with $44.7 million, or $0.61 per diluted share, in the same quarter of 2020.

Adjusted net income with tax benefit advanced 34.0% to $87.2 million, or $1.18 per diluted share, in the second quarter, compared with $65.1 million, or $0.89 per diluted share in the same quarter last year. Adjusted EBITDA rose 30.0% to $112.2 million, compared with $86.3 million in last year’s same quarter. Year-over-year, adjusted EBITDA margin expanded 310 basis points to 50.6% in the second quarter of 2021, compared with 47.5% in the same quarter last year.

Six Months Ended June 30, 2021 Compared with Six Months Ended June 30, 2020

Revenue for the six months ended June 30, 2021, rose 12.6% to $434.9 million, compared with $386.3 million in the same period of 2020. The increase was primarily due to higher average AUM.

Displaying the inherent operating leverage in the Company’s business model, operating expenses increased just 8.7% to $249.8 million for the six months ended June 30, 2021, compared with $229.9 million in the same period in 2020, reflecting the Company’s variable operating expenses that rose as a result of the higher average AUM and earnings as well as continued investments to support future growth. GAAP operating margin was 42.5% for the six months ended June 30, 2021, a 200 basis point increase from the 40.5% recorded in the same period in 2020 primarily due to improved operating leverage. GAAP net income rose 32.0% to $134.5 million, or $1.81 per diluted share, in the first six months of 2021 compared with $101.9 million, or $1.38 per diluted share, in the same period in 2020.

Adjusted net income with tax benefit advanced 27.9% to $170.8 million, or $2.30 per diluted share, in the first six months of 2021, compared with $133.5 million, or $1.81 per diluted share in the same period in 2020. For the six months ended June 30, 2021, adjusted EBITDA rose 23.2% to $219.1 million, compared with $177.8 million for the same period in 2020. Year-over-year, adjusted EBITDA margin expanded 440 basis points to 50.4% in the first six months of 2021, compared with 46.0% in the same period last year.

Balance Sheet / Capital Management

During the second quarter, the Company reduced outstanding debt by an additional $57.0 million. Subsequent to June 30, 2021, the Company reduced outstanding debt by $35.0 million, for a total of $453.8 million, since July 1, 2019.

The 10b-5 plan expired on May 12, 2021 as it reached its authorized share repurchase limit of $15 million. On May 13, 2021, the Company announced that its Board of Directors approved a new 10b-5 plan authorizing the repurchase of up to $15 million of Class A common stock through December 31, 2022. During the second quarter, the Company repurchased 288 thousand shares.

Today, the Company’s Board of Directors declared a $0.15 per share quarterly cash dividend, a 25% increase over the dividend declared in the prior quarter. The dividend is payable on September 27, 2021, to shareholders of record on September 10, 2021.

Conference Call, Webcast and Slide Presentation

The Company will host a conference call tomorrow morning, August 6, at 8:00 a.m. ET to discuss the results. Analysts and investors may participate in the question-and-answer session. To participate in the conference call, please call (877) 823-8673 (domestic) or (647) 689-4067 (international), shortly before 8:00 a.m. ET and reference the Victory Capital Conference Call. A live, listen-only webcast will also be available via the investor relations section of the Company’s website at https://ir.vcm.com. Prior to the call, a supplemental slide presentation that will be used during the conference call will be available on the Events and Presentations page of the Company’s investor relations website. For anyone who is unable to join the live event, an archive of the webcast will be available for replay shortly after the call concludes.

About Victory Capital

Victory Capital is a diversified global asset management firm with $161.9 billion in assets under management as of June 30, 2021. The Company operates a next-generation business model combining boutique investment qualities with the benefits of a fully integrated, centralized operating and distribution platform.

Victory Capital provides specialized investment strategies to institutions, intermediaries, retirement platforms and individual investors. With 10 autonomous Investment Franchises and a Solutions Platform, Victory Capital offers a wide array of investment styles and investment vehicles including, actively managed mutual funds, separately managed accounts, rules-based and active ETFs, multi-asset class strategies, custom-designed solutions and a 529 College Savings Plan.

For more information, please visit www.vcm.com or follow us on: Twitter and LinkedIn.

FORWARD-LOOKING STATEMENTS

This press release may contain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These statements may include, without limitation, any statements preceded by, followed by or including words such as “target,” “believe,” “expect,” “aim,” “intend,” “may,” “anticipate,” “assume,” “budget,” “continue,” “estimate,” “future,” “objective,” “outlook,” “plan,” “potential,” “predict,” “project,” “will,” “can have,” “likely,” “should,” “would,” “could” and other words and terms of similar meaning or the negative thereof. Such forward-looking statements involve known and unknown risks, uncertainties and other important factors beyond Victory Capital’s control such as the COVID-19 pandemic and its effect on our business, operations and financial results going forward, as discussed in Victory Capital’s filings with the SEC, that could cause Victory Capital’s actual results, performance or achievements to be materially different from the expected results, performance or achievements expressed or implied by such forward-looking statements.

Although it is not possible to identify all such risks and factors, they include, among others, the following: reductions in AUM based on investment performance, client withdrawals, difficult market conditions and other factors such as a pandemic; the nature of the Company’s contracts and investment advisory agreements; the Company’s ability to maintain historical returns and sustain its historical growth; the Company’s dependence on third parties to market its strategies and provide products or services for the operation of its business; the Company’s ability to retain key investment professionals or members of its senior management team; the Company’s reliance on the technology systems supporting its operations; the Company’s ability to successfully acquire and integrate new companies; the concentration of the Company’s investments in long-only small- and mid-cap equity and U.S. clients; risks and uncertainties associated with non-U.S. investments; the Company’s efforts to establish and develop new teams and strategies; the ability of the Company’s investment teams to identify appropriate investment opportunities; the Company’s ability to limit employee misconduct; the Company’s ability to meet the guidelines set by its clients; the Company’s exposure to potential litigation (including administrative or tax proceedings) or regulatory actions; the Company’s ability to implement effective information and cyber security policies, procedures and capabilities; the Company’s substantial indebtedness; the potential impairment of the Company’s goodwill and intangible assets; disruption to the operations of third parties whose functions are integral to the Company’s ETF platform; the Company’s determination that Victory Capital is not required to register as an “investment company” under the 1940 Act; the fluctuation of the Company’s expenses; the Company’s ability to respond to recent trends in the investment management industry; the level of regulation on investment management firms and the Company’s ability to respond to regulatory developments; the competitiveness of the investment management industry; the dual class structure of the Company’s common stock; the level of control over the Company retained by Crestview GP; the Company’s status as an emerging growth company and a controlled company; and other risks and factors listed under “Risk Factors” and elsewhere in the Company’s filings with the SEC.

Such forward-looking statements are based on numerous assumptions regarding Victory Capital’s present and future business strategies and the environment in which it will operate in the future. Any forward-looking statement made in this press release speaks only as of the date hereof. Except as required by law, Victory Capital assumes no obligation to update these forward-looking statements, or to update the reasons actual results could differ materially from those anticipated in the forward-looking statements, even if new information becomes available in the future.

Victory Capital Holdings, Inc. and Subsidiaries

Unaudited Consolidated Statements of Operations

(in thousands except per share data and percentages)

For the Three Months Ended

For the Six Months Ended

June 30,

March 31,

June 30,

June 30,

June 30,

2021

2021

2020

2021

2020

Revenue

Investment management fees $
168,033

$
160,284

$
130,032

$
328,317

$
276,913

Fund administration and distribution fees
53,871

52,665

51,854

106,536

109,394

Total revenue
221,904

212,949

181,886

434,853

386,307

Expenses

Personnel compensation and benefits
57,462

59,006

49,105

116,468

96,676

Distribution and other asset-based expenses
44,223

42,103

41,630

86,326

96,490

General and administrative
13,713

13,310

13,289

27,023

25,177

Depreciation and amortization
4,694

4,385

4,166

9,079

8,216

Change in value of consideration payable for acquisition of business
5,700

2,500

5,300

8,200

(200

)

Acquisition-related costs
422

(164

)

(23

)

258

(92

)

Restructuring and integration costs
422

2,053

2,605

2,475

3,603

Total operating expenses
126,636

123,193

116,072

249,829

229,870

Income from operations
95,268

89,756

65,814

185,024

156,437

Operating margin
42.9

%

42.1

%

36.2

%

42.5

%

40.5

%

Other income (expense)

Interest income and other income (expense)
1,932

2,734

2,966

4,666

(1,206

)

Interest expense and other financing costs
(6,155

)

(6,845

)

(9,710

)

(13,000

)

(21,118

)

Gain (loss) on debt extinguishment
(1,146

)

(2,781

)

137

(3,927

)

(917

)

Total other expense, net
(5,369

)

(6,892

)

(6,607

)

(12,261

)

(23,241

)

Income before income taxes
89,899

82,864

59,207

172,763

133,196

Income tax expense
(20,629

)

(17,662

)

(14,487

)

(38,291

)

(31,310

)

Net income $
69,270

$
65,202

$
44,720

$
134,472

$
101,886

Earnings per share of common stock

Basic $
1.02

$
0.96

$
0.66

$
1.98

$
1.50

Diluted
0.93

0.88

0.61

1.81

1.38

Weighted average number of shares outstanding

Basic
67,776

67,761

67,821

67,769

67,806

Diluted
74,166

74,108

73,204

74,155

73,818

Dividends declared per share $
0.12

$
0.09

$
0.05

$
0.21

$
0.10

Victory Capital Holdings, Inc. and Subsidiaries

Reconciliation of GAAP to Non-GAAP Measures¹

(unaudited; in thousands except per share data and percentages)

For the Three Months Ended

For the Six Months Ended

June 30,

March 31,

June 30,

June 30,

June 30,

2021

2021

2020

2021

2020

Net income (GAAP) $
69,270

$
65,202

$
44,720

$
134,472

$
101,886

Income tax expense
(20,629

)

(17,662

)

(14,487

)

(38,291

)

(31,310

)

Income before income taxes $
89,899

$
82,864

$
59,207

$
172,763

$
133,196

Interest expense
6,086

7,310

8,267

13,396

18,795

Depreciation
1,524

1,246

746

2,770

1,630

Other business taxes
524

374

219

898

(3,077

)

Amortization of acquisition-related intangible assets
3,171

3,138

3,420

6,309

6,586

Stock-based compensation
3,124

4,636

3,068

7,760

8,440

Acquisition, restructuring and exit costs
6,544

4,389

10,105

10,933

8,563

Debt issuance costs
1,304

2,793

1,312

4,097

3,701

Losses from equity method investments
65

92

—

157

—

Adjusted EBITDA $
112,241

$
106,842

$
86,344

$
219,083

$
177,834

Adjusted EBITDA margin
50.6

%

50.2

%

47.5

%

50.4

%

46.0

%

Net income (GAAP) $
69,270

$
65,202

$
44,720

$
134,472

$
101,886

Adjustment to reflect the operating performance of the Company

Other business taxes
524

374

219

898

(3,077

)

Amortization of acquisition-related intangible assets
3,171

3,138

3,420

6,309

6,586

Stock-based compensation
3,124

4,636

3,068

7,760

8,440

Acquisition, restructuring and exit costs
6,544

4,389

10,105

10,933

8,563

Debt issuance costs
1,304

2,793

1,312

4,097

3,701

Tax effect of above adjustments
(3,667

)

(3,832

)

(4,531

)

(7,499

)

(6,053

)

Adjusted net income $
80,270

$
76,700

$
58,313

$
156,970

$
120,046

Adjusted net income per diluted share $
1.08

$
1.03

$
0.80

$
2.12

$
1.63

Tax benefit of goodwill and acquired intangible assets $
6,918

$
6,918

$
6,745

$
13,836

$
13,473

Tax benefit of goodwill and acquired intangible assets per diluted share $
0.09

$
0.09

$
0.09

$
0.19

$
0.18

Adjusted net income with tax benefit $
87,188

$
83,618

$
65,058

$
170,806

$
133,519

Adjusted net income with tax benefit per diluted share $
1.18

$
1.13

$
0.89

$
2.30

$
1.81

¹Refer to page 15 for further information regarding the Company’s non-GAAP financial measures.

Victory Capital Holdings, Inc. and Subsidiaries

Unaudited Condensed Consolidated Balance Sheets

(In thousands, except for shares)

June 30,

2021

December 31, 2020

Assets

Cash and cash equivalents $
31,622

$
22,744

Receivables
98,684

88,182

Prepaid expenses
6,230

6,082

Investments, at fair value
29,566

23,493

Property and equipment, net
24,290

18,747

Goodwill
404,750

404,750

Other intangible assets, net
1,156,919

1,162,641

Other assets
4,014

4,090

Total assets $
1,756,075

$
1,730,729

Liabilities and stockholders’ equity

Accounts payable and accrued expenses $
51,153

$
42,144

Accrued compensation and benefits
38,885

47,278

Consideration payable for acquisition of business
100,700

92,500

Deferred tax liability, net
51,022

37,684

Other liabilities
30,620

34,573

Long-term debt, net¹
667,539

769,009

Total liabilities
939,919

1,023,188

Stockholders’ equity

Class A common stock, $0.01 par value per share:
2021 – 400,000,000 shares authorized, 19,816,767 shares issued and 16,059,105 shares
outstanding; 2020 – 400,000,000 shares authorized, 19,388,671 shares issued and 16,205,689
shares outstanding
198

194

Class B common stock, $0.01 par value per share:
2021 – 200,000,000 shares authorized, 55,782,820 shares issued and 51,761,697
shares outstanding; 2020 – 200,000,000 shares authorized, 54,766,934 shares issued and 51,336,177
shares outstanding
558

548

Additional paid-in capital
659,920

647,602

Class A treasury stock, at cost: 2021 – 3,757,662 shares; 2020 – 3,182,982 shares
(63,290

)

(47,844

)

Class B treasury stock, at cost: 2021 – 4,021,123 shares; 2020 – 3,430,757 shares
(62,925

)

(47,080

)

Accumulated other comprehensive income (loss)
351

(7,460

)

Retained earnings
281,344

161,581

Total stockholders’ equity
816,156

707,541

Total liabilities and stockholders’ equity $
1,756,075

$
1,730,729

¹Balances at June 30, 2021 and December 31, 2020 are shown net of unamortized loan discount and debt issuance costs in the amount of $13.7 million and $19.2 million, respectively. The gross amount of the debt outstanding was $681.2 million as of June 30, 2021 and $788.2 million as of December 31, 2020.

Victory Capital Holdings, Inc. and Subsidiaries

Assets Under Management

(unaudited; in millions except for percentages)

For the Three Months Ended

% Change from

June 30,

March 31,

June 30,

March 31,

June 30,

2021

2021

2020

2021

2020

Beginning assets under management $
154,331

$
147,241

$
123,779

5

%

25

%

Gross client cash inflows
10,074

6,833

9,577

47

%

5

%

Gross client cash outflows
(9,898

)

(8,007

)

(21,459

)

24

%

-54

%

Net client cash flows
176

(1,174

)

(11,882

)

N/A

N/A

Market appreciation (depreciation)
7,703

7,718

17,173

0

%

-55

%

Acquired assets / Net transfers¹
(275

)

547

—

N/A

N/A

Ending assets under management
161,936

154,331

129,070

5

%

25

%

Average assets under management
158,471

151,090

128,927

5

%

23

%

For the Six Months Ended

% Change from

June 30,

June 30,

June 30,

2021

2020

2020

Beginning assets under management $
147,241

$
151,832

-3

%

Gross client cash inflows
16,908

24,502

-31

%

Gross client cash outflows
(17,906

)

(39,284

)

-54

%

Net client cash flows
(998

)

(14,782

)

-93

%

Market appreciation (depreciation)
15,421

(7,979

)

N/A

Acquired assets / Net transfers²
272

—

N/A

Ending assets under management
161,936

129,070

25

%

Average assets under management
154,781

136,519

13

%

¹The three months ended June 30, 2021 includes $250 million of seed capital that USAA liquidated and $25 million related to Victory’s closure of two mutual funds and an ETF. The three months ended March 31, 2021 includes the transfer in of $547 million of assets associated with the THB Asset Management acquisition, which closed on March 1, 2021.

²The six months ended June 30, 2021 includes the transfer in of $547 million of assets associated with the THB Asset Management acquisition, which closed on March 1, 2021 partially offset by $250 million of seed capital that USAA liquidated and $25 million related to Victory’s closure of two mutual funds and an ETF.

Victory Capital Holdings, Inc. and Subsidiaries

Assets Under Management by Asset Class

(unaudited; in millions)

For the Three Months Ended By Asset Class

Global /

U.S. Mid U.S. Small Fixed U.S. Large Non-U.S. Total Money Market /

Cap Equity Cap Equity Income Cap Equity Equity Solutions Other Long-term Short-term Total

June 30, 2021

Beginning assets under management $
29,156

$
20,230

$
36,776

$
14,448

$
14,652

$
35,356

$
341

$
150,958

$
3,373

$
154,331

Gross client cash inflows
1,412

1,238

1,750

91

1,072

4,370

40

9,973

102

10,074

Gross client cash outflows
(1,940

)

(1,428

)

(2,949

)

(407

)

(541

)

(2,380

)

(27

)

(9,671

)

(228

)

(9,898

)

Net client cash flows
(527

)

(190

)

(1,200

)

(316

)

531

1,991

13

302

(126

)

176

Market appreciation (depreciation)
1,745

616

677

1,253

928

2,419

62

7,700

3

7,703

Acquired assets / Net transfers¹
(33

)

(39

)

156

(101

)

(180

)

(126

)

44

(278

)

3

(275

)

Ending assets under management $
30,340

$
20,617

$
36,410

$
15,284

$
15,931

$
39,640

$
460

$
158,682

$
3,254

$
161,936

March 31, 2021

Beginning assets under management $
26,230

$
18,368

$
36,599

$
14,230

$
13,982

$
34,041

$
257

$
143,706

$
3,534

$
147,241

Gross client cash inflows
1,741

1,072

2,024

98

593

1,143

55

6,726

108

6,833

Gross client cash outflows
(1,854

)

(1,696

)

(1,701

)

(432

)

(648

)

(1,350

)

(28

)

(7,709

)

(299

)

(8,007

)

Net client cash flows
(112

)

(624

)

323

(334

)

(55

)

(207

)

27

(983

)

(191

)

(1,174

)

Market appreciation (depreciation)
3,032

2,024

(219

)

604

700

1,521

57

7,720

(2

)

7,718

Acquired assets / Net transfers²
6

461

73

(52

)

25

1

—

515

32

547

Ending assets under management $
29,156

$
20,230

$
36,776

$
14,448

$
14,652

$
35,356

$
341

$
150,958

$
3,373

$
154,331

June 30, 2020

Beginning assets under management $
18,622

$
11,885

$
35,402

$
10,703

$
9,372

$
25,526

$
140

$
111,650

$
12,129

$
123,779

Gross client cash inflows
943

997

1,498

216

436

1,067

10

5,166

4,411

9,577

Gross client cash outflows
(1,511

)

(1,393

)

(2,775

)

(599

)

(575

)

(1,767

)

(12

)

(8,632

)

(12,826

)

(21,459

)

Net client cash flows
(568

)

(396

)

(1,278

)

(383

)

(138

)

(700

)

(3

)

(3,466

)

(8,416

)

(11,882

)

Market appreciation (depreciation)
4,428

2,592

1,503

2,207

1,898

4,479

55

17,159

14

17,173

Acquired assets / Net transfers
2

2

(4

)

(2

)

(1

)

—

3

—

—

—

Ending assets under management $
22,483

$
14,083

$
35,622

$
12,524

$
11,130

$
29,305

$
195

$
125,343

$
3,727

$
129,070

¹The three months ended June 30, 2021 includes $250 million of seed capital that USAA liquidated and $25 million related to Victory’s closure of two mutual funds and an ETF.

²The three months ended March 31, 2021 includes the transfer in of $547 million of assets associated with the THB Asset Management acquisition, which closed on March 1, 2021.

Victory Capital Holdings, Inc. and Subsidiaries

Assets Under Management by Asset Class

(unaudited; in millions)

For the Six Months Ended By Asset Class

Global /

U.S. Mid U.S. Small Fixed U.S. Large Non-U.S. Total Money Market /

Cap Equity Cap Equity Income Cap Equity Equity Solutions Other Long-term Short-term Total

June 30, 2021

Beginning assets under management $
26,230

$
18,368

$
36,599

$
14,230

$
13,982

$
34,041

$
257

$
143,706

$
3,534

$
147,241

Gross client cash inflows
3,154

2,310

3,774

189

1,664

5,513

95

16,698

209

16,908

Gross client cash outflows
(3,794

)

(3,124

)

(4,651

)

(839

)

(1,188

)

(3,729

)

(55

)

(17,379

)

(526

)

(17,906

)

Net client cash flows
(640

)

(814

)

(877

)

(650

)

476

1,784

40

(681

)

(317

)

(998

)

Market appreciation (depreciation)
4,777

2,641

458

1,857

1,628

3,940

119

15,420

1

15,421

Acquired assets / Net transfers¹
(27

)

423

229

(152

)

(155

)

(125

)

44

236

36

272

Ending assets under management $
30,340

$
20,617

$
36,410

$
15,284

$
15,931

$
39,640

$
460

$
158,682

$
3,254

$
161,936

June 30, 2020

Beginning assets under management $
26,347

$
17,346

$
37,973

$
14,091

$
12,603

$
31,649

$
236

$
140,245

$
11,587

$
151,832

Gross client cash inflows
2,416

2,230

3,449

454

1,107

2,762

21

12,439

12,063

24,502

Gross client cash outflows
(3,776

)

(2,703

)

(5,665

)

(1,406

)

(1,259

)

(4,161

)

(36

)

(19,007

)

(20,277

)

(39,284

)

Net client cash flows
(1,360

)

(473

)

(2,217

)

(952

)

(152

)

(1,399

)

(15

)

(6,568

)

(8,214

)

(14,782

)

Market appreciation (depreciation)
(2,479

)

(2,733

)

142

(621

)

(1,347

)

(956

)

(32

)

(8,027

)

48

(7,979

)

Acquired assets / Net transfers
(25

)

(57

)

(276

)

7

26

12

6

(307

)

307

—

Ending assets under management $
22,483

$
14,083

$
35,622

$
12,524

$
11,130

$
29,305

$
195

$
125,343

$
3,727

$
129,070

¹The six months ended June 30, 2021 includes the transfer in of $547 million of assets associated with the THB Asset Management acquisition, which closed on March 1, 2021 partially offset by $250 million of seed capital that USAA liquidated and $25 million related to Victory’s closure of two mutual funds and an ETF.

Victory Capital Holdings, Inc. and Subsidiaries

Assets Under Management by Vehicle

(unaudited; in millions)

For the Three Months Ended By Vehicle

Separate

Accounts

Mutual

and Other

Funds¹

ETFs²

Vehicles³

Total

June 30, 2021

Beginning assets under management $
117,830

$
4,441

$
32,061

$
154,331

Gross client cash inflows
5,060

239

4,775

10,074

Gross client cash outflows
(5,376

)

(169

)

(4,353

)

(9,898

)

Net client cash flows
(317

)

70

423

176

Market appreciation (depreciation)
5,879

218

1,606

7,703

Acquired assets / Net transfers⁴
(229

)

(375

)

329

(275

)

Ending assets under management $
123,164

$
4,354

$
34,418

$
161,936

March 31, 2021

Beginning assets under management $
112,998

$
3,976

$
30,267

$
147,241

Gross client cash inflows
5,465

240

1,128

6,833

Gross client cash outflows
(6,293

)

(117

)

(1,598

)

(8,007

)

Net client cash flows
(828

)

123

(469

)

(1,174

)

Market appreciation (depreciation)
5,575

343

1,801

7,718

Acquired assets / Net transfers⁵
85

—

462

547

Ending assets under management $
117,830

$
4,441

$
32,061

$
154,331

June 30, 2020

Beginning assets under management $
98,305

$
3,177

$
22,296

$
123,779

Gross client cash inflows
8,621

90

866

9,577

Gross client cash outflows
(19,726

)

(214

)

(1,519

)

(21,459

)

Net client cash flows
(11,104

)

(124

)

(653

)

(11,882

)

Market appreciation (depreciation)
13,229

409

3,535

17,173

Acquired assets / Net transfers
—

—

—

—

Ending assets under management $
100,430

$
3,462

$
25,179

$
129,070

¹Includes institutional and retail share classes, money market and VIP funds.

²Excludes assets managed for other proprietary product (i.e. funds of funds) in order to adjust for double counting.

³Includes collective trust funds, wrap program accounts, UMAs, UCITS, private funds and non-U.S. domiciled pooled vehicles.

⁴The three months ended June 30, 2021 includes $250 million of seed capital that USAA liquidated and $25 million related to Victory’s closure of two mutual funds and an ETF.

⁵The three months ended March 31, 2021 includes the transfer in of $547 million of assets associated with the THB Asset Management acquisition, which closed on March 1, 2021.

Victory Capital Holdings, Inc. and Subsidiaries

Assets Under Management by Vehicle

(unaudited; in millions)

For the Six Months Ended By Vehicle

Separate

Accounts

Mutual and Other

Funds¹ ETFs² Vehicles³ Total

June 30, 2021

Beginning assets under management $
112,998

$
3,976

$
30,267

$
147,241

Gross client cash inflows
10,525

479

5,904

16,908

Gross client cash outflows
(11,669

)

(286

)

(5,950

)

(17,906

)

Net client cash flows
(1,145

)

193

(46

)

(998

)

Market appreciation (depreciation)
11,454

561

3,406

15,421

Acquired assets / Net transfers⁴
(144

)

(375

)

791

272

Ending assets under management $
123,164

$
4,354

$
34,418

$
161,936

June 30, 2020

Beginning assets under management $
118,605

$
4,213

$
29,014

$
151,832

Gross client cash inflows
22,366

345

1,790

24,502

Gross client cash outflows
(35,357

)

(675

)

(3,252

)

(39,284

)

Net client cash flows
(12,990

)

(330

)

(1,462

)

(14,782

)

Market appreciation (depreciation)
(5,185

)

(421

)

(2,374

)

(7,979

)

Acquired assets / Net transfers
—

—

—

—

Ending assets under management $
100,430

$
3,462

$
25,179

$
129,070

¹Includes institutional and retail share classes, money market and VIP funds.

²Excludes assets managed for other proprietary product (i.e. funds of funds) in order to adjust for double counting.

³Includes collective trust funds, wrap program accounts, UMAs, UCITS, private funds and non-U.S. domiciled pooled vehicles.

⁴The six months ended June 30, 2021 includes the transfer in of $547 million of assets associated with the THB Asset Management acquisition, which closed on March 1, 2021 partially offset by $250 million of seed capital that USAA liquidated and $25 million related to Victory’s closure of two mutual funds and an ETF.

Information Regarding Non-GAAP Financial Measures

Victory Capital uses non-GAAP financial measures referred to as Adjusted EBITDA and Adjusted Net Income to measure the operating profitability of the Company. These measures eliminate the impact of one-time acquisition, restructuring and integration costs and demonstrate the ongoing operating earnings metrics of the Company. The Company has included these non-GAAP measures to provide investors with the same financial metrics used by management to assess the operating performance of the Company.

Adjusted EBITDA

Adjustments made to GAAP Net Income to calculate Adjusted EBITDA, as applicable, are:

Adding back income tax expense;

Adding back interest paid on debt and other financing costs, net of interest income;

Adding back depreciation on property and equipment;

Adding back other business taxes;

Adding back amortization expense on acquisition-related intangible assets;

Adding back stock-based compensation expense associated with equity awards issued from pools created in connection with the management-led buyout and various acquisitions and as a result of equity grants related to the IPO;

Adding back direct incremental costs of acquisitions, including restructuring costs;

Adding back debt issuance cost expense;

Adjusting for earnings/losses on equity method investments.

Adjusted Net Income

Adjustments made to GAAP Net Income to calculate Adjusted Net Income, as applicable, are:

Adding back other business taxes;

Adding back amortization expense on acquisition-related intangible assets;

Adding back stock-based compensation expense associated with equity awards issued from pools created in connection with the management-led buyout and various acquisitions and as a result of any equity grants related to the IPO;

Adding back direct incremental costs of acquisitions, including restructuring costs;

Adding back debt issuance cost expense;

Subtracting an estimate of income tax expense applied to the sum of the adjustments above.

Tax Benefit of Goodwill and Acquired Intangible Assets

Due to Victory Capital’s acquisitive nature, tax deductions allowed on acquired intangible assets and goodwill provide it with additional significant supplemental economic benefit. The tax benefit of goodwill and intangible assets represent the tax benefits associated with deductions allowed for intangible assets and goodwill generated from prior acquisitions in which the Company received a step-up in basis for tax purposes. Acquired intangible assets and goodwill may be amortized for tax purposes, generally over a 15-year period. The tax benefit from amortization on these assets is included to show the full economic benefit of deductions for all acquired intangible assets with a step-up in tax basis.

View source version on businesswire.com: https://www.businesswire.com/news/home/20210805005870/en/

Investors:

Matthew Dennis, CFA

Chief of Staff

Director, Investor Relations

216-898-2412

[email protected]

Media:

Tricia Ross

310-622-8226

[email protected]

KEYWORDS: United States North America Texas

INDUSTRY KEYWORDS: Banking Professional Services Family Consumer Other Construction & Property Construction & Property Other Consumer Other Professional Services Human Resources REIT Finance Consulting

MEDIA:

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Posted on August 5, 2021 4:33 pm
Geron to Announce Second Quarter 2021 Financial Results on August 16, 2021

Geron to Announce Second Quarter 2021 Financial Results on August 16, 2021

FOSTER CITY, Calif.–(BUSINESS WIRE)–
Geron Corporation (Nasdaq: GERN) today announced that it will release its second quarter and year to date 2021 financial results after the market closes on Monday, August 16, 2021 via press release, which will be available on the Company’s website at www.geron.com/investors. Geron will host a conference call to discuss the financial results as well as recent events at 4:30 p.m. ET the same day.

A live, listen-only webcast will be available on the Company’s website at www.geron.com/investors/events. An archive of the webcast will be available on the Company’s website for 30 days.

Participants may access the conference call live via telephone by pre-registering online using the following link, http://www.directeventreg.com/registration/event/5548255. Upon registration, a phone number, Direct Event Passcode and unique Registrant ID will be sent via email. This information will be needed in order to enter the conference call. Participants are advised to pre-register at least 10 minutes prior to joining the call.

About Geron

Geron is a late-stage clinical biopharmaceutical company focused on the development and potential commercialization of a first-in-class telomerase inhibitor, imetelstat, in hematologic myeloid malignancies. The Company currently is conducting two Phase 3 clinical trials: IMerge in lower risk myelodysplastic syndromes and IMpactMF in refractory myelofibrosis. For more information about Geron, visit www.geron.com.

View source version on businesswire.com: https://www.businesswire.com/news/home/20210805005933/en/

Olivia Bloom

Chief Financial Officer

[email protected]

[email protected]

KEYWORDS: United States North America California

INDUSTRY KEYWORDS: Biotechnology Pharmaceutical Health

MEDIA:

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Posted on August 5, 2021 4:33 pm
Neuronetics Announces Appointment of Megan Rosengarten to its Board of Directors

MALVERN, Pa., Aug. 05, 2021 (GLOBE NEWSWIRE) — Neuronetics, Inc. (NASDAQ: STIM), a commercial stage medical technology company focused on designing, developing, and marketing products that improve the quality of life for patients who suffer from psychiatric disorders, today announced the appointment of Megan Rosengarten as a new member of its Board of Directors. Following her appointment, the Neuronetics’ Board of Directors now has eight members.

“I am very pleased to have Megan join Neuronetics’ Board of Directors,” said Keith Sullivan, President and Chief Executive Officer of Neuronetics, Inc. “Her background in medical technology product development, marketing, and strategic communications sets her apart as a highly qualified individual who will help guide Neuronetics as we continue to seek to grow our leadership position and bring the benefits of NeuroStar Advanced Therapy for Mental Health to the people who need it.”

Megan has extensive experience in the healthcare sector, spanning over two decades of marketing and strategic leadership. Megan serves as President of Surgical Robotics at Medtronic, which is part of Medtronic’s Medical Surgical portfolio. Prior to joining Medtronic, she served as Vice President of Global Marketing at Hologic in the Breast and Skeletal Health division. In addition, Megan held a variety of roles in product management, marketing, and strategy at Covidien and Johnson & Johnson. Megan earned a B.S. in Biological Anthropology and Anatomy from Duke University, and an M.B.A. from the University of North Carolina – Chapel Hill’s Kenan-Flagler School of Business.

“I’m honored to join Neuronetics as a member of the Board of Directors,” said Megan Rosengarten. “NeuroStar is a unique, highly effective therapy for a disease state that impacts millions of patients annually. I am looking forward to helping drive awareness among both customers and patients, and ultimately drive the expanded adoption of NeuroStar Advanced Therapy for Mental Health.”

About Neuronetics
Neuronetics, Inc. is a commercial-stage medical technology company focused on designing, developing, and marketing products that improve the quality of life for patients who suffer from psychiatric disorders. Our first commercial product, the NeuroStar® Advanced Therapy System, is a non-invasive and non-systemic office-based treatment that uses transcranial magnetic stimulation, or TMS, to create a pulsed, MRI-strength magnetic field that induces electrical currents designed to stimulate specific areas of the brain associated with mood. The system is cleared by the United States Food and Drug Administration, or FDA, for the treatment of major depressive disorder in adult patients who have failed to achieve satisfactory improvement from prior antidepressant medication in the current episode. NeuroStar is also available in other parts of the world, including Japan, where it is listed under Japan’s national health insurance. Additional information can be found at www.neuronetics.com.

Investor Contact:

Mike Vallie or Mark Klausner
Westwicke Partners
443-213-0499
[email protected]

Media Contact:

EvolveMKD
646.517.4220
[email protected]

Posted on August 5, 2021 4:33 pm
Merrimack Reports Second Quarter 2021 Financial Results

Merrimack Reports Second Quarter 2021 Financial Results

CAMBRIDGE, Mass.–(BUSINESS WIRE)–
Merrimack Pharmaceuticals, Inc. (Nasdaq:MACK) (“Merrimack” or the “Company”) today announced its second quarter 2021 financial results for the period ended June 30, 2021.

“We are pleased to report continued reductions in our operating expenses as well as positive overall cashflow during the quarter due to receipt of a tax refund,” said Gary Crocker, Chairman of Merrimack’s Board of Directors. “Both Ipsen Pharmaceuticals and Elevation Oncology continue to report progress on separate clinical programs which could result in future milestone payments to Merrimack.”

Second Quarter 2021 Financial Results

Merrimack reported net loss of $0.8 million for the second quarter ended June 30, 2021, or $0.06 per basic share, compared to a net loss of $1.2 million, or $0.09 per basic share, for the same period in 2020.

General and administrative expenses for the second quarter ended June 30, 2021 were $0.8 million, compared to $1.2 million for the same period in 2020.

As of June 30, 2021, Merrimack had cash and cash equivalents of $14.9 million, compared to $14.0 million as of December 31, 2020. The increase in cash position was due to a decrease of $1.8 million in prepaid expense and other assets related to the receipt of our federal tax refund in April 2021, as well as $0.2 million from the exercise of stock options.

As of June 30, 2021, Merrimack had 13.4 million shares of common stock outstanding.

Updates on Programs Underlying Potential Milestone Payments

Ipsen Pharmaceuticals

On July 29, 2021, as part of its H1 2021 Results Presentation, Ipsen provided to the public an update on the RESILIENT trial of ONIVYDE as a second line treatment for Small Cell Lung Cancer, indicating that clinical data from this trial as well as a possible regulatory filing are anticipated in 2022. Ipsen also provided an update on the NAPOLI 3 trial of ONIVYDE as a first line treatment for pancreatic cancer. Enrollment is continuing in this trial and Ipsen indicated that clinical data as well as a possible regulatory filing are expected in 2023

Elevation Oncology

On June 24, 2021 Elevation Oncology announced the pricing of its initial public offering of 6,250,000 shares of its common stock at a public offering price of $16.00 per share, with gross proceeds to Elevation expected to be $100 million. The anti-HER3 program licensed from Merrimack continues to be Elevation’s lead clinical asset.

About Merrimack

Merrimack Pharmaceuticals, Inc. is a biopharmaceutical company based in Cambridge, Massachusetts that is entitled to receive up to $450.0 million in contingent milestone payments related to its sale of ONIVYDE^® to Ipsen S.A. in April 2017. These milestone payments would be payable by Ipsen upon approval by the U.S. Food and Drug Administration (“FDA”) of ONIVYDE^® for certain additional clinical indications. ONIVYDE^® is already approved by the FDA in combination with fluorouracil (5-FU) and leucovorin (LV) for the treatment of patients with metastatic adenocarcinoma of the pancreas after disease progression following gemcitabine-based therapy. This existing approval is unrelated to any future potential milestone payments. Merrimack’s agreement with Ipsen does not require Ipsen to provide Merrimack with any information on the progress of ONIVYDE^® clinical trials that is not publicly available. Merrimack is also entitled to receive up to $54.5 million in contingent milestone payments related to its sale of anti-HER3 programs to Elevation Oncology (formerly 14ner Oncology, Inc.) in July 2019. The Company is seeking potential acquirers for its remaining preclinical assets.

Forward-Looking Statements

To the extent that statements contained in this press release are not descriptions of historical facts, they are forward-looking statements reflecting the current beliefs and expectations of management made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995, as amended. Forward-looking statements include any statements about Merrimack’s strategy, future operations, future financial position, future revenues and future expectations and plans and prospects for Merrimack, and any other statements containing the words “anticipate,” “believe,” “estimate,” “expect,” “intend,” “may,” “plan,” “predict,” “project,” “target,” “potential,” “will,” “would,” “could,” “should,” “continue” and similar expressions. In this press release, Merrimack’s forward-looking statements include, among others, statements about Merrimack’s plans to seek to divest its preclinical and clinical assets, Merrimack’s rights to receive payments related to certain milestone events or whether such milestones will be achieved, if at all, the sufficiency of Merrimack’s cash resources and Merrimack’s strategic plan, including any potential distribution of additional cash. Such forward-looking statements involve substantial risks and uncertainties that could cause Merrimack’s future results, performance or achievements to differ significantly from those expressed or implied by the forward-looking statements. Such risks and uncertainties include, among others: Positive information about pre-clinical and early stage clinical trial results does not ensure that later stage or larger scale clinical trials will be successful. For example, Onivyde^® may not demonstrate promising therapeutic effect or appropriate safety profiles in current or later stage or larger scale clinical trials as a result of known or as yet unanticipated side effects. The results achieved in later stage trials may not be sufficient to meet applicable regulatory standards or to justify further development. Problems or delays may arise prior to the initiation of planned clinical trials, during clinical trials or in the course of developing, testing or manufacturing that could lead Ipsen and Elevation Oncology and their partners and collaborators to fail to initiate or to discontinue development. Even if later stage clinical trials are successful, unexpected concerns may arise from subsequent analysis of data or from additional data. Obstacles may arise or issues may be identified in connection with review of clinical data with regulatory authorities. Regulatory authorities may disagree with Ipsen and Elevation Oncology’s view of the data or require additional data or information or additional studies. In addition, the planned timing of initiation and completion of clinical trials based upon Onivyde^® and the anti-HER Program are subject to the ability of each of Ipsen and Elevation Oncology, respectively, to enroll patients, enter into agreements with clinical trial sites and investigators, and overcome technical hurdles and other issues related to the conduct of the trials for which each of them is responsible. Additionally, each of Ipsen and Elevation Oncology are subject to the risk that they may not successfully commercialize these development programs. Merrimack is also subject to the risk that it may not have funding sufficient for its foreseeable and unforeseeable operating expenses and capital expenditure requirements. In addition, press releases and other public statements by Ipsen and Elevation Oncology may contain forward-looking statements. Merrimack undertakes no obligation to update or revise any forward-looking statements. Forward-looking statements should not be relied upon as representing Merrimack’s views as of any date subsequent to the date hereof. For a further description of the risks and uncertainties that could cause actual results to differ from those expressed in these forward-looking statements, as well as risks relating to Merrimack’s business in general, see the “Risk Factors” section of Merrimack’s Annual Report on Form 10-K filed with the SEC on March 10, 2021, any subsequent quarterly report on Form 10-Q filed by Merrimack and the other reports Merrimack files with the Securities and Exchange Commission.

View source version on businesswire.com: https://www.businesswire.com/news/home/20210805005726/en/

Tim Surgenor

[email protected]

KEYWORDS: United States North America Massachusetts

INDUSTRY KEYWORDS: Biotechnology Pharmaceutical Health Oncology

MEDIA:

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Posted on August 5, 2021 4:33 pm
Intrepid East Mine Receives the National 2020 Sentinels of Safety Award

Denver, CO, Aug. 05, 2021 (GLOBE NEWSWIRE) — Intrepid Potash, Inc. (NYSE: IPI) announced today that its East Mine operation in Carlsbad, NM was the recipient of the 2020 Sentinels of Safety Award in the Large Underground Nonmetal category.

Established in 1925, the Sentinels of Safety Award is presented by the National Mining Association each year to recognize the outstanding safety achievements of mining operations across a variety of categories. Recipients of the award recorded the greatest number of employee work hours without a single lost-time injury.

“This award is a testament to Intrepid’s relentless focus on safe operations and our core value of ‘Safety in all that we do both at work and at home’.” said Robert Baldridge, Intrepid’s Senior Vice President – New Mexico. “We are honored to receive this award and congratulate every employee at our East Mine for this tremendous achievement.”

About Intrepid

Intrepid is a diversified mineral company that delivers potassium, magnesium, sulfur, salt and water products essential for customer success in agriculture, animal feed and the oil and gas industry. Intrepid is the only U.S. producer of muriate of potash, which is applied as an essential nutrient for healthy crop development, utilized in several industrial applications and used as an ingredient in animal feed. In addition, Intrepid produces a specialty fertilizer, Trio^®, which delivers three key nutrients, potassium, magnesium, and sulfate, in a single particle. Intrepid also provides water, magnesium chloride, brine and various oilfield services.

Intrepid serves diverse customers in markets where a logistical advantage exists and is a leader in the use of solar evaporation for potash production, resulting in lower cost and more environmentally friendly production. Intrepid’s mineral production comes from three solar solution potash facilities and one conventional underground Trio^® mine.

Intrepid routinely posts important information, including information about upcoming investor presentations and press releases, on its website under the Investor Relations tab. Investors and other interested parties are encouraged to enroll at intrepidpotash.com, to receive automatic email alerts for new postings.

Contact

Matt Preston, Vice President – Finance
Phone: 303-996-3048
Email: [email protected]

Posted on August 5, 2021 4:33 pm
Kaman Reports 2021 Second Quarter Results

Kaman Reports 2021 Second Quarter Results

Second Quarter Highlights:

Kaman revises full year outlook for 2021

Net sales from continuing operations of $182.4 million, up 2.5% over the prior year period; Organic sales up 5.4% over the prior year period

Gross profit from continuing operations of $61.9 million; Gross margin of 34.0%

Earnings from continuing operations of $11.9 million, up $12.0 million over the prior year period

Diluted earnings per share from continuing operations of $0.42; Adjusted diluted earnings per share from continuing operations* of $0.56, up 56% from prior year period

Adjusted EBITDA from continuing operations* of $26.9 million, or 14.8%, up 480 basis points from the first quarter of 2021 and 140 basis points from the second quarter of 2020

Year-to-date net cash used in operating activities of $14.7 million; Adjusted Free Cash Flow* of $2.3 million, a $91.3 million improvement over the prior year period

James G. Coogan appointed Senior Vice President and Chief Financial Officer

BLOOMFIELD, Conn.–(BUSINESS WIRE)–
Kaman Corp. (NYSE:KAMN) today reported financial results for the second fiscal quarter ended July 2, 2021.

Table 1. Summary of Financial Results (unaudited)

In thousands except per share amounts

For the Three Months Ended

July 2,

2021

July 3,

2020

Change

Net sales from continuing operations

$

182,394

$

177,890

$

4,504

Operating income from continuing operations:

Operating income (loss) from continuing operations

$

14,832

$

(2,770)

$

17,602

% of sales

8.1

%

(1.6)

%

9.7

%

Adjustments

$

2,930

$

16,382

$

(13,452)

Adjusted operating income from continuing operations*

$

17,762

$

13,612

$

4,150

% of sales

9.7

%

7.7

%

2.0

%

Adjusted EBITDA from continuing operations*:

Earnings (loss) from continuing operations

$

11,856

$

(100)

$

11,956

Adjustments

15,088

24,017

(8,929)

Adjusted EBITDA from continuing operations*

$

26,944

$

23,917

$

3,027

% of sales

14.8

%

13.4

%

1.4

%

Earnings per share from continuing operations:

Diluted earnings per share from continuing operations

$

0.42

$

0.00

$

0.42

Adjustments

0.14

0.36

(0.22)

Adjusted diluted earnings per share from continuing operations*

$

0.56

$

0.36

$

0.20

Ian K. Walsh, Chairman, President and Chief Executive Officer, commented, “Our strong second quarter results speak to the broad diversity of our product offerings as we continue to see sequential improvements for our Medical and Industrial products and higher sales on our Defense products. Looking at the remainder of the year, we continue to see strong order rates for our Medical and Industrial products and we anticipate a meaningful recovery for our Commercial, Business and General Aviation products, providing us confidence in raising our full year outlook for Adjusted EBITDA* and Adjusted Diluted earnings per share*.”

“We recorded GAAP diluted earnings per share of $0.42 in the quarter. When adjusted*, we earned diluted earnings per share of $0.56, a 55.6% increase over the adjusted diluted earnings per share* of $0.36 earned in the second quarter of 2020. Strong gross margin performance in the quarter, up 210 basis points to 34.0%, coupled with the 40 basis point improvement in S,G&A as a percentage of sales of 21.2% led to improved profitability for the period. This improvement demonstrates the power of our newly deployed Operations Excellence.”

“Investments in product development continue to be a primary focus for us as we look to drive future organic growth. In the quarter, we made significant progress on our new purpose built medium-lift autonomous aerial vehicle with several successful test flights and early testing of its external cargo capability. These test flights demonstrate our proof of concept and the ability of our aircraft to perform in real world conditions. As we look to the remainder of the year, we anticipate we will make further progress on this aircraft, as well as our other R&D initiatives, while continuing to build on our portfolio of highly engineered products through strategic acquisitions.”

Management’s Commentary on Second Quarter Results:

Net sales for the quarter increased 2.5% when compared to the second quarter of 2020 and 6.3% sequentially. Organic sales*, which excludes sales from our former U.K. composite operations, increased 5.4% from the second quarter of 2020 and increased 7.3% from the first quarter of 2021. These improvements were the result of increased sales on our Medical and Industrial products, partially offset by lower sales volume of our Commercial, Business and General Aviation products.

Higher sales volume of our miniature bearings contributed to recoveries in our Medical and Industrial end markets. Coupled with the increase in sales of our medical and analytical devices, our Medical products delivered a 54.8% increase in sales over the second quarter of 2020 and 11.1% over the first quarter of 2021. Sales for our Industrial products increased 28.2% when compared to the second quarter of 2020 and 15.3% sequentially. We continue to see high order intake for these product offerings and expect strong performance through the remainder of the year.

Sales of our Defense products and Commercial, Business and General Aviation products decreased 1.4% and 14.1%, respectively, on a GAAP basis from the prior year period. Prior year sales of our Defense and Commercial, Business and General Aviation products included $3.6 million and $1.2 million, respectively, of sales from our former U.K. composites operations.

Organic sales* for our Defense products increased 2.3% when compared to the second quarter of 2020 and 16.2% when compared to the first quarter of 2021. The sequential increase was due in large part to the mix of sales on our Joint Programmable Fuze program offset by a modest decrease in our other defense offerings. During the quarter we delivered 8,200 fuzes, bringing our total year-to-date deliveries to 16,290 units, and we continue to expect to deliver 30,000 to 35,000 Joint Programmable Fuzes for the full year.

Organic sales* for our Commercial, Business and General Aviation products decreased 11.8% from the second quarter of 2020 and 13.0% from the first quarter of 2021. This sequential decrease was due to a 13.1% decrease in sales for our commercial aviation products and the absence of a K-MAX® aircraft sale in the quarter, partially offset by a 10.9% increase in sales for other general and business aviation products. Based on lead times with our customers, we anticipated the second quarter being the low point in demand for 2021 and, thus, we expect a meaningful ramp in sales for these products in the second half of the year.

Chief Financial Officer, James G. Coogan, commented, “In the quarter, we used $12.3 million of cash from operating activities which contributed to our Free Cash Flow* usage of $15.7 million. For the year-to-date period we have used $14.7 million in cash from operating activities; however, this included a $25.1 million payment for the acquired retention plans at Bal Seal. When adjusted for this payment, our Free Cash Flow* was $2.3 million in the first half of the year compared to a usage of $89.0 million in the first half of 2020, a significant improvement, as we benefited from improved collections on our JPF program and overall cash management across the company.”

“Adjusted EBITDA margin from continuing operations* increased 480 basis points sequentially to 14.8% in the quarter demonstrating our commitment to our new Operations Excellence model while remaining agile in this dynamic environment.”

“We are revising our full year outlook based on our strong performance in the first half of 2021 and the anticipated recovery in our Commercial, Business and General Aviation products in the second half of the year, while remaining mindful of the timing of the recovery in the commercial aerospace market. We are lowering our sales range to $715 million to $735 million, while increasing our expectations for Adjusted EBITDA* to $87.5 million to $97.5 million and Adjusted Diluted Earnings per share* to $1.70 to $1.95. These new ranges reflect lower expected sales on our lower margin structures programs and our continued focus on improved profitability. We continue to expect Adjusted Free Cash Flow of $30.1 million to $40.1 million for the full year.”

2021 Outlook

(in millions)

2020

2021 Outlook

Actual

Low End

High End

Sales

Sales from continuing operations

$

784.5

$

715.0

$

735.0

Sales of Disposed Business⁽¹⁾

21.5

—

—

Organic Sales*

$

763.0

$

715.0

$

735.0

Adjusted EBITDA*

Earnings from continuing operations

$

(70.4)

$

41.8

$

48.8

Adjustments

173.3

45.7

48.7

Adjusted EBITDA* from continuing operations

$

102.9

$

87.5

$

97.5

Adjusted EBITDA margin* from continuing operations

13.1

%

12.2

%

13.3

%

Adjusted Diluted Earnings Per Share*

Diluted Earnings Per Share

$

(2.54)

$

1.50

$

1.75

Adjustments

4.65

0.20

0.20

Adjusted Diluted Earnings Per Share*

$

2.11

$

1.70

$

1.95

Cash Flow

Operating cash flow from continuing operations

$

16.5

$

25.0

$

35.0

Bal Seal Acquisition Retention Payment

—

25.1

25.1

Cash used for the purchase of property, plant and equipment

(17.8)

(20.0)

(20.0)

Adjusted Free Cash Flow*

$

(1.3)

$

30.1

$

40.1

Discretionary Pension Contribution

$

10.0

$

10.0

$

10.0

⁽¹⁾ In the first quarter of 2021 the Company sold its U.K Composites Business which did not qualify for reporting as a discontinued operation under GAAP. In 2021 we will record sales of $1.7 million for this business which was not contemplated as part of our outlook for the year.

⁽²⁾Operating cash flow from continuing operations include the $25.1 million payment to Bal Seal employees which represents purchase price paid to the former Bal Seal owners that was accounted for as compensation expense under ASC 805 in 2020.

Please see the MD&A section of the Company’s Form 10-Q filed with the Securities and Exchange Commission concurrently with the issuance of this release for greater detail on our results and various company programs.

A conference call has been scheduled for tomorrow, August 6, 2021, at 8:30 AM ET. The call will be accessible by telephone within the U.S. at (844) 473-0975 and from outside the U.S. at (562) 350-0826 (using the Conference I.D.: 1672665) or via the Internet at www.kaman.com. Please go to the website at least fifteen minutes prior to the start of the call to register, download and install any necessary audio software. A replay will also be available two hours after the call and can be accessed at (855) 859-2056 or (404) 537-3406 using the Conference I.D.: 1672665.

About Kaman Corporation

Kaman Corporation, founded in 1945 by aviation pioneer Charles H. Kaman, and headquartered in Bloomfield, Connecticut, conducts business in the Aerospace, Defense, Industrial and Medical markets. Kaman produces and markets proprietary aircraft bearings and components; super precision, miniature ball bearings; proprietary spring energized seals, springs and contacts; complex metallic and composite aerostructures for commercial, military and general aviation fixed and rotary wing aircraft; safe and arming solutions for missile and bomb systems for the U.S. and allied militaries; subcontract helicopter work; restoration, modification and support of our SH-2G Super Seasprite maritime helicopters; manufacture and support of our K-MAX® manned and unmanned medium-to-heavy lift helicopters.

More information is available at www.kaman.com.

Non-GAAP Measures Disclosure

Management believes that the Non-GAAP financial measures (i.e. financial measures that are not computed in accordance with Generally Accepted Accounting Principles) identified by an asterisk (*) used in this release or in other disclosures provide important perspectives into the Company’s ongoing business performance. The Company does not intend for the information to be considered in isolation or as a substitute for the related GAAP measures. Other companies may define the measures differently. We define the Non-GAAP measures used in this release and other disclosures as follows:

Organic Sales – Organic Sales is defined as “Net Sales” less sales derived from acquisitions completed or businesses disposed of that did not qualify for accounting as a discontinued operation during the preceding twelve months. We believe that this measure provides management and investors with a more complete understanding of underlying operating results and trends of established, ongoing operations by excluding the effect of acquisitions, which can obscure underlying trends. We also believe that presenting Organic Sales enables a more direct comparison to other businesses and companies in similar industries. Management recognizes that the term “Organic Sales” may be interpreted differently by other companies and under different circumstances. No other adjustments were made during the three-month and six-month fiscal periods ended July 2, 2021 and July 3, 2020, respectively. The following table illustrates the calculation of Organic Sales using the GAAP measure, “Net Sales”.

Table 2. Organic Sales from continuing operations (in thousands) (unaudited)

For the Three Months Ended

For the Six Months Ended

July 2,

2021

July 3,

2020

July 2,

2021

July 3,

2020

Net sales

$

182,394

$

177,890

$

354,010

$

385,212

Acquisition Sales

—

—

—

—

Sales of Disposed Business

—

4,812

1,704

13,298

Organic Sales

$

182,394

$

173,078

$

352,306

$

371,914

$ Change

9,316

(19,608)

% Change

5.4

%

(5.3)

%

Adjusted Net Sales from continuing operations and Adjusted Operating Income from continuing operations – Adjusted Net Sales from continuing operations is defined as net sales from continuing operations, less items not indicative of normal sales, such as revenue recorded related to the settlement of claims. Adjusted Operating Income from continuing operations is defined as operating income from continuing operations, less items that are not indicative of the operating performance of the Company for the period presented. These items are included in the reconciliation below. Management uses Adjusted Net Sales from continuing operations and Adjusted Operating Income from continuing operations to evaluate performance period over period, to analyze underlying trends and to assess our performance relative to our competitors. We believe that this information is useful for investors and financial institutions seeking to analyze and compare companies on the basis of operating performance. The following table illustrates the calculation of Adjusted Operating Income from continuing operations to the Consolidated Financial Statements included in the Company’s Form 10-Q filed with the Securities and Exchange Commission on August 5, 2021.

Table 3. Adjusted Net Sales and Adjusted Operating Income from Continuing Operations

(In thousands) (unaudited)

For the Three Months Ended

For the Six Months Ended

July 2,

2021

July 3,

2020

July 2,

2021

July 3,

2020

CONSOLIDATED OPERATING INCOME:

Net Sales from continuing operations

$

182,394

$

177,890

$

354,010

$

385,212

GAAP – Operating income (loss) from

continuing operations

$

14,832

$

(2,770)

$

20,445

$

(7,192)

% of GAAP net sales

8.1

%

(1.6)

%

5.8

%

(1.9)

%

Adjustments

Restructuring and severance costs

1,516

4,484

2,868

6,279

Costs associated with corporate development activities

415

679

415

2,466

Bal Seal acquisition costs

—

(36)

—

8,447

Cost of acquired Bal Seal retention plans

—

5,704

—

11,407

Inventory step-up associated with Bal Seal acquisition

—

1,178

—

2,355

Costs from transition services agreement

999

4,373

1,704

8,513

Reversal of employee tax-related matters in

foreign operations

—

—

—

(1,211)

Reversal of environmental accrual at GRW

—

—

—

(264)

Loss (gain) on sale business

—

—

234

(493)

Total adjustments

$

2,930

$

16,382

$

5,221

$

37,499

Adjusted Operating Income

$

17,762

$

13,612

$

25,666

$

30,307

% of GAAP net sales

9.7

%

7.7

%

7.3

%

7.9

%

Adjusted EBITDA from continuing operations – Adjusted EBITDA from continuing operations is defined as earnings from continuing operations before interest, taxes, other expense (income), net, depreciation and amortization and certain items that are not indicative of the operating performance of the Company for the periods presented. Adjusted EBITDA from continuing operations differs from earnings from continuing operations, as calculated in accordance with GAAP, in that it excludes interest expense, net, income tax expense, depreciation and amortization, other expense (income), net, non-service pension and post retirement benefit expense (income), and certain items that are not indicative of the operating performance of the Company for the periods presented. We have made numerous investments in our business, such as acquisitions and capital expenditures, including facility improvements, new machinery and equipment, improvements to our information technology infrastructure and ERP systems, which we have adjusted for in Adjusted EBITDA from continuing operations. Adjusted EBITDA from continuing operations also does not give effect to cash used for debt service requirements and thus does not reflect funds available for distributions, reinvestments or other discretionary uses. Management believes Adjusted EBITDA from continuing operations provides an additional perspective on the operating results of the organization and its earnings capacity and helps improve the comparability of our results between periods because it provides a view of our operations that excludes items that management believes are not reflective of operating performance, such as items traditionally removed from net earnings in the calculation of EBITDA as well as Other expense (income), net and certain items that are not indicative of the operating performance of the Company for the period presented. Adjusted EBITDA from continuing operations is not presented as an alternative measure of operating performance, as determined in accordance with GAAP. No other adjustments were made during the three-month and six-month fiscal periods ended July 2, 2021 and July 3, 2020. The following table illustrates the calculation of Adjusted EBITDA from continuing operations using GAAP measures:

Table 4. Adjusted EBITDA from continuing operations (in thousands) (unaudited)

For the Three Months Ended

For the Six Months Ended

July 2,

2021

July 3,

2020

July 2,

2021

July 3,

2020

Adjusted EBITDA from continuing operations

Consolidated Results

Sales from continuing operations

$

182,394

$

177,890

$

354,010

$

385,212

Earnings (loss) from continuing operations, net of tax

11,856

(100)

19,840

(507)

Interest expense, net

4,335

5,808

8,586

9,055

Income tax expense (benefit)

5,502

(1,258)

5,709

(1,701)

Non-service pension and post retirement

benefit income

(6,577)

(4,062)

(13,220)

(8,125)

Other expense, net

158

(108)

447

110

Depreciation and amortization

9,182

10,305

18,391

19,814

Other Adjustments:

Restructuring and severance costs

1,516

4,484

2,868

6,279

Cost associated with corporate development activities

415

679

415

2,466

Bal Seal acquisition costs

—

(36)

—

8,447

Cost of acquired Bal Seal retention plans

—

5,704

—

11,407

Inventory step-up associated with Bal Seal acquisition

—

1,178

—

2,355

Costs from transition services agreement

999

4,373

1,704

8,513

Income from transition services agreement

(442)

(3,050)

(917)

(6,024)

Reversal of employee tax-related matters in

foreign operations

—

—

—

(1,211)

Reversal of environmental accrual at GRW

—

—

—

(264)

Loss (gain) on sale of business

—

—

234

(493)

Adjustments

$

15,088

$

24,017

$

24,217

$

50,628

Adjusted EBITDA from continuing operations

$

26,944

$

23,917

$

44,057

$

50,121

Adjusted EBITDA margin

14.8

%

13.4

%

12.4

%

13.0

%

Adjusted Earnings from Continuing Operations and Adjusted Diluted Earnings Per Share from Continuing Operations – Adjusted Earnings from Continuing Operations and Adjusted Diluted Earnings per Share from Continuing Operations are defined as GAAP “Earnings from Continuing Operations” and “Diluted earnings per share from continuing operations”, less items that are not indicative of the operating performance of the business for the periods presented. These items are included in the reconciliation below. Management uses Adjusted Earnings from Continuing Operations and Adjusted Diluted Earnings per Share from Continuing Operations to evaluate performance period over period, to analyze the underlying trends in our business and to assess its performance relative to its competitors. We believe that this information is useful for investors and financial institutions seeking to analyze and compare companies on the basis of operating performance.

The following table illustrates the calculation of Adjusted Earnings from Continuing Operations and Adjusted Diluted Earnings per Share from Continuing Operations using “Earnings from Continuing Operations” and “Diluted earnings per share from continuing operations” from the “Consolidated Statements of Operations” included in the Company’s Form 10-Q filed with the Securities and Exchange Commission on August 5, 2021.

Table 5. Adjusted Earnings from continuing operations and Adjusted Diluted Earnings per Share from continuing operations

(In thousands except per share amounts) (unaudited)

For the Three Months Ended

For the Six Months Ended

July 2,

2021

July 3,

2020

July 2,

2021

July 3,

2020

Adjustments to Earnings from Continuing Operations

Restructuring and severance costs

$

1,516

$

4,484

$

2,868

$

6,279

Costs associated with corporate development activities

415

679

415

2,466

Bal Seal acquisition costs

—

(36)

—

8,447

Cost of acquired Bal Seal retention plans

—

5,704

—

11,407

Inventory step-up associated with Bal Seal acquisition

—

1,178

—

2,355

Costs from transition services agreement

999

4,373

1,704

8,513

Income from transition services agreement

(442)

(3,050)

(917)

(6,024)

Reversal of employee tax-related matters in

foreign operations

—

—

—

(1,211)

Reversal of environmental accrual at GRW

—

—

—

(264)

Tax expense on sale of UK operations

1,799

—

287

—

Loss (gain) on sale of business

—

—

234

(493)

Adjustments, pre tax

$

4,287

$

13,332

$

4,591

$

31,475

Tax Effect of Adjustments to Earnings from

Continuing Operations

Restructuring and severance costs

$

322

$

1,143

$

596

$

1,601

Costs associated with corporate development activities

88

173

86

629

Bal Seal acquisition costs

—

(9)

—

2,154

Cost of acquired Bal Seal retention plans

—

1,455

—

2,909

Inventory step-up associated with Bal Seal acquisition

—

300

—

601

Costs from transition services agreement

212

1,115

354

2,171

Income from transition services agreement

(94)

(778)

(191)

(1,536)

Employee tax-related matters in foreign operations

—

—

—

(309)

Reversal of environmental accrual at GRW

—

—

—

(67)

Tax expense on sale of UK operations

—

—

—

—

Loss (gain) on sale of business

—

—

—

(126)

Tax effect of Adjustments

$

528

$

3,399

$

845

$

8,027

Adjustments to Earnings from Continuing

Operations, net of tax

GAAP Earnings (loss) from continuing

operations, as reported

$

11,856

$

(100)

$

19,840

$

(507)

Restructuring and severance costs

1,194

3,341

2,272

4,678

Costs associated with corporate development activities

327

506

329

1,837

Bal Seal acquisition costs

—

(27)

—

6,293

Cost of acquired Bal Seal retention plans

—

4,249

—

8,498

Inventory step-up associated with Bal Seal acquisition

—

878

—

1,754

Costs from transition services agreement

787

3,258

1,350

6,342

Income from transition services agreement

(348)

(2,272)

(726)

(4,488)

Employee tax-related matters in foreign operations

—

—

—

(902)

Reversal of environmental accrual at GRW

—

—

—

(197)

Tax expense on sale of UK Operations

1,799

—

287

—

Loss (gain) on sale of business

—

—

234

(367)

Adjusted Earnings from continuing operations

$

15,615

$

9,833

$

23,586

$

22,941

Calculation of Adjusted Diluted Earnings per

Share from Continuing Operations

GAAP diluted earnings (loss) per share from

continuing operations

$

0.42

$

0.00

$

0.71

$

(0.02)

Restructuring and severance costs

0.04

0.12

0.08

0.17

Costs associated with corporate development activities

0.01

0.02

0.01

0.07

Bal Seal acquisition costs

—

—

—

0.23

Cost of accrued Bal Seal retention plans

—

0.15

—

0.30

Inventory step-up associated with Bal Seal acquisition

—

0.03

—

0.06

Costs from transition services agreement

0.03

0.12

0.05

0.23

Income from transition services agreement

(0.01)

(0.08)

(0.02)

(0.16)

Employee tax-related matters in foreign operations

—

—

—

(0.03)

Reversal of environmental accrual at GRW

—

—

—

(0.01)

Tax effect on sale of UK operations

0.07

—

0.01

—

Loss (gain) on sale of business

—

—

0.01

(0.01)

Adjustments to diluted earnings per share from

continuing operations

$

0.14

$

0.36

$

0.14

$

0.85

Adjusted Diluted Earnings per Share from continuing operations

$

0.56

$

0.36

$

0.85

$

0.83

Diluted weighted average shares outstanding

27,913

27,659

27,890

27,734

Adjusted Free Cash Flowfrom continuing operations – Adjusted Free Cash Flow from continuing operations is defined as GAAP “Net cash provided by (used in) operating activities from continuing operations” in a period less “Expenditures for property, plant & equipment” in the same period and any adjustments that are representative of the Company’s cash generation or usage in the period. For 2021 we will adjust free cash flow to remove the cash payment made to Bal Seal employees under the retention plan established by the former owners of Bal Seal. Management believes Free Cash Flow from continuing operations and Adjusted Free Cash Flow provides an important perspective on our ability to generate cash from our business operations and, as such, that it is an important financial measure for use in evaluating the Company’s financial performance. Free Cash Flow from continuing operations and Adjusted Free Cash Flow should not be viewed as representing the residual cash flow available for discretionary expenditures such as dividends to shareholders or acquisitions, as it may exclude certain mandatory expenditures such as repayment of maturing debt and other contractual obligations. Management uses Free Cash Flow from continuing operations and Adjusted Free Cash Flow internally to assess overall liquidity. The following table illustrates the calculation of Adjusted Free Cash Flow from continuing operations using “Net cash provided by (used in) operating activities from continuing operations”, “Expenditures for property, plant & equipment” and “Cash paid for acquired retention plans”, GAAP measures from the Condensed Consolidated Statements of Cash Flows included in this release.

Table 6. Adjusted Free Cash Flow from continuing operations (in thousands) (unaudited)

For the Six

Months Ended

For the Three

Months Ended

For the Three

Months Ended

July 2, 2021

April 2, 2021

July 2, 2021

Net cash used in operating activities from continuing operations

$

(14,723)

$

(2,415)

$

(12,308)

Expenditures for property, plant & equipment

(8,102)

(4,678)

(3,424)

Cash paid for acquired retention plans ⁽¹⁾

25,108

25,108

—

Adjusted Free Cash Flow from continuing operations

$

2,283

$

18,015

$

(15,732)

⁽¹⁾ Operating cash flow from continuing operations will include the $25.1 million payment to Bal Seal employees which represents purchase price paid to the former Bal Seal owners accounted for as compensation under ASC 805

Debt to Capitalization Ratio – Debt to Capitalization Ratio is calculated by dividing debt by capitalization. Debt is defined as GAAP “Current portion of long-term debt” plus “Long-term debt, excluding current portion”. Capitalization is defined as Debt plus GAAP “Total shareholders’ equity”. Management believes that Debt to Capitalization Ratio is a measurement of financial leverage and provides an insight into the financial structure of the Company and its financial strength. The following table illustrates the calculation of Debt to Capitalization Ratio using GAAP measures from the Condensed Consolidated Balance Sheets included in this release.

Table 7. Debt to Capitalization Ratio (in thousands) (unaudited)

July 2, 2021

December 31, 2020

Long-term debt, excluding current portion

$

187,358

$

185,401

Debt

187,358

185,401

Total shareholders’ equity

779,212

746,438

Capitalization

$

966,570

$

931,839

Debt to Capitalization Ratio

19.4

%

19.9

%

FORWARD-LOOKING STATEMENTS

This release contains “forward-looking statements” within the meaning of the safe harbor provisions of the U.S. Private Securities Litigation Reform Act of 1995. Forward-looking statements also may be included in other publicly available documents issued by the Company and in oral statements made by our officers and representatives from time to time. These forward-looking statements are intended to provide management’s current expectations or plans for our future operating and financial performance, based on assumptions currently believed to be valid. They can be identified by the use of words such as “anticipate,” “intend,” “plan,” “goal,” “seek,” “believe,” “project,” “estimate,” “expect,” “strategy,” “future,” “likely,” “may,” “should,” “would,” “could,” “will” and other words of similar meaning in connection with a discussion of future operating or financial performance. Examples of forward looking statements include, among others, statements relating to future sales, earnings, cash flows, results of operations, uses of cash and other measures of financial performance.

Because forward-looking statements relate to the future, they are subject to inherent risks, uncertainties and other factors that may cause the Company’s actual results and financial condition to differ materially from those expressed or implied in the forward-looking statements. Such risks, uncertainties and other factors include, among others: (i) risks related to Kaman’s performance of its obligations under the transition services agreement entered into in connection with the sale of our former Distribution business and UK Composites business and disruption of management time from ongoing business operations relating thereto; (ii) changes in domestic and foreign economic and competitive conditions in markets served by the Company, particularly the defense, commercial aviation and industrial production markets; (iii) changes in government and customer priorities and requirements (including cost-cutting initiatives, government and customer shut-downs, the potential deferral of awards, terminations or reductions of expenditures to respond to the priorities of Congress and the Administration, or budgetary cuts resulting from Congressional actions, including the elimination of Overseas Contingency Operations funding, or automatic sequestration); (iv) the global economic impact of the COVID-19 pandemic; (v) changes in geopolitical conditions in countries where the Company does or intends to do business; (vi) the successful conclusion of competitions for government programs (including new, follow-on and successor programs) and thereafter successful contract negotiations with government authorities (both foreign and domestic) for the terms and conditions of the programs; (vii) the timely receipt of any necessary export approvals and/or other licenses or authorizations from the USG; (viii) timely satisfaction or fulfillment of material contractual conditions precedents in customer purchase orders, contracts, or similar arrangements; (ix) the existence of standard government contract provisions permitting renegotiation of terms and termination for the convenience of the government; (x) the successful resolution of government inquiries or investigations relating to our businesses and programs; (xi) risks and uncertainties associated with the successful implementation and ramp up of significant new programs, including the ability to manufacture the products to the detailed specifications required and recover start-up costs and other investments in the programs; (xii) potential difficulties associated with variable acceptance test results, given sensitive production materials and extreme test parameters; (xiii) the receipt and successful execution of production orders under the Company’s existing USG JPF contract, including the exercise of all contract options and receipt of orders from allied militaries, but excluding any next generation programmable fuze programs, as all have been assumed in connection with goodwill impairment evaluations; (xiv) the continued support of the existing K-MAX® helicopter fleet, including the sale of existing K-MAX® spare parts inventory and the receipt of orders for new aircraft sufficient to recover our investments in the K-MAX® production line; (xv) the accuracy of current cost estimates associated with environmental remediation activities; (xvi) the profitable integration of acquired businesses into the Company’s operations; (xvii) the ability to recover from cyber-based or other security attacks, information technology failures or other disruptions, including the December 2020 Bal Seal incident; (xviii) changes in supplier sales or vendor incentive policies; (xix) the ability of our suppliers to satisfy their performance obligations; (xx) the effects of price increases or decreases; (xxi) the effects of pension regulations, pension plan assumptions, pension plan asset performance, future contributions and the pension freeze, including the ultimate determination of the USG’s share of any pension curtailment adjustment calculated in accordance with CAS 413; (xxii) future levels of indebtedness and capital expenditures; (xxiii) the continued availability of raw materials and other commodities in adequate supplies and the effect of increased costs for such items; (xxiv) the effects of currency exchange rates and foreign competition on future operations; (xxv) changes in laws and regulations, taxes, interest rates, inflation rates and general business conditions; (xxvi) future repurchases and/or issuances of common stock; (xxvii) the occurrence of unanticipated restructuring costs or the failure to realize anticipated savings or benefits from past or future expense reduction actions; (xxviii) the ability to recruit and retain skilled employees; and (xxix) other risks and uncertainties set forth herein and in our 2020 Form 10-K and our Second Quarter Form 10-Q filed August 5, 2021.

Any forward-looking information provided in this release should be considered with these factors in mind. We assume no obligation to update any forward-looking statements contained in this report.

KAMAN CORPORATION AND SUBSIDIARIES

Condensed Consolidated Statements of Operations

(In thousands, except per share amounts) (unaudited)

For the Three Months Ended

For the Six Months Ended

July 2,

2021

July 3,

2020

July 2,

2021

July 3,

2020

Net sales

$

182,394

$

177,890

$

354,010

$

385,212

Cost of sales

120,448

121,222

239,159

260,842

Gross profit

61,946

56,668

114,851

124,370

Selling, general and administrative expenses

38,719

38,396

76,847

91,724

Research and development costs

3,238

2,847

7,464

7,702

Intangible asset amortization expense

2,637

3,637

5,274

6,443

Costs from transition services agreement

999

4,373

1,704

8,513

Cost of acquired retention plans

—

5,704

—

11,407

Restructuring and severance costs

1,516

4,484

2,868

6,279

Loss (gain) on sale of business

—

—

234

(493)

Net loss (gain) on sale of assets

5

(3)

15

(13)

Operating income (loss)

14,832

(2,770)

20,445

(7,192)

Interest expense, net

4,335

5,808

8,586

9,055

Non-service pension and post retirement benefit income

(6,577)

(4,062)

(13,220)

(8,125)

Income from transition services agreement

(442)

(3,050)

(917)

(6,024)

Other expense (income), net

158

(108)

447

110

Earnings (loss) from continuing operations

before income taxes

17,358

(1,358)

25,549

(2,208)

Income tax expense (benefit)

5,502

(1,258)

5,709

(1,701)

Earnings (loss) from continuing operations

11,856

(100)

19,840

(507)

Earnings from discontinued operations before

gain on disposal, net of tax

—

—

—

—

Gain on disposal of discontinued operations, net

of tax

—

—

—

692

Total earnings from discontinued operations

—

—

—

692

Net earnings (loss)

$

11,856

$

(100)

$

19,840

$

185

Earnings per share:

Basic earnings (loss) per share from

continuing operations

$

0.43

$

0.00

$

0.71

$

(0.02)

Basic earnings per share from discontinued operations

0.00

0.00

0.00

0.03

Basic earnings per share

$

0.43

$

0.00

$

0.71

$

0.01

Diluted earnings (loss) per share from

continuing operations

$

0.42

$

0.00

$

0.71

$

(0.02)

Diluted earnings per share from

discontinued operations

0.00

0.00

0.00

0.03

Diluted earnings per share

$

0.42

$

0.00

$

0.71

$

0.01

Average shares outstanding:

Basic

27,867

27,659

27,841

27,734

Diluted

27,913

27,659

27,890

27,734

KAMAN CORPORATION AND SUBSIDIARIES

Condensed Consolidated Balance Sheets

(In thousands, except share and per share amounts) (unaudited)

July 2, 2021

December 31, 2020

Assets

Current assets:

Cash and cash equivalents

$

98,362

$

104,377

Restricted cash

—

25,121

Accounts receivable, net

99,361

153,806

Contract assets

114,552

108,645

Contract costs, current portion

3,841

3,511

Inventories

196,133

185,072

Income tax refunds receivable

3,783

5,269

Other current assets

13,194

12,173

Total current assets

529,226

597,974

Property, plant and equipment, net of accumulated depreciation of $240,970 and

$228,984, respectively

204,659

210,852

Operating right-of-use assets, net

12,075

12,880

Goodwill

244,480

247,244

Other intangible assets, net

144,204

150,198

Deferred income taxes

36,144

39,809

Contract costs, noncurrent portion

8,332

8,311

Other assets

37,545

39,125

Total assets

$

1,216,665

$

1,306,393

Liabilities and Shareholders’ Equity

Current liabilities:

Accounts payable – trade

$

36,543

$

60,200

Accrued salaries and wages

37,782

70,552

Contract liabilities, current portion

17,268

39,073

Operating lease liabilities, current portion

4,005

4,305

Income taxes payable

1,555

19

Liabilities held for sale, current portion

—

18,086

Other current liabilities

35,183

36,177

Total current liabilities

132,336

228,412

Long-term debt, excluding current portion, net of debt issuance costs

187,358

185,401

Deferred income taxes

7,293

7,381

Underfunded pension

44,754

69,610

Contract liabilities, noncurrent portion

14,324

11,019

Operating lease liabilities, noncurrent portion

8,681

9,325

Liabilities held for sale, noncurrent portion

—

1,171

Other long-term liabilities

42,707

47,636

Commitments and contingencies

Shareholders’ equity:

Preferred stock, $1 par value, 200,000 shares authorized; none outstanding

—

—

Common stock, $1 par value, 50,000,000 shares authorized; voting;

30,400,125 and 30,278,668 shares issued, respectively

30,400

30,279

Additional paid-in capital

244,546

238,829

Retained earnings

737,203

728,764

Accumulated other comprehensive income (loss)

(111,848)

(130,821)

Less 2,567,430 and 2,555,785 shares of common stock, respectively, held in

treasury, at cost

(121,089)

(120,613)

Total shareholders’ equity

779,212

746,438

Total liabilities and shareholders’ equity

$

1,216,665

$

1,306,393

KAMAN CORPORATION AND SUBSIDIARIES

Condensed Consolidated Statements of Cash Flows

(In thousands) (unaudited)

For the Six Months Ended

July 2,

2021

July 3,

2020

Cash flows from operating activities:

Net earnings

$

19,840

$

185

Less: Total earnings from discontinued operations

—

692

Earnings (loss) from continuing operations

$

19,840

$

(507)

Adjustments to reconcile net earnings from continuing operations to net cash (used in)

provided by operating activities of continuing operations:

Depreciation and amortization

18,391

19,814

Amortization of debt issuance costs

882

907

Accretion of convertible notes discount

1,484

1,412

Provision for doubtful accounts

290

314

Loss (gain) on sale of business

234

(493)

Net loss (gain) on sale of assets

15

(13)

Net loss on derivative instruments

566

404

Stock compensation expense

4,225

3,590

Deferred income taxes

2,957

4,124

Changes in assets and liabilities, excluding effects of acquisitions/divestitures:

Accounts receivable

53,232

(11,368)

Contract assets

(4,637)

(9,158)

Contract costs

(349)

(842)

Inventories

(12,205)

(38,029)

Income tax refunds receivable

1,485

(3,382)

Operating right of use assets

781

1,974

Other assets

1,319

135

Accounts payable – trade

(24,068)

(13,872)

Contract liabilities

(18,588)

(11,002)

Operating lease liabilities

(919)

(1,916)

Acquired retention plan payments

(25,108)

—

Other current liabilities

(9,470)

528

Income taxes payable

1,532

(2,658)

Pension liabilities

(22,837)

(15,775)

Other long-term liabilities

(3,775)

(3,587)

Net cash used in operating activities of continuing operations

(14,723)

(79,400)

Cash flows from investing activities:

Proceeds from sale of discontinued operations

—

5,223

Proceeds from sale of business, net of cash on hand

(3,428)

493

Expenditures for property, plant & equipment

(8,102)

(9,592)

Acquisition of businesses, net of cash acquired

—

(304,661)

Other, net

(671)

(366)

Net cash used in investing activities of continuing operations

(12,201)

(308,903)

Cash flows from financing activities:

Net borrowings under revolving credit agreements

—

201,100

Purchase of treasury shares

(390)

(14,168)

Dividends paid

(11,106)

(11,144)

Other, net

876

1,399

Net cash (used in) provided by financing activities of continuing operations

(10,620)

177,187

Net decrease in cash and cash equivalents

(37,544)

(211,116)

Effect of exchange rate changes on cash and cash equivalents

(183)

314

Cash and cash equivalents and restricted cash at beginning of period

136,089

471,540

Cash and cash equivalents and restricted cash at end of period

$

98,362

$

260,738

View source version on businesswire.com: https://www.businesswire.com/news/home/20210805005949/en/

James Coogan

Senior Vice President and Chief Financial Officer

(860) 243-6342

[email protected]

KEYWORDS: United States North America Connecticut

INDUSTRY KEYWORDS: Defense Aerospace Manufacturing Other Defense

MEDIA:

Posted on August 5, 2021 4:33 pm
Checkpoint Therapeutics Reports Second Quarter 2021 Financial Results

NEW YORK, Aug. 05, 2021 (GLOBE NEWSWIRE) — Checkpoint Therapeutics, Inc. (“Checkpoint”) (NASDAQ: CKPT), a clinical-stage immunotherapy and targeted oncology company, today announced financial results for the second quarter ended June 30, 2021.

James F. Oliviero, President and Chief Executive Officer of Checkpoint, stated, “In the second quarter of 2021, we were pleased to announce the completion of enrollment in our pivotal cohort of patients with metastatic cutaneous squamous cell carcinoma (“cSCC”) in our ongoing registration-enabling clinical trial for cosibelimab, our potential best-in-class anti-PD-L1 antibody product candidate, and continue to expect to report top-line data in the fourth quarter of this year. Upon a successful outcome, Checkpoint intends to submit a Biologics License Application (“BLA”) for cosibelimab in 2022, followed shortly thereafter by a Marketing Authorization Application submission in Europe. With a potential favorable safety profile and a plan to commercialize at a substantially lower price than currently available therapies in this drug class, we believe cosibelimab could be a disruptive product in the $25 billion and growing PD-(L)1 market.”

Mr. Oliviero continued, “Additionally, during the second quarter, we had productive interactions with the FDA regarding our development program for olafertinib (formerly CK-101), our third-generation epidermal growth factor receptor (“EGFR”) inhibitor being evaluated by our partner in an ongoing double-blind, randomized Phase 3 study in China. We intend to utilize the Phase 3 study, if successful, to support a New Drug Application (“NDA”) submission for olafertinib as a potential first-line treatment for patients with non-small cell lung cancer whose tumors have certain types of EGFR mutations.”

Financial Results:

Cash Position: As of June 30, 2021, Checkpoint’s cash and cash equivalents totaled $65.1 million, compared to $60.0 million at March 31, 2021 and $40.8 million at December 31, 2020, an increase of $5.1 million for the quarter and an increase of $24.3 million for the first half of 2021.

R&D Expenses: Research and development expenses for the second quarter of 2021 were $7.2 million, compared to $3.0 million for the second quarter of 2020, an increase of $4.2 million. The increase in research and development expense is primarily attributable to an increase in clinical trial and manufacturing related expenses for cosibelimab. Research and development expenses for the second quarters of 2021 and 2020 each included $0.2 million of non-cash stock expenses.

G&A Expenses: General and administrative expenses for the second quarter of 2021 were $2.1 million, compared to $1.7 million for the second quarter of 2020, an increase of $0.4 million. General and administrative expenses for the second quarter of 2021 included $0.9 million of non-cash stock expenses, compared to $0.7 million for the second quarter of 2020.

Net Loss: Net loss attributable to common stockholders for the second quarter of 2021 was $9.1 million, or $0.12 per share, compared to a net loss of $4.6 million, or $0.09 per share, in the second quarter of 2020. Net loss for the second quarter of 2021 included $1.0 million of non-cash stock expenses, compared to $0.8 million for the second quarter of 2020.

About Checkpoint Therapeutics

Checkpoint Therapeutics, Inc. (“Checkpoint”) is a clinical-stage immunotherapy and targeted oncology company focused on the acquisition, development and commercialization of novel treatments for patients with solid tumor cancers. Checkpoint is evaluating its lead antibody product candidate, cosibelimab, a potential best-in-class anti-PD-L1 antibody licensed from the Dana-Farber Cancer Institute, in an ongoing global, open-label, multicohort Phase 1 clinical trial in checkpoint therapy-naïve patients with selected recurrent or metastatic cancers, including ongoing cohorts in locally advanced and metastatic cutaneous squamous cell carcinoma intended to support one or more applications for marketing approval. In addition, Checkpoint is evaluating its lead small-molecule, targeted anti-cancer agent, CK-101, a third-generation epidermal growth factor receptor (“EGFR”) inhibitor, as a potential new treatment for patients with EGFR mutation-positive non-small cell lung cancer. Checkpoint is headquartered in New York City and was founded by Fortress Biotech, Inc. (NASDAQ: FBIO). For more information, visit www.checkpointtx.com.

Forward‐Looking Statements

This press release may contain “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, each as amended. Such statements include, but are not limited to, any statements relating to our plans to submit one or more Biologics License Applications and seek approvals for cosibelimab, statements regarding the potential differentiation of cosibelimab, including a potentially favorable safety profile as compared to the currently available anti-PD-1 therapies, statements relating to the half-life and functional Fc domain of cosibelimab translating into potential enhanced efficacy, statements relating to the timing of the completion of enrollment and full top-line results, statements relating to how long we believe our cash will fund our operations, any statements relating to our growth strategy, product development programs and commercial prospects, and any other statements that are not historical facts. Forward-looking statements are based on management’s current expectations and are subject to risks and uncertainties that could negatively affect our business, operating results, financial condition and stock value. Factors that could cause actual results to differ materially from those currently anticipated include: risks that regulatory authorities will not accept an application for approval of cosibelimab based on data from the ongoing Phase 1 study; risks relating to our growth strategy and commercial prospects; our ability to obtain, perform under and maintain financing and strategic agreements and relationships; risks relating to the results of research and development activities; risks relating to the timing of starting and completing clinical trials; uncertainties relating to preclinical and clinical testing; our dependence on third-party suppliers; our ability to attract, integrate and retain key personnel; the early stage of products under development; our need for substantial additional funds; government regulation; patent and intellectual property matters; competition; as well as other risks described in our Securities and Exchange Commission filings. We expressly disclaim any obligation or undertaking to release publicly any updates or revisions to any forward-looking statements contained herein to reflect any change in our expectations or any changes in events, conditions or circumstances on which any such statement is based, except as required by law, and we claim the protection of the safe harbor for forward-looking statements contained in the Private Securities Litigation Reform Act of 1995.

Company Contacts:

Jaclyn Jaffe and Bill Begien
Checkpoint Therapeutics, Inc.
(781) 652-4500
[email protected]

Investor Relations Contact:

Ashley R. Robinson
Managing Director, LifeSci Advisors, LLC
(617) 430-7577
[email protected]

Media Relations Contact:

Eddie Kraft
Gregory FCA
(212) 398-9680
[email protected]

CHECKPOINT THERAPEUTICS, INC.

CONDENSED BALANCE SHEETS

(in thousands, except share and per share amounts)

June 30, 2021 December 31, 2020

(Unaudited)

ASSETS

Current Assets:

Cash and cash equivalents $ 65,124 $ 40,772

Prepaid expenses and other assets 844 1,804

Other receivables – related party 155 20

Total current assets 66,123 42,596

Total Assets $ 66,123 $ 42,596

LIABILITIES AND STOCKHOLDERS’ EQUITY

Current Liabilities:

Accounts payable and accrued expenses $ 8,346 $ 6,367

Accounts payable and accrued expenses – related party 903 850

Total current liabilities 9,249 7,217

Total Liabilities 9,249 7,217

Commitments and Contingencies

Stockholders’ Equity

Common Stock ($0.0001 par value), 135,000,000 and 95,000,000 shares authorized as of June 30, 2021 and December 31, 2020, respectively

Class A common shares, 7,000,000 shares issued and outstanding as of June 30, 2021 and December 31, 2020 1 1

Common shares, 75,741,873 and 62,420,439 shares issued and outstanding as of June 30, 2021 and December 31, 2020, respectively 8 6

Common stock issuable, 0 and 1,742,449 shares as of June 30, 2021 and December 31, 2020, respectively – 4,617

Additional paid-in capital 215,706 173,947

Accumulated deficit (158,841 ) (143,192 )

Total Stockholders’ Equity 56,874 35,379

Total Liabilities and Stockholders’ Equity $ 66,123 $ 42,596

CHECKPOINT THERAPEUTICS, INC.

CONDENSED STATEMENTS OF OPERATIONS

(in thousands, except share and per share amounts)
(Unaudited)

For the three months ended June 30, For the six months ended June 30,

2021 2020 2021 2020

Revenue – related party $ 155 $ 42 $ 223 $ 1,014

Operating expenses:

Research and development 7,198 3,029 11,411 5,664

General and administrative 2,114 1,687 4,487 3,365

Total operating expenses 9,312 4,716 15,898 9,029

Loss from operations (9,157 ) (4,674 ) (15,675 ) (8,015 )

Other income

Interest income 13 29 26 89

Total other income 13 29 26 89

Net Loss $ (9,144 ) $ (4,645 ) $ (15,649 ) $ (7,926 )

Loss per Share:

Basic and diluted net loss per common share outstanding $ (0.12 ) $ (0.09 ) $ (0.21 ) $ (0.15 )

Basic and diluted weighted average number of common shares outstanding 75,492,853 51,802,451 72,912,456 51,338,963

Posted on August 5, 2021 4:33 pm
Global Water Resources Reports Second Quarter 2021 Results

PHOENIX, Aug. 05, 2021 (GLOBE NEWSWIRE) — Global Water Resources, Inc. (NASDAQ: GWRS), (TSX: GWR), a pure-play water resource management company, reported results for the second quarter ended June 30, 2021. All comparisons are to the same year-ago period unless otherwise noted. The company will hold a conference call at 1:00 p.m. Eastern time tomorrow to discuss the results (see dial-in information below.)

Q2 2021 Financial Highlights

Revenues increased $1.1 million, or 10.7%, to $10.9 million, driven by organic connection growth, greater consumption, and increased rates.

Net income totaled $2.0 million, or $0.09 per share, improving from a net loss of $0.1 million, or $(0.01) per share.

Adjusted EBITDA increased $0.5 million, or 11.5%, to $5.3 million (see definition of Adjusted EBITDA, a non-GAAP term, and its reconciliation to GAAP, below).

Cash and cash equivalents totaled $19.3 million at June 30, 2021.

Declared three monthly cash dividends of $0.02434 per common share, or $0.29208 per share on an annualized basis.

Q2 2021 Operational Highlights

Total active service connections increased 10.2% to 51,314 at June 30, 2021 from 46,573 at June 30, 2020.

Q2 annualized active connection growth rate was 9.9%.

Invested $3.1 million on infrastructure projects to support existing utilities as well as continued growth. This brings the year to date total capital investments to $6.4 million.

Global Water – Picacho Cove Water Company activated services to Nikola Motor Corp in Coolidge, AZ.

Promoted Steven Brill to the new position of vice president of IT Operations and Security, which more closely aligns the company’s management structure to address IT initiatives and prepare for future growth.

Extended the maturity date for the company’s three-year revolving $10 million credit line from April 30, 2022 to April 30, 2024. The full amount under this credit line remains available to-date.

Management Commentary

“In Q2, revenues totaled $10.9 million, up 10.7% versus the same year-ago quarter,” said Global Water Resources president and CEO, Ron Fleming. “Revenues from water services, wastewater and recycled water services increased across the board, driven by greater water consumption, organic growth in connections, and increased rates.

“Our utilities and service areas remain in the anticipated path of residential and commercial development, primarily in the Phoenix metropolitan area. We also continue to be well-positioned to benefit from population growth in the area due to availability of lots and the existing infrastructure within our service areas.

“During the quarter, we advanced our water infrastructure design and engineering for Inland Port Arizona, a 2,700 acre or 3.4 square mile property located in the City of Coolidge. The property is under development by Saint Holdings, which is actively marketing the project. Following its completion, we expect the project to expand our existing service areas and create new ones.

“Late last year, we signed a master utility agreement to serve the new Nikola manufacturing facility located next to Inland Port Arizona. Last month, we completed the first phase of a water solution for the site, allowing us to turn on its service. While we do not anticipate Nikola’s initial usage to be material given the current stage of construction, we are encouraged by the associated long-term growth prospects of the larger Inland Port Arizona area. As one of the first major manufacturers to locate to Inland Port Arizona, we expect the new manufacturing facility to stimulate commercial and residential growth in our surrounding service area.

“Our capital resources, including cash and cash equivalents of $19.3 million and unused credit line of $10 million, enables us to be a strong utility partner for the communities where we have the privilege to serve. It also allows us to pursue growth through investments in organic expansion, acquisitions and new projects, both big and small.

“We continue to evaluate acquisitive opportunities that are synergistic to our growing portfolio of water utilities and existing regional footprints, and anticipate adding further to our portfolio of water utilities in Arizona before the end of the year.

“Next week, we have a regulatory hearing regarding our rate case filing. Any new rates established by the filing would be effective for most of our utilities through and up to a three-year phase-in period likely starting in January of next year. Rate cases are typically a lengthy and uncertain process, and there can be no guarantees in terms of timing or outcome.

“Looking ahead to the rest of the year, we anticipate continued investment and growth across all areas of our business supported by positive population and job growth trends. For the benefit of our customers, shareholders and environment, we remain committed to our comprehensive approach to water utility management that is designed to reduce demand on scarce non-renewable water sources and costly renewable water supplies.”

Q2 2021 Financial Summary

Revenues

Total revenues in the second quarter of 2021 increased $1.1 million, or 10.7%, to $10.9 million compared to $9.9 million in the same period in 2020. This increase was primarily driven by an increase of 10.2% in active service connections combined with an increase in usage and rates.

Total revenues for the first half of 2021 increased $2.1 million, or 11.5%, to $20.2 million compared to $18.1 million in the same period in 2020. This increase was primarily driven by increase in active service connections along with an increase in usage and rates.

Operating Expenses

Operating expenses increased $0.4 million, or 5.4%, to $8.6 million in the second quarter of 2021 compared to $8.2 million in the same period in 2020. The increase was primarily attributed to increased operations and maintenance expenses associated with increased property tax expense and utilities and related expense. The increase in operating expenses was also driven by an increase of $0.2 million in depreciation expense.

Operating expenses for the first half of 2021 increased $2.2 million, or 15.2%, to $16.8 million, compared to $14.6 million in the same period in 2020. The increase was primarily attributed to increased general and administrative expenses associated with increased deferred compensation expense and board compensation expense, both driven by the increase in stock price. The increase in operating expenses was also driven by a $0.3 million increase in depreciation expense.

Other Income (Expense)

Other income totaled $0.3 million for the second quarter of 2021, compared to other expense of $1.8 million in the second quarter of 2020. The change in other income (expense) was primarily attributed to $1.5 million of income recognized on the sale of a wireless communications tower in the second quarter of 2021 combined with a $0.5 million increase related to the loss on disposal of assets recognized in 2020.

Total other expense for the first half of 2021 decreased $2.0 million, or 66.5%, to $1.0 million, compared to $3.0 million for the same period in 2020. The decrease in other expense was primarily attributed to $1.5 million of income recognized on the sale of a wireless communications tower in the second quarter of 2021 combined with a $0.5 million increase related to the loss on disposal of assets recognized in 2020.

Net Income (Loss)

Net income totaled $2.0 million, or $0.09 per share, in the second quarter of 2021, compared to net loss of $0.1 million, or $(0.01) per share, in the same period in 2020. The increase was primarily attributed to the increase in other income, which was primarily driven by $1.5 million of income recognized on the sale of a wireless communications tower. The increase was also driven by the increase in total revenues, partially offset by increases in operating expenses.

Net income increased $1.5 million to $1.8 million, or $0.08 per share, for the first half of 2021, from $0.2 million, or $0.01 per share, for the same period in 2020. The increase was primarily attributed to the increase in other income, which was primarily driven by the $1.5 million of income recognized on the sale of a wireless communications tower. The increase was also driven by the increase in total revenues, partially offset by increases in operating expenses.

Adjusted EBITDA

Adjusted EBITDA increased $0.5 million, or 11.5%, to $5.3 million in the second quarter of 2021, compared to $4.8 million for the same period in 2020. The increase was driven by an increase in revenue from increase in active service connections, increased consumption, and higher rates, partially offset by higher operating expenses (see definition of Adjusted EBITDA, a non-GAAP term, and its reconciliation to GAAP, below).

Adjusted EBITDA increased less than $0.1 million to $8.9 million for the first half of 2021, compared to $8.8 million for the same period in 2020. The increase was driven by increased total revenues for the first half of 2020 (see definition of Adjusted EBITDA, a non-GAAP term, and its reconciliation to GAAP, below).

Capital Resources

Cash and cash equivalents totaled $19.3 million at June 30, 2021, as compared to $18.0 million at December 31, 2020. The increase was primarily due to cash generated from operating activities. As of June 30, 2021, the company has no notable near-term cash expenditures, other than the first two principal payments on its debt obligation in the amounts of $1.9 million due in December 2021 and $1.9 million due in June 2022.

Dividend Policy

The company recently declared a monthly cash dividend of $0.02434 per common share (or $0.29208 per share on an annualized basis), which will be payable on August 31, 2021 to holders of record at the close of business on August 17, 2021.

Business Strategy

Global Water’s near-term growth strategy involves increasing service connections, improving operating efficiencies, and increasing utility rates as approved by the Arizona Corporation Commission. The company will also continue to aggregate water and wastewater utilities, allowing the company and its customers to realize the benefits of consolidation, regionalization, and environmental stewardship.

Connection Rates

As of June 30, 2021, active service connections increased by 4,741, or 10.2%, to 51,314, compared to 46,573 at June 30, 2020. The increase in active service connections was primarily due to growth in the company’s service areas. As of June 30, 2021, the vacancy rate was 0.6%.

Arizona’s Growth Corridor: Positive Population and Economic Trends

The Metropolitan Phoenix area is steadily growing due to low-cost housing, excellent weather, large and growing universities, a diverse employment base, and business friendly environment. The area’s population has increased throughout 2019 and 2020, and it continues to grow. The Employment and Population Statistics Department of the State of Arizona predicts that Phoenix Metro will have a population of 5.7 million by 2030 and reach 6.5 million by 2040. During the three months ended June 30, 2021, Arizona’s employment rate increased by 5.5%, ranking the state in the top 25 nationally for job growth. The company sees this strong growth outlook as an opportunity to increase active service connections and grow revenues.

Conference Call

Global Water Resources will hold a conference call to discuss its second quarter 2021 results tomorrow, followed by a question and answer period.

Date: Friday, August 6, 2021
Time: 1:00 p.m. Eastern time (10:00 a.m. Pacific time)
Toll-free dial-in number: 1-855-327-6837
International dial-in number: 1-631-891-4304
Conference ID: 10015833

The conference call will be webcast live and available for replay here as well as via a link in the Investors section of the company’s website at www.gwresources.com.

Please call the conference telephone number five minutes prior to the start time. An operator will register your name and organization. If you have any difficulty connecting with the conference call, please contact CMA at 1-949-432-7566.

A replay of the call will be available after 4:00 p.m. Eastern time on the same day through August 20, 2021.

Toll-free replay number: 1-844-512-2921
International replay number: 1-412-317-6671
Replay ID: 10015833

About Global Water Resources

Global Water Resources, Inc. is a leading water resource management company that owns and operates 16 utilities which provide water, wastewater, and recycled water services. The company’s service areas are located primarily in growth corridors around metropolitan Phoenix. Global Water recycles nearly 1 billion gallons of water annually.

The company has been recognized for its highly effective implementation of Total Water Management (TWM). TWM is an integrated approach to managing the entire water cycle by owning and operating water, wastewater, and recycled water utilities within the same geographic area in order to maximize the beneficial use of recycled water. TWM includes additional smart water management programs such as remote metering infrastructure and other advanced technologies, rate designs, and incentives that result in real conservation. TWM helps protect water supplies in water-scarce areas experiencing population growth. To learn more, visit www.gwresources.com.

Cautionary Statement Regarding Non-GAAP Measures

This press release contains certain financial measures that are not recognized measures under accounting principles generally accepted in the United States of America (“GAAP”), including EBITDA, and Adjusted EBITDA. EBITDA is defined for the purposes of this press release as net income (loss) before interest, income taxes, depreciation, and amortization. Adjusted EBITDA is defined as EBITDA excluding the gain or loss related to (i) nonrecurring events; (ii) option expense related to awards made to the board of directors and management; and (iii) restricted stock expense related to awards made to executive officers.

Management believes that EBITDA and Adjusted EBITDA are useful supplemental measures of our operating performance and provide our investors meaningful measures of overall corporate performance exclusive of our capital structure and the method and timing of certain expenditures. EBITDA is also presented because management believes that it is frequently used by investment analysts, investors, and other interested parties as a measure of financial performance. Adjusted EBITDA is also presented because management believes that this measure provides our investors measures of our recurring core business. However, non-GAAP measures do not have a standardized meaning prescribed by GAAP, and investors are cautioned that non-GAAP measures, such as EBITDA and Adjusted EBITDA, should not be construed as an alternative to net income or loss or other income statement data (which are determined in accordance with GAAP) as an indicator of our performance or as a measure of liquidity and cash flows. Management’s method of calculating EBITDA and Adjusted EBITDA may differ materially from the method used by other companies and accordingly, may not be comparable to similarly titled measures used by other companies. A reconciliation of EBITDA and Adjusted EBITDA to net income (loss), the most comparable GAAP measure, is included in the schedules attached to this press release.

Cautionary Note Regarding Forward-Looking Statements

This press release includes certain forward-looking statements which reflect the company’s expectations regarding future events. The forward-looking statements involve a number of assumptions, risks, uncertainties, and other factors that could cause actual results to differ materially from those contained in the forward-looking statements. These forward-looking statements include, but are not limited to, statements concerning future net income growth, our strategy, acquisition plans and our ability to complete additional acquisitions, our dividend policy, trends relating to population growth, active service connections, regulated revenue, the development of residential and commercial properties within our service areas, the anticipated impacts from the COVID-19 pandemic on the company, including to our business operations, results of operations, cash flows, and financial position, and our future responses to the COVID-19 pandemic, the success of our rate application and the timing of any resulting phase-in of new rates, and other statements that are not historical facts as well as statements identified by words such as “expects”, “anticipates”, “intends”, “plans”, “believes”, “seeks”, “estimates”, or the negative of these terms, or other words of similar meaning. These statements are based on our current beliefs or expectations and are inherently subject to a number of risks, uncertainties, and assumptions, most of which are difficult to predict and many of which are beyond our control. Actual results may differ materially from these expectations due to changes in political, economic, business, market, regulatory, and other factors, including the duration and spread of the COVID-19 pandemic, its severity, the emergence and severity of its variants, the actions to contain the virus or treat its impact, such as the availability and efficacy of vaccines (particularly with respect to emerging strains of the virus) and potential hesitancy to utilize them, restrictions on travel and transportation, and how quickly and to what extent normal economic and operating conditions can resume. Accordingly, investors are cautioned not to place undue reliance on any forward-looking statements, which reflect management’s views as of the date hereof. Factors that may affect future results are disclosed under the headings “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in our filings with the Securities and Exchange Commission (the “SEC”), which are available at the SEC’s website at www.sec.gov. This includes, but is not limited to, our Annual Report on Form 10-K for the year ended December 31, 2020, our Quarterly Report on Form 10-Q for the quarter ended June 30, 2021, and subsequent filings with the SEC. We undertake no obligation to publicly update any forward-looking statement, except as required by law, whether as a result of new information, future developments or otherwise.

Company Contact:

Michael J. Liebman
SVP and CFO
Tel (480) 999-5104
[email protected]

Investor Relations:

Ron Both or Grant Stude
CMA Investor Relations
Tel (949) 432-7566
[email protected]

GLOBAL WATER RESOURCES, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(Unaudited, in thousands, except share and per share amounts)

June 30, 2021 December 31, 2020

ASSETS

PROPERTY, PLANT AND EQUIPMENT:

Property, plant and equipment $ 353,349 $ 340,193

Less accumulated depreciation (105,828 ) (101,302 )

Net property, plant and equipment 247,521 238,891

CURRENT ASSETS:

Cash and cash equivalents 19,349 18,033

Accounts receivable — net 1,899 2,147

Customer payments in-transit 136 306

Unbilled revenue 2,910 2,304

Prepaid expenses and other current assets 1,026 665

Total current assets 25,320 23,455

OTHER ASSETS:

Goodwill 4,595 4,600

Intangible assets — net 10,681 11,185

Regulatory asset 2,229 2,036

Restricted cash 1,316 3,272

Other noncurrent assets 9 —

Total other assets 18,830 21,102

TOTAL ASSETS 291,671 283,448

LIABILITIES AND SHAREHOLDERS’ EQUITY

CURRENT LIABILITIES:

Accounts payable 811 531

Accrued expenses 7,819 8,261

Deferred revenue — 4

Customer and meter deposits 1,594 1,558

Long-term debt and capital leases — current portion 3,994 2,035

Total current liabilities 14,218 12,389

NONCURRENT LIABILITIES:

Long-term debt and capital leases 110,893 112,659

Deferred revenue – ICFA 18,475 17,843

Regulatory liability 7,654 7,986

Advances in aid of construction 84,066 76,384

Contributions in aid of construction — net 18,067 14,632

Deferred income tax liabilities — net 4,180 3,652

Acquisition liability 1,773 1,773

Other noncurrent liabilities 1,381 3,942

Total noncurrent liabilities 246,489 238,871

Total liabilities 260,707 251,260

Commitments and contingencies

SHAREHOLDERS’ EQUITY:

Common stock, $0.01 par value, 60,000,000 shares authorized; 22,748,143 and 22,690,477 shares issued as of June 30, 2021 and December 31, 2020, respectively. 227 227

Treasury stock, 127,708 and 102,711 shares at June 30, 2021 and December 31, 2020, respectively. (1 ) (1 )

Paid in capital 30,738 31,962

Retained earnings — —

Total shareholders’ equity 30,964 32,188

TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY $ 291,671 $ 283,448

GLOBAL WATER RESOURCES, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited, in thousands, except share and per share amounts)

Three Months Ended June 30, Six Months Ended June 30,

2021 2020 2021 2020

REVENUES:

Water services $ 5,250 $ 4,675 $ 9,236 $ 8,063

Wastewater and recycled water services 5,676 5,126 10,919 9,949

Unregulated revenues 18 88 47 107

Total revenues 10,944 9,889 20,202 18,119

OPERATING EXPENSES:

Operations and maintenance 2,480 2,340 4,979 4,572

General and administrative 3,717 3,625 7,207 5,713

Depreciation and amortization 2,408 2,197 4,634 4,310

Total operating expenses 8,605 8,162 16,820 14,595

OPERATING INCOME 2,339 1,727 3,382 3,524

OTHER INCOME (EXPENSE):

Interest income 8 27 13 79

Interest expense (1,353 ) (1,359 ) (2,678 ) (2,697 )

Other 1,629 (480 ) 1,644 (431 )

Total other income (expense) 284 (1,812 ) (1,021 ) (3,049 )

INCOME (LOSS) BEFORE INCOME TAXES 2,623 (85 ) 2,361 475

INCOME TAX BENEFIT (EXPENSE) (641 ) (37 ) (596 ) (243 )

NET INCOME (LOSS) $ 1,982 $ (122 ) $ 1,765 $ 232

Basic earnings (loss) per common share $ 0.09 $ (0.01 ) $ 0.08 $ 0.01

Diluted earnings (loss) per common share $ 0.09 $ (0.01 ) $ 0.08 $ 0.01

Dividends declared per common share $ 0.07 $ 0.07 $ 0.15 $ 0.14

Weighted average number of common shares used in the determination of:

Basic 22,620,037 22,566,014 22,603,991 22,449,720

Diluted 22,895,275 22,566,014 22,884,618 22,485,622

GLOBAL WATER RESOURCES, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited, in thousands)

Six Months Ended June 30,

2021 2020

CASH FLOWS FROM OPERATING ACTIVITIES:

Net income $ 1,765 $ 232

Adjustments to reconcile net income to net cash provided by operating activities:

Deferred compensation 1,697 1,069

Depreciation and amortization 4,634 4,310

Amortization of deferred debt issuance costs and discounts 22 92

Other losses 16 550

Provision for doubtful accounts receivable 36 43

Deferred income tax expense 528 181

Changes in assets and liabilities

Accounts receivable 212 (537 )

Other current assets (798 ) (553 )

Accounts payable and other current liabilities (3,077 ) (951 )

Other noncurrent assets (193 ) 39

Other noncurrent liabilities 2,522 626

Net cash provided by operating activities 7,364 5,101

CASH FLOWS FROM INVESTING ACTIVITIES:

Capital expenditures (6,408 ) (5,399 )

Cash paid for acquisitions, net of cash acquired (5 ) —

Other cash flows from investing activities — (8 )

Net cash used in investing activities (6,413 ) (5,407 )

CASH FLOWS FROM FINANCING ACTIVITIES:

Dividends paid (3,301 ) (3,263 )

Advances in aid of construction 1,773 481

Proceeds from stock option exercise 4 —

Principal payments under capital lease (67 ) (54 )

Loan repayments — (18 )

Proceeds from sale of stock — 11,739

Debt issuance costs paid — (53 )

Payments of offering costs for sale of stock — (221 )

Net cash (used) provided by financing activities (1,591 ) 8,611

INCREASE IN CASH, CASH EQUIVALENTS, AND RESTRICTED CASH (640 ) 8,305

CASH, CASH EQUIVALENTS, AND RESTRICTED CASH — Beginning of period 21,305 9,095

CASH, CASH EQUIVALENTS, AND RESTRICTED CASH – End of period $ 20,665 $ 17,400

Supplemental disclosure of cash flow information:

June 30, 2021 June 30, 2020

Cash and cash equivalents $ 19,349 $ 15,477

Restricted Cash 1,316 1,923

Total cash, cash equivalents, and restricted cash $ 20,665 $ 17,400

A reconciliation of net income (loss) to EBITDA and Adjusted EBITDA for the three and six months ended June 30, 2021 and 2020 is as follows (in thousands):

Three Months Ended June 30, Six Months Ended June 30,

2021 2020 2021 2020

Net Income (Loss) $ 1,982 $ (122 ) $ 1,765 $ 232

Income tax benefit (expense) 641 37 596 243

Interest income (8 ) (27 ) (13 ) (79 )

Interest expense 1,353 1,359 2,678 2,697

Depreciation and amortization 2,408 2,197 4,634 4,310

EBITDA 6,376 3,444 9,660 7,403

Management option expense 115 115 226 231

Loss on disposal of assets — 548.684 — 547

Restricted stock expense 306 654 465 654

Wireless communication tower sale (1,485 ) — (1,486 ) —

EBITDA adjustments (1,064 ) 1,318 (795 ) 1,432

Adjusted EBITDA $ 5,312 $ 4,762 $ 8,865 $ 8,835

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