Market Newsdesk

Allison Transmission Announces Second Quarter 2021 Results

• Net Sales of $603 million, up 60% year-over-year
• Net Income of $110 million, 18% of Net Sales, up over 375% year-over-year
• Adjusted EBITDA of $213 million, 35% of Net Sales
• Diluted EPS of $1.01

INDIANAPOLIS–(BUSINESS WIRE)–Allison Transmission Holdings Inc. (NYSE: ALSN), a leading designer and manufacturer of conventional and electrified vehicle propulsion solutions and the largest global manufacturer of medium- and heavy-duty fully automatic transmissions for commercial and defense vehicles, today reported a 60 percent increase in net sales from the same period in 2020, as the recovery in customer demand and the global economy continue to strengthen, despite ongoing industry production constraints due to global supply chain challenges.

Year-over-year results were led by an 84 percent increase in net sales in the North America On-Highway end market and a 63 percent increase in net sales in the Outside North America On-Highway end market as a result of the continuing recovery in global on-highway customer demand following the pandemic-related disruptions experienced in 2020. Service Parts, Support Equipment & Other end market net sales were up 44 percent from the same period in 2020 principally driven by higher demand for North America service parts, aluminum die cast components and support equipment.

Net sales for the quarter were $603 million. Net income for the quarter was $110 million. Diluted EPS for the quarter was $1.01. Adjusted EBITDA, a non-GAAP financial measure, for the quarter was $213 million. Net cash provided by operating activities for the quarter was $131 million. Adjusted free cash flow, a non-GAAP financial measure, for the quarter was $95 million.

David S. Graziosi, Chairman and Chief Executive Officer of Allison Transmission, commented, “Allison’s second quarter 2021 results reflect an unprecedented recovery in global markets. Customer demand is quickly nearing pre-pandemic levels, and despite broad challenges to global supply chains, industry production is recovering. I am extremely proud of the resilience and dedication demonstrated by the Allison team and extended family throughout this critical and historic time to ensure the continuous delivery of the Allison Brand Promise.

Graziosi continued, “As a result of the ongoing global economic recovery, we are reaffirming the 2021 guidance ranges released to the market on April 28. Finally, during the second quarter, we continued our well-defined approach to capital allocation by settling $130 million of share repurchases, representing 3 percent of outstanding shares, and paying a quarterly dividend of $0.19 per share. Notably, Allison has repurchased over 50 percent of outstanding shares since its 2012 initial public offering.”

Second Quarter Net Sales by End Market

End Market	Q2 2021 Net Sales ($M)	Q2 2020 Net Sales ($M)	% Variance
North America On-Highway	$302	$164	84	%
North America Off-Highway	$9	$3	200	%
Defense	$48	$42	14	%
Outside North America On-Highway	$98	$60	63	%
Outside North America Off-Highway	$18	$19	(5	%)
Service Parts, Support Equipment & Other	$128	$89	44	%
Total Net Sales	$603	$377	60	%

Second Quarter Financial Highlights

Gross profit for the quarter was $288 million, an increase of 75 percent from $165 million for the same period in 2020. Gross margin for the quarter was 47.8 percent, an increase of 400 basis points from a gross margin of 43.8 percent for the same period in 2020. The increase in gross profit was principally driven by higher net sales, 2020 restructuring charges that did not recur in 2021 and price increases on certain products partially offset by higher manufacturing expense commensurate with higher net sales and unfavorable material costs.

Selling, general and administrative expenses for the quarter were $80 million, an increase of $11 million from $69 million for the same period in 2020. The increase was principally driven by higher incentive compensation expense and higher commercial activities spending partially offset by the impact of 2020 restructuring charges.

Engineering – research and development expenses for the quarter were $41 million, an increase of $3 million from $38 million for the same period in 2020. The increase was principally driven by increased product initiatives spending partially offset by the impact of 2020 restructuring charges.

Net income for the quarter was $110 million, an increase of $87 million from $23 million for the same period in 2020. The increase was principally driven by higher gross profit partially offset by higher selling, general and administrative expenses and increased product initiatives spending.

Net cash provided by operating activities was $143 million, an increase of $51 million from $92 million for the same period in 2020. The increase was principally driven by higher gross profit and lower cash interest expense partially offset by higher operating working capital requirements, higher cash income taxes, increased product initiatives spending and higher commercial activities spending.

Second Quarter Non-GAAP Financial Measures

Adjusted EBITDA for the quarter was $213 million, an increase of $98 million from $115 million for the same period in 2020. The increase in Adjusted EBITDA was principally driven by higher gross profit partially offset by increased incentive compensation expense, increased product initiatives spending and higher commercial activities spending.

Adjusted free cash flow for the quarter was $95 million, an increase of $28 million from $67 million for the same period in 2020. The increase was principally driven by higher net cash provided by operating activities partially offset by increased capital expenditures.

Full Year 2021 Guidance Update

We are reaffirming the full year 2021 guidance ranges released to the market on April 28 for Net Sales, Adjusted EBITDA, Net Cash Provided by Operating Activities, Adjusted Free Cash Flow and Capital Expenditures. Allison expects 2021 Net Sales in the range of $2,325 to $2,475 million, Net Income in the range of $395 to $465 million, Adjusted EBITDA in the range of $795 to $885 million, Net Cash Provided by Operating Activities in the range of $585 to $655 million, Adjusted Free Cash Flow in the range of $415 to $475 million and Capital Expenditures in the range of $170 to $180 million.

Our 2021 net sales guidance continues to reflect higher demand in the global On-Highway, Service Parts, Support Equipment & Other and North America Off-Highway end markets as a result of the ongoing global economic recovery and price increases on certain products. Our full year 2021 guidance also assumes the continuation of industry production constraints and global supply chain challenges for the foreseeable future.

Conference Call and Webcast

The company will host a conference call at 8:00 a.m. ET on Thursday, July 29 to discuss its second quarter 2021 results. The dial-in phone number for the conference call is 1-877-425-9470 and the international dial-in number is 1-201-389-0878. A live webcast of the conference call will also be available online at http://ir.allisontransmission.com.

For those unable to participate on the conference call, a replay will be available from 11:00 a.m. ET on July 29 until 11:59 p.m. ET on August 5. The replay dial-in phone number is 1-844-512-2921 and the international replay dial-in number is 1-412-317-6671. The replay passcode is 13721635.

About Allison Transmission

Allison Transmission (NYSE: ALSN) is a leading designer and manufacturer of vehicle propulsion solutions for commercial and defense vehicles, the largest global manufacturer of medium- and heavy-duty fully automatic transmissions, and a leader in electrified propulsion systems that Improve the Way the World Works. Allison products are used in a wide variety of applications, including on-highway trucks (distribution, refuse, construction, fire and emergency), buses (school, transit and coach), motorhomes, off-highway vehicles and equipment (energy, mining and construction applications) and defense vehicles (tactical wheeled and tracked). Founded in 1915, the company is headquartered in Indianapolis, Indiana, USA. With a presence in more than 150 countries, Allison has regional headquarters in the Netherlands, China and Brazil, manufacturing facilities in the USA, Hungary and India, as well as global engineering resources, including electrification engineering centers in Indianapolis, Indiana, Auburn Hills, Michigan and London in the United Kingdom. Allison also has more than 1,400 independent distributor and dealer locations worldwide. For more information, visit allisontransmission.com.

Forward-Looking Statements

This press release contains forward-looking statements. All statements other than statements of historical fact contained in this press release are forward-looking statements, including all statements regarding future financial results. In some cases, you can identify forward-looking statements by terminology such as “may,” “will,” “should,” “expect,” “plans,” “project,” “anticipate,” “believe,” “estimate,” “predict,” “intend,” “forecast,” “could,” “potential,” “continue” or the negative of these terms or other similar terms or phrases. Forward-looking statements are not guarantees of future performance and involve known and unknown risks. Factors which may cause the actual results to differ materially from those anticipated at the time the forward-looking statements are made include, but are not limited to: the duration and spread of the COVID-19 pandemic, including new variants of the virus and the pace and availability of vaccines, mitigating efforts deployed by government agencies and the public at large, and the overall impact from such outbreak on economic conditions, financial market volatility and our business, including but not limited to the operations of our manufacturing and other facilities, our supply chain, our distribution processes and demand for our products and the corresponding impacts to our net sales and cash flow; increases in cost, disruption of supply or shortage of labor, freight, raw materials or components used to manufacture or transport our products, including as a result of the COVID-19 pandemic; risks related to our substantial indebtedness; our participation in markets that are competitive; the highly cyclical industries in which certain of our end users operate; uncertainty in the global regulatory and business environments in which we operate; our ability to prepare for, respond to and successfully achieve our objectives relating to technological and market developments, competitive threats and changing customer needs; the concentration of our net sales in our top five customers and the loss of any one of these; the failure of markets outside North America to increase adoption of fully-automatic transmissions; the success of our research and development efforts, the outcome of which is uncertain; U.S. and foreign defense spending; risks associated with our international operations, including increased trade protectionism; general economic and industry conditions; the discovery of defects in our products, resulting in delays in new model launches, recall campaigns and/or increased warranty costs and reduction in future sales or damage to our brand and reputation; our ability to identify, consummate and effectively integrate acquisitions; labor shortages, labor strikes, work stoppages or similar labor disputes, which could significantly disrupt our operations or those of our principal customers or suppliers; our intention to pay dividends and repurchase shares of our common stock and other risks and uncertainties associated with our business described in our Annual Report on Form 10-K, Quarterly Reports on Form 10-Q and Current Reports on Form 8-K. Although we believe the expectations reflected in such forward-looking statements are based upon reasonable assumptions, we can give no assurance that the expectations will be attained or that any deviation will not be material. All information is as of the date of this press release, and we undertake no obligation to update any forward-looking statement to conform the statement to actual results or changes in expectations.

Use of Non-GAAP Financial Measures

This press release contains information about Allison’s financial results and forward-looking estimates of financial results which are not presented in accordance with accounting principles generally accepted in the United States (“GAAP”). Such non-GAAP financial measures are reconciled to their closest GAAP financial measures at the end of this press release. Non-GAAP financial measures should not be considered in isolation or as a substitute for our reported results prepared in accordance with GAAP and, as calculated, may not be comparable to other similarly titled measures of other companies.

We use Adjusted EBITDA and Adjusted EBITDA as a percent of net sales to measure our operating profitability. We believe that Adjusted EBITDA and Adjusted EBITDA as a percent of net sales provide management, investors and creditors with useful measures of the operational results of our business and increase the period-to-period comparability of our operating profitability and comparability with other companies. Adjusted EBITDA as a percent of net sales is also used in the calculation of management’s incentive compensation program. The most directly comparable GAAP measure to Adjusted EBITDA is Net income. The most directly comparable GAAP measure to Adjusted EBITDA as a percent of net sales is Net Income as a percent of net sales. Adjusted EBITDA is calculated as the earnings before interest expense, income tax expense, amortization of intangible assets, depreciation of property, plant and equipment and other adjustments as defined by Allison Transmission, Inc.’s, the Company’s wholly-owned subsidiary, Second Amended and Restated Credit Agreement. Adjusted EBITDA as a percent of net sales is calculated as Adjusted EBITDA divided by net sales.

We use Adjusted Free Cash Flow to evaluate the amount of cash generated by our business that, after the capital investment needed to maintain and grow our business and certain mandatory debt service requirements, can be used for the repayment of debt, stockholder distributions and strategic opportunities, including investing in our business. We believe that Adjusted Free Cash Flow enhances the understanding of the cash flows of our business for management, investors and creditors. Adjusted Free Cash Flow is also used in the calculation of management’s incentive compensation program. The most directly comparable GAAP measure to Adjusted Free Cash Flow is Net cash provided by operating activities. Adjusted Free Cash Flow is calculated as Net cash provided by operating activities, excluding non-recurring restructuring charges, after additions of long-lived assets.

Attachments

• Condensed Consolidated Statements of Operations
• Condensed Consolidated Balance Sheets
• Condensed Consolidated Statements of Cash Flows
• Reconciliation of GAAP to Non-GAAP Financial Measures
• Reconciliation of GAAP to Non-GAAP Financial Measures for Full Year Guidance

Allison Transmission Holdings, Inc.
Condensed Consolidated Statements of Operations
(Unaudited, dollars in millions, except per share data)
		Three months ended June 30,								Six months ended June 30,
			2021				2020				2021				2020
Net sales		$	603			$	377			$	1,191			$	1,014
Cost of sales			315				212				612				523
Gross profit			288				165				579				491
Selling, general and administrative			80				69				153				144
Engineering – research and development			41				38				79				74
Operating income			167				58				347				273
Interest expense, net			(30	)			(33	)			(59	)			(66	)
Other income, net			3				5				6				4
Income before income taxes			140				30				294				211
Income tax expense			(30	)			(7	)			(64	)			(49	)
Net income		$	110			$	23			$	230			$	162
Basic earnings per share attributable to common stockholders		$	1.01			$	0.20			$	2.09			$	1.42
Diluted earnings per share attributable to common stockholders		$	1.01			$	0.20			$	2.07			$	1.41

Allison Transmission Holdings, Inc.
Condensed Consolidated Balance Sheets
(Unaudited, dollars in millions)
					June 30,			December 31,
						2021			2020
ASSETS
Current Assets
Cash and cash equivalents					$	238		$	310
Accounts receivable, net						299			228
Inventories						206			181
Other current assets						55			37
Total Current Assets						798			756
Property, plant and equipment, net						665			638
Intangible assets, net						940			963
Goodwill						2,064			2,064
Other non-current assets						55			56
TOTAL ASSETS					$	4,522		$	4,477
LIABILITIES
Current Liabilities
Accounts payable					$	167		$	157
Product warranty liability						29			36
Current portion of long-term debt						6			6
Deferred revenue						39			34
Other current liabilities						188			140
Total Current Liabilities						429			373
Product warranty liability						31			30
Deferred revenue						103			109
Long-term debt						2,505			2,507
Deferred income taxes						473			442
Other non-current liabilities						249			260
TOTAL LIABILITIES						3,790			3,721
TOTAL STOCKHOLDERS’ EQUITY						732			756
TOTAL LIABILITIES & STOCKHOLDERS’ EQUITY					$	4,522		$	4,477

Allison Transmission Holdings, Inc.
Condensed Consolidated Statements of Cash Flows
(Unaudited, dollars in millions)
						Three months ended June 30,								Six months ended June 30,
							2021				2020				2021				2020
Net cash provided by operating activities (a)						$	143			$	92			$	271			$	240
Net cash used for investing activities (b) (c)							(48	)			(24	)			(69	)			(45	)
Net cash (used for) provided by financing activities							(153	)			252				(274	)			49
Effect of exchange rate changes on cash							1				–				–				(2	)
Net (decrease) increase in cash and cash equivalents							(57	)			320				(72	)			242
Cash and cash equivalents at beginning of period							295				114				310				192
Cash and cash equivalents at end of period						$	238			$	434			$	238			$	434
Supplemental disclosures:
Interest paid						$	31			$	57			$	38			$	65
Income taxes paid						$	44			$	2			$	45			$	8
(a) Restructuring charges						$	–			$	3			$	–			$	3
(b) Additions of long-lived assets						$	(48	)		$	(28	)		$	(69	)		$	(49	)
(c) Business acquisitions						$	–			$	4			$	–			$	4

Allison Transmission Holdings, Inc.
Reconciliation of GAAP to Non-GAAP Financial Measures
(Unaudited, dollars in millions)
		Three months ended								Six months ended
		June 30,								June 30,
			2021				2020				2021				2020
Net income (GAAP)		$	110			$	23			$	230			$	162
plus:
Income tax expense			30				7				64				49
Interest expense, net			30				33				59				66
Depreciation of property, plant and equipment			26				24				51				46
Amortization of intangible assets			11				13				23				29
Stock-based compensation expense (a)			5				2				8				5
Unrealized loss on foreign exchange (b)			1				–				–				2
Restructuring charges (c)			–				12				–				12
Acquisition-related earnouts (d)			–				1				–				1
Adjusted EBITDA (Non-GAAP)		$	213			$	115			$	435			$	372
Net sales (GAAP)		$	603			$	377			$	1,191			$	1,014
Net income as a percent of net sales (GAAP)			18.2	%			6.1	%			19.3	%			16.0	%
Adjusted EBITDA as a percent of net sales (Non-GAAP)			35.3	%			30.5	%			36.5	%			36.7	%
Net cash provided by operating activities (GAAP)		$	143			$	92			$	271			$	240
Deductions to Reconcile to Adjusted Free Cash Flow:
Additions of long-lived assets			(48	)			(28	)			(69	)			(49	)
Restructuring charges (c)			–				3				–				3
Adjusted free cash flow (Non-GAAP)		$	95			$	67			$	202			$	194

	(a)		Represents stock-based compensation expense (recorded in Cost of sales, Selling, general and administrative, and Engineering – research and development).
	(b)		Represents losses (recorded in Other income, net) on intercompany financing transactions related to investments in plant assets for our India facility.
	(c)		Represents restructuring charges (recorded in Cost of sales, Selling, general and administrative, and Engineering – research and development) related to voluntary and involuntary separation programs for hourly and salaried employees in the second quarter of 2020.
	(d)		Represents expense (recorded in Selling, general and administrative and Engineering – research and development) for earnouts related to our acquisition of Vantage Power Limited.

	Allison Transmission Holdings, Inc.
	Reconciliation of GAAP to Non-GAAP Financial Measures for Full Year Guidance
	(Unaudited, dollars in millions)
			Guidance
			Year Ending December 31, 2021
			Low				High
	Net Income (GAAP)		$	395			$	465
	plus:
	Depreciation and amortization			152				152
	Interest expense, net			118				118
	Income tax expense			113				133
	Stock-based compensation expense (a)			16				16
	Acquisition-related earnouts (b)			1				1
	Adjusted EBITDA (Non-GAAP)		$	795			$	885
	Net Cash Provided by Operating Activities (GAAP)		$	585			$	655
	Deductions to Reconcile to Adjusted Free Cash Flow:
	Additions of long-live assets		$	(170	)		$	(180	)
	Adjusted Free Cash Flow (Non-GAAP)		$	415			$	475

(a)		Represents stock-based compensation expense (recorded in Cost of sales, Selling, general and administrative, and Engineering – research and development).
(b)		Represents expense (recorded in Selling, general and administrative and Engineering – research and development) for earnouts related to our acquisition of Vantage Power Limited.

 

View source version on businesswire.com: https://www.businesswire.com/news/home/20210728005994/en/

Raymond Posadas

Managing Director, Investor Relations

[email protected]

(317) 242-3078

Media Relations

[email protected]

(317) 242-5000

KEYWORDS: United States North America Indiana

INDUSTRY KEYWORDS: Aftermarket Automotive Automotive Manufacturing Manufacturing Performance & Special Interest Other Manufacturing

MEDIA:

Posted on July 28, 2021 4:09 pm

Points International to Hold Second Quarter 2021 Conference Call on Wednesday, August 11, 2021 at 4:30 p.m. ET

TORONTO, July 28, 2021 (GLOBE NEWSWIRE) — Points International Ltd. (TSX: PTS) (Nasdaq: PCOM) (Points), the global leader in powering loyalty commerce, will hold a conference call on Wednesday, August 11, 2021 at 4:30 p.m. Eastern time to discuss its financial results for the second quarter ended June 30, 2021. The company will report its results in a press release prior to the conference call.

Points management will host the conference call, followed by a question and answer period.

Date: Wednesday, August 11, 2021
Time: 4:30 p.m. Eastern time (1:30 p.m. Pacific time)
Toll-free dial-in number: 1-877-407-0784
International dial-in number: 1-201-689-8560
Conference ID: 13721291

Please call the conference telephone number 5-10 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 Gateway Investor Relations at 1-949-574-3860.

The conference call will be broadcast live and available for replay here and via the Events section of Points International’s IR site here.

A replay of the conference call will be available after 7:30 p.m. Eastern time on the same day through August 25, 2021.

Toll-free dial-in number: 1-844-512-2921
International dial-in number: 1-412-317-6671
Conference ID: 13721291

About Points International Ltd.

Points
, (TSX: PTS) (Nasdaq: PCOM) is a trusted partner to the world’s leading loyalty programs, leveraging its unique Loyalty Commerce Platform to build, power, and grow a network of ways members can get and use their favourite loyalty currency. Our platform combines insights, technology, and resources to make the movement of loyalty currency simpler and more intelligent for nearly 60 reward programs worldwide. Founded in 2000, Points is headquartered in Toronto with teams operating around the globe.

For more information, visit Points.com.

Investor Relations Contact

Cody Slach and Jackie Keshner
Gateway Investor Relations
1-949-574-3860
[email protected]

Posted on July 28, 2021 4:09 pm

LSB Industries, Inc. Reports Operating Results for the 2021 Second Quarter

LSB Industries, Inc. Reports Operating Results for the 2021 Second Quarter

Achieves Record Adjusted EBITDA

OKLAHOMA CITY–(BUSINESS WIRE)–
LSB Industries, Inc. (NYSE: LXU) (“LSB” or the “Company”) today announced results for the second quarter ended June 30, 2021.

Second Quarter Highlights

• Net sales of $140.7 million compared to $105.0 million in the second quarter of 2020
• Adjusted EBITDA⁽¹⁾ of $46.0 million compared to $29.2 million in the second quarter of 2020
• Adjusted EBITDA⁽¹⁾ margin of 32.7% compared to 27.8% in the second quarter of 2020
• Total liquidity of approximately $68 million as of June 30, 2021
• Initiated process of exchanging outstanding preferred stock into shares of common stock in order to provide Company with lower cost of capital and unlock growth opportunities

“We delivered significant year-over-year growth in both our top and bottom line in the second quarter,” stated Mark Behrman, LSB Industries’ President and CEO. “Our net sales increased 34% while adjusted EBITDA, which reached an all-time record level for our chemical operations, was up almost 60% versus the same period last year. These outstanding results reflect robust demand and pricing trends for both our agricultural and industrial products coupled with continued solid operating performance by our facilities and the operating leverage inherent in our business model.”

“In addition to the strong improvement in our financial performance, which we expect to persist through the balance of the year and into 2022, we recently announced that we signed an agreement with the holder of our outstanding preferred stock to exchange their preferred stock for shares of LSB common stock. If our shareholders approve the exchange transaction, we expect this transformative transaction to simplify our capital structure, lower our cost of capital and provide us with greater financial flexibility to pursue growth initiatives. Given the favorable nitrogen industry dynamics we are currently experiencing, we believe that now is an opportune time to execute this transaction, particularly given our intention to refinance our senior secured notes and opportunities we believe exist to drive organic growth, including our entry into the rapidly emerging blue/green ammonia and clean energy markets. Additionally, we regularly evaluate M&A prospects that we believe could be accretive to earnings as a result of the increased scale and expanded production capabilities that they would provide us. We believe that the exchange of this preferred stock into common stock and the overall simplification of our capital structure, including the potential refinancing of our senior secured notes, will enhance our ability to generate profitable growth and greater long-term value for our shareholders.”

Second Quarter Results Overview

		Three Months Ended June 30,
		2021						2020
		(Dollars in thousands)
Net Sales by Market Sector		Net Sales			Sector Mix			Net Sales				Sector Mix						% Change
Agricultural		$ 66,508				47%			$ 64,997				62%				2%
Industrial		60,608				43%			29,559				28%				105%
Mining		13,580				10%			10,477				10%				30%
		$ 140,696							$105,033							34%

Comparison of 2021 to 2020 quarterly periods:

• Net sales of our agricultural products increased during the quarter relative to the prior year period driven by stronger pricing for UAN, ammonia and HDAN. Partially offsetting the benefit of stronger pricing was the impact from winter storm Uri in February 2021. Our El Dorado and Pryor facilities were shut down as our natural gas supply was curtailed during the very cold weather conditions that were experienced throughout the central United States. This shutdown, resulted in a drawdown of inventory, particularly of HDAN, given increased sales in the first quarter, reducing our inventory available for sale in the second quarter. Also depressing agricultural volumes during the second quarter was the impact of wet weather across the Southern Plains throughout much of May which delayed the application of fertilizer products. Agricultural sales were also impacted by a shift in product mix as we continue our focus on the Industrial business.
• Net sales of our industrial and mining products increased as a result of higher pricing related to a rise in the Tampa ammonia benchmark price, to which many of our industrial contracts are tied. Also benefitting industrial sales was the ramp up of a new nitric acid offtake agreement along with the continued recovery of demand from several key end markets including automotive, home building and power generation, which have now exceeded pre-pandemic levels of demand.

• The year-over-year improvement in operating income and adjusted EBITDA was primarily the result of the higher selling prices along with stronger Industrial and Mining volumes partially offset by higher natural gas prices as well as the impact of the weather issues that reduced our inventory headed into the second quarter.

The following tables provide key sales metrics for our Agricultural products:

		Three Months Ended June 30,
Product (tons sold)			2021			2020		% Change
Urea ammonium nitrate (UAN)			121,995			111,860		9	%
High density ammonium nitrate (HDAN)			76,539			128,018		(40	) %
Ammonia			17,038			28,383		(40	) %
Other			6,628			9,257		(28	) %
			222,200			277,518		(20	) %
Average Selling Prices (price per ton)(A)
UAN		$	231		$	149		55	%
HDAN		$	286		$	232		23	%
Ammonia		$	395		$	250		58	%

(A) Average selling prices represent “net back” prices which are calculated as sales less freight expenses divided by product sales volume in tons.

The following table indicates the volumes sold of our major Industrial and Mining products:

		Three Months Ended June 30,
Product (tons sold)			2021			2020		% Change
Ammonia			67,503			62,108		9	%
AN, Nitric Acid, Other			118,327			72,990		62	%
			185,830			135,098		38	%
Tampa Ammonia Benchmark (price per metric ton)		$	545		$	234		133	%
Input Costs
Average natural gas cost/MMBtu		$	2.78		$	1.81		54	%

Financial Position and Capital Expenditures

As of June 30, 2021, our total cash position was $17.6 million. Additionally, LSB had approximately $50.3 million of borrowing availability under its Working Capital Revolver resulting in total liquidity of approximately $68 million. Total long-term debt, including the current portion, was $470.5 million on June 30, 2021 compared to $484.2 million on December 31, 2020. The aggregate liquidation value of the Series E-! Redeemable Preferred at June 30, 2021, inclusive of accrued dividends of $157.9 million, was $297.7 million.

Interest expense for the second quarter of 2021 was $12.3 million compared to $12.5 million for the same period in 2020.

In June 2021, the entire principal balance and interest of the Company’s Paycheck Protection Program (“PPP”) loan was forgiven in the amount of $10.0 million plus interest. The loan was originally issued to the Company in April 2020 under the CARES Act.

Capital expenditures were approximately $14.8 million for the first half of 2021. For the full year of 2021, total capital expenditures related to capital work to be performed in 2021 are expected to be approximately $30-$35 million, inclusive of investments for margin enhancement purposes.

Outlook

The environment for U.S. agricultural markets is significantly more favorable relative to this point last year due to a combination of stronger farmer incomes in 2020, increased demand for corn from China and other countries, and dry conditions in South America, which have led to the highest corn prices in eight years. This has translated into strong demand and a significant increase in pricing for fertilizers. Tampa ammonia, based on its second quarter 2021 average selling price, increased by over $300/MT, or 133% relative to the same period in 2020, while UAN and HDAN, increased by approximately $80 per ton and $50 per ton, or nearly 55% and 25%, respectively, compared to the same period last year. Our industrial business also continues to benefit from positive trends in its key end markets including automotive, homebuilding and power generation, which have recovered to above pre-pandemic levels reflecting the beneficial impact of widespread COVID vaccination throughout the U.S. Economic forecasts point to continued expansion, including those from The International Monetary Fund, that predict 7% year-over-year GDP growth for the U.S. in 2021, the largest percentage increase since 1984. The strength in the Tampa ammonia price also has positive ramifications for our industrial business as many industrial chemical contracts are indexed to the Tampa ammonia price. With the market trends on both sides of our business expected to continue through 2021, we continued to anticipate significant growth in net sales and adjusted EBITDA for the full year relative to 2020.

Conference Call

LSB’s management will host a conference call covering the second quarter results on Thursday, July 29, 2021 at 10:00 am ET / 9:00 am CT to discuss these results and recent corporate developments. Participating in the call will be President & Chief Executive Officer, Mark Behrman and Executive Vice President & Chief Financial Officer, Cheryl Maguire. Interested parties may participate in the call by dialing (201) 493-6739. Please call in 10 minutes before the conference is scheduled to begin and ask for the LSB conference call. To coincide with the conference call, LSB will post a slide presentation at www.lsbindustries.com on the webcast section of the Investor tab of our website.

To listen to a webcast of the call, please go to the Company’s website at www.lsbindustries.com at least 15 minutes prior to the conference call to download and install any necessary audio software. If you are unable to listen live, the conference call webcast will be archived on the Company’s website.

LSB Industries, Inc.

LSB Industries, Inc., headquartered in Oklahoma City, Oklahoma, manufactures and sells chemical products for the agricultural, mining, and industrial markets. The Company owns and operates facilities in Cherokee, Alabama, El Dorado, Arkansas and Pryor, Oklahoma, and operates a facility for a global chemical company in Baytown, Texas. LSB’s products are sold through distributors and directly to end customers primarily throughout the United States and parts of Mexico and Canada. Additional information about the Company can be found on its website at www.lsbindustries.com.

Forward-Looking Statements

Statements in this release that are not historical are forward-looking statements within the meaning of the U.S. Private Securities Litigation Reform Act of 1995. These forward-looking statements, which are subject to known and unknown risks, uncertainties and assumptions about us, may include projections of our future financial performance including the effects of the COVID-19 pandemic and anticipated performance based on our growth and other strategies and anticipated trends in our business. These statements are only predictions based on our current expectations and projections about future events. There are important factors that could cause our actual results, level of activity, performance or actual achievements to differ materially from the results, level of activity, performance or anticipated achievements expressed or implied by the forward-looking statements. Significant risks and uncertainties may relate to, but are not limited to, business and market disruptions related to the COVID-19 pandemic, market conditions and price volatility for our products and feedstocks, as well as global and regional economic downturns, including as a result of the COVID-19 pandemic, that adversely affect the demand for our end-use products; disruptions in production at our manufacturing facilities; our ability to complete the preferred stock exchange transaction on the terms disclosed or at all and other financial, economic, competitive, environmental, political, legal and regulatory factors. These and other risk factors are discussed in the Company’s filings with the Securities and Exchange Commission (SEC).

Moreover, we operate in a very competitive and rapidly changing environment. New risks and uncertainties emerge from time to time, and it is not possible for our management to predict all risks and uncertainties, nor can management 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. Although we believe the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee future results, level of activity, performance or achievements. Neither we nor any other person assumes responsibility for the accuracy or completeness of any of these forward-looking statements. You should not rely upon forward-looking statements as predictions of future events. Unless otherwise required by applicable laws, we undertake no obligation to update or revise any forward-looking statements, whether because of new information or future developments.

See Accompanying Tables

LSB Industries, Inc. Condensed Consolidated Statement of Operations
		Three Months Ended								Six Months Ended
		June 30,								June 30,
		2021				2020				2021				2020
		(In Thousands, Except Per Share Amounts)
Net sales		$	140,696			$	105,033			$	238,812			$	188,444
Cost of sales			105,688				86,012				195,744				166,872
Gross profit			35,008				19,021				43,068				21,572
Selling, general and administrative expense			8,545				8,504				17,338				18,510
Other expense (income), net			6				(167	)			(257	)			(635	)
Operating income			26,457				10,684				25,987				3,697
Interest expense, net			12,290				12,476				24,662				25,955
Gain on extinguishment of debt			(10,000	)			—				(10,000	)			—
Non-operating other expense (income), net			745				(128	)			1,140				(803	)
Income (loss) before benefit for income taxes			23,422				(1,664	)			10,185				(21,455	)
Benefit for income taxes			(248)				(1,299	)			(206)				(1,638	)
Net income (loss)			23,670				(365	)			10,391				(19,817	)
Dividends on convertible preferred stocks			75				75				150				150
Dividends on Series E redeemable preferred stock			10,213				8,689				19,724				16,996
Accretion of Series E redeemable preferred stock			513				505				1,024				1,009
Net income attributable to participating securities			223				—				—				—
Net income (loss) attributable to common stockholders		$	12,646			$	(9,634	)		$	(10,507	)		$	(37,972	)
Income (loss) per Common share:
Basic:
Net income (loss)		$	0.44			$	(0.34	)		$	(0.37)			$	(1.35	)
Diluted:
Net income (loss)		$	0.42			$	(0.34	)		$	(0.37)			$	(1.35	)

LSB Industries, Inc. Consolidated Balance Sheets
		June 30,				December 31,
		2021				2020
		(In Thousands)
Assets
Current assets:
Cash and cash equivalents		$	17,625			$	16,264
Accounts receivable			67,431				42,929
Allowance for doubtful accounts			(377	)			(378	)
Accounts receivable, net			67,054				42,551
Inventories:
Finished goods			12,781				17,778
Raw materials			1,521				1,795
Total inventories			14,302				19,573
Supplies, prepaid items and other:
Prepaid insurance			5,682				12,315
Precious metals			7,801				6,787
Supplies			25,878				25,288
Other			4,757				6,802
Total supplies, prepaid items and other			44,118				51,192
Total current assets			143,099				129,580
Property, plant and equipment, net			871,780				891,198
Other assets:
Operating lease assets			27,854				26,403
Intangible and other assets, net			6,752				6,121
			34,606				32,524
		$	1,049,485			$	1,053,302

LSB Industries, Inc. Consolidated Balance Sheets (continued)
		June 30,				December 31,
		2021				2020
		(In Thousands)
Liabilities and Stockholders’ Equity
Current liabilities:
Accounts payable		$	51,212			$	46,551
Short-term financing			4,516				13,576
Accrued and other liabilities			30,541				30,367
Current portion of long-term debt			9,049				16,801
Total current liabilities			95,318				107,295
Long-term debt, net			461,459				467,389
Noncurrent operating lease liabilities			20,277				19,845
Other noncurrent accrued and other liabilities			7,372				6,090
Deferred income taxes			31,195				30,939
Commitments and contingencies
Redeemable preferred stocks:
Series E 14% cumulative, redeemable Class C preferred stock, no par value, 210,000 shares issued; 139,768 outstanding; aggregate liquidation preference of $297,706,000 ($277,982,000 at December 31, 2020)			292,849				272,101
Series F redeemable Class C preferred stock, no par value, 1 share issued and outstanding; aggregate liquidation preference of $100			—				—
Stockholders’ equity:
Series B 12% cumulative, convertible preferred stock, $100 par value; 20,000 shares issued and outstanding; aggregate liquidation preference of $3,385,000 ($3,265,000 at December 31, 2020)			2,000				2,000
Series D 6% cumulative, convertible Class C preferred stock, no par value; 1,000,000 shares issued and outstanding; aggregate liquidation preference of $1,342,000 ($1,312,000 at December 31, 2020)			1,000				1,000
Common stock, $.10 par value; 75,000,000 shares authorized, 31,283,210 shares issued			3,128				3,128
Capital in excess of par value			192,980				198,215
Accumulated deficit			(51,844	)			(41,487	)
			147,264				162,856
Less treasury stock, at cost:
Common stock, 982,639 shares (2,074,565 shares at December 31, 2020)			6,249				13,213
Total stockholders’ equity			141,015				149,643
		$	1,049,485			$	1,053,302

LSB Industries, Inc.

Non-GAAP Reconciliations

This news release includes certain “non-GAAP financial measures” under the rules of the Securities and Exchange Commission, including Regulation G. These non-GAAP measures are calculated using GAAP amounts in our consolidated financial statements.

EBITDA and Adjusted EBITDA Reconciliation

EBITDA is defined as net income (loss) plus interest expense, less gain on extinguishment of debt, plus depreciation and amortization (D&A) (which includes D&A of property, plant and equipment and amortization of intangible and other assets), plus provision for income taxes. Adjusted EBITDA is reported to show the impact of one time/non-cash or non-operating items-such as, loss (gain) on sale of a business and other property and equipment, one-time income or fees, certain fair market value (FMV) adjustments, non-cash stock-based compensation, and consulting costs associated with reliability and purchasing initiatives (Initiatives). We historically have performed turnaround activities on an annual basis; however, we have moved towards extending Turnarounds to a two or three-year cycle. Rather than being capitalized and amortized over the period of benefit, our accounting policy is to recognize the costs as incurred. Given these Turnarounds are essentially investments that provide benefits over multiple years, they are not reflective of our operating performance in a given year.

We believe that certain investors consider EBITDA a useful means of measuring our ability to meet our debt service obligations and evaluating our financial performance. In addition, we believe that certain investors consider adjusted EBITDA as more meaningful to further assess our performance. We believe that the inclusion of supplementary adjustments to EBITDA is appropriate to provide additional information to investors about certain items.

EBITDA and adjusted EBITDA have limitations and should not be considered in isolation or as a substitute for net income, operating income, cash flow from operations or other consolidated income or cash flow data prepared in accordance with GAAP. Because not all companies use identical calculations, this presentation of EBITDA and adjusted EBITDA may not be comparable to a similarly titled measure of other companies. The following table provides a reconciliation of net income (loss) to EBITDA and adjusted EBITDA for the periods indicated. Adjusted EBITDA margin is calculated by taking adjusted EBITDA divided by Net Sales.

LSB Industries, Inc. Non-GAAP Reconciliations (continued)
LSB Consolidated ($ in thousands)	Three Months Ended June 30,					Six Months Ended June 30,
	2021		2020			2021		2020
Net income (loss)	$ 23,670		$(365)			$ 10,391		$ (19,817)
Plus:
Interest expense	12,290		12,476			24,662		25,955
Depreciation and amortization	17,277		17,295			34,354		35,202
Gain on Extinguishment of debt-PPP loan	(10,000)		–			(10,000)		–
Benefit for income taxes	(248)		(1,299)			(206)		(1,638)
EBITDA	$ 42,989		$ 28,107			$ 59,201		$ 39,702
Stock-based compensation	1,063		685			1,776		1,180
Noncash loss (gain) on natural gas contracts	–		(396)			(1,205)		131
Legal fees (Leidos)	441		955			1,327		4,242
Loss (gain) on disposal of assets	91		(54)			174		(277)
FMV adjustment on preferred
stock embedded derivatives	716		(120)			1,152		(757)
Consulting costs associated with Initiatives	–		–			–		576
Turnaround costs	707		11			847		11
Adjusted EBITDA	$ 46,007		$ 29,188			$ 63,272		$ 44,808
Adjusted EBITDA Margin	32.7 %		27.8 %			26.5 %		23.8 %

Agricultural Sales Price Reconciliation

The following table provides a reconciliation of total agricultural net sales as reported under GAAP in our consolidated financial statement reconciled to netback sales which is calculated as net sales less freight expenses. We believe this provides a relevant industry comparison among our peer group.

	Three Months Ended June 30,				Six Months Ended June 30,
	2021		2020		2021		2020
Agricultural net sales ($ in thousands)	$ 66,508		$ 64,997		$ 111,421		$ 106,455
Less freight	4,089		5,530		7,715		9,466
Agricultural netback sales	$ 62,419		$ 59,467		$ 103,706		$ 96,989

 

View source version on businesswire.com: https://www.businesswire.com/news/home/20210728005992/en/

Company Contact:

Mark Behrman, President & CEO

Cheryl Maguire, Executive Vice President & CFO

(405) 235-4546

Investor Contact: The Equity Group Inc.

Fred Buonocore, CFA (212) 836-9607

Mike Gaudreau (212) 836-9620

KEYWORDS: United States North America Oklahoma

INDUSTRY KEYWORDS: Commercial Building & Real Estate Agriculture Construction & Property Natural Resources Engineering Chemicals/Plastics Other Construction & Property Manufacturing

MEDIA:

Logo

Already-strong balance sheet further reinforced by long-term, attractively priced notes due 2031

MaxLinear, Inc. Announces Second Quarter 2021 Financial Results

• Net revenue of $205.4 million, up 215% year-on-year
• GAAP gross margin 54.8%, up 140 bps from previous quarter
• Non-GAAP Gross Margin of 60.2%, up 160 bps from previous quarter, above the high-end guidance
• Strong Sales growth expected to continue into Q3 across all end-markets

CARLSBAD, Calif.–(BUSINESS WIRE)–
MaxLinear, Inc. (NYSE: MXL), a leading provider of RF, analog, digital and mixed-signal integrated circuits, today announced financial results for the second quarter ended June 30, 2021.

Second Quarter Financial Highlights

GAAP basis:

• Net revenue was $205.4 million, up 215% year-on-year.
• GAAP gross margin was 54.8%, compared to 53.4% in the prior quarter, and 50.2% in the year-ago quarter.
• GAAP operating expenses were $110.3 million in the second quarter 2021, or 54% of net revenue, compared to $101.8 million in the prior quarter, or 49% of net revenue, and $55.5 million in the year-ago quarter, or 85% of net revenue.
• GAAP income from operations was 1% of revenue, compared to income from operations of 5% in the prior quarter, and loss from operations of 35% in the year-ago quarter.
• Net cash flow provided by operating activities was $7.9 million, compared to net cash flow provided by operating activities of $60.3 million in the prior quarter, and net cash flow provided by operating activities of $9.3 million in the year-ago quarter.
• GAAP diluted earnings per share was $0.01, compared to diluted earnings per share of $0.05 in the prior quarter, and diluted loss per share of $0.30 in the year-ago quarter.

Non-GAAP basis:

• Non-GAAP gross margin was 60.2%. This compares to 58.6% in the prior quarter, and 63.7% in the year-ago quarter.
• Non-GAAP operating expenses were $75.2 million, or 37% of revenue, compared to $72.6 million or 35% of revenue in the prior quarter, and $32.6 million or 50% of revenue in the year-ago quarter.
• Non-GAAP income from operations was 24% of revenue, compared to 24% in the prior quarter, and 14% in the year-ago quarter.
• Non-GAAP diluted earnings per share was $0.53, compared to diluted earnings per share of $0.55 in the prior quarter, and diluted earnings per share of $0.09 in the year-ago quarter.

Recent Business Highlights

• Announced showcase of industry-first 5nm CMOS 800Gbps PAM4 DSP for data center applications.
• Announced selection of MxL 93516 PAM4 DSP by uSenlight Corporation to deliver sub-3.5W 100G optical modules for hyperscale data centers and wireless front haul applications
• Announced MaxLinear’s collaboration with MACOM to assure interoperability of PAM4 DSPs and 100G/lane transimpedance amplifiers for 100G/lambda applications in data center applications.
• Announced partnership with Cree, Inc. combining MaxLinear’s ultra-wideband linearization solution and Cree’s Wolfspeed Gallium Nitride on SiC mid-band power amplifiers increasing wireless capacity of a 5G base station

Management Commentary

“In the second quarter, revenue was up 215% year-over-year, driven by growth across all of our end markets. Solid demand for our broadband access and connectivity and high-performance analog products was due to a combination of end-market strength and company-specific drivers, including platform-level silicon content increases and market share gains. Non-GAAP gross margin for Q2 of 60.2% was the highest level reported in the past four quarters, mainly due to our strategic focus on driving operational synergies. We are currently focused on improving the ability of our manufacturing supply chain to meet the strong and growing market demand for our connectivity, broadband, and infrastructure products in the latter half of 2021 and heading into 2022. Despite the ongoing challenges within the worldwide semiconductor manufacturing supply chain, we are increasingly confident in the Company’s outlook for the remainder of this year,” commented Kishore Seendripu, Ph.D., Chairman and CEO.

Third Quarter 2021 Business Outlook

The company expects revenue in the third quarter 2021 to be approximately $215 million to $225 million. The Company also estimates the following:

• GAAP gross margin of approximately 54.5% to 56.5%;
• Non-GAAP gross margin of approximately 59.5% to 61.5%;
• GAAP operating expenses of approximately $106.0 million to $110.0 million;
• Non-GAAP operating expenses of approximately $75.5 million to $79.5 million;
• GAAP interest and other expense of approximately $2.9 million to $3.0 million; and
• Non-GAAP interest and other expense of approximately $2.8 million to $2.9 million.

Webcast and Conference Call

MaxLinear will host its second quarter financial results conference call today, July 28, 2021 at 1:30 p.m. Pacific Time (4:30 p.m. Eastern Time). To access this call, dial US toll free: 1-877-407-3109 / International: 1-201-493-6798. A live webcast of the conference call will be accessible from the investor relations section of the MaxLinear website at https://investors.maxlinear.com, and will be archived and available after the call at https://investors.maxlinear.com until August 11, 2021. A replay of the conference call will also be available until August 11, 2021 by dialing US toll free: 1-877-660-6853 / International: 1-201-612-7415 and Conference ID#: 13721386.

Cautionary Note Concerning Forward-Looking Statements

This press release contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Forward-looking statements include, among others, statements concerning our future financial performance (including specifically our current guidance for third quarter 2021 revenue, gross margins, and operating expenses as well as statements with respect to confidence in the Company’s outlook for the balance of 2021 and into 2022) and statements concerning expectations of potential developments in our target markets, including (without limitation) management’s views with respect to the prospects for and trends in our broadband, connectivity and 5G wireless and fiber-optic high-speed interconnect infrastructure markets. These forward-looking statements involve known and unknown risks, uncertainties, and other factors that may cause actual results to be materially different from any future results expressed or implied by the forward-looking statements. Forward-looking statements are based on management’s current, preliminary expectations and are subject to various risks and uncertainties. In particular, our future operating results are substantially dependent on our assumptions about market trends and conditions. In addition, we have incurred indebtedness, which enhances specific risks relating to our ability to service interest and principal payments and limitations on our operating flexibility based on financial and operating covenants in the applicable term loan agreements, including (without limitation) debt covenant restrictions that may limit our ability to obtain additional financing, granting liens, undergoing certain fundamental changes, or making investments or certain restricted payments, and selling assets. Additional risks and uncertainties affecting our business and future operating results include, without limitation, increasing supply chain risks within our industry, including increases in shipping and material costs and substantial shipping delays resulting in extended lead-times; the on-going impact of the Covid-19 pandemic on our business, including the extent to which our broadband businesses will continue to benefit from work-from-home and similar initiatives as the pandemic abates; risks associated with our ability to realize improved profitability from our Wi-Fi and Broadband assets business; intense competition in our industry; our dependence on a limited number of customers for a substantial portion of our revenues; potential uncertainties arising from continued consolidation among cable television and satellite operators in our target markets and continued consolidation among competitors within the semiconductor industry generally; our ability to develop and introduce new and enhanced products on a timely basis and achieve market acceptance of those products, particularly as we seek to expand outside of our historic markets; potential decreases in average selling prices for our products; risks relating to intellectual property protection and the prevalence of intellectual property litigation in our industry; our reliance on a limited number of third party manufacturers; our lack of long-term supply contracts and dependence on limited sources of supply, which may be adversely affected by the pandemic; uncertainties concerning how end user markets for our products will develop, including in particular markets we have entered more recently such as broadband and Wi-Fi and 5G wireless and fiber-optic data center high-speed interconnect infrastructure markets but also existing markets which we previously referred to as connected home; and uncertainties concerning the outcome of global trade negotiations, export control limitations, and heightened geopolitical risks generally.

In addition to these risks and uncertainties, investors should review the risks and uncertainties contained in our filings with the Securities and Exchange Commission (SEC), including our Annual Report on Form 10-K for the year ended December 31, 2020 filed with the SEC on February 11, 2021, and our Current Reports on Form 8-K, as well as the information to be set forth under the caption “Risk Factors” in MaxLinear’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2021, which we expect to file soon. All forward-looking statements are based on the estimates, projections and assumptions of management as of July 28, 2021, and MaxLinear is under no obligation (and expressly disclaims any such obligation) to update or revise any forward-looking statements whether as a result of new information, future events, or otherwise.

Use of Non-GAAP Financial Measures

To supplement our unaudited consolidated financial statements presented on a basis consistent with GAAP, we disclose certain non-GAAP financial measures, including non-GAAP gross margin, operating expenses, operating expenses as a percentage of revenue, income from operations as percentage of revenue, and diluted earnings per share. These supplemental measures exclude the effects of (i) stock-based compensation expense; (ii) accruals related to our performance based bonus plan for 2021, which we currently intend to settle in shares of our common stock; (iii) accruals related to our performance based bonus plan for 2020, which we settled in shares of common stock in 2021; (iv) amortization of purchased intangible assets; (v) research and development funded by others; (vi) acquisition and integration costs related to our acquisitions; (vii) professional fees and settlement costs related to IP and commercial litigation matters; (viii) severance and other restructuring charges; (ix) impairment losses on intangible assets; (x) loss from extinguishment of debt; (xi) other non-recurring interest and other income (expenses), net attributable to acquisitions and (xii) non-cash income tax benefits and expenses. These non-GAAP measures are not in accordance with and do not serve as an alternative for GAAP. We believe that these non-GAAP measures have limitations in that they do not reflect all of the amounts associated with our GAAP results of operations. These non-GAAP measures should only be viewed in conjunction with corresponding GAAP measures. We compensate for the limitations of non-GAAP financial measures by relying upon GAAP results to gain a complete picture of our performance.

We believe that non-GAAP financial measures can provide useful information to both management and investors by excluding certain non-cash and other one-time expenses that are not indicative of our core operating results. Among other uses, our management uses non-GAAP measures to compare our performance relative to forecasts and strategic plans and to benchmark our performance externally against competitors. In addition, management’s incentive compensation will be determined in part using these non-GAAP measures because we believe non-GAAP measures better reflect our core operating performance.

The following are explanations of each type of adjustment that we incorporate into non-GAAP financial measures:

Stock-based compensation expense relates to equity incentive awards granted to our employees, directors, and consultants. Our equity incentive plans are important components of our employee incentive compensation arrangements and are reflected as expenses in our GAAP results. Stock-based compensation expense has been and will continue to be a significant recurring expense for MaxLinear. While we include the dilutive impact of equity awards in weighted average shares outstanding, the expense associated with stock-based awards reflects a non-cash charge that we exclude from non-GAAP net income.

Bonuses under our executive and non-executive bonus programs have been excluded from our non-GAAP net income for all periods reported. Bonus payments for the 2020 performance periods were settled through the issuance of shares of common stock under our equity incentive plans in March 2021. We currently expect that bonus awards under our fiscal 2021 program will be settled in common stock in the first quarter of fiscal 2022.

Expenses incurred in relation to acquisitions include amortization of purchased intangible assets, acquisition and integration costs primarily consisting of professional and consulting fees, and amortization of discount on deferred purchase price payments to interest expense.

Research and development funded by others represents proceeds received under a contract for a jointly funded R&D project to develop technology that may be commercialized into a product in the future. Such proceeds have not yet been recognized in GAAP results as the Company may be required to repay all or a portion of the funds provided by the other party under certain conditions. Management believes it is not probable that it will trigger such conditions.

Impairment losses relate to certain intangible assets.

Restructuring charges incurred are related to our restructuring plans which eliminate redundancies and primarily include severance and restructuring costs related to impairment of leased right-of-use assets or from exiting certain facilities.

Loss on extinguishment of debt is related to the charge-off of remaining unamortized debt discount and issuance costs on debt we repaid early with proceeds from a new term loan in June 2021.

Expenses incurred in relation to our intellectual property and commercial litigation include professional fees incurred.

Income tax benefits and expense adjustments are those that do not affect cash income taxes payable.

Reconciliations of non-GAAP measures for the historic periods disclosed in this press release appear below. Because of the inherent uncertainty associated with our ability to project future charges, particularly related to stock-based compensation and its related tax effects as well as potential impairments, we have not provided a reconciliation for non-GAAP guidance provided for the third quarter 2021.

About MaxLinear, Inc.

MaxLinear, Inc. (NYSE:MXL) is a leading provider of radio frequency (RF), analog, digital and mixed-signal integrated circuits for access and connectivity, wired and wireless infrastructure, and industrial and multi-market applications. MaxLinear is headquartered in Carlsbad, California. For more information, please visit www.maxlinear.com.

MXL is MaxLinear’s registered trademark. Other trademarks appearing herein are the property of their respective owners.

MAXLINEAR, INC. UNAUDITED GAAP CONSOLIDATED STATEMENTS OF OPERATIONS (in thousands, except per share data)
	Three Months Ended
	June 30, 2021				March 31, 2021				June 30, 2020
Net revenue	$	205,376			$	209,359			$	65,220
Cost of net revenue	92,833				97,640				32,477
Gross profit	112,543				111,719				32,743
Operating expenses:
Research and development	74,416				63,166				27,984
Selling, general and administrative	35,885				36,469				27,470
Restructuring charges	38				2,166				64
Total operating expenses	110,339				101,801				55,518
Income (loss) from operations	2,204				9,918				(22,775		)
Interest income	18				—				31
Interest expense	(3,741		)		(4,206		)		(2,183		)
Loss on extinguishment of debt	(5,221		)		—				—
Other income (expense), net	(537		)		(104		)		(81		)
Total other income (expense), net	(9,481		)		(4,310		)		(2,233		)
Income (loss) before income taxes	(7,277		)		5,608				(25,008		)
Income tax provision (benefit)	(8,010		)		1,806				(3,201		)
Net income (loss)	$	733			$	3,802			$	(21,807	)
Net income (loss) per share:
Basic	$	0.01			$	0.05			$	(0.30	)
Diluted	$	0.01			$	0.05			$	(0.30	)
Shares used to compute net income (loss) per share:
Basic	75,930				74,852				72,740
Diluted	79,026				78,283				72,740

MAXLINEAR, INC. UNAUDITED GAAP CONSOLIDATED STATEMENTS OF OPERATIONS (in thousands, except per share data)
	Six Months Ended
	June 30, 2021				June 30, 2020
Net revenue	$	414,735			$	127,247
Cost of net revenue	190,473				63,742
Gross profit	224,262				63,505
Operating expenses:
Research and development	137,582				53,673
Selling, general and administrative	72,354				52,102
Impairment losses	—				86
Restructuring charges	2,204				553
Total operating expenses	212,140				106,414
Income (loss) from operations	12,122				(42,909		)
Interest income	18				256
Interest expense	(7,947		)		(4,659		)
Loss on extinguishment of debt	(5,221		)		—
Other income (expense), net	(641		)		99
Total other income (expense), net	(13,791		)		(4,304		)
Loss before income taxes	(1,669		)		(47,213		)
Income tax benefit	(6,204		)		(9,937		)
Net income (loss)	$	4,535			$	(37,276	)
Net income (loss) per share:
Basic	$	0.06			$	(0.51	)
Diluted	$	0.06			$	(0.51	)
Shares used to compute net income (loss) per share:
Basic	75,394				72,389
Diluted	78,657				72,389

MAXLINEAR, INC. UNAUDITED GAAP CONSOLIDATED STATEMENTS OF CASH FLOWS (in thousands)
	Three Months Ended
	June 30, 2021				March 31, 2021				June 30, 2020
Operating Activities
Net income (loss)	$	733			$	3,802			$	(21,807	)
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
Amortization and depreciation	21,997				22,325				16,532
Amortization of debt issuance costs and accretion of discount on debt and leases	918				1,153				397
Stock-based compensation	13,966				12,955				12,085
Deferred income taxes	(6,002		)		541				(2,879		)
Loss on disposal of property and equipment	20				368				—
Impairment of leasehold improvements	—				226				—
Impairment of leased right-of-use assets	—				429				—
Loss on extinguishment of debt	5,221				—				—
Loss on foreign currency and other	387				21				20
Excess tax benefits on stock based awards	(2,822		)		(1,809		)		(472		)
Changes in operating assets and liabilities:
Accounts receivable	(47,800		)		(20,079		)		3,362
Inventory	(6,254		)		5,658				(3,184		)
Prepaid expenses and other assets	3,588				29,860				(669		)
Leased right-of-use assets	36				36				(314		)
Accounts payable, accrued expenses and other current liabilities	8,652				(2,341		)		6,020
Accrued compensation	13,857				1,376				4,396
Accrued price protection liability	(344		)		7,299				(2,132		)
Lease liabilities	(2,345		)		(2,002		)		(1,279		)
Other long-term liabilities	4,043				454				(816		)
Net cash provided by operating activities	7,851				60,272				9,260
Investing Activities
Purchases of property and equipment	(11,158		)		(6,152		)		(3,901		)
Purchases of intangible assets	—				(1,112		)		(13		)
Cash used in acquisitions, net of cash acquired	(7,500		)		(20,000		)		—
Purchases of long-term investments	—				(5,000		)		—
Net cash used in investing activities	(18,658		)		(32,264		)		(3,914		)
Financing Activities
Proceeds from the issuance of debt	350,000				—				—
Payment of debt issuance cost	(4,127		)		—				—
Repayment of debt	(349,813		)		(20,000		)		—
Net proceeds from issuance of common stock	4,796				1,298				4,154
Minimum tax withholding paid on behalf of employees for restricted stock units	(2,663		)		(7,442		)		(1,024		)
Repurchase of common stock	(4,464		)		(2,673		)		—
Net cash provided by (used in) financing activities	(6,271		)		(28,817		)		3,130
Effect of exchange rate changes on cash, cash equivalents and restricted cash	(681		)		(32		)		513
Increase (decrease) in cash, cash equivalents and restricted cash	(17,759		)		(841		)		8,989
Cash, cash equivalents and restricted cash at beginning of period	149,193				150,034				98,440
Cash, cash equivalents and restricted cash at end of period	$	131,434			$	149,193			$	107,429

MAXLINEAR, INC. UNAUDITED GAAP CONSOLIDATED STATEMENTS OF CASH FLOWS (in thousands)
	Six months ended
	June 30, 2021				June 30, 2020
Operating Activities
Net income (loss)	$	4,535			$	(37,276	)
Adjustments to reconcile net income (loss) to cash provided by operating activities:
Amortization and depreciation	44,322				33,265
Impairment losses	—				86
Amortization of debt issuance costs and accretion of discount on debt and leases	2,071				807
Stock-based compensation	26,921				18,912
Deferred income taxes	(5,461		)		(9,087		)
Loss on disposal of property and equipment	388				—
Impairment of leasehold improvements	226				163
Impairment of leased right-of-use assets	429				44
Loss on extinguishment of debt	5,221				—
(Gain) loss on foreign currency	408				(226		)
Excess tax benefits on stock-based awards	(4,631		)		(378		)
Changes in operating assets and liabilities, net of effects of acquisitions:
Accounts receivable	(67,879		)		8,977
Inventory	(596		)		(2,831		)
Prepaid expenses and other assets	33,448				774
Leased right-of-use assets	72				326
Accounts payable, accrued expenses and other current liabilities	6,311				5,235
Accrued compensation	15,233				7,757
Accrued price protection liability	6,955				(6,669		)
Lease liabilities	(4,347		)		(2,709		)
Other long-term liabilities	4,497				(1,262		)
Net cash provided by operating activities	68,123				15,908
Investing Activities
Purchases of property and equipment	(17,310		)		(4,936		)
Purchases of intangible assets	(1,112		)		(13		)
Cash used in acquisitions, net of cash acquired	(27,500		)		—
Purchases of available-for-sale securities	(5,000		)		—
Net cash used in investing activities	(50,922		)		(4,949		)
Financing Activities
Proceeds from the issuance of debt	350,000				—
Payment of debt issuance cost	(4,127		)		—
Repayment of debt	(369,813		)		—
Net proceeds from issuance of common stock	6,094				4,642
Minimum tax withholding paid on behalf of employees for restricted stock units	(10,105		)		(1,499		)
Repurchase of common stock	(7,137		)		—
Net cash provided by (used in) financing activities	(35,088		)		3,143
Effect of exchange rate changes on cash, cash equivalents and restricted cash	(713		)		210
Increase (decrease) in cash, cash equivalents and restricted cash	(18,600		)		14,312
Cash, cash equivalents and restricted cash at beginning of period	150,034				93,117
Cash, cash equivalents and restricted cash at end of period	$	131,434			$	107,429

MAXLINEAR, INC. UNAUDITED GAAP CONDENSED CONSOLIDATED BALANCE SHEETS (in thousands)
	June 30, 2021				March 31, 2021				June 30, 2020
Assets
Current assets:
Cash and cash equivalents	$	130,312			$	148,095			$	107,362
Short-term restricted cash	107				114				9
Accounts receivable, net	135,321				87,521				41,434
Inventory	98,502				92,154				34,284
Prepaid expenses and other current assets	13,866				17,096				7,489
Total current assets	378,108				344,980				190,578
Long-term restricted cash	1,015				984				58
Property and equipment, net	48,104				40,787				18,059
Leased right-of-use assets	22,847				24,403				8,942
Intangible assets, net	174,964				191,542				159,441
Goodwill	302,828				302,828				238,330
Deferred tax assets	91,526				85,524				76,371
Other long-term assets	7,235				7,551				1,281
Total assets	$	1,026,627			$	998,599			$	693,060
Liabilities and stockholders’ equity
Current liabilities	$	211,789			$	197,637			$	69,964
Long-term lease liabilities	20,445				22,419				6,833
Long-term debt	343,022				344,116				207,486
Other long-term liabilities	17,704				13,649				6,802
Stockholders’ equity	433,667				420,778				401,975
Total liabilities and stockholders’ equity	$	1,026,627			$	998,599			$	693,060

MAXLINEAR, INC. UNAUDITED RECONCILIATION OF NON-GAAP ADJUSTMENTS (in thousands, except per share data)
	Three Months Ended
	June 30, 2021				March 31, 2021				June 30, 2020
GAAP gross profit	$	112,543			$	111,719			$	32,743
Stock-based compensation	148				169				126
Performance based equity	127				82				109
Amortization of purchased intangible assets	10,743				10,747				8,581
Non-GAAP gross profit	123,561				122,717				41,559
GAAP R&D expenses	74,416				63,166				27,984
Stock-based compensation	(7,268		)		(7,162		)		(5,040		)
Performance based equity	(8,249		)		(4,598		)		(2,054		)
Research and development funded by others	(3,800		)		—				—
Acquisition and integration costs	(38		)		(92		)		—
Non-GAAP R&D expenses	55,061				51,314				20,890
GAAP SG&A expenses	35,885				36,469				27,470
Stock-based compensation	(6,551		)		(5,624		)		(6,920		)
Performance based equity	(3,357		)		(1,890		)		(1,144		)
Amortization of purchased intangible assets	(5,816		)		(6,070		)		(5,549		)
Acquisition and integration costs	(25		)		(1,561		)		(2,090		)
IP litigation costs, net	—				(11		)		(54		)
Non-GAAP SG&A expenses	20,136				21,313				11,713
GAAP restructuring expenses	38				2,166				64
Restructuring charges	(38		)		(2,166		)		(64		)
Non-GAAP restructuring expenses	—				—				—
GAAP income (loss) from operations	2,204				9,918				(22,775		)
Total non-GAAP adjustments	46,160				40,172				31,731
Non-GAAP income from operations	48,364				50,090				8,956
GAAP loss on extinguishment of debt	(5,221		)		—				—
Loss on extinguishment of debt	5,221				—				—
Non-GAAP loss on extinguishment of debt	—				—				—
GAAP and non-GAAP interest and other income (expense), net	(4,260		)		(4,310		)		(2,233		)
Non-recurring interest and other income (expense), net	133				310				—
Non-GAAP interest and other income (expense), net	(4,127		)		(4,000		)		(2,233		)
GAAP income (loss) before income taxes	(7,277		)		5,608				(25,008		)
Total non-GAAP adjustments	51,514				40,482				31,731
Non-GAAP income before income taxes	44,237				46,090				6,723
GAAP income tax provision (benefit)	(8,010		)		1,806				(3,201		)
Adjustment for non-cash tax benefits/expenses	10,665				959				3,605
Non-GAAP income tax provision	2,655				2,765				404
GAAP net income (loss)	733				3,802				(21,807		)
Total non-GAAP adjustments before income taxes	51,514				40,482				31,731
Less: total tax adjustments	10,665				959				3,605
Non-GAAP net income	$	41,582			$	43,325			$	6,319
Shares used in computing non-GAAP basic net income per share	75,930				74,852				72,740
Shares used in computing non-GAAP diluted net income per share	79,026				78,283				73,772
Non-GAAP basic net income per share	$	0.55			$	0.58			$	0.09
Non-GAAP diluted net income per share	$	0.53			$	0.55			$	0.09

MAXLINEAR, INC. UNAUDITED RECONCILIATION OF NON-GAAP ADJUSTMENTS (in thousands, except per share data)
	Six Months Ended
	June 30, 2021				June 30, 2020
GAAP gross profit	$	224,262			$	63,505
Stock-based compensation	317				274
Performance based equity	209				178
Amortization of purchased intangible assets	21,490				17,162
Non-GAAP gross profit	246,278				81,119
GAAP R&D expenses	137,582				53,673
Stock-based compensation	(14,430		)		(8,786		)
Performance based equity	(12,847		)		(3,804		)
Research and development funded by others	(3,800		)		—
Acquisition and integration costs	(130		)		—
Non-GAAP R&D expenses	106,375				41,083
GAAP SG&A expenses	72,354				52,102
Stock-based compensation	(12,175		)		(9,853		)
Performance based equity	(5,247		)		(2,280		)
Amortization of purchased intangible assets	(11,886		)		(11,272		)
Acquisition and integration costs	(1,586		)		(5,360		)
IP litigation costs, net	(11		)		(114		)
Non-GAAP SG&A expenses	41,449				23,223
GAAP impairment losses	—				86
Impairment losses	—				(86		)
Non-GAAP impairment losses	—				—
GAAP restructuring expenses	2,204				553
Restructuring charges	(2,204		)		(553		)
Non-GAAP restructuring expenses	—				—
GAAP income (loss) from operations	12,122				(42,909		)
Total non-GAAP adjustments	86,332				59,722
Non-GAAP income from operations	98,454				16,813
GAAP loss on extinguishment of debt	(5,221		)		—
Loss on extinguishment of debt	5,221				—
Non-GAAP loss on extinguishment of debt	—				—
GAAP and non-GAAP interest and other income (expense), net	(8,570		)		(4,304		)
Non-recurring interest and other income (expense), net	443				—
Non-GAAP interest and other income (expense), net	(8,127		)		(4,304		)
GAAP income (loss) before income taxes	(1,669		)		(47,213		)
Total non-GAAP adjustments	91,996				59,722
Non-GAAP income before income taxes	90,327				12,509
GAAP income tax provision (benefit)	(6,204		)		(9,937		)
Adjustment for non-cash tax benefits/expenses	11,624				10,688
Non-GAAP income tax provision	5,420				751
GAAP net income (loss)	4,535				(37,276		)
Total non-GAAP adjustments before income taxes	91,996				59,722
Less: total tax adjustments	11,624				10,688
Non-GAAP net income	$	84,907			$	11,758
Shares used in computing non-GAAP basic net income per share	75,394				72,389
Shares used in computing non-GAAP diluted net income per share	78,657				73,223
Non-GAAP basic net income per share	$	1.13			$	0.16
Non-GAAP diluted net income per share	$	1.08			$	0.16

MAXLINEAR, INC. UNAUDITED RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL MEASURES
	Three Months Ended
	June 30, 2021			March 31, 2021			June 30, 2020
GAAP gross profit	54.8	%		53.4	%		50.2	%
Stock-based compensation	0.1	%		0.1	%		0.2	%
Performance based equity	0.1	%		—	%		0.2	%
Amortization of purchased intangible assets	5.2	%		5.1	%		13.2	%
Non-GAAP gross profit	60.2	%		58.6	%		63.7	%
GAAP R&D expenses	36.2	%		30.2	%		42.9	%
Stock-based compensation	(3.5	)%		(3.4	)%		(7.7	)%
Performance based equity	(4.0	)%		(2.2	)%		(3.1	)%
Research and development funded by others	(1.9	)%		—	%		—	%
Acquisition and integration costs	—	%		—	%		—	%
Non-GAAP R&D expenses	26.8	%		24.5	%		32.0	%
GAAP SG&A expenses	17.5	%		17.4	%		42.1	%
Stock-based compensation	(3.2	)%		(2.7	)%		(10.6	)%
Performance based equity	(1.6	)%		(0.9	)%		(1.8	)%
Amortization of purchased intangible assets	(2.8	)%		(2.9	)%		(8.5	)%
Acquisition and integration costs	—	%		(0.8	)%		(3.2	)%
IP litigation costs, net	—	%		—	%		(0.1	)%
Non-GAAP SG&A expenses	9.8	%		10.2	%		18.0	%
GAAP restructuring expenses	—	%		1.0	%		0.1	%
Restructuring charges	—	%		(1.0	)%		(0.1	)%
Non-GAAP restructuring expenses	—	%		—	%		—	%
GAAP income (loss) from operations	1.1	%		4.7	%		(34.9	)%
Total non-GAAP adjustments	22.5	%		19.2	%		48.7	%
Non-GAAP income from operations	23.6	%		23.9	%		13.7	%
GAAP loss on extinguishment of debt	(2.5	)%		—	%		—	%
Loss on extinguishment of debt	2.5	%		—	%		—	%
Non-GAAP loss on extinguishment of debt	—	%		—	%		—	%
GAAP and non-GAAP interest and other income (expense), net	(2.1	)%		(2.1	)%		(3.4	)%
Non-recurring interest and other income (expense), net	0.1	%		0.1	%		—	%
Non-GAAP interest and other income (expense), net	(2.0	)%		(1.9	)%		(3.4	)%
GAAP income (loss) before income taxes	(3.5	)%		2.7	%		(38.3	)%
Total non-GAAP adjustments before income taxes	25.1	%		19.3	%		48.7	%
Non-GAAP income before income taxes	21.5	%		22.0	%		10.3	%
GAAP income tax provision (benefit)	(3.9	)%		0.9	%		(4.9	)%
Adjustment for non-cash tax benefits/expenses	5.2	%		0.5	%		5.5	%
Non-GAAP income tax provision	1.3	%		1.3	%		0.6	%
GAAP net income (loss)	0.4	%		1.8	%		(33.4	)%
Total non-GAAP adjustments before income taxes	25.1	%		19.3	%		48.7	%
Less: total tax adjustments	5.2	%		0.5	%		5.5	%
Non-GAAP net income	20.3	%		20.7	%		9.7	%

MAXLINEAR, INC. UNAUDITED RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL MEASURES
	Six Months Ended
	June 30, 2021			June 30, 2020
GAAP gross profit	54.1	%		49.9	%
Stock-based compensation	0.1	%		0.2	%
Performance based equity	0.1	%		0.1	%
Amortization of purchased intangible assets	5.2	%		13.5	%
Non-GAAP gross profit	59.4	%		63.7	%
GAAP R&D expenses	33.2	%		42.2	%
Stock-based compensation	(3.5	)%		(6.9	)%
Performance based equity	(3.1	)%		(3.0	)%
Research and development funded by others	(0.9	)%		—	%
Acquisition and integration costs	—	%		—	%
Non-GAAP R&D expenses	25.7	%		32.3	%
GAAP SG&A expenses	17.4	%		40.9	%
Stock-based compensation	(2.9	)%		(7.7	)%
Performance based equity	(1.3	)%		(1.8	)%
Amortization of purchased intangible assets	(2.9	)%		(8.9	)%
Acquisition and integration costs	(0.4	)%		(4.2	)%
IP litigation costs, net	—	%		(0.1	)%
Non-GAAP SG&A expenses	10.0	%		18.3	%
GAAP impairment losses	—	%		0.1	%
Impairment losses	—	%		(0.1	)%
Non-GAAP impairment losses	—	%		—	%
GAAP restructuring expenses	0.5	%		0.4	%
Restructuring charges	(0.5	)%		(0.4	)%
Non-GAAP restructuring expenses	—	%		—	%
GAAP income (loss) from operations	2.9	%		(33.7	)%
Total non-GAAP adjustments	20.8	%		46.9	%
Non-GAAP income from operations	23.7	%		13.2	%
GAAP loss on extinguishment of debt	(1.3	)%		—	%
Loss on extinguishment of debt	1.3	%		—	%
Non-GAAP loss on extinguishment of debt	—	%		—	%
GAAP and non-GAAP interest and other income (expense), net	(2.1	)%		(3.4	)%
Non-recurring interest and other income (expense), net	0.1	%		—	%
Non-GAAP interest and other income (expense), net	(2.0	)%		(3.4	)%
GAAP income (loss) before income taxes	(0.4	)%		(37.1	)%
Total non-GAAP adjustments	22.2	%		46.9	%
Non-GAAP income before income taxes	21.8	%		9.8	%
GAAP income tax provision (benefit)	(1.5	)%		(7.8	)%
Adjustment for non-cash tax benefits/expenses	2.8	%		8.4	%
Non-GAAP income tax provision	1.3	%		0.6	%
GAAP net income (loss)	1.1	%		(29.3	)%
Total non-GAAP adjustments before income taxes	22.2	%		46.9	%
Less: total tax adjustments	2.8	%		8.4	%
Non-GAAP net income	20.5	%		9.2	%

 

View source version on businesswire.com: https://www.businesswire.com/news/home/20210728005991/en/

MaxLinear, Inc. Investor Relations Contact:

Steven Litchfield

Tel: 949-333-0080

[email protected]

KEYWORDS: United States North America California

INDUSTRY KEYWORDS: Technology Mobile/Wireless Hardware Semiconductor

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