Market Newsdesk

October 28, 2021 4:15 pm

Mohawk Industries Reports Q3 Results

CALHOUN, Ga., Oct. 28, 2021 (GLOBE NEWSWIRE) — Mohawk Industries, Inc. (NYSE: MHK) today announced 2021 third quarter net earnings of $271 million and diluted earnings per share (EPS) of $3.93. Adjusted net earnings were $272 million, and EPS was $3.95, excluding restructuring, acquisition and other charges. Net sales for the third quarter of 2021 were $2.8 billion, up 9.4% as reported and 8.7% on a constant currency basis. For the third quarter of 2020, net sales were $2.6 billion, net profit was $205 million and diluted earnings per share was $2.87, adjusted net earnings were $233 million, and EPS was $3.26, excluding restructuring, acquisition and other charges.

For the nine months ending October 2, 2021, net earnings and EPS were $844 million and $12.11, respectively. Net earnings excluding restructuring, acquisition and other charges were $828 million and EPS was $11.89. For the 2021 nine-month period, net sales were $8.4 billion, an increase of 22.1% versus prior year as reported or approximately 18% on a constant currency and days basis. For the nine-month period ending September 26, 2020, net sales were $6.9 billion, net earnings were $267 million and EPS was $3.75; excluding restructuring, acquisition and other charges, net earnings and EPS were $379 million and $5.31, respectively.

Commenting on Mohawk Industries’ third quarter performance, Jeffrey S. Lorberbaum, Chairman and CEO, stated, “All of our businesses performed well, managing through a changing environment. In the period, Covid directly and indirectly impacted many economies, creating supply chain difficulties that disrupted production as well as leading to government lockdowns in Australia, New Zealand, and Malaysia that halted manufacturing and retail. Despite these and other headwinds, our third quarter sales trends continued in most regions, with Europe’s results reflecting normal summer seasonality. Home sales were robust across most geographies, and consumers continued remodeling investments at a strong pace. Year over year, the commercial sector showed improvement, though at a slower rate as Covid concerns delayed the timing of some projects. Our strategies to enhance organizational flexibility, reduce product and operational complexity, and align pricing with costs improved our results.

“Even with greater external constraints, we ran most of our operations at high levels, and we successfully managed many interruptions across the enterprise. Rather than improving as expected, the availability of labor, materials and transportation became more challenging, resulting in higher costs in the period. Tight chemical supplies, in particular, reduced the output of our LVT, carpet, laminate and board panels. For the near term, we do not foresee significant changes in these external pressures. Due to supply shortages, government regulations and political issues, natural gas costs in Europe are presently about four times higher than earlier in the year. This adds a temporary challenge to our European businesses as the higher costs are reflected in gas, electricity and materials.

“Most of our businesses are carrying significant order backlogs, and we plan to run our operations at high levels during the fourth period to improve our service and efficiencies. Currently, some of our fastest growing products are being limited by material and capacity constraints. We have initiated additional investments to increase our production of those and increase our sales and service. Completion of these projects is being extended due to longer lead times on building materials and equipment.

“Our results have improved significantly during 2021, and we generated over $1.9 billion of EBITDA for the trailing 12 months. Given this and our current valuation, our board increased our stock purchase program by an additional $500 million. Since the end of the second quarter, we have bought approximately $250 million of our stock at an average price of $193 per share. With our current low leverage, we have the capital to pursue additional investments and acquisitions to expand our sales and profitability.

“For the quarter, our Flooring Rest of the World Segment’s sales increased approximately 13% as reported and 11% on a constant currency basis. The segment’s operating margins were 17.4%, as a result of pricing and mix improvements offset by inflation, a return to more normal seasonality in the period and Covid restrictions. During the quarter, sales were strong across our product categories and geographies, outside those affected by government lockdowns. These Covid restrictions have now been lifted, and we are ramping up production to meet demand. Our laminate collections continued to deliver strong sales growth with consumers embracing our proprietary water-proof products for their performance and realistic visuals. We added new laminate capacity in Europe to meet demand, and we are initiating other projects to support further sales growth. As anticipated, our LVT sales were lower during the period given material shortages and lower production that reduced our output. We minimized the impact by improving our product mix and raising prices to pass through inflation. Our Russian sheet vinyl business performed well with sales growing as our distribution expanded. We have acquired a European wood veneer plant to improve supply yields and costs of our wood flooring. Sales of our European insulation panels grew as we implemented another price increase to offset rising material inflation. We have also acquired an insulation manufacturer in Ireland and have begun integrating their operations with our existing business. Our panels business grew, and margins expanded as we increased our mix and pricing. We have added a new press that will increase our capacity and add more differentiated features to our products. In the fourth quarter, we will complete the acquisition of an MDF manufacturer in France to expand our capacity in Western Europe. The company is a pioneer in bio-based resins, which will enhance our sustainability position.

“During the quarter, our Flooring North America Segment’s sales increased 6.9% as reported and on a constant basis and operating margin increased to approximately 11% from 8% as reported, primarily due to favorable price and mix and productivity improvements, partially offset by inflation. Flooring North America had strong results given the material, transportation and labor constraints impacting our sales and production during the period. We implemented additional price increases across most product categories as inflationary pressures intensified. We continue to streamline our product portfolio and reduce operational complexity benefiting our efficiencies and quality. In carpet, residential was limited by material and labor, which affected our production and costs. Commercial sales improved, though the rate of growth slowed as Covid cases increased. In both residential and commercial manufacturing, we are investing in more efficient assets to improve cost, enhance styling and reduce labor requirements. Our laminate and wood business continues to grow, though our sales were restricted by our capacities. Our new laminate line should be operational by the end of this year to expand our sales and provide more advanced features. Our new high performance UltraWood collections are increasing our mix in wood, and the productivity of our new plant is improving as volume increases. Our LVT sales increased in the period, even with material supply limiting production and shipping delays in our sourced products. We have improved our LVT mix with enhanced features and lowered our cost by streamlining our processes. We are also increasing our sheet vinyl plant’s production to satisfy expanding sales of our collections.

“For the quarter, our Global Ceramic Segment’s sales increased 9.6% as reported and 9.1% on a constant currency basis. The segment’s operating margin increased to approximately 12% from 8% as reported, primarily due to pricing and mix improvements and favorable productivity, partially offset by inflation. Our U.S. ceramic business grew during the period with the residential sector remaining strong and commercial continuing to show improvement. We are reducing our manufacturing costs by re-engineering our products, utilizing alternative materials and enhancing our logistics strategies. We are introducing higher value products with new printing technologies, textured finishes and polished surfaces to provide alternatives to premium imported tile. Our quartz countertops sales continue to grow substantially as production recovered during the period, and sales of our higher end visuals grew at a faster rate. Our Mexican and Brazilian ceramic businesses are growing, as we increase prices to offset inflation in both countries. We are refining our product offering, improving our efficiencies and increasing our output. In both countries, we are investing in new assets to expand our production and enhance our product offering. Sales in our European ceramic business remained strong as vacation schedules returned to normal. Increases in price, mix and productivity enhanced our results, though they were more than offset by rising inflation. In the period, natural gas and electricity prices in Europe rose to unprecedented levels due to anticipated shortages. Our margins will be negatively impacted until our prices align with energy costs in the future. We are upgrading production lines to further enhance our styling and improve our efficiencies. Sales and margins increased in our Russian ceramic business as enhanced mix and increased prices offset higher inflation. Lower inventories and capacity limitations impacted our sales volumes in the period, and we will continue to manage our mix until our new capacity is operational.

“Throughout 2021, Mohawk has delivered exceptional results with higher sales growth, margin expansion and robust cash generation. For the fourth quarter, we anticipate that industry seasonality will be more typical, unlike last year when demand was unusually high. In the period, we will run our operations at high levels to support our sales, improve service and increase inventories. Our sales in some categories are being limited by our manufacturing capacities, and we are increasing investments to expand the production of these growing categories. We are continuing to implement additional price increases and manage staffing, supply and transportation constraints across our businesses. We are maintaining aggressive cost management, leveraging technology and enhancing our strategies across the enterprise. In Ceramic Europe, record natural gas prices are increasing net costs by approximately $25 million in the fourth quarter, and it will take some time for the industry to adjust to higher costs. In addition, our fourth quarter calendar has 6% fewer days than the prior year. Given these factors, we anticipate our fourth quarter adjusted EPS to be $2.80 to $2.90, excluding any restructuring charges.

“Despite temporary challenges from inflation and material availability, our long-term outlook remains optimistic with new home construction and residential remodeling projected to remain robust, and the commercial sector improving as businesses invest and grow. Next year, our sales should grow with capacity expansions and innovative new product introductions. Our strategies to optimize our results continue to evolve with the economic and supply chain conditions. Our balance sheet is the strongest in our history, and it supports increased investments and strategic acquisitions to maximize our growth.”

ABOUT MOHAWK INDUSTRIES

Mohawk Industries is the leading global flooring manufacturer that creates products to enhance residential and commercial spaces around the world. Mohawk’s vertically integrated manufacturing and distribution processes provide competitive advantages in the production of carpet, rugs, ceramic tile, laminate, wood, stone and vinyl flooring. Our industry leading innovation has yielded products and technologies that differentiate our brands in the marketplace and satisfy all remodeling and new construction requirements. Our brands are among the most recognized in the industry and include American Olean, Daltile, Durkan, Eliane, Feltex, Godfrey Hirst, IVC, Karastan, Marazzi, Mohawk, Mohawk Group, Pergo, Quick-Step and Unilin. During the past decade, Mohawk has transformed its business from an American carpet manufacturer into the world’s largest flooring company with operations in Australia, Brazil, Canada, Europe, India, Malaysia, Mexico, New Zealand, Russia and the United States.

Certain of the statements in the immediately preceding paragraphs, particularly anticipating future performance, business prospects, growth and operating strategies and similar matters and those that include the words “could,” “should,” “believes,” “anticipates,” “expects,” and “estimates,” or similar expressions constitute “forward-looking statements.” For those statements, Mohawk claims the protection of the safe harbor for forward-looking statements contained in the Private Securities Litigation Reform Act of 1995. There can be no assurance that the forward-looking statements will be accurate because they are based on many assumptions, which involve risks and uncertainties. The following important factors could cause future results to differ: changes in economic or industry conditions; competition; inflation and deflation in raw material prices and other input costs; inflation and deflation in consumer markets; energy costs and supply; timing and level of capital expenditures; timing and implementation of price increases for the Company’s products; impairment charges; integration of acquisitions; international operations; introduction of new products; rationalization of operations; taxes and tax reform, product and other claims; litigation; and other risks identified in Mohawk’s SEC reports and public announcements.

Conference call October 29, 2021, at 11:00 AM Eastern Time

The telephone number is 1-800-603-9255 for U.S./Canada and 1-706-634-2294 for International/Local. Conference ID # 4259806. A replay will be available until November 29, 2021, by dialing 1-855-859-2056 for U.S./local calls and 1-404-537-3406 for International/Local calls and entering Conference ID # 4259806.

MOHAWK INDUSTRIES, INC. AND SUBSIDIARIES
(Unaudited)
Condensed Consolidated Statement of Operations Data	Three Months Ended					Nine Months Ended
(Amounts in thousands, except per share data)	October 2,2021			September 26, 2020		October 2,2021			September 26, 2020

Net sales	$	2,817,017		2,574,870			8,439,876		6,910,433
Cost of sales		1,979,702		1,868,671			5,908,585		5,217,827
Gross profit		837,315		706,199			2,531,291		1,692,606
Selling, general and administrative expenses		477,341		443,455			1,449,378		1,339,338
Operating income		359,974		262,744			1,081,913		353,268
Interest expense		14,948		14,854			45,083		36,481
Other (income) expense, net		21		(726	)		(13,374	)	5,990
Earnings before income taxes		345,005		248,616			1,050,204		310,797
Income tax expense		73,821		43,163			205,756		43,467
Net earnings including noncontrolling interests		271,184		205,453			844,448		267,330
Net earnings (loss) attributable to noncontrolling interests		206		336			378		(44	)
Net earnings attributable to Mohawk Industries, Inc.	$	270,978		205,117			844,070		267,374

Basic earnings per share attributable to Mohawk Industries, Inc.
Basic earnings per share attributable to Mohawk Industries, Inc.	$	3.95		2.88			12.16		3.76
Weighted-average common shares outstanding – basic		68,541		71,197			69,389		71,190

Diluted earnings per share attributable to Mohawk Industries, Inc.
Diluted earnings per share attributable to Mohawk Industries, Inc.	$	3.93		2.87			12.11		3.75
Weighted-average common shares outstanding – diluted		68,864		71,378			69,683		71,362



Other Financial Information
(Amounts in thousands)
Net cash provided by operating activities	$	498,739		598,499			1,096,735		1,361,994
Less: Capital expenditures		147,740		69,143			375,179		265,414
Free cash flow	$	350,999		529,356			721,556		1,096,580

Depreciation and amortization	$	148,618		151,342			448,299		450,952


Condensed Consolidated Balance Sheet Data
(Amounts in thousands)
						October 2,2021			September 26, 2020
ASSETS
Current assets:
Cash and cash equivalents						$	1,128,027		781,238
Short-term investments							–		407,784
Receivables, net							1,880,476		1,710,961
Inventories							2,215,630		1,841,973
Prepaid expenses and other current assets							421,944		410,031
Total current assets							5,646,077		5,151,987
Property, plant and equipment, net							4,442,339		4,405,243
Right of use operating lease assets							385,606		303,050
Goodwill							2,612,201		2,574,641
Intangible assets, net							911,271		918,778
Deferred income taxes and other non-current assets							452,806		430,515
Total assets						$	14,450,300		13,784,214
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Short-term debt and current portion of long-term debt						$	588,669		356,130
Accounts payable and accrued expenses							2,209,942		1,933,206
Current operating lease liabilities							103,132		97,778
Total current liabilities							2,901,743		2,387,114
Long-term debt, less current portion							1,710,207		2,282,781
Non-current operating lease liabilities							292,806		214,654
Deferred income taxes and other long-term liabilities							793,095		732,596
Total liabilities							5,697,851		5,617,145
Total stockholders’ equity							8,752,449		8,167,069
Total liabilities and stockholders’ equity						$	14,450,300		13,784,214

Segment Information	Three Months Ended					As of or for the Nine Months Ended
(Amounts in thousands)	October 2,2021			September 26, 2020		October 2,2021			September 26, 2020

Net sales:
Global Ceramic	$	998,444		911,303			2,967,818		2,513,088
Flooring NA		1,050,453		982,292			3,100,892		2,630,710
Flooring ROW		768,120		681,275			2,371,166		1,766,635
Consolidated net sales	$	2,817,017		2,574,870			8,439,876		6,910,433

Operating income (loss):
Global Ceramic	$	118,896		73,998			343,135		88,166
Flooring NA		118,625		74,313			315,866		65,035
Flooring ROW		133,595		129,135			456,787		234,429
Corporate and intersegment eliminations		(11,142	)	(14,702	)		(33,875	)	(34,362	)
Consolidated operating income	$	359,974		262,744			1,081,913		353,268

Assets:
Global Ceramic						$	5,174,981		5,111,492
Flooring NA							3,960,037		3,626,339
Flooring ROW							4,276,310		3,928,243
Corporate and intersegment eliminations							1,038,972		1,118,140
Consolidated assets						$	14,450,300		13,784,214

Reconciliation of Net Earnings Attributable to Mohawk Industries, Inc. to Adjusted Net Earnings Attributable to Mohawk Industries, Inc. and Adjusted Diluted Earnings Per Share Attributable to Mohawk Industries, Inc.
(Amounts in thousands, except per share data)
	Three Months Ended					Nine Months Ended
	October 2,2021			September 26, 2020		October 2,2021		September 26, 2020
Net earnings attributable to Mohawk Industries, Inc.	$	270,978		205,117		844,070		267,374
Adjusting items:
Restructuring, acquisition and integration-related and other costs		1,270		32,168		19,242		144,434
Resolution of foreign non-income tax contingencies		–		–		(6,211	)	–
One-time tax planning election		–		–		(26,731	)	–
Income taxes		(203	)	(4,342	)	(2,015	)	(33,144	)
Adjusted net earnings attributable to Mohawk Industries, Inc.	$	272,045		232,943		828,355		378,664

Adjusted diluted earnings per share attributable to Mohawk Industries, Inc.	$	3.95		3.26		11.89		5.31
Weighted-average common shares outstanding – diluted		68,864		71,378		69,683		71,362




Reconciliation of Total Debt to Net Debt
(Amounts in thousands)
	October 2,2021
Short-term debt and current portion of long-term debt	$	588,669
Long-term debt, less current portion		1,710,207
Total debt		2,298,876
Less: Cash and cash equivalents		1,128,027
Net Debt	$	1,170,849





Reconciliation of Operating Income to Adjusted EBITDA
(Amounts in thousands)										Trailing Twelve
	Three Months Ended									Months Ended
	December 31, 2020			April 3, 2021		July 3,2021		October 2,2021		October 2,2021
Operating income	$	282,733		317,515		404,424		359,974		1,364,646
Other income		6,742		2,227		11,168		(21	)	20,116
Net income attributable to noncontrolling interests		(176	)	(4	)	(168	)	(206	)	(554	)
Depreciation and amortization (1)		156,555		151,216		148,466		148,618		604,855
EBITDA		445,854		470,954		563,890		508,365		1,989,063
Restructuring, acquisition and integration-related and other costs		15,947		6,059		(2,737	)	1,208		20,477
Adjusted EBITDA	$	461,801		477,013		561,153		509,573		2,009,540

Net Debt to Adjusted EBITDA										0.6
(1) Includes $62 of accelerated depreciation in Q3 2021 with $6,435 in Q4 2020 and $5,818 in Q1 2021 and $2,620 in Q2 2021.

Reconciliation of Net Sales to Net Sales on a Constant Exchange Rate and on Constant Shipping Days
(Amounts in thousands)
	Three Months Ended					Nine Months Ended
	October 2,2021			September 26, 2020		October 2,2021		September 26, 2020
Net sales	$	2,817,017		2,574,870		8,439,876		6,910,433
Adjustment to net sales on constant shipping days		–		–		(131,365	)	–
Adjustment to net sales on a constant exchange rate		(19,035	)	–		(180,752	)	–
Net sales on a constant exchange rate and constant shipping days	$	2,797,982		2,574,870		8,127,759		6,910,433



Reconciliation of Segment Net Sales to Segment Net Sales on a Constant Exchange Rate
(Amounts in thousands)
	Three Months Ended
Global Ceramic	October 2,2021			September 26, 2020
Net sales	$	998,444		911,303
Adjustment to segment net sales on a constant exchange rate		(3,967	)	–
Segment net sales on a constant exchange rate	$	994,477		911,303


Reconciliation of Segment Net Sales to Segment Net Sales on a Constant Exchange Rate
(Amounts in thousands)
	Three Months Ended
Flooring ROW	October 2,2021			September 26, 2020
Net sales	$	768,120		681,275
Adjustment to segment net sales on a constant exchange rate		(15,069	)	–
Segment net sales on a constant exchange rate	$	753,051		681,275


Reconciliation of Gross Profit to Adjusted Gross Profit
(Amounts in thousands)
	Three Months Ended
	October 2,2021			September 26, 2020
Gross Profit	$	837,315		706,199
Adjustments to gross profit:
Restructuring, acquisition and integration-related and other costs		778		23,585
Adjusted gross profit	$	838,093		729,784



Reconciliation of Selling, General and Administrative Expenses to Adjusted Selling, General and Administrative Expenses
(Amounts in thousands)
	Three Months Ended
	October 2,2021			September 26, 2020
Selling, general and administrative expenses	$	477,341		443,455
Adjustments to selling, general and administrative expenses:
Restructuring, acquisition and integration-related and other costs		(521	)	(8,764	)
Adjusted selling, general and administrative expenses	$	476,820		434,691




Reconciliation of Operating Income to Adjusted Operating Income
(Amounts in thousands)
	Three Months Ended
	October 2,2021			September 26, 2020
Operating income	$	359,974		262,744
Adjustments to operating income:
Restructuring, acquisition and integration-related and other costs		1,299		32,349
Adjusted operating income	$	361,273		295,093


Reconciliation of Segment Operating Income to Adjusted Segment Operating Income
(Amounts in thousands)
	Three Months Ended
Global Ceramic	October 2,2021			September 26, 2020
Operating income	$	118,896		73,998
Adjustments to segment operating income:
Restructuring, acquisition and integration-related and other costs		212		20,129
Adjusted segment operating income	$	119,108		94,127



Reconciliation of Segment Operating Income to Adjusted Segment Operating Income
(Amounts in thousands)
	Three Months Ended
Flooring NA	October 2,2021			September 26, 2020
Operating income	$	118,625		74,313
Adjustments to segment operating income:
Restructuring, acquisition and integration-related and other costs		1,396		5,953
Adjusted segment operating income	$	120,021		80,266



Reconciliation of Segment Operating Income to Adjusted Segment Operating Income
(Amounts in thousands)
	Three Months Ended
Flooring ROW	October 2,2021			September 26, 2020
Operating income	$	133,595		129,135
Adjustments to segment operating income:
Restructuring, acquisition and integration-related and other costs		(228	)	2,019
Adjusted segment operating income	$	133,367		131,154



Reconciliation of Earnings Including Noncontrolling Interests Before Income Taxes to Adjusted Earnings Including Noncontrolling Interests Before Income Taxes
(Amounts in thousands)
	Three Months Ended
	October 2,2021			September 26, 2020
Earnings before income taxes	$	345,005		248,616
Net earnings attributable to noncontrolling interests		(206	)	(336	)
Adjustments to earnings including noncontrolling interests before income taxes:
Restructuring, acquisition and integration-related and other costs		1,270		32,168
Adjusted earnings including noncontrolling interests before income taxes	$	346,069		280,448




Reconciliation of Income Tax Expense to Adjusted Income Tax Expense
(Amounts in thousands)
	Three Months Ended
	October 2,2021			September 26, 2020
Income tax expense	$	73,821		43,163
Income tax effect of adjusting items		203		4,342
Adjusted income tax expense	$	74,024		47,505

Adjusted income tax rate		21.4	%	16.9	%

The Company supplements its condensed consolidated financial statements, which are prepared and presented in accordance with US GAAP, with certain non-GAAP financial measures. As required by the Securities and Exchange Commission rules, the tables above present a reconciliation of the Company’s non-GAAP financial measures to the most directly comparable US GAAP measure. Each of the non-GAAP measures set forth above should be considered in addition to the comparable US GAAP measure, and may not be comparable to similarly titled measures reported by other companies. The Company believes these non-GAAP measures, when reconciled to the corresponding US GAAP measure, help its investors as follows: Non-GAAP revenue measures that assist in identifying growth trends and in comparisons of revenue with prior and future periods and non-GAAP profitability measures that assist in understanding the long-term profitability trends of the Company’s business and in comparisons of its profits with prior and future periods.

The Company excludes certain items from its non-GAAP revenue measures because these items can vary dramatically between periods and can obscure underlying business trends. Items excluded from the Company’s non-GAAP revenue measures include: foreign currency transactions and translation and the impact of acquisitions.

The Company excludes certain items from its non-GAAP profitability measures because these items may not be indicative of, or are unrelated to, the Company’s core operating performance. Items excluded from the Company’s non-GAAP profitability measures include: restructuring, acquisition and integration-related and other costs, acquisition purchase accounting, including inventory step-up, release of indemnification assets and the reversal of uncertain tax positions.

Contact:

James Brunk, Chief Financial Officer (706) 624-2239

October 28, 2021 4:15 pm

SomaLogic to Announce Third Quarter 2021 Financial Results

BOULDER, Colo., Oct. 28, 2021 (GLOBE NEWSWIRE) — SomaLogic, Inc., a leader in AI-data driven proteomics technology, today announced that it will report financial results for the third quarter 2021 before the market opens on Monday, November 15, 2021. Company management will host a corresponding conference call beginning at 8:00 a.m. Eastern Time.

Investors interested in listening to the conference call may do so by dialing (844) 535-4027 for domestic callers or (270) 215-9487 for international callers, using conference ID: 8689426. A live audio webcast and an archive of the presentation will be available through the Investors page of SomaLogic’s corporate website at https://investors.somalogic.com/.

About SomaLogic

SomaLogic seeks to deliver precise, meaningful, and actionable health-management information that empowers individuals worldwide to continuously optimize their personal health and wellness throughout their lives. This essential information, to be provided through a global network of partners and users, is derived from SomaLogic’s personalized measurement of important changes in an individual’s proteins over time. For more information, visit www.somalogic.com and follow @somalogic on Twitter.

SomaSignal™ tests are developed and their performance characteristics determined by SomaLogic, Inc. SomaLogic is a Clinical Laboratory Improvement Amendments (CLIA) certified, and College of American Pathologists (CAP) accredited laboratory.

The SomaScan Platform is for Research Use Only (RUO) and has not been cleared or approved by the US Food and Drug Administration for diagnostic or patient management purposes. SomaLogic’s proprietary SomaScan Platform was designed to be a universal platform that can be applied across research and discovery, translational research and biopharmaceutical development, and clinical applications. SomaLogic can run approximately 7,000 protein measurements on a single 55 microliter plasma or serum sample. The Company has run more than 450,000 samples to date.

SomaLogic Contact
Emilia Costales
720-798-5054
[email protected]

Investor Contact

Marissa Bych or Lynn Lewis
Gilmartin Group LLC
[email protected]

October 28, 2021 4:15 pm

CTO Realty Growth Reports Third Quarter 2021 Operating Results

DAYTONA BEACH, Fla., Oct. 28, 2021 (GLOBE NEWSWIRE) — CTO Realty Growth, Inc. (NYSE: CTO) (the “Company” or “CTO”) today announced its operating results and earnings for the quarter ended September 30, 2021.

Select Quarterly Highlights

Reported Net Income per diluted share attributable to common stockholders of $3.87 for the quarter ended September 30, 2021.
Reported FFO and AFFO per diluted share attributable to common stockholders of $1.03 and $1.09, respectively, for the quarter ended September 30, 2021.
Sold four single tenant income properties for a total disposition volume of $75.3 million at a weighted average exit cap rate of 5.0%. The sale of the properties generated combined gains of $22.7 million.
Purchased the remaining 70% interest in the entity that holds approximately 2,500 acres of land in Daytona Beach, Florida, which is engaged in the operation of a mitigation bank (the “Mitigation Bank”) from the joint venture partner for a net cash payment of $16.1 million.
Sold approximately 4,700 acres of subsurface oil, gas and mineral rights for $0.9 million.
Issued 3,000,000 shares of 6.375% Series A Cumulative Redeemable Preferred Stock (the “Series A Preferred”) stock for $25.00 per share, generating net proceeds of $72.4 million.
Paid cash dividends on the Company’s Series A Preferred stock and common stock for the third quarter of 2021 of $0.3763 per share and $1.00 per share, respectively, on September 30, 2021 to stockholders of record as of September 9, 2021.
Recognized a non-cash, unrealized loss of $1.3 million on the mark-to-market of the Company’s investment in Alpine Income Property Trust, Inc. (NYSE: PINE).
Book value per common share outstanding as of September 30, 2021 increased to $60.42.

CEO Comments

“We had a very active third quarter, signing new leases on more than 10% of our existing vacancies and selling more than $75 million of single tenant properties for a 5.0% weighted average exit cap rate, including our largest single tenant office property,” commented John P. Albright, President and Chief Executive Officer of CTO Realty Growth. “The net investment spreads we have been able to generate to-date on the strategic sale of non-core assets and the redeployment of those proceeds, combined with anticipated strong growth in 2022 same-store net operating income and the ample liquidity on our balance sheet for investment into our pipeline of high-quality, multi-tenanted retail and mixed-use properties, is positioning us for very attractive FFO and AFFO growth in 2022.”

Quarterly Financial Results Highlights

The tables below provide a summary of the Company’s operating results for the three months ended September 30, 2021:

(in thousands)	For the Three Months Ended September 30, 2021		For the Three Months Ended September 30, 2020		*Variance to Comparable Period in the Prior Year*
Income Properties	$	13,734	$	12,933	$	801		6.2	%
Management Fee Income	$	940	$	683	$	257		37.6	%
Commercial Loan and Master Lease Investments	$	726	$	413	$	313		75.8	%
Real Estate Operations	$	1,177	$	543	$	634	116.8			%
Total Revenues	$	16,577	$	14,572	$	2,005	13.8			%

The increase in total revenue during the three months ended September 30, 2021 was primarily attributable to income produced by the Company’s recent income property acquisitions as compared to the income from properties sold by the Company during the comparative period. Revenues also increased from the sale of subsurface interests and mitigation credits, which are reflected in real estate operations, as well as from increased income from the Company’s portfolio of commercial loan and master lease investments and increased management fee income from PINE.

(in thousands, except per share data)	For the Three Months Ended September 30, 2021		For the Three Months Ended September 30, 2020			*Variance to Comparable Period in the Prior Year*
Net Income (Loss) Attributable to the Company	$	23,947	$	(1,522	)	$	25,469		1,673.4	%
Net Income (Loss) Attributable to Common Stockholders	$	22,818	$	(1,522	)	$	24,340		1,599.2	%
Net Income (Loss) per Diluted Share Attributable to Common Stockholders	$	3.87	$	(0.33	)	$	4.20		1,272.7	%
FFO Attributable to Common Stockholders ⁽¹⁾	$	6,071	$	5,517		$	554		10.0	%
FFO per Common Share – Diluted ⁽¹⁾	$	1.03	$	1.19		$	(0.16	)	(13.4	%)
AFFO Attributable to Common Stockholders ⁽¹⁾	$	6,422	$	6,033		$	389		6.4	%
AFFO per Common Share – Diluted ⁽¹⁾	$	1.09	$	1.30		$	(0.21	)	(16.2	%)
Dividends Declared and Paid, per Preferred Share	$	0.3763	$	—		$	0.3763		100.0	%
Dividends Declared and Paid, per Common Share	$	1.00	$	0.40		$	0.60		150.0	%

⁽¹⁾	See the “Non-GAAP Financial Measures” section and tables at the end of this press release for a discussion and reconciliation of Net Income (Loss) Attributable to the Company to non-GAAP financial measures, including FFO Attributable to Common Stockholders, FFO per Common Share – Diluted, AFFO Attributable to Common Stockholders and AFFO per Common Share – Diluted.

The increase in net income attributable to the Company for the three months ended September 30, 2021 was primarily attributable to gains on dispositions of income properties totaling $22.7 million, or $3.84 per diluted share, most notably from the disposition of the Company’s office property in Raleigh, North Carolina leased to Wells Fargo, which resulted in a gain on disposition of $17.5 million.

Reported per diluted share amounts attributable to common stockholders for the three months ended September 30, 2021 include the dilutive effects of the Company’s previously announced special distribution, which was paid in connection with the Company’s election to be taxable as a REIT commencing with its taxable year ended December 31, 2020. The Special Distribution was paid in the fourth quarter of 2020 through an aggregate of $5.6 million in cash and the issuance of 1,198,963 shares of the Company’s common stock; therefore, there was no dilutive impact for the three months ended September 30, 2020.

Year-to-Date Financial Results Highlights

The tables below provide a summary of the Company’s operating results for the nine months ended September 30, 2021:

(in thousands)	For the Nine Months Ended September 30, 2021		For the Nine Months Ended September 30, 2020		*Variance to Comparable Period in the Prior Year*
Income Properties	$	36,757	$	35,409	$	1,348			3.8	%
Management Fee Income	$	2,361	$	2,080	$	281			13.5	%
Commercial Loan and Master Lease Investments	$	2,136	$	2,300	$	(164	)		(7.1	%)
Real Estate Operations	$	4,318	$	631	$	3,687		584.3			%
Total Revenues	$	45,572	$	40,420	$	5,152		12.7			%

The increase in total revenue during the nine months ended September 30, 2021 was primarily attributable to increased revenue from real estate operations related to the sale of subsurface interests and mitigation credits, as well as increased income produced by the Company’s recent income property acquisitions as compared to the properties sold by the Company during the comparative period and increased management fee income from PINE. Increased revenues were partially offset by decreased revenues from the Company’s portfolio of commercial loan and master lease investments.

(in thousands, except per share data)	For the Nine Months Ended September 30, 2021		For the Nine Months Ended September 30, 2020			*Variance to Comparable Period in the Prior Year*
Net Income (Loss) Attributable to the Company	$	28,008	$	(1,173	)	$	29,181		(2,487.7	%)
Net Income (Loss) Attributable to Common Stockholders	$	26,879	$	(1,173	)	$	28,052		(2,391.5	%)
Net Income (Loss) per Diluted Share Attributable to Common Stockholders	$	4.56	$	(0.25	)	$	4.81		1,924.0	%
FFO Attributable to Common Stockholders ⁽¹⁾	$	16,232	$	17,339		$	(1,107	)	(6.4	%)
FFO per Common Share – Diluted ⁽¹⁾	$	2.75	$	3.71		$	(0.96	)	(25.9	%)
AFFO Attributable to Common Stockholders ⁽¹⁾	$	18,403	$	15,658		$	2,745		17.5	%
AFFO per Common Share – Diluted ⁽¹⁾	$	3.12	$	3.35		$	(0.23	)	(6.9	%)
Dividends Declared and Paid, per Preferred Share	$	0.3763	$	—		$	0.3763		100.0	%
Dividends Declared and Paid, per Common Share	$	3.00	$	0.90		$	2.10		233.3	%

⁽¹⁾	See the “Non-GAAP Financial Measures” section and tables at the end of this press release for a discussion and reconciliation of Net Income (Loss) Attributable to the Company to non-GAAP financial measures, including FFO Attributable to Common Stockholders, FFO per Common Share – Diluted, AFFO Attributable to Common Stockholders and AFFO per Common Share – Diluted.

Net income attributable to the Company for the nine months ended September 30, 2021 was primarily attributable to gains on dispositions of income properties totaling $28.1 million, or $4.77 per diluted share, most notably from the disposition of the Company’s office property in Raleigh, North Carolina leased to Wells Fargo, which resulted in a gain on disposition of $17.5 million. In addition, the non-cash, unrealized gain on the mark-to-market of the Company’s investment in PINE, as compared to an unrealized loss in the comparable prior year period, totaled $6.9 million, or $1.17 per diluted share. The operating results for the nine months ended September 30, 2021 also include a non-cash impairment charge on the Company’s retained interest in the joint venture that currently holds approximately 1,600 acres of undeveloped land in Daytona Beach, Florida (the “Land JV”) of $16.5 million, or $2.11 per diluted share, net of the related income tax benefit. The non-cash impairment charge is a result of the executed agreement to sell the Land JV’s remaining holdings.

Reported per diluted share amounts attributable to common stockholders for the nine months ended September 30, 2021 include the dilutive effects of the Company’s previously announced special distribution, which was paid in connection with the Company’s election to be taxable as a REIT commencing with its taxable year ended December 31, 2020. The Special Distribution was paid in the fourth quarter of 2020 through an aggregate of $5.6 million in cash and the issuance of 1,198,963 shares of the Company’s common stock; therefore, there was no dilutive impact for the nine months ended September 30, 2020.

Acquisitions

During the nine months ended September 30, 2021, the Company acquired three multi-tenant retail-based properties for $111.0 million. These acquisitions represent a weighted average going-in cash cap rate of 8.5%.

On October 18, 2021, the Company entered into a purchase and sale agreement with a partnership for the acquisition of a retail center in the Raleigh, North Carolina metropolitan area for $70.5 million (the “Property”). Certain customary closing conditions must be met before or at the closing and are not currently satisfied. Accordingly, until the closing of the purchase of the Property, there can be no assurance that the Company will acquire the Property.

Dispositions

During the three months ended September 30, 2021, the Company sold four single tenant income properties for a total disposition volume of $75.3 million, at a weighted average exit cap rate of 5.0%. The sale of the properties generated aggregate gains of $22.7 million. The proceeds from each of the third quarter 2021 sales are expected to be part of section 1031 like-kind exchanges.

During the nine months ended September 30, 2021, the Company sold fourteen income properties for a total disposition volume of $140.8 million, at a weighted average exit cap rate of 6.0%. The sale of the properties generated aggregate gains of $28.0 million.

Income Property Portfolio

As of September 30, 2021, the Company’s portfolio had economic occupancy of 90.4% and physical occupancy of 89.6%.

The Company’s income property portfolio consisted of the following as of September 30, 2021:

Property Type	# of Properties	Square Feet	Weighted Average Remaining Lease Term
Single-Tenant ⁽¹⁾	11	665	24.1 years
Multi-Tenant	8	1,533	6.4 years
Total / Weighted Average Lease Term	19	2,198	12.6 years

% of Cash Rent attributable to Retail Tenants		63%
% of Cash Rent attributable to Office Tenants		35%
% of Cash Rent attributable to Hotel Ground Lease		2%

Square feet in thousands.

	⁽¹⁾	The 11 single-tenant properties include (i) a property leased to The Carpenter Hotel which is under a long-term ground lease and includes two tenant repurchase options and (ii) a property in Hialeah leased to a master tenant which includes three tenant repurchase options. Pursuant to FASB ASC Topic 842, Leases, the $16.3 and $21.0 million investments, respectively, have been recorded in the Company’s consolidated balance sheets as Commercial Loan and Master Lease Investments.

Operational Highlights

During the third quarter of 2021, the Company signed leases totaling 50,525 square feet. A summary of the Company’s leasing activity is as follows:

Retail	Square Feet	Weighted Average Lease Term	Cash Rent Per Square Foot		Tenant Improvements		Leasing Commissions
New Leases	23.4	5.0 years	$	30.20	$	740	$	233
Renewals & Extensions	27.1	5.5 years	$	21.28		319		168
Total / Weighted Average	50.5	5.2 years	$	25.41	$	1,059	$	401

In thousands except for per square foot and lease term data.

Land Joint Venture

During the three months ended June 30, 2021, the Land JV entered into an agreement to sell its remaining land holdings, including any land previously under contract, for $67.0 million. During the three months ended September 30, 2021, the Land JV completed the sale of approximately 8 acres for $0.8 million and as a result, the sales price for the remaining land was reduced to $66.2 million. The sale is anticipated to occur prior to the end of 2021.

Mitigation Bank Joint Venture

On September 30, 2021, the Company purchased the remaining 70% interest in the Mitigation Bank from certain funds and accounts managed by an investment advisor subsidiary of BlackRock, Inc. (“BlackRock”) for a net cash payment by the Company of $16.1 million (the “Interest Purchase”). The Company intends to sell the mitigation credits produced by the Mitigation Bank or may sell the Mitigation Bank in its entirety. During the nine months ended September 30, 2021, the Company sold mitigation credits for total proceeds of $0.2 million. No assurance can be given that the Company will be able to consummate any future sales or regarding the likelihood, timing, or final terms of any such potential sales.

“We purchased our joint venture partner’s interest in the mitigation bank partnership as a way to reduce interim carrying costs on the mitigation credits as we look to find less expensive long-term partnership capital, monetize the mitigation credits as they are released, or sell the mitigation bank in its entirety, as we believe the mitigation bank will have a market-based mitigation credit value of approximately $30 million over the 10-year credit release period,” noted John P. Albright, President and Chief Executive Officer of CTO Realty Growth.

Subsurface Interests

During the three months ended September 30, 2021, the Company sold approximately 4,700 acres of subsurface oil, gas and mineral rights for $0.9 million, resulting in a gain on sale of $0.8 million.

During the nine months ended September 30, 2021, the Company sold approximately 39,000 acres of subsurface oil, gas and mineral rights for $3.5 million, resulting in a gain on sale of $3.3 million. As of September 30, 2021, the Company owns full or fractional subsurface oil, gas, and mineral interests underlying approximately 415,000 “surface” acres of land owned by others in 20 counties in Florida.

Capital Markets and Balance Sheet

On June 28, 2021, the Company priced a public offering of 3,000,000 shares of its Series A Preferred stock at a public offering price of $25.00 per share. The offering closed on July 6, 2021 and generated total net proceeds to the Company of $72.4 million, which were utilized to pay down the Company’s revolving credit facility.

The following table provides a summary of the Company’s long-term debt, at face value, as of September 30, 2021:

Component of Long-Term Debt	Principal	Interest Rate	Maturity Date
Revolving Credit Facility ⁽¹⁾	$100.0 million	30-day LIBOR + [1.35% – 1.95%]	May 2023
Revolving Credit Facility	$9.0 million	30-day LIBOR + [1.35% – 1.95%]	May 2023
2025 Convertible Senior Notes	$61.7 million	3.88%	April 2025
2026 Term Loan ⁽²⁾	$65.0 million	30-day LIBOR + [1.35% – 1.95%]	March 2026
Total Debt / Weighted Average Interest Rate	$235.7 million	2.53%

⁽¹⁾	Effective March 31, 2020, the Company utilized an interest rate swap to fix LIBOR and achieve an interest rate of 0.73% plus the applicable spread on $100.0 million of the outstanding balance on the revolving credit facility.

⁽²⁾	The Company utilized interest rate swaps on the $65.0 million 2026 Term Loan balance, including (i) its redesignation of the existing $50.0 million interest rate swap, entered into as of August 31, 2020, and (ii) a $15.0 million interest rate swap effective August 31, 2021, to fix LIBOR and achieve a weighted average fixed interest rate of 0.35% plus the applicable spread.

Dividends

The Company paid a cash dividend for the third quarter of 2021 of $1.00 per share, on September 30, 2021 to stockholders of record as of the close of business on September 9, 2021.

The Company paid a pro rata cash dividend for the third quarter of 2021 on its Series A Preferred stock of $0.3763 per share, on September 30, 2021 to preferred stockholders of record as of the close of business on September 9, 2021.

2021 Outlook

For the second consecutive quarter, the Company is increasing its outlook and guidance for 2021, which considers the Company’s various investment activities and capital markets transactions, including the recent Series A preferred equity issuance, excludes any potential tax expense or tax benefit related to the Company’s retained ownership in the Land JV, and assumes continued improvement in economic activity and stable or positive business trends related to each of our tenants.

	2021 Outlook
	Low	High
Acquisition of Income Producing Assets	$225.0 million	$250.0 million
Target Investment Initial Cash Yield	7.00%	7.25%
Disposition of Assets	$150.0 million	$175.0 million
Target Disposition Cash Yield	6.00%	6.25%

FFO per Diluted Share	$3.75	$3.85
AFFO per Diluted Share	$4.10	$4.20

Weighted Average Diluted Shares Outstanding	6.0 million	6.0 million

COVID-19 Pandemic

In March 2020, the World Health Organization declared the outbreak of the novel coronavirus as a pandemic (the “COVID-19 Pandemic”), which has spread throughout the United States. The impact of the COVID-19 Pandemic and its variants have evolved rapidly, with many jurisdictions taking drastic measures to limit the spread of the virus by instituting quarantines or lockdowns and imposing travel restrictions. Such actions have created significant disruptions to global supply chains, and adversely impacted several industries, including airlines, hospitality, retail and the broader real estate industry.

As a result of the approval of multiple COVID-19 vaccines for use and the distribution of such vaccines among the general population, a number of jurisdictions have reopened and loosened restrictions. However, wide disparities in vaccination rates and continued vaccine hesitancy, combined with the emergence of COVID-19 variants and surges in COVID-19 cases, could trigger the reinstatement of further restrictions. Such restrictions could include mandatory business shut-downs, travel restrictions, reduced business operations and social distancing requirements.

The future impact of the COVID-19 Pandemic on the real estate industry and the Company’s financial condition and results of operations is uncertain and cannot be predicted currently since it depends on several factors beyond the control of the Company, including, but not limited to: (i) the uncertainty surrounding the severity and duration of the COVID-19 Pandemic, including possible recurrences and differing economic and social impacts of the COVID-19 Pandemic in various regions of the United States; (ii) the effectiveness of the United States public health response; (iii) the COVID-19 Pandemic’s impact on the United States and global economies; (iv) the timing, scope and effectiveness of additional governmental responses to the COVID-19 Pandemic; (v) the availability of a treatment and effectiveness of vaccines approved for COVID-19 and the willingness of individuals to get vaccinated; (vi) changes in how certain types of commercial property are used while maintaining social distancing and other techniques intended to control the impact of COVID-19; (vii) the impact of phase out of economic stimulus measures, the inflationary pressure of economic stimulus, and the eventual halt and reversal by the U.S. Treasury of asset purchases; and (viii) the uneven impact on the Company’s tenants, real estate values and cost of capital.

3rd Quarter Earnings Conference Call & Webcast

The Company will host a conference call to present its operating results for the quarter ended September 30, 2021, on Friday, October 29, 2021, at 9:00 AM ET. Stockholders and interested parties may access the earnings call via teleconference or webcast:

United States:	1-844-200-6205
All Other Locations:	1-929-526-1599

Please dial in at least fifteen minutes prior to the scheduled start time and use the code 094458 when prompted.

A webcast of the call can be accessed at: https://www.incommglobalevents.com/registration/q4inc/8800/cto-q3-2021-earnings-call/.

To access the webcast, log on to the web address noted above or go to www.ctoreit.com and log in at the investor relations section. Please log in to the webcast at least ten minutes prior to the scheduled time of the Earnings Call.

About CTO Realty Growth, Inc.

CTO Realty Growth, Inc. is a publicly traded real estate investment trust that owns and operates a portfolio of high-quality, retail-based properties located primarily in higher growth markets in the United States. CTO also owns an approximate 16% interest in Alpine Income Property Trust, Inc. (NYSE: PINE), a publicly traded net lease REIT.

We encourage you to review our most recent investor presentation, which is available on our website at www.ctoreit.com.

Safe Harbor

Certain statements contained in this press release (other than statements of historical fact) are 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 can typically be identified by words such as “believe,” “estimate,” “expect,” “intend,” “anticipate,” “will,” “could,” “may,” “should,” “plan,” “potential,” “predict,” “forecast,” “project,” and similar expressions, as well as variations or negatives of these words.

Although forward-looking statements are made based upon management’s present expectations and reasonable beliefs concerning future developments and their potential effect upon the Company, a number of factors could cause the Company’s actual results to differ materially from those set forth in the forward-looking statements. Such factors may include, but are not limited to: the Company’s ability to remain qualified as a REIT; the Company’s exposure to U.S. federal and state income tax law changes, including changes to the REIT requirements; general adverse economic and real estate conditions; the ultimate geographic spread, severity and duration of pandemics such as the recent outbreak of the novel coronavirus, actions that may be taken by governmental authorities to contain or address the impact of such pandemics, and the potential negative impacts of such pandemics on the global economy and the Company’s financial condition and results of operations; the inability of major tenants to continue paying their rent or obligations due to bankruptcy, insolvency or a general downturn in their business; the loss or failure, or decline in the business or assets of PINE or the venture formed when the Company sold its controlling interest in the entity that owned the Company’s remaining land portfolio, of which the Company has a retained interest; the completion of 1031 exchange transactions; the availability of investment properties that meet the Company’s investment goals and criteria; the uncertainties associated with obtaining required governmental permits and satisfying other closing conditions for planned acquisitions and sales; and the uncertainties and risk factors discussed in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2020 and other risks and uncertainties discussed from time to time in the Company’s filings with the U.S. Securities and Exchange Commission.

There can be no assurance that future developments will be in accordance with management’s expectations or that the effect of future developments on the Company will be those anticipated by management. Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date of this press release. The Company undertakes no obligation to update the information contained in this press release to reflect subsequently occurring events or circumstances.

Non-GAAP Financial Measures

Our reported results are presented in accordance with accounting principles generally accepted in the United States of America (“GAAP”). We also disclose Funds From Operations (“FFO”) and Adjusted Funds From Operations (“AFFO”), both of which are non-GAAP financial measures. We believe these two non-GAAP financial measures are useful to investors because they are widely accepted industry measures used by analysts and investors to compare the operating performance of REITs.

FFO and AFFO do not represent cash generated from operating activities and are not necessarily indicative of cash available to fund cash requirements; accordingly, they should not be considered alternatives to net income as a performance measure or cash flows from operating activities as reported on our statement of cash flows as a liquidity measure and should be considered in addition to, and not in lieu of, GAAP financial measures.

We compute FFO in accordance with the definition adopted by the Board of Governors of the National Association of Real Estate Investment Trusts, or NAREIT. NAREIT defines FFO as GAAP net income or loss adjusted to exclude extraordinary items (as defined by GAAP), net gain or loss from sales of depreciable real estate assets, impairment write-downs associated with depreciable real estate assets and real estate related depreciation and amortization, including the pro rata share of such adjustments of unconsolidated subsidiaries. The Company also excludes the gains or losses from sales of assets incidental to the primary business of the REIT which specifically include the sales of mitigation credits, impact fee credits, subsurface sales, and the land sales gains included in discontinued operations. To derive AFFO, we modify the NAREIT computation of FFO to include other adjustments to GAAP net income related to non-cash revenues and expenses such as straight-line rental revenue, amortization of deferred financing costs, amortization of capitalized lease incentives and above- and below-market lease related intangibles, and non-cash compensation. Such items may cause short-term fluctuations in net income but have no impact on operating cash flows or long-term operating performance. We use AFFO as one measure of our performance when we formulate corporate goals.

FFO is used by management, investors and analysts to facilitate meaningful comparisons of operating performance between periods and among our peers primarily because it excludes the effect of real estate depreciation and amortization and net gains or losses on sales, which are based on historical costs and implicitly assume that the value of real estate diminishes predictably over time, rather than fluctuating based on existing market conditions. We believe that AFFO is an additional useful supplemental measure for investors to consider because it will help them to better assess our operating performance without the distortions created by other non-cash revenues or expenses. FFO and AFFO may not be comparable to similarly titled measures employed by other companies.

CTO Realty Growth, Inc.

Consolidated Balance Sheets

(In thousands, except share and per share data)

	As of
	(Unaudited) September 30, 2021			December 31, 2020
ASSETS
Real Estate:
Land, at cost	$	162,297		$	166,512
Building and Improvements, at cost		256,902			305,614
Other Furnishings and Equipment, at cost		701			672
Construction in Process, at cost		1,675			323
Total Real Estate, at cost		421,575			473,121
Less, Accumulated Depreciation		(22,385	)		(30,737	)
Real Estate—Net		399,190			442,384
Land and Development Costs		6,702			7,083
Intangible Lease Assets—Net		64,624			50,176
Assets Held for Sale		835			833
Investment in Joint Ventures		25,575			48,677
Investment in Alpine Income Property Trust, Inc.		37,468			30,574
Mitigation Credits		3,405			2,622
Mitigation Credit Rights		21,573			—
Commercial Loan and Master Lease Investments		38,993			38,320
Cash and Cash Equivalents		7,005			4,289
Restricted Cash		68,546			29,536
Refundable Income Taxes		856			26
Deferred Income Taxes—Net		215			—
Other Assets		11,695			12,180
Total Assets	$	686,682		$	666,700
LIABILITIES AND STOCKHOLDERS’ EQUITY
Liabilities:
Accounts Payable	$	1,402		$	1,047
Accrued and Other Liabilities		12,716			9,090
Deferred Revenue		3,656			3,319
Intangible Lease Liabilities—Net		3,036			24,163
Liabilities Held for Sale		831			831
Deferred Income Taxes—Net		—			3,521
Long-Term Debt		229,894			273,830
Total Liabilities		251,535			315,801
Commitments and Contingencies
Stockholders’ Equity:
Preferred Stock – 100,000,000 shares authorized; $0.01 par value, 6.375% Series A Cumulative Redeemable Preferred Stock, $25.00 Per Share Liquidation Preference, 3,000,000 shares issued and outstanding at September 30, 2021; 50,000 shares authorized; $100.00 par value, no shares issued or outstanding at December 31, 2020		30			—
Common Stock – 500,000,000 shares authorized; $0.01 par value, 5,960,912 shares issued and outstanding at September 30, 2021; 25,000,000 shares authorized; $1.00 par value, 7,310,680 shares issued and 5,915,756 shares outstanding at December 31, 2020		60			7,250
Treasury Stock – 0 shares at September 30, 2021 and 1,394,924 shares at December 31, 2020		—			(77,541	)
Additional Paid-In Capital		86,899			83,183
Retained Earnings		348,681			339,917
Accumulated Other Comprehensive Loss		(523	)		(1,910	)
Total Stockholders’ Equity		435,147			350,899
Total Liabilities and Stockholders’ Equity	$	686,682		$	666,700

CTO Realty Growth, Inc.

Consolidated Statements of Operations

(Unaudited, in thousands, except share, per share and dividend data)

	Three Months Ended						Nine Months Ended
	September 30, 2021			September 30, 2020			September 30, 2021			September 30, 2020
Revenues
Income Properties	$	13,734		$	12,933		$	36,757		$	35,409
Management Fee Income		940			683			2,361			2,080
Interest Income from Commercial Loan and Master Lease Investments		726			413			2,136			2,300
Real Estate Operations		1,177			543			4,318			631
Total Revenues		16,577			14,572			45,572			40,420
Direct Cost of Revenues
Income Properties		(3,984	)		(3,592	)		(9,688	)		(8,273	)
Real Estate Operations		(252	)		(1,682	)		(867	)		(3,263	)
Total Direct Cost of Revenues		(4,236	)		(5,274	)		(10,555	)		(11,536	)
General and Administrative Expenses		(2,680	)		(3,341	)		(8,477	)		(8,604	)
Impairment Charges		—			—			(16,527	)		(1,905	)
Depreciation and Amortization		(5,567	)		(4,761	)		(15,428	)		(14,334	)
Total Operating Expenses		(12,483	)		(13,376	)		(50,987	)		(36,379	)
Gain on Disposition of Assets		22,666			289			28,106			7,365
Gain (Loss) on Extinguishment of Debt		—			—			(641	)		1,141
Other Gains and Income		22,666			289			27,465			8,506
Total Operating Income		26,760			1,485			22,050			12,547
Investment and Other Income (Loss)		(797	)		(1,030	)		8,438			(5,746	)
Interest Expense		(1,986	)		(2,478	)		(6,851	)		(8,384	)
Income (Loss) from Operations Before Income Tax Benefit (Expense)		23,977			(2,023	)		23,637			(1,583	)
Income Tax Benefit (Expense)		(30	)		501			4,371			410
Net Income (Loss) Attributable to the Company	$	23,947		$	(1,522	)	$	28,008		$	(1,173	)
Distributions to Preferred Stockholders		(1,129	)		—			(1,129	)		—
Net Income (Loss) Attributable to Common Stockholders	$	22,818		$	(1,522	)	$	26,879		$	(1,173	)

Per Share Information:
Basic and Diluted Net Income (Loss) Attributable to Common Stockholders	$	3.87		$	(0.33	)	$	4.56		$	(0.25	)

Weighted Average Number of Common Shares:
Basic		5,901,095			4,654,329			5,892,900			4,673,049
Diluted		5,901,095			4,654,329			5,892,900			4,673,049

Dividends Declared and Paid – Preferred Stock	$	0.3763		$	—		$	0.3763		$	—
Dividends Declared and Paid – Common Stock	$	1.00		$	0.40		$	3.00		$	0.90

CTO Realty Growth, Inc.

Non-GAAP Financial Measures

(Unaudited, in thousands, except per share data)

	Three Months Ended						Nine Months Ended
	September 30, 2021			September 30, 2020			September 30, 2021			September 30, 2020
Net Income (Loss) Attributable to the Company	$	23,947		$	(1,522	)	$	28,008		$	(1,173	)
Depreciation and Amortization		5,567			4,761			15,428			14,334
Gains on Disposition of Assets		(22,666	)		(289	)		(28,106	)		(7,365	)
Losses (Gains) on the Disposition of Other Assets		(974	)		1,119			(3,549	)		2,540
Impairment Charges, Net		—			—			12,474			1,905
Unrealized (Gain) Loss on Investment Securities		1,326			1,448			(6,894	)		7,098
Funds from Operations	$	7,200		$	5,517		$	17,361		$	17,339
Distributions to Preferred Stockholders		(1,129	)		—			(1,129	)		—
Funds from Operations Attributable to Common Stockholders	$	6,071		$	5,517		$	16,232		$	17,339
Adjustments:
Straight-Line Rent Adjustment		(669	)		(670	)		(1,844	)		(1,810	)
COVID-19 Rent Repayments (Deferrals), Net		84			(217	)		738			(1,368	)
Amortization of Intangibles to Lease Income		(86	)		(434	)		(820	)		(1,352	)
Contributed Leased Assets Accretion		(38	)		(43	)		(197	)		(130	)
Loss (Gain) on Extinguishment of Debt		—			—			641			(1,141	)
Amortization of Discount on Convertible Debt		322			307			951			1,067
Non-Cash Compensation		734			617			2,434			2,135
Non-Recurring G&A		—			953			155			1,055
Amortization of Deferred Financing Costs to Interest Expense		120			115			444			338
Accretion of Loan Origination Fees		—			(7	)		(1	)		(164	)
Non-Cash Imputed Interest		(116	)		(105	)		(330	)		(311	)
Adjusted Funds from Operations Attributable to Common Stockholders	$	6,422		$	6,033		$	18,403		$	15,658

FFO per Common Share – Diluted	$	1.03		$	1.19		$	2.75		$	3.71
AFFO per Common Share – Diluted	$	1.09		$	1.30		$	3.12		$	3.35

Contact:	Matthew M. Partridge
	Senior Vice President, Chief Financial Officer and Treasurer
	(386) 944-5643
	[email protected]

October 28, 2021 4:15 pm

PCB Bancorp Reports Record Earnings of $11.0 Million for Q3 2021

PCB Bancorp Reports Record Earnings of $11.0 Million for Q3 2021

LOS ANGELES–(BUSINESS WIRE)–
PCB Bancorp (the “Company”) (NASDAQ: PCB), the holding company of Pacific City Bank (the “Bank”), today reported net income of $11.0 million, or $0.73 per diluted common share for the third quarter of 2021, compared with $9.8 million, or $0.64 per diluted common share, for the previous quarter and $3.4 million, or $0.22 per diluted common share, for the year-ago quarter.

Q3 2021 Highlights

Net income totaled $11.0 million or $0.73 per diluted common share;
- The Company recorded a provision (reversal) for loan losses of $(1.1) million for the current quarter compared with $(934) thousand for the previous quarter and $4.3 million for the year-ago quarter.
- Allowance for loan losses to loans held-for-investment ⁽¹⁾ ratio was 1.39% at September 30, 2021 compared with 1.45% at June 30, 2021 and 1.55% at September 30, 2020. Adjusted allowance for loan losses to loans held-for-investment ratio ⁽²⁾ was 1.48% at September 30, 2021 compared with 1.62% at June 30, 2021 and 1.70% at September 30, 2020.
- Net interest income was $20.2 million for the current quarter compared with $19.0 million for the previous quarter and $16.9 million for the year-ago quarter. Net interest margin was 3.93% for the third quarter of 2021 compared with 3.83% for the previous quarter and 3.43% for the year-ago quarter.
- Gain on sale of loans was $4.3 million for the current quarter compared with $4.0 million for the previous quarter and $821 thousand for the year-ago quarter.
Total assets were $2.10 billion at September 30, 2021, an increase of $44.7 million, or 2.2%, from $2.06 billion at June 30, 2021 and an increase of $83.5 million, or 4.1%, from $2.02 billion at September 30, 2020;
Loans held-for-investment were $1.71 billion at September 30, 2021, a decrease of $11.8 million, or 0.7%, from $1.72 billion at June 30, 2021, but an increase of $129.1 million, or 8.2%, from $1.58 billion at September 30, 2020;
- SBA PPP loans totaled $101.9 million and $181.0 million at September 30, 2021 and June 30, 2021, respectively.
- The Company had no loans under modified terms related to COVID-19 at September 30, 2021.
Total deposits were $1.83 billion at September 30, 2021, an increase of $35.0 million from $1.80 billion at June 30, 2021 and an increase of $185.6 million, or 11.3%, from $1.65 billion at September 30, 2020;
The Company repurchased and retired 680,269 shares of common stock totaling $10.9 million for a weighted-average price of $15.99 per share under the repurchase program announced on April 8, 2021 that expired on September 7, 2021; and
A cash dividend of $0.12 per share was declared on October 28, 2021. This represents the 27th consecutive quarterly dividend paid by PCB Bancorp.

Henry Kim, President and Chief Executive Officer, commented, “We are pleased to announce another record quarter with net income of $11.0 million for the third quarter of 2021. Our total loans reached a record $1.74 billion as of September 30, 2021. Total loans increased by 19.7% annualized from June 30, 2021, and by 11.5% from September 30, 2020, excluding the changes in the balances of Paycheck Protection Program loans.”

“Total deposits increased at an annualized rate of 7.8% during the quarter to a record $1.83 billion as of September 30, 2021 driven by $36.5 million growth in noninterest-bearing demand deposits that now make up 45.4% of the total balances, compared with 35.0% a year ago.”

Mr. Kim continued, “In addition to the healthy organic loan and deposit growth, our net interest margin improved by ten basis points to 3.93% in the third quarter of 2021 as compared to the second quarter of 2021 and our credit quality remains solid as evidenced by nonperformance assets to total assets ratio of 0.05% at September 30, 2021.”

“The momentum in our loan pipeline continues to be strong with equally healthy liquidity to expand our net interest income. We are looking forward to finishing the year strong and remain positive in our outlook in delivering excellent financial performance for the year and heading into 2022.”

____________________________________
(1)		Loans held-for-investment are presented net of deferred fees and costs in this press release.
(2)		Adjusted allowance for loan losses to loans held-for-investment ratio is a non-GAAP measure, which excludes U.S. Small Business Administration (“SBA”) Paycheck Protection Program (“PPP”) loans from loans held-for-investment. See “Non-GAAP Measures” for reconciliation of this measure to its most comparable GAAP measure.

Financial Highlights (Unaudited)
($ in thousands, except per share data)	ThreeMonthsEnded													Nine Months Ended
($ in thousands, except per share data)	9/30/2021			6/30/2021			% Change		9/30/2020			% Change		9/30/2021			9/30/2020			% Change
Net income	$	11,023		$	9,844		12.0	%	$	3,449		219.6	%	$	29,427		$	10,388		183.3	%
Diluted earnings per common share	$	0.73		$	0.64		14.1	%	$	0.22		231.8	%	$	1.92		$	0.67		186.6	%

Net interest income	$	20,227		$	18,996		6.5	%	$	16,853		20.0	%	$	57,042		$	48,782		16.9	%
Provision (reversal) for loan losses	(1,053		)	(934		)	12.7	%	4,326			(124.3	)%	(3,134		)	11,077			(128.3	)%
Noninterest income	5,588			5,151			8.5	%	2,272			146.0	%	13,596			7,216			88.4	%
Noninterest expense	11,232			11,139			0.8	%	9,886			13.6	%	32,040			30,149			6.3	%

Return on average assets ⁽¹⁾	2.11		%	1.96		%			0.69		%			1.94		%	0.73		%
Return on average shareholders’ equity ^{(1), (2)}	17.98		%	16.49		%			5.98		%			16.40		%	6.10		%
Net interest margin ⁽¹⁾	3.93		%	3.83		%			3.43		%			3.82		%	3.49		%
Efficiency ratio ⁽³⁾	43.51		%	46.13		%			51.69		%			45.36		%	53.84		%

($ in thousands, except per share data)	9/30/2021			6/30/2021			% Change		12/31/2020			% Change		9/30/2020			% Change
Total assets	$	2,104,699		$	2,060,003		2.2	%	$	1,922,853		9.5	%	$	2,021,187		4.1	%
Net loans held-for-investment	1,684,071			1,694,767			(0.6	)%	1,557,068			8.2	%	1,554,258			8.4	%
Total deposits	1,832,666			1,797,648			1.9	%	1,594,851			14.9	%	1,647,107			11.3	%
Book value per common share ^{(2), (4)}	$	16.68		$	16.09		3.7	%	$	15.19		9.8	%	$	14.91		11.9	%
Tier 1 leverage ratio (consolidated)	11.91		%	11.76		%			11.94		%			11.40		%
Total shareholders’ equity to total assets ⁽²⁾	11.76		%	11.60		%			12.16		%			11.35		%

(1)		Ratios are presented on an annualized basis.
(2)		The Company did not have any intangible equity components for the presented periods.
(3)		The ratios are calculated by dividing noninterest expense by the sum of net interest income and noninterest income.
(4)		Calculated by dividing total shareholders’ equity by the number of outstanding common shares.

COVID-19 Pandemic

The ongoing COVID-19 pandemic, and governmental and societal responses thereto, have had a severe impact on recent global economic and market conditions, including significant disruption of, and volatility in, financial markets; global supply chain disruptions; and the institution of social distancing and shelter-in-place requirements that have resulted in temporary closures of many businesses, lost revenues, and increased unemployment throughout the U.S., but also specifically in California, where most of the Company’s operations and a large majority of its customers are located. While California’s and New York’s shelter-at-home limits were largely lifted in June 2021, the local economies in the Company’s primary markets have not yet fully recovered.

Since the beginning of the crisis, the Company has taken a number of steps to protect the safety of its employees and to support its customers. The Company has enabled its staff to work remotely and established safety measures within its bank premises and branches for both employees and customers. In order to support its customers, the Company has been in close contact with them, assessing the level of impact on their businesses, and putting a process in place to evaluate each client’s specific situation and provide relief programs where appropriate.

In addition, the Company has been monitoring its liquidity and capital closely. As of September 30, 2021, the Company maintained $215.0 million, or 10.2% of total assets, of cash and cash equivalents and $606.9 million, or 28.8% of total assets, of available borrowing capacity. All regulatory capital ratios were also well above the regulatory well-capitalized requirements as of September 30, 2021.

At this time, the Company cannot estimate the long term impact of the COVID-19 pandemic, but these conditions are expected to impact its business, results of operations, and financial condition negatively.

Network and Data Incident

As previously disclosed, on August 30, 2021, the Bank identified unusual activity on its network, responded promptly to disable the activity, investigate its source and monitor the Bank’s network. The Bank subsequently became aware of claims that it had been the target of a ransomware attack, and on September 7, 2021, determined that an external actor had accessed or acquired certain data on its network. The Bank has been working with third-party forensic investigators to understand the nature and scope of the incident and determine what information may have been accessed and what clients were impacted. The investigation, which is continuing, revealed that this incident impacted files containing certain Bank customer information, including in some cases personal information of customers and customers’ employees. The Bank has notified or will notify all individuals identified to date, consistent with applicable laws, whose information may have been impacted. All impacted individuals will be offered free Equifax Complete Premier credit monitoring and identity theft protection services. The Bank has notified law enforcement and appropriate authorities of the incident.

Result of Operations (Unaudited)

Net Interest Income and Net Interest Margin

The following table presents the components of net interest income for the periods indicated:

	ThreeMonthsEnded													Nine Months Ended
($ in thousands)	9/30/2021			6/30/2021			% Change		9/30/2020			% Change		9/30/2021			9/30/2020			% Change
Interest income/expense on
Loans	$	20,537		$	19,511		5.3	%	$	18,938		8.4	%	$	58,792		$	57,617		2.0	%
Investment securities	437			375			16.5	%	515			(15.1	)%	1,172			1,698			(31.0	)%
Other interest-earning assets	194			165			17.6	%	167			16.2	%	513			938			(45.3	)%
Total interest-earning assets	21,168			20,051			5.6	%	19,620			7.9	%	60,477			60,253			0.4	%
Interest-bearing deposits	885			1,000			(11.5	)%	2,599			(65.9	)%	3,196			11,000			(70.9	)%
Borrowings	56			55			1.8	%	168			(66.7	)%	239			471			(49.3	)%
Total interest-bearing liabilities	941			1,055			(10.8	)%	2,767			(66.0	)%	3,435			11,471			(70.1	)%
Net interest income	$	20,227		$	18,996		6.5	%	$	16,853		20.0	%	$	57,042		$	48,782		16.9	%
Average balance of
Loans	$	1,715,106		$	1,691,704		1.4	%	$	1,564,704		9.6	%	$	1,683,084		$	1,524,628		10.4	%
Investment securities	136,874			132,249			3.5	%	128,212			6.8	%	131,039			122,371			7.1	%
Other interest-earning assets	188,137			164,710			14.2	%	260,426			(27.8	)%	180,663			221,698			(18.5	)%
Total interest-earning assets	$	2,040,117		$	1,988,663		2.6	%	$	1,953,342		4.4	%	$	1,994,786		$	1,868,697		6.7	%
Interest-bearing deposits	$	1,000,332		$	1,026,937		(2.6	)%	$	1,063,962		(6.0	)%	$	1,026,842		$	1,100,855		(6.7	)%
Borrowings	18,152			19,012			(4.5	)%	130,000			(86.0	)%	37,363			95,276			(60.8	)%
Total interest-bearing liabilities	$	1,018,484		$	1,045,949		(2.6	)%	$	1,193,962		(14.7	)%	$	1,064,205		$	1,196,131		(11.0	)%
Total funding ⁽¹⁾	$	1,812,649		$	1,766,054		2.6	%	$	1,746,217		3.8	%	$	1,772,005		$	1,661,765		6.6	%
Annualized average yield/cost of
Loans	4.75		%	4.63		%			4.81		%			4.67		%	5.05		%
Investment securities	1.27		%	1.14		%			1.60		%			1.20		%	1.85		%
Other interest-earning assets	0.41		%	0.40		%			0.26		%			0.38		%	0.57		%
Total interest-earning assets	4.12		%	4.04		%			4.00		%			4.05		%	4.31		%
Interest-bearing deposits	0.35		%	0.39		%			0.97		%			0.42		%	1.33		%
Borrowings	1.22		%	1.16		%			0.51		%			0.86		%	0.66		%
Total interest-bearing liabilities	0.37		%	0.40		%			0.92		%			0.43		%	1.28		%
Net interest margin	3.93		%	3.83		%			3.43		%			3.82		%	3.49		%
Cost of total funding ⁽¹⁾	0.21		%	0.24		%			0.63		%			0.26		%	0.92		%
Supplementary information
Net accretion of discount on loans	$	932		$	1,012		(7.9	)%	$	743		25.4	%	$	2,689		$	2,301		16.9	%
Net amortization of deferred loan fees	$	1,983		$	1,459		35.9	%	$	1,218		62.8	%	$	4,662		$	1,988		134.5	%

(1)

Total funding is the sum of interest-bearing liabilities and noninterest-bearing deposits. The cost of total funding is calculated as annualized total interest expense divided by average total funding.

Loans. The increase in average yield for the current quarter compared with the previous quarter was primarily due to an increase in net amortization of deferred loan fees from an increased forgiveness of SBA PPP loans, partially offset by a decrease in net accretion of discount on loans. The decreases in average yield for the current quarter and year-to-date period compared with the same periods of 2020 were primarily due to a decrease in overall interest rates on loans from lower market rates, partially offset by increases in net accretion of discount on loans and net amortization of deferred loan fees.

The following table presents a composition of total loans by interest rate type accompanied with the weighted-average contractual rates as of the dates indicated:

	9/30/2021				6/30/2021				12/31/2020				9/30/2020
	% to Total Loans		Weighted-Average Contractual Rate		% to Total Loans		Weighted-Average Contractual Rate		% to Total Loans		Weighted-Average Contractual Rate		% to Total Loans		Weighted-Average Contractual Rate
Fixed rate loans	29.9	%	3.86	%	33.9	%	3.56	%	31.7	%	3.86	%	40.6	%	4.12	%
Hybrid rate loans	26.4	%	4.28	%	22.5	%	4.52	%	20.8	%	4.82	%	12.2	%	4.98	%
Variable rate loans	43.7	%	3.96	%	43.6	%	3.99	%	47.5	%	4.06	%	47.2	%	4.10	%

Investment Securities. The increase in average yield for the current quarter compared with the previous quarter was primarily due to a decrease in net amortization of premiums on mortgage-backed securities and collateralized mortgage obligations. The decreases in average yield for the current quarter and year-to-date period compared with the same periods of 2020 were primarily due to new investment securities purchased at lower market rates.

Other Interest-Earning Assets. The increase in average yield for the current quarter compared with the year-ago quarters was primarily due to an increase in dividend income on Federal Home Loan Bank stock. The decrease in average yield for the current year-to-date period compared with the previous year-to-date period was primarily due to lower market rates. The decreases in average balance for the current quarter and year-to-date period compared with the same periods of 2020 were primarily due to an increase in loans, partially offset by an increase in deposits. The Company maintains most of its cash at the Federal Reserve Bank account. For additional detail, please see the discussion in “Loans” and “Deposits” under the “Balance Sheet” discussion.

Interest-Bearing Deposits. The decreases in average cost for the current quarter and year-to-date period were primarily due to the decreases in market rates.

Borrowings. The increases in average cost for the current quarter and year-to-date period compared with the same periods of 2020 were primarily due to matured borrowings with lower interest rates during the current year-to-date period. Matured FHLB advances totaled $70.0 million with a weighted-average rate of 0.47% for the current year-to-date period. At September 30, 2021, the Company had a term FHLB advance of $10.0 million with an interest rate of 2.07% that matures on June 29, 2022.

Provision (reversal) for Loan Losses

Provision (reversal) for loan losses was $(1.1) million for the current quarter compared with $(934) thousand for the previous quarter and $4.3 million for the year-ago quarter. For the current and previous year-to-date periods, provision (reversal) for loan losses was $(3.1) million and $11.1 million, respectively. The reversals for the current and previous quarters were primarily due to a decrease in historical loss and qualitative adjustment factor allocations as a result of improving economic conditions. The Company recorded net charge-offs (recoveries) of $30 thousand for the current quarter compared with $(309) thousand for the previous quarter and $28 thousand for the year-ago quarter. For the current and previous year-to-date periods, net charge-offs (recoveries) were $(431) thousand and $911 thousand, respectively.

Adjusted allowance for loan losses to loans held-for-investment ratio⁽¹⁾ was 1.48%, 1.62%, 1.83% and 1.70% at September 30, 2021, June 30, 2021, December 31, 2020 and September 30, 2020, respectively.

____________________________________
(1)		Adjusted allowance for loan losses to loans held-for-investment ratio is a non-GAAP measure, which excludes SBA PPP loans from loans held-for-investment. See “Non-GAAP Measures” for reconciliation of this measure to its most comparable GAAP measure.

Noninterest Income

The following table presents the components of noninterest income for the periods indicated:

	ThreeMonthsEnded										Nine Months Ended
($ in thousands)	9/30/2021		6/30/2021		% Change		9/30/2020		% Change		9/30/2021		9/30/2020		% Change
Gain on sale of loans	$	4,269	$	3,967	7.6	%	$	821	420.0	%	$	9,558	$	3,044	214.0	%
Service charges and fees on deposits	292		302		(3.3	)%	280		4.3	%	887		945		(6.1	)%
Loan servicing income	655		545		20.2	%	856		(23.5	)%	2,082		2,312		(9.9	)%
Other income	372		337		10.4	%	315		18.1	%	1,069		915		16.8	%
Total noninterest income	$	5,588	$	5,151	8.5	%	$	2,272	146.0	%	$	13,596	$	7,216	88.4	%

Gain on Sale of Loans. The following table presents information on gain on sale of loans for the periods indicated:

	ThreeMonthsEnded										Nine Months Ended
($ in thousands)	9/30/2021		6/30/2021		% Change		9/30/2020		% Change		9/30/2021		9/30/2020		% Change
Gain on sale of SBA loans
Sold loan balance	$	45,048	$	34,107	32.1	%	$	8,582	424.9	%	$	90,074	$	47,363	90.2	%
Premium received	4,879		4,172		16.9	%	917		432.1	%	10,360		4,015		158.0	%
Gain recognized	4,263		3,954		7.8	%	689		518.7	%	9,412		2,841		231.3	%
Gain on sale of residential property loans
Sold loan balance	$	301	$	1,615	(81.4	)%	$	16,585	(98.2	)%	$	9,823	$	24,782	(60.4	)%
Gain recognized	2		13		(84.6	)%	132		(98.5	)%	142		203		(30.0	)%

The Company also sold certain commercial property loans of $3.5 million and $5.2 million during the current quarter and year-to-date period, respectively.

Loan Servicing Income. The following table presents information on loan servicing income for the periods indicated:

	ThreeMonthsEnded													Nine Months Ended
($ in thousands)	9/30/2021			6/30/2021			% Change		9/30/2020			% Change		9/30/2021			9/30/2020			% Change
Loan servicing income
Servicing income received	$	1,180		$	1,124		5.0	%	$	1,244		(5.1	)%	$	3,577		$	3,696		(3.2	)%
Servicing assets amortization	(525		)	(579		)	(9.3	)%	(388		)	35.3	%	(1,495		)	(1,384		)	8.0	%
Loan servicing income	$	655		$	545		20.2	%	$	856		(23.5	)%	$	2,082		$	2,312		(9.9	)%
Underlying loans at end of period	$	511,930		$	492,130		4.0	%	$	484,651		5.6	%	$	511,930		$	484,651		5.6	%

The Company services SBA loans and certain residential property loans that are sold to the secondary market. The increase for the current quarter compared with the previous quarter was primarily due to a decrease in servicing asset amortization from a decrease in loan payoffs and an increase in servicing income received. The decreases for the current quarter and year-to-date period compared with the same periods of 2020 were primarily due to a decrease in servicing income received and an increase in servicing asset amortization from an increase in loan payoffs.

Noninterest Expense

The following table presents the components of noninterest expense for the periods indicated:

	ThreeMonthsEnded										Nine Months Ended
($ in thousands)	9/30/2021		6/30/2021		% Change		9/30/2020		% Change		9/30/2021		9/30/2020		% Change
Salaries and employee benefits	$	7,606	$	7,125	6.8	%	$	6,438	18.1	%	$	20,913	$	18,750	11.5	%
Occupancy and equipment	1,399		1,388		0.8	%	1,416		(1.2	)%	4,158		4,196		(0.9	)%
Professional fees	422		658		(35.9	)%	325		29.8	%	1,574		1,631		(3.5	)%
Marketing and business promotion	416		516		(19.4	)%	193		115.5	%	1,070		920		16.3	%
Data processing	391		396		(1.3	)%	373		4.8	%	1,164		1,097		6.1	%
Director fees and expenses	144		151		(4.6	)%	125		15.2	%	433		453		(4.4	)%
Regulatory assessments	12		179		(93.3	)%	267		(95.5	)%	399		728		(45.2	)%
Other expenses	842		726		16.0	%	749		12.4	%	2,329		2,374		(1.9	)%
Total noninterest expense	$	11,232	$	11,139	0.8	%	$	9,886	13.6	%	$	32,040	$	30,149	6.3	%

Salaries and Employee Benefits. The increase for the current quarter compared the previous quarter was primarily due to the incentive tied to the sales of Loan Production Offices (“LPO”) originated SBA loans and the incentive for SBA PPP loan production paid during the current quarter. The increase for the current quarter and year-to-date period compared with the same periods of 2020 were primarily due to increases in wages, bonus accrual, and the incentives for LPO originated SBA loan sales and SBA PPP loan production, partially offset by decreases in vacation and stock compensation expense.

Professional Fees. The decrease for the current quarter compared with the previous quarter were primarily due to a decrease in expenses related to internal audit. The decrease for the current year-to-date period compared with the previous year-to-date period was primarily due to decreases in expenses related to the Bank’s Bank Secrecy Act and Anti-Money Laundering (“BSA/AML”) compliance enhancements.

Director fees and expense. The increase for the current quarter compared with the year-ago quarter was primarily due to the Board of Directors’ decision to temporarily decrease fees during the year-ago quarter. The decrease for the current year-to-date period compared with the previous year-to-date period was primarily due to a severance payment for a former director in the first quarter of 2020.

Regulatory Assessments. The decrease for the current quarter compared with the previous quarter was primarily due to an adjustment made for the assessment rate decrease for the previous quarter. The decreases for the current quarter and year-to-date period compared with the same periods of 2020 were primarily due to a decrease in assessment rate, partially offset by an increase in balance sheet growth.

Balance Sheet (Unaudited)

Total assets were $2.10 billion at September 30, 2021, an increase of $44.7 million, or 2.2%, from $2.06 billion at June 30, 2021 and an increase of $83.5 million, or 4.1%, from $2.02 billion at September 30, 2020. The increase for the current quarter was primarily due to increases in loans held-for-sale and cash and cash equivalents, partially offset by a decrease in net loans held-for-investment. The increase for the current year-to-date period was primarily due to increases in loans held-for-investment, loans-held-for-sale, investment securities, and cash and cash equivalents.

The following table presents a composition of total loans (includes both loans held-for-sale and loans held-for-investment) as of the dates indicated:

($ in thousands)	9/30/2021		6/30/2021		% Change		12/31/2020		% Change		9/30/2020		% Change
Real estate loans
Commercial property	$	1,054,351	$	997,918	5.7	%	$	880,736	19.7	%	$	853,708	23.5	%
Residential property	201,635		196,983		2.4	%	198,431		1.6	%	212,804		(5.2	)%
SBA property	127,845		124,251		2.9	%	126,570		1.0	%	128,038		(0.2	)%
Construction	6,572		13,475		(51.2	)%	15,199		(56.8	)%	19,803		(66.8	)%
Commercial and industrial loans
Commercial term	74,390		74,503		(0.2	)%	87,250		(14.7	)%	90,867		(18.1	)%
Commercial lines of credit	101,456		90,286		12.4	%	96,087		5.6	%	92,222		10.0	%
SBA commercial term	18,338		19,614		(6.5	)%	21,878		(16.2	)%	23,011		(20.3	)%
SBA PPP	101,901		181,019		(43.7	)%	135,654		(24.9	)%	136,418		(25.3	)%
Other consumer loans	21,390		21,607		(1.0	)%	21,773		(1.8	)%	21,933		(2.5	)%
Loans held-for-investment	1,707,878		1,719,656		(0.7	)%	1,583,578		7.8	%	1,578,804		8.2	%
Loans held-for-sale	29,020		11,255		157.8	%	1,979		1,366.4	%	30,878		(6.0	)%
Total loans	$	1,736,898	$	1,730,911	0.3	%	$	1,585,557	9.5	%	$	1,609,682	7.9	%

The decrease in loans held-for-investment for the current quarter was primarily due to pay-downs and pay-offs of $178.1 million, partially offset by new funding of $137.4 million and advances on lines of credit of $32.5 million. During the current quarter, SBA PPP loans of $81.9 million were paid off through regular payments or forgiveness from SBA, and related unamortized net deferred fees were recognized through interest income. The increase in loans held-for-investment for the current year-to-date period was primarily due to new funding of $498.9 million and advances on lines of credit of $88.9 million, partially offset by pay-downs and pay-offs of $457.9 million. During the current year-to-date period, SBA PPP loans of $144.9 million were paid off through regular payments or forgiveness from SBA, and related unamortized net deferred fees were recognized through interest income.

The increase in loans held-for-sale for the current quarter was primarily due to new funding of $63.1 million, partially offset by sales of $48.8 million. The increase in loans held-for-sale for the current year-to-date period was primarily due to new funding of $126.8 million, partially offset by sales of $105.1 million.

The following table presents a composition of commitments to extend credit as of the dates indicated:

($ in thousands)	9/30/2021		6/30/2021		% Change		12/31/2020		% Change		9/30/2020		% Change
Real estate loans
Commercial property	$	17,873	$	15,277	17.0	%	$	21,016	(15.0	)%	$	17,621	1.4	%
SBA property	4,747		6,191		(23.3	)%	540		779.1	%	—		—	%
Construction	9,478		6,233		52.1	%	13,986		(32.2	)%	15,366		(38.3	)%
Commercial and industrial loans
Commercial term	1,455		2,950		(50.7	)%	1,000		45.5	%	1,000		45.5	%
Commercial lines of credit	156,411		164,648		(5.0	)%	156,870		(0.3	)%	173,080		(9.6	)%
SBA commercial term	245		—		—	%	—		—	%	—		—	%
Other consumer loans	130		118		10.2	%	84		54.8	%	75		73.3	%
Total commitments to extend credit	$	190,339	$	195,417	(2.6	)%	$	193,496	(1.6	)%	$	207,142	(8.1	)%

Credit Quality

The following table presents a summary of non-performing loans, non-performing assets and classified assets as of the dates indicated:

($ in thousands)	9/30/2021			6/30/2021			% Change		12/31/2020			% Change		9/30/2020			% Change
Nonaccrual loans
Real estate loans
Commercial property	$	—		$	—		—	%	$	524		(100.0	)%	$	—		—	%
Residential property	—			—			—	%	189			(100.0	)%	—			—	%
SBA property	766			781			(1.9	)%	885			(13.4	)%	923			(17.0	)%
Commercial and industrial loans
Commercial lines of credit	—			—			—	%	904			(100.0	)%	1,525			(100.0	)%
SBA commercial term	314			600			(47.7	)%	595			(47.2	)%	378			(16.9	)%
Other consumer loans	33			65			(49.2	)%	66			(50.0	)%	67			(50.7	)%
Total nonaccrual loans held-for-investment	1,113			1,446			(23.0	)%	3,163			(64.8	)%	2,893			(61.5	)%
Loans past due 90 days or more and still accruing	3			—			—	%	—			—	%	699			(99.6	)%
Non-performing loans (“NPLs”)	1,116			1,446			(22.8	)%	3,163			(64.7	)%	3,592			(68.9	)%
Other real estate owned (“OREO”)	—			—			—	%	1,401			(100.0	)%	376			(100.0	)%
Non-performing assets (“NPAs”)	$	1,116		$	1,446		(22.8	)%	$	4,564		(75.5	)%	$	3,968		(71.9	)%
Loans past due and still accruing
Past due 30 to 59 days	$	292		$	227		28.6	%	$	302		(3.3	)%	$	298		(2.0	)%
Past due 60 to 89 days	—			—			—	%	36			(100.0	)%	3			(100.0	)%
Past due 90 days or more	3			—			—	%	—			—	%	699			(99.6	)%
Total loans past due and still accruing	$	295		$	227		30.0	%	338			(12.7	)%	$	1,000		(70.5	)%
Troubled debt restructurings (“TDRs”)
Accruing TDRs	$	589		$	605		(2.6	)%	$	634		(7.1	)%	$	649		(9.2	)%
Nonaccrual TDRs	26			30			(13.3	)%	5			420.0	%	38			(31.6	)%
Total TDRs	$	615		$	635		(3.1	)%	$	639		(3.8	)%	$	687		(10.5	)%
Special mention loans	$	17,315		$	18,238		(5.1	)%	$	16,461		5.2	%	$	4,746		264.8	%
Classified assets
Classified loans	$	5,345		$	9,666		(44.7	)%	$	10,130		(47.2	)%	$	4,860		10.0	%
OREO	—			—			—	%	1,401			(100.0	)%	376			(100.0	)%
Classified assets	$	5,345		$	9,666		(44.7	)%	$	11,531		(53.6	)%	$	5,236		2.1	%
NPLs to loans held-for-investment	0.07		%	0.08		%			0.20		%			0.23		%
NPAs to total assets	0.05		%	0.07		%			0.24		%			0.20		%
Classified assets to total assets	0.25		%	0.47		%			0.60		%			0.26		%

Loan Modifications Related to the COVID-19 Pandemic

The Company provided modifications, including interest only payments or payment deferrals, to customers that were adversely affected by the COVID-19 pandemic. The loan modifications met all criteria under the Coronavirus Aid, Relief, and Economic Security Act. Therefore, the modified loans were not considered TDRs. As of September 30, 2021, the Company had no loans under modified terms related to the COVID-19 pandemic. Total loans under modified terms related to the COVID-19 pandemic were $16.2 million at June 30, 2021, $36.1 million at December 31, 2020 and $171.6 million at September 30, 2020.

The increases in special mention and classified loans for the current year periods were primarily due to the loans that were granted modifications related to the COVID-19 pandemic in excess of 6 months, on a cumulative basis. The Company had classified these loans as special mention or classified. Special mention and classified loans included $15.6 million and $2.7 million, respectively, at September 30, 2021, $16.4 million and $6.2 million, respectively, at June 30, 2021, and $14.9 million and $4.2 million, respectively, at December 31, 2020, of the loans that were granted such modifications.

Investment Securities

Total investment securities were $133.1 million at September 30, 2021, a decrease of $2.4 million, or 1.8%, from $135.5 million at June 30, 2021, but an increase of $4.1 million, or 3.2%, from $129.0 million at September 30, 2020. The decrease for the current quarter was primarily due to principal pay-downs and calls of $9.3 million and net premium amortization of $222 thousand, partially offset by purchases of $7.8 million. The increase in investment securities for the current year-to-date period was primarily due to purchases of $47.3 million, partially offset by principal pay-downs and calls of $32.2 million and net premium amortization of $811 thousand.

Deposits

The following table presents the Company’s deposit mix as of the dates indicated:

	9/30/2021				6/30/2021				12/31/2020				9/30/2020
($ in thousands)	Amount		% to Total		Amount		% to Total		Amount		% to Total		Amount		% to Total
Noninterest-bearing demand deposits	$	832,240	45.4	%	$	795,741	44.3	%	$	538,009	33.7	%	$	576,086	35.0	%
Interest-bearing deposits
Savings	13,294		0.7	%	11,671		0.6	%	10,481		0.7	%	11,124		0.7	%
NOW	20,461		1.1	%	21,725		1.2	%	21,604		1.4	%	21,726		1.3	%
Retail money market accounts	376,333		20.5	%	358,575		19.9	%	351,739		22.0	%	344,939		20.9	%
Brokered money market accounts	4		0.1	%	4		0.1	%	25,002		1.6	%	30,001		1.9	%
Retail time deposits of
$250,000 or less	262,207		14.3	%	271,531		15.1	%	299,431		18.7	%	312,171		18.9	%
More than $250,000	163,127		8.9	%	173,401		9.6	%	168,683		10.6	%	167,208		10.2	%
Time deposits from internet rate service providers	—		—	%	—		—	%	24,902		1.6	%	31,852		1.9	%
State and brokered time deposits	165,000		9.0	%	165,000		9.2	%	155,000		9.7	%	152,000		9.2	%
Total interest-bearing deposits	1,000,426		54.6	%	1,001,907		55.7	%	1,056,842		66.3	%	1,071,021		65.0	%
Total deposits	$	1,832,666	100.0	%	$	1,797,648	100.0	%	$	1,594,851	100.0	%	$	1,647,107	100.0	%

The increase in noninterest-bearing demand deposits for the current year-to-date period was primarily due to the overall liquid deposit market. During the current year-to-date period, a total of $93.9 million of SBA PPP loans were funded through the Bank’s noninterest-bearing demand deposits and deposit customers also received $138.2 million of SBA Economic Injury Disaster Loans and SBA Revitalization Funds.

The decrease in retail time deposits for the current quarter was primarily due to matured and closed accounts of $135.7 million, partially offset by new accounts of $17.1 million, renewals of the matured accounts of $95.8 million, and balance increases of $3.2 million. The decrease in retail time deposits for the current year-to-date period was primarily due to matured and closed accounts of $457.6 million, partially offset by new accounts of $76.4 million, renewals of the matured accounts of $328.5 million, and balance increases of $9.9 million.

Liquidity

The following table presents a summary of the Company’s liquidity position as of September 30, 2021:

($ in thousands)	9/30/2021
Cash and cash equivalents	$	214,973
Cash and cash equivalents to total assets	10.2		%

Available borrowing capacity
FHLB advances	$	504,986
Federal Reserve Discount Window	36,889
Overnight federal funds lines	65,000
Total	$	606,875
Total available borrowing capacity to total assets	28.8		%

Shareholders’ Equity

Shareholders’ equity was $247.6 million at September 30, 2021, an increase of $8.7 million, or 3.6%, from $238.9 million at June 30, 2021 and an increase of $18.3 million, or 8.0%, from $229.3 million at September 30, 2020. The increase for the current quarter was primarily due to net income, partially offset by cash dividends declared on common stock of $1.8 million, repurchases of common stock of $543 thousand and a decrease in accumulated other comprehensive income. The increase for the current year-to-date period was primarily due to net income, partially offset by repurchases of common stock of $10.9 million, cash dividends declared on common stock of $4.9 million and a decrease in accumulated other comprehensive income.

On April 8, 2021, the Company’s Board of Directors approved a repurchase program authorizing the repurchase of up to 5% of the Company’s outstanding common stock as of the date of the board meeting, which represented 775,000 shares, through September 7, 2021. The Company repurchased and retired 680,269 shares of common stock totaling $10.9 million at a weighted-average price of $15.99 per share under this program.

Capital Ratios

Based on changes to the Federal Reserve’s definition of a “Small Bank Holding Company” that increased the threshold to $3 billion in assets in August 2018, the Company is not currently subject to separate minimum capital measurements. At such time as the Company reaches the $3 billion asset level, it will again be subject to capital measurements independent of the Bank. For comparison purposes, the Company’s ratios are included in following discussion. The following table presents capital ratios for the Company and the Bank as of dates indicated:

	9/30/2021		6/30/2021		12/31/2020		9/30/2020		Well Capitalized Requirements
PCB Bancorp
Common tier 1 capital (to risk-weighted assets)	15.07	%	15.17	%	15.97	%	15.60	%	N/A
Total capital (to risk-weighted assets)	16.32	%	16.43	%	17.22	%	16.86	%	N/A
Tier 1 capital (to risk-weighted assets)	15.07	%	15.17	%	15.97	%	15.60	%	N/A
Tier 1 capital (to average assets)	11.91	%	11.76	%	11.94	%	11.40	%	N/A
Pacific City Bank
Common tier 1 capital (to risk-weighted assets)	14.76	%	14.88	%	15.70	%	15.34	%	6.5	%
Total capital (to risk-weighted assets)	16.01	%	16.13	%	16.95	%	16.60	%	10.0	%
Tier 1 capital (to risk-weighted assets)	14.76	%	14.88	%	15.70	%	15.34	%	8.0	%
Tier 1 capital (to average assets)	11.66	%	11.53	%	11.74	%	11.21	%	5.0	%

About PCB Bancorp

PCB Bancorp, formerly known as Pacific City Financial Corporation, is the bank holding company for Pacific City Bank, a California state chartered bank, offering a full suite of commercial banking services to small to medium-sized businesses, individuals and professionals, primarily in Southern California, and predominantly in Korean-American and other minority communities.

Cautionary Note Regarding Forward-Looking Statements

This press release contains forward-looking statements. These forward-looking statements represent plans, estimates, objectives, goals, guidelines, expectations, intentions, projections and statements of our beliefs concerning future events, business plans, objectives, expected operating results and the assumptions upon which those statements are based. Forward-looking statements include without limitation, any statement that may predict, forecast, indicate or imply future results, performance or achievements, and are typically identified with words such as “may,” “could,” “should,” “will,” “would,” “believe,” “anticipate,” “estimate,” “expect,” “aim,” “intend,” “plan,” or words or phases of similar meaning. We caution that the forward-looking statements are based largely on our expectations and are subject to a number of known and unknown risks and uncertainties that are subject to change based on factors which are, in many instances, beyond our control, including but not limited to our borrowers’ actual payment performance as loan deferrals related to the COVID-19 pandemic expire, changes to statutes, regulations, or regulatory policies or practices as a result of, or in response to the COVID-19 pandemic, including the potential adverse impact of loan modifications and payment deferrals implemented consistent with recent regulatory guidance, and the general economic uncertainty caused by the COVID-19 pandemic, and government and societal responses thereto. These and other important factors are detailed in various securities law filings made periodically by the Company, copies of which are available from the Company without charge. Actual results, performance or achievements could differ materially from those contemplated, expressed, or implied by the forward-looking statements. Any forward-looking statements presented herein are made only as of the date of this press release, and we do not undertake any obligation to update or revise any forward-looking statements to reflect changes in assumptions, the occurrence of unanticipated events, or otherwise, except as required by law.

PCB Bancorp and Subsidiary Consolidated Balance Sheets (Unaudited) ($ in thousands, except share and per share data)

	9/30/2021			6/30/2021			% Change		12/31/2020			% Change		9/30/2020			% Change
Assets
Cash and due from banks	$	19,688		$	18,417		6.9	%	$	19,605		0.4	%	$	13,572		45.1	%
Interest-bearing deposits in other financial institutions	195,285			156,204			25.0	%	174,493			11.9	%	243,810			(19.9	)%
Total cash and cash equivalents	214,973			174,621			23.1	%	194,098			10.8	%	257,382			(16.5	)%
Securities available-for-sale, at fair value	133,102			135,479			(1.8	)%	120,527			10.4	%	128,982			3.2	%
Loans held-for-sale	29,020			11,255			157.8	%	1,979			1,366.4	%	30,878			(6.0	)%
Loans held-for-investment	1,707,878			1,719,656			(0.7	)%	1,583,578			7.8	%	1,578,804			8.2	%
Allowance for loan losses	(23,807		)	(24,889		)	(4.3	)%	(26,510		)	(10.2	)%	(24,546		)	(3.0	)%
Net loans held-for-investment	1,684,071			1,694,767			(0.6	)%	1,557,068			8.2	%	1,554,258			8.4	%
Premises and equipment, net	3,306			3,576			(7.6	)%	4,048			(18.3	)%	4,355			(24.1	)%
Federal Home Loan Bank and other bank stock	8,577			8,577			—	%	8,447			1.5	%	8,447			1.5	%
Other real estate owned, net	—			—			—	%	1,401			(100.0	)%	376			(100.0	)%
Deferred tax assets, net	7,519			7,892			(4.7	)%	8,120			(7.4	)%	7,454			0.9	%
Servicing assets	7,009			6,482			8.1	%	6,400			9.5	%	6,166			13.7	%
Operating lease assets	7,164			6,595			8.6	%	7,616			(5.9	)%	7,329			(2.3	)%
Accrued interest receivable	5,494			6,741			(18.5	)%	9,334			(41.1	)%	11,246			(51.1	)%
Other assets	4,464			4,018			11.1	%	3,815			17.0	%	4,314			3.5	%
Total assets	$	2,104,699		$	2,060,003		2.2	%	$	1,922,853		9.5	%	$	2,021,187		4.1	%
Liabilities
Deposits
Noninterest-bearing demand	$	832,240		$	795,741		4.6	%	$	538,009		54.7	%	$	576,086		44.5	%
Savings, NOW and money market accounts	410,092			391,975			4.6	%	408,826			0.3	%	407,790			0.6	%
Time deposits of $250,000 or less	327,207			336,531			(2.8	)%	379,333			(13.7	)%	406,023			(19.4	)%
Time deposits of more than $250,000	263,127			273,401			(3.8	)%	268,683			(2.1	)%	257,208			2.3	%
Total deposits	1,832,666			1,797,648			1.9	%	1,594,851			14.9	%	1,647,107			11.3	%
Federal Home Loan Bank advances	10,000			10,000			—	%	80,000			(87.5	)%	130,000			(92.3	)%
Operating lease liabilities	7,862			7,338			7.1	%	8,455			(7.0	)%	8,204			(4.2	)%
Accrued interest payable and other liabilities	6,573			6,076			8.2	%	5,759			14.1	%	6,537			0.6	%
Total liabilities	1,857,101			1,821,062			2.0	%	1,689,065			9.9	%	1,791,848			3.6	%
Commitments and contingent liabilities
Shareholders’ equity
Common stock, no par value	154,618			154,796			(0.1	)%	164,140			(5.8	)%	163,960			(5.7	)%
Retained earnings	92,248			83,002			11.1	%	67,692			36.3	%	63,443			45.4	%
Accumulated other comprehensive income, net	732			1,143			(36.0	)%	1,956			(62.6	)%	1,936			(62.2	)%
Total shareholders’ equity	247,598			238,941			3.6	%	233,788			5.9	%	229,339			8.0	%
Total liabilities and shareholders’ equity	$	2,104,699		$	2,060,003		2.2	%	$	1,922,853		9.5	%	$	2,021,187		4.1	%

Outstanding common shares	14,841,626			14,854,315					15,385,878					15,379,538
Book value per common share ⁽¹⁾	$	16.68		$	16.09				$	15.19				$	14.91
Total loan to total deposit ratio	94.77		%	96.29		%			99.42		%			97.73		%
Noninterest-bearing deposits to total deposits	45.41		%	44.27		%			33.73		%			34.98		%

(1)

The ratios are calculated by dividing total shareholders’ equity by the number of outstanding common shares. The Company did not have any intangible equity components for the presented periods.

PCB Bancorp and Subsidiary Consolidated Statements of Income (Unaudited) ($ in thousands, except share and per share data)

	ThreeMonthsEnded													Nine Months Ended
	9/30/2021			6/30/2021			% Change		9/30/2020			% Change		9/30/2021			9/30/2020			% Change
Interest and dividend income
Loans, including fees	$	20,537		$	19,511		5.3	%	$	18,938		8.4	%	$	58,792		$	57,617		2.0	%
Investment securities	437			375			16.5	%	515			(15.1	)%	1,172			1,698			(31.0	)%
Other interest-earning assets	194			165			17.6	%	167			16.2	%	513			938			(45.3	)%
Total interest income	21,168			20,051			5.6	%	19,620			7.9	%	60,477			60,253			0.4	%
Interest expense
Deposits	885			1,000			(11.5	)%	2,599			(65.9	)%	3,196			11,000			(70.9	)%
Other borrowings	56			55			1.8	%	168			(66.7	)%	239			471			(49.3	)%
Total interest expense	941			1,055			(10.8	)%	2,767			(66.0	)%	3,435			11,471			(70.1	)%
Net interest income	20,227			18,996			6.5	%	16,853			20.0	%	57,042			48,782			16.9	%
Provision (reversal) for loan losses	(1,053		)	(934		)	12.7	%	4,326			(124.3	)%	(3,134		)	11,077			(128.3	)%
Net interest income after provision (reversal) for loan losses	21,280			19,930			6.8	%	12,527			69.9	%	60,176			37,705			59.6	%
Noninterest income
Gain on sale of loans	4,269			3,967			7.6	%	821			420.0	%	9,558			3,044			214.0	%
Service charges and fees on deposits	292			302			(3.3	)%	280			4.3	%	887			945			(6.1	)%
Loan servicing income	655			545			20.2	%	856			(23.5	)%	2,082			2,312			(9.9	)%
Other income	372			337			10.4	%	315			18.1	%	1,069			915			16.8	%
Total noninterest income	5,588			5,151			8.5	%	2,272			146.0	%	13,596			7,216			88.4	%
Noninterest expense
Salaries and employee benefits	7,606			7,125			6.8	%	6,438			18.1	%	20,913			18,750			11.5	%
Occupancy and equipment	1,399			1,388			0.8	%	1,416			(1.2	)%	4,158			4,196			(0.9	)%
Professional fees	422			658			(35.9	)%	325			29.8	%	1,574			1,631			(3.5	)%
Marketing and business promotion	416			516			(19.4	)%	193			115.5	%	1,070			920			16.3	%
Data processing	391			396			(1.3	)%	373			4.8	%	1,164			1,097			6.1	%
Director fees and expenses	144			151			(4.6	)%	125			15.2	%	433			453			(4.4	)%
Regulatory assessments	12			179			(93.3	)%	267			(95.5	)%	399			728			(45.2	)%
Other expenses	842			726			16.0	%	749			12.4	%	2,329			2,374			(1.9	)%
Total noninterest expense	11,232			11,139			0.8	%	9,886			13.6	%	32,040			30,149			6.3	%
Income before income taxes	15,636			13,942			12.2	%	4,913			218.3	%	41,732			14,772			182.5	%
Income tax expense	4,613			4,098			12.6	%	1,464			215.1	%	12,305			4,384			180.7	%
Net income	$	11,023		$	9,844		12.0	%	$	3,449		219.6	%	$	29,427		$	10,388		183.3	%
Earnings per common share
Basic	$	0.74		$	0.65				$	0.22				$	1.94		$	0.67
Diluted	$	0.73		$	0.64				$	0.22				$	1.92		$	0.67
Average common shares
Basic	14,779,707			15,115,561					15,343,888					15,090,989			15,395,475
Diluted	15,031,558			15,309,873					15,377,531					15,298,065			15,466,207

Dividend paid per common share	$	0.12		$	0.10				$	0.10				$	0.32		$	0.30
Return on average assets ⁽¹⁾	2.11		%	1.96		%			0.69		%			1.94		%	0.73		%
Return on average shareholders’ equity^{(1), (2)}	17.98		%	16.49		%			5.98		%			16.40		%	6.10		%
Efficiency ratio⁽³⁾	43.51		%	46.13		%			51.69		%			45.36		%	53.84		%

(1)		Ratios are presented on an annualized basis.
(2)		The Company did not have any intangible equity components for the presented periods.
(3)		The ratios are calculated by dividing noninterest expense by the sum of net interest income and noninterest income.

PCB Bancorp and Subsidiary Average Balance, Average Yield, and Average Rate (Unaudited) ($ in thousands)

	Three Months Ended
	9/30/2021							6/30/2021							9/30/2020
	Average Balance			Interest Income/ Expense		Avg. Yield/Rate⁽⁶⁾		Average Balance			Interest Income/ Expense		Avg. Yield/Rate⁽⁶⁾		Average Balance			Interest Income/ Expense		Avg. Yield/Rate⁽⁶⁾
Assets
Interest-earning assets
Total loans ⁽¹⁾	$	1,715,106		$	20,537	4.75	%	$	1,691,704		$	19,511	4.63	%	$	1,564,704		$	18,938	4.81	%
Mortgage-backed securities	95,908			278		1.15	%	92,732			233		1.01	%	75,832			339		1.78	%
Collateralized mortgage obligation	22,534			57		1.00	%	22,929			54		0.94	%	33,393			82		0.98	%
SBA loan pool securities	10,390			45		1.72	%	10,828			51		1.89	%	12,996			57		1.74	%
Municipal bonds ⁽²⁾	5,759			36		2.48	%	5,760			37		2.58	%	5,991			37		2.46	%
Corporate bonds	2,283			21		3.65	%	—			—		—	%	—			—		—	%
Other interest-earning assets	188,137			194		0.41	%	164,710			165		0.40	%	260,426			167		0.26	%
Total interest-earning assets	2,040,117			21,168		4.12	%	1,988,663			20,051		4.04	%	1,953,342			19,620		4.00	%
Noninterest-earning assets
Cash and cash equivalents	19,915							19,080							17,094
Allowance for loan losses	(24,854		)					(25,559		)					(21,268		)
Other assets	35,187							36,605							42,446
Total noninterest-earning assets	30,248							30,126							38,272
Total assets	$	2,070,365						$	2,018,789						$	1,991,614
Liabilities and Shareholders’ Equity
Interest-bearing liabilities
Deposits
NOW and money market accounts	$	387,661		291		0.30	%	$	400,314		317		0.32	%	$	365,093		391		0.43	%
Savings	12,806			2		0.06	%	11,588			1		0.03	%	9,517			2		0.08	%
Time deposits	599,865			592		0.39	%	615,035			682		0.44	%	689,352			2,206		1.27	%
Total interest-bearing deposits	1,000,332			885		0.35	%	1,026,937			1,000		0.39	%	1,063,962			2,599		0.97	%
Federal Home Loan Bank advances	18,152			56		1.22	%	19,012			55		1.16	%	130,000			168		0.51	%
Total interest-bearing liabilities	1,018,484			941		0.37	%	1,045,949			1,055		0.40	%	1,193,962			2,767		0.92	%
Noninterest-bearing liabilities
Noninterest-bearing demand	794,165							720,105							552,255
Other liabilities	14,531							13,287							15,934
Total noninterest-bearing liabilities	808,696							733,392							568,189
Total liabilities	1,827,180							1,779,341							1,762,151
Total shareholders’ equity	243,185							239,448							229,463
Total liabilities and shareholders’ equity	$	2,070,365						$	2,018,789						$	1,991,614
Net interest income				$	20,227						$	18,996						$	16,853
Net interest spread⁽³⁾						3.75	%						3.64	%						3.08	%
Net interest margin ⁽⁴⁾						3.93	%						3.83	%						3.43	%
Total deposits	$	1,794,497		$	885	0.20	%	$	1,747,042		$	1,000	0.23	%	$	1,616,217		$	2,599	0.64	%
Total funding ⁽⁵⁾	$	1,812,649		$	941	0.21	%	$	1,766,054		$	1,055	0.24	%	$	1,746,217		$	2,767	0.63	%

(1)		Total loans include both loans held-for-sale and loans held-for-investment, net of deferred loan fees and costs.
(2)		The yield on municipal bonds has not been computed on a tax-equivalent basis.
(3)		Net interest spread is calculated by subtracting average rate on interest-bearing liabilities from average yield on interest-earning assets.
(4)		Net interest margin is calculated by dividing annualized net interest income by average interest-earning assets.
(5)		Total funding is the sum of interest-bearing liabilities and noninterest-bearing deposits. The cost of total funding is calculated as annualized total interest expense divided by average total funding.
(6)		Annualized.

PCB Bancorp and Subsidiary Average Balance, Average Yield, and Average Rate (Unaudited) ($ in thousands)

	Nine Months Ended
	9/30/2021							9/30/2020
	Average Balance			Interest Income/ Expense		Avg. Yield/Rate⁽⁶⁾		Average Balance			Interest Income/ Expense		Avg. Yield/Rate⁽⁶⁾
Assets
Interest-earning assets
Total loans ⁽¹⁾	$	1,683,084		$	58,792	4.67	%	$	1,524,628		$	57,617	5.05	%
Mortgage-backed securities	90,095			726		1.08	%	65,713			985		2.00	%
Collateralized mortgage obligation	23,442			168		0.96	%	37,500			402		1.43	%
SBA loan pool securities	10,959			148		1.81	%	13,351			198		1.98	%
Municipal bonds ⁽²⁾	5,774			109		2.52	%	5,807			113		2.60	%
Corporate bonds	769			21		3.65	%	—			—		—	%
Other interest-earning assets	180,663			513		0.38	%	221,698			938		0.57	%
Total interest-earning assets	1,994,786			60,477		4.05	%	1,868,697			60,253		4.31	%
Noninterest-earning assets
Cash and cash equivalents	19,359							17,324
Allowance for loan losses	(25,753		)					(17,676		)
Other assets	37,371							38,255
Total noninterest-earning assets	30,977							37,903
Total assets	$	2,025,763						$	1,906,600
Liabilities and Shareholders’ Equity
Interest-bearing liabilities
Deposits
NOW and money market accounts	$	398,459		941		0.32	%	$	367,222		2,058		0.75	%
Savings	11,676			4		0.05	%	7,706			8		0.14	%
Time deposits	616,707			2,251		0.49	%	725,927			8,934		1.64	%
Total interest-bearing deposits	1,026,842			3,196		0.42	%	1,100,855			11,000		1.33	%
Federal Home Loan Bank advances	37,363			239		0.86	%	95,276			471		0.66	%
Total interest-bearing liabilities	1,064,205			3,435		0.43	%	1,196,131			11,471		1.28	%
Noninterest-bearing liabilities
Noninterest-bearing demand	707,800							465,634
Other liabilities	13,925							17,493
Total noninterest-bearing liabilities	721,725							483,127
Total liabilities	1,785,930							1,679,258
Total shareholders’ equity	239,833							227,342
Total liabilities and shareholders’ equity	$	2,025,763						$	1,906,600
Net interest income				$	57,042						$	48,782
Net interest spread⁽³⁾						3.62	%						3.03	%
Net interest margin ⁽⁴⁾						3.82	%						3.49	%
Total deposits	$	1,734,642		$	3,196	0.25	%	$	1,566,489		$	11,000	0.94	%
Total funding ⁽⁵⁾	$	1,772,005		$	3,435	0.26	%	$	1,661,765		$	11,471	0.92	%

(1)		Total loans include both loans held-for-sale and loans held-for-investment, net of deferred loan fees and costs.
(2)		The yield on municipal bonds has not been computed on a tax-equivalent basis.
(3)		Net interest spread is calculated by subtracting average rate on interest-bearing liabilities from average yield on interest-earning assets.
(4)		Net interest margin is calculated by dividing annualized net interest income by average interest-earning assets.
(5)		Total funding is the sum of interest-bearing liabilities and noninterest-bearing deposits. The cost of total funding is calculated as annualized total interest expense divided by average total funding.
(6)		Annualized.

PCB Bancorp and Subsidiary

Non-GAAP Measures

($ in thousands)

Adjusted allowance for loan losses to loans held-for-investment ratio

Adjusted allowance for loan losses to loans held-for-investment ratio calculated by removing SBA PPP loans from loans held-for-investment from the allowance for loan losses to loans held-for-investment ratio calculation. The SBA launched the PPP to provide a direct incentive for small businesses to keep their workers on the payroll in response to the COVID-19 pandemic. The SBA guarantees 100% of the PPP loans made to eligible borrowers, and the loans are eligible to be forgiven if certain conditions are met, at which point the SBA will make payments to the Bank for the forgiven amounts. The SBA guarantee on PPP loans cannot be separated from the loan and therefore is not a separate unit of account. The Company considered the SBA guarantee in the allowance for loan losses evaluation and determined that it is not required to reserve an allowance on SBA PPP loans. Management believes this non-GAAP measure enhances comparability to prior periods and provide supplemental information regarding the Company’s credit trends.

		9/30/2021			6/30/2021			12/31/2020			9/30/2020
Loans held-for-investment	(a)	$	1,707,878		$	1,719,656		$	1,583,578		$	1,578,804
Less: SBA PPP loans	(b)	101,901			181,019			135,654			136,418
Loans held-for-investment, excluding SBA PPP loans	(c)=(a)-(b)	$	1,605,977		$	1,538,637		$	1,447,924		$	1,442,386
Allowance for loan losses	(d)	$	23,807		$	24,889		$	26,510		$	24,546
Allowance for loan losses to loans held-for-investment ratio	(d)/(a)	1.39		%	1.45		%	1.67		%	1.55		%
Adjusted allowance for loan losses to loans held-for-investment ratio	(d)/(c)	1.48		%	1.62		%	1.83		%	1.70		%

View source version on businesswire.com: https://www.businesswire.com/news/home/20211028005127/en/

Timothy Chang

Executive Vice President & Chief Financial Officer

213-210-2000

KEYWORDS: United States North America California

INDUSTRY KEYWORDS: Banking Professional Services Finance

MEDIA:

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October 28, 2021 4:15 pm

STAG Industrial Announces Third Quarter 2021 Results

PR Newswire

BOSTON, Oct. 28, 2021 /PRNewswire/ — STAG Industrial, Inc. (the “Company”) (NYSE: STAG), today announced its financial and operating results for the quarter ended September 30, 2021.

“STAG showcased the rare ability to drive acquisition volume while maintaining pricing discipline,” said Ben Butcher, Chief Executive Officer of the Company. “This combined with continued internal growth resulted in exceptional Core FFO per share growth in the third quarter.”

Third Quarter 2021 Highlights

Reported $0.30 of net income per basic and diluted common share for the third quarter of 2021, compared to $0.15 of net income per basic and diluted common share for the third quarter of 2020. Reported $48.4 million of net income attributable to common stockholders for the third quarter of 2021, compared to net income attributable to common stockholders of $22.4 million for the third quarter of 2020.
Achieved $0.53 of Core FFO per diluted share for the third quarter of 2021, an increase of 15.2% compared to third quarter 2020 Core FFO per diluted share of $0.46. Generated Core FFO of $88.1 million for the third quarter of 2021, compared to $70.7 million for the third quarter of 2020, an increase of 24.6%.
Produced Cash NOI of $111.1 million for the third quarter of 2021, an increase of 16.8% compared to the third quarter of 2020 of $95.2 million.
Produced Same Store Cash NOI of $89.2 million for the third quarter of 2021, an increase of 2.9% compared to the third quarter of 2020 of $86.7 million.
Produced Cash Available for Distribution of $72.4 million for the third quarter of 2021, an increase of 32.1% compared to the third quarter of 2020 of $54.8 million.
Acquired 24 buildings in the third quarter of 2021, consisting of 4.0 million square feet, for $427.2 million, with a Cash Capitalization Rate of 5.3% and a Straight-Line Capitalization Rate of 5.7%.
Sold eight buildings in the third quarter of 2021, consisting of 711,050 square feet for $39.4 million, resulting in a net gain of $22.7 million.
Achieved an Occupancy Rate of 95.9% on the total portfolio and 96.8% on the Operating Portfolio as of September 30, 2021.
Commenced Operating Portfolio leases of 3.7 million square feet for the third quarter of 2021, resulting in a Cash Rent Change and Straight-Line Rent Change of 8.0% and 14.7%, respectively.
Experienced 55.7% Retention for 3.3 million square feet of leases expiring in the quarter.
Raised gross proceeds of $127.5 million of equity through the Company’s at-the-market offering (“ATM”) program for the third quarter of 2021.
Subsequent to quarter end, on October 26, 2021, closed a new $750 million senior unsecured revolving credit facility, refinanced a $150 million unsecured term loan scheduled to mature in 2022, and improved pricing on $675 million of unsecured debt.
Subsequent to quarter end, on October 28, 2021, closed the sale of a 350,326 square foot building located in Taunton, Massachusetts. The gross proceeds of $78.0 million represent a 3.1% cap rate.

Please refer to the Non-GAAP Financial Measures and Other Definitions section at the end of this release for definitions of capitalized terms used in this release.

The Company will host a conference call tomorrow, Friday, October 29, 2021 at 10:00 a.m. (Eastern Time), to discuss the quarter’s results and provide information about acquisitions, operations, capital markets and corporate activities. Details of the call can be found at the end of this release.

Key Financial Measures

THIRD QUARTER 2021 KEY FINANCIAL MEASURES
	Three months ended September 30,				Nine Months Ended September 30,
Metrics	2021	2020	% Change		2021	2020	% Change
(in $000s, except per share data)
Net income attributable to common stockholders	$48,444	$22,386	116.4	%	$101,951	$102,021	(0.1)	%
Net income per common share — basic	$0.30	$0.15	100.0	%	$0.64	$0.69	(7.2)	%
Net income per common share — diluted	$0.30	$0.15	100.0	%	$0.63	$0.69	(8.7)	%
Cash NOI	$111,134	$95,169	16.8	%	$323,580	$285,520	13.3	%
Same Store Cash NOI ⁽¹⁾	$89,205	$86,668	2.9	%	$267,585	$258,812	3.4	%
Adjusted EBITDAre	$100,467	$87,268	15.1	%	$293,947	$258,539	13.7	%
Core FFO	$88,138	$70,741	24.6	%	$254,236	$213,156	19.3	%
Core FFO per share / unit — basic	$0.53	$0.47	12.8	%	$1.56	$1.41	10.6	%
Core FFO per share / unit — diluted	$0.53	$0.46	15.2	%	$1.55	$1.40	10.7	%
Cash Available for Distribution	$72,394	$54,813	32.1	%	$219,611	$179,793	22.1	%
(1) The Same Store pool accounted for 81.6% of the total portfolio square footage as of September 30, 2021.

Definitions of the above-mentioned non-GAAP financial measures, together with reconciliations to net income (loss) in accordance with GAAP, appear at the end of this release. Please also see the Company’s supplemental information package for additional disclosure.

Acquisition and Disposition Activity

For the three months ended September 30, 2021, the Company acquired 24 buildings for $427.2 million with an Occupancy Rate of 80.1% upon acquisition. The chart below details the acquisition activity for the quarter:

THIRD QUARTER 2021 ACQUISITION ACTIVITY
Market	Date Acquired	Square Feet	Buildings	Purchase Price ($000s)	W.A. Lease Term (Years)	Cash Capitalization Rate	Straight-Line Capitalization Rate
Chicago, IL	7/19/2021	109,355	2	$13,341	9.5
Chicago, IL	7/20/2021	207,223	1	23,345	4.6
Columbia, SC	7/27/2021	194,290	1	14,546	3.6
South Bay/San Jose, CA	8/9/2021	75,954	1	26,820	10.4
Columbus, OH	8/19/2021	814,265	2	75,422	4.4
Salt Lake City, UT	8/19/2021	177,071	1	35,141	20.0
Greenville/Spartanburg, SC	8/23/2021	209,461	1	15,317	6.9
Indianapolis, IN	8/26/2021	78,600	1	5,707	8.9
Birmingham, AL	8/26/2021	595,176	1	36,850	3.4
Sacramento, CA	8/30/2021	114,597	1	15,388	5.9
Chicago, IL	9/2/2021	95,482	1	11,799	—
Chicago, IL	9/16/2021	506,096	4	50,661	3.9
Milwaukee/Madison, WI	9/16/2021	157,438	1	13,650	1.2
Denver, CO	9/24/2021	195,674	2	39,136	—
Milwaukee/Madison, WI	9/28/2021	156,482	1	10,807	4.7
Chicago, IL	9/29/2021	110,035	1	10,585	10.0
Boston, MA	9/29/2021	247,056	2	28,704	3.7
Total / weighted average		4,044,255	24	$427,219	5.0	5.3%	5.7%

The chart below details the 2021 acquisition activity and Pipeline through October 28, 2021:

2021 ACQUISITION ACTIVITY AND PIPELINE DETAIL
	Square Feet	Buildings	Purchase Price ($000s)	W.A. Lease Term (Years)	Cash Capitalization Rate	Straight-Line Capitalization Rate
Q1	1,252,323	6	$100,228	7.9	6.0%	6.4%
Q2	1,349,267	9	126,721	6.8	5.7%	6.2%
Q3	4,044,255	24	427,219	5.0	5.3%	5.7%
Total / weighted average	6,645,845	39	$654,168	5.9	5.5%	5.9%

As of October 28, 2021
Subsequent to quarter-end acquisitions	869,361	9	$103.3 million

Pipeline	35.5 million	190	$3.7 billion

The chart below details the 2021 disposition activity through October 28, 2021:

2021 DISPOSITION ACTIVITY
	Square Feet	Buildings	Sale Price ($000s)
Q1	483,586	4	$25,208
Q2	444,663	2	16,400
Q3	711,050	8	39,364
Total	1,639,299	14	$80,972

As of October 28, 2021
Subsequent to quarter-end dispositions	350,326	1	$78.0 million

Leasing Activity

The chart below details the leasing activity for leases commenced during the three months ended September 30, 2021:

THIRD QUARTER 2021 OPERATING PORTFOLIO LEASING ACTIVITY
Lease Type	Square Feet	W.A. Lease Term (Years)	Cash Base Rent $/SF	SL Base Rent $/SF	Lease Commissions $/SF	Tenant Improvements $/SF	Cash Rent Change	SL Rent Change	Retention
New Leases	1,859,045	4.4	$4.26	$4.39	$1.18	$1.15	8.4%	12.9%
Renewal Leases	1,818,720	4.9	$5.10	$5.24	$0.93	$0.71	7.7%	16.2%	55.7%
Total / weighted average	3,677,765	4.6	$4.68	$4.81	$1.06	$0.94	8.0%	14.7%

The chart below details the leasing activity for leases commenced during the nine months ended September 30, 2021:

2021 YEAR TO DATE OPERATING PORTFOLIO LEASING ACTIVITY
Lease Type	Square Feet	W.A. Lease Term (Years)	Cash Base Rent $/SF	SL Base Rent $/SF	Lease Commissions $/SF	Tenant Improvements $/SF	Cash Rent Change	SL Rent Change	Retention
New Leases	3,327,309	5.6	$4.19	$4.36	$1.34	$0.96	8.0%	13.9%
Renewal Leases	6,803,405	5.5	$4.50	$4.69	$0.68	$0.59	8.6%	16.7%	76.2%
Total / weighted average	10,130,714	5.6	$4.40	$4.58	$0.89	$0.71	8.4%	15.8%

Additionally, for the three and nine months ended September 30, 2021, leases commenced totaling 0 and 139,064 square feet, respectively, related to Value Add assets and first generation leasing. These are excluded from the Operating Portfolio statistics above.

Capital Markets Activity

The chart below details the ATM program activity for the nine months ended September 30, 2021:

2021 ATM ACTIVITY
Equity ⁽¹⁾	Shares Issued	Price per Share (Weighted Avg)	Gross Proceeds ($000s)	Net Proceeds ($000s)
Q1	680,276	$32.35	$22,005	$21,785
Q2	1,208,014	$34.95	$42,221	$41,799
Q3	3,221,712	$39.59	$127,541	$126,390
Total / weighted average	5,110,002	$37.53	$191,766	$189,974
(1) Excludes ATM issuances on a forward basis that were settled during the nine months ended September 30, 2021, which are discussed below.

On September 28, 2021, the Company issued $325 million of fixed rate senior unsecured notes with a weighted average interest rate of 2.82% as of the issuance date. The transaction consists of $275 million of 2.80% notes with a ten-year term maturing on September 29, 2031, and $50 million of 2.95% notes with a twelve-year term maturing on September 28, 2033.

On September 29, 2021, the Company settled the remaining net proceeds of $48.4 million related to the forward ATM program offering completed on April 5, 2021.

On September 29, 2021, the Company settled the remaining net proceeds of $133.8 million related to the public offering completed on November 16, 2020.

As of September 30, 2021, net debt to annualized Run Rate Adjusted EBITDAre was 4.8x and Liquidity was $739.9 million.

Subsequent to quarter end, on October 26, 2021, the Company refinanced its Unsecured Credit Facility. The transaction included extending the maturity date and reducing the borrowing costs of the revolver. The refinanced facility matures on October 24, 2025, with two six-month extension options, subject to certain conditions. The refinanced facility bears a current interest rate of LIBOR plus a spread of 0.775% based on the Company’s current leverage level and debt rating. This is a reduction in pricing of 12.5 basis points compared to the Company’s previous unsecured revolving facility.

Subsequent to quarter end, on October 26, 2021, the Company refinanced a $150 million unsecured term loan that was set to mature in March 2022. The refinanced term loan bears a current interest rate of LIBOR plus a spread of 0.85%, a reduction in pricing of 15 basis points compared to the previous term loan, and now matures on March 15, 2027. The Company entered into interest rate swaps to fix the interest rate of the new term loan at 2.15% as of April 1, 2022 through March 15, 2027.

Subsequent to quarter end, on October 26, 2021, the Company improved pricing on its $175 million unsecured term loan E, $200 million unsecured term loan F, and $300 million unsecured term loan G. The term loans now bear a current interest rate of LIBOR plus a spread of 0.85%, a reduction in pricing of 15 basis points compared to the previous pricing, with no change to maturities.

Conference Call

The Company will host a conference call tomorrow, Friday, October 29, 2021, at 10:00 a.m. (Eastern Time) to discuss the quarter’s results. The call can be accessed live over the phone toll-free by dialing (877) 407-4018, or for international callers, (201) 689-8471. A replay will be available shortly after the call and can be accessed by dialing (844) 512-2921, or for international callers, (412) 317-6671. The passcode for the replay is 13723743.

Interested parties may also listen to a simultaneous webcast of the conference call by visiting the Investor Relations section of the Company’s website at www.stagindustrial.com, or by clicking on the following link:

http://ir.stagindustrial.com/QuarterlyResults

Supplemental Schedule

The Company has provided a supplemental information package with additional disclosure and financial information on its website (www.stagindustrial.com) under the “Quarterly Results” tab in the Investor Relations section.

CONSOLIDATED BALANCE SHEETS STAG Industrial, Inc. (unaudited, in thousands, except share data)
	September 30, 2021		December 31, 2020
Assets
Rental Property:
Land	$	560,434	$	492,783
Buildings and improvements, net of accumulated depreciation of $582,202 and $495,348, respectively	3,923,301		3,532,608
Deferred leasing intangibles, net of accumulated amortization of $266,737 and $258,005, respectively	508,314		499,802
Total rental property, net	4,992,049		4,525,193
Cash and cash equivalents	42,001		15,666
Restricted cash	4,172		4,673
Tenant accounts receivable	88,023		77,796
Prepaid expenses and other assets	63,340		43,471
Interest rate swaps	2,055		—
Operating lease right-of-use assets	24,382		25,403
Assets held for sale, net	—		444
Total assets	$	5,216,022	$	4,692,646
Liabilities and Equity
Liabilities:
Unsecured credit facility	$	49,000	$	107,000
Unsecured term loans, net	971,274		971,111
Unsecured notes, net	896,809		573,281
Mortgage notes, net	55,446		51,898
Accounts payable, accrued expenses and other liabilities	82,605		69,765
Interest rate swaps	25,230		40,656
Tenant prepaid rent and security deposits	32,408		27,844
Dividends and distributions payable	20,932		19,379
Deferred leasing intangibles, net of accumulated amortization of $19,173 and $15,759, respectively	33,456		32,762
Operating lease liabilities	27,859		27,898
Total liabilities	2,195,019		1,921,594
Equity:
Preferred stock, par value $0.01 per share, 20,000,000 shares authorized at September 30, 2021 and December 31, 2020,
Series C, -0- and 3,000,000 shares (liquidation preference of $25.00 per share) issued and outstanding at September 30, 2021 and December 31, 2020, respectively	—		75,000
Common stock, par value $0.01 per share, 300,000,000 shares authorized at September 30, 2021 and December 31, 2020, 169,712,271 and 158,209,823 shares issued and outstanding at September 30, 2021 and December 31, 2020, respectively	1,697		1,582
Additional paid-in capital	3,796,275		3,421,721
Cumulative dividends in excess of earnings	(815,449)		(742,071)
Accumulated other comprehensive loss	(22,901)		(40,025)
Total stockholders’ equity	2,959,622		2,716,207
Noncontrolling interest	61,381		54,845
Total equity	3,021,003		2,771,052
Total liabilities and equity	$	5,216,022	$	4,692,646

CONSOLIDATED STATEMENTS OF OPERATIONS STAG Industrial, Inc. (unaudited, in thousands, except per share data)
	Three months ended September 30,				Nine months ended September 30,
	2021		2020		2021		2020
Revenue
Rental income	$	140,277	$	117,247	$	411,907	$	353,057
Other income	1,837		48		2,629		403
Total revenue	142,114		117,295		414,536		353,460
Expenses
Property	26,742		20,817		79,100		63,156
General and administrative	12,668		9,537		38,036		29,316
Depreciation and amortization	59,246		53,921		174,985		160,215
Loss on impairments	—		3,172		—		3,172
Other expenses	821		436		2,184		1,500
Total expenses	99,477		87,883		294,305		257,359
Other income (expense)
Interest and other income	30		165		92		400
Interest expense	(15,746)		(15,928)		(46,377)		(46,125)
Debt extinguishment and modification expenses	—		—		(679)		(834)
Gain on involuntary conversion	—		1,500		—		2,157
Gain on the sales of rental property, net	22,662		9,060		35,047		56,864
Total other income (expense)	6,946		(5,203)		(11,917)		12,462
Net income	$	49,583	$	24,209	$	108,314	$	108,563
Less: income attributable to noncontrolling interest after preferred stock dividends	1,067		466		2,273		2,471
Net income attributable to STAG Industrial, Inc.	$	48,516	$	23,743	$	106,041	$	106,092
Less: preferred stock dividends	—		1,289		1,289		3,867
Less: redemption of preferred stock	—		—		2,582		—
Less: amount allocated to participating securities	72		68		219		204
Net income attributable to common stockholders	$	48,444	$	22,386	$	101,951	$	102,021
Weighted average common shares outstanding — basic	162,652		148,997		160,288		148,412
Weighted average common shares outstanding — diluted	163,462		149,905		160,869		148,865
Net income per share — basic and diluted
Net income per share attributable to common stockholders — basic	$	0.30	$	0.15	$	0.64	$	0.69
Net income per share attributable to common stockholders — diluted	$	0.30	$	0.15	$	0.63	$	0.69

RECONCILIATIONS OF GAAP TO NON-GAAP MEASURES STAG Industrial, Inc. (unaudited, in thousands)
	Three months ended September 30,				Nine months ended September 30,
	2021		2020		2021		2020
NET OPERATING INCOME RECONCILIATION
Net income	$	49,583	$	24,209	$	108,314	$	108,563
General and administrative	12,668		9,537		38,036		29,316
Transaction costs	110		23		189		82
Depreciation and amortization	59,246		53,921		174,985		160,215
Interest and other income	(30)		(165)		(92)		(400)
Interest expense	15,746		15,928		46,377		46,125
Loss on impairments	—		3,172		—		3,172
Gain on involuntary conversion	—		(1,500)		—		(2,157)
Debt extinguishment and modification expenses	—		—		679		834
Other expenses	711		413		1,995		1,418
Gain on the sales of rental property, net	(22,662)		(9,060)		(35,047)		(56,864)
Net operating income	$	115,372	$	96,478	$	335,436	$	290,304

Net operating income	$	115,372	$	96,478	$	335,436	$	290,304
Straight-line rent adjustments, net	(4,101)		(3,648)		(15,362)		(12,162)
Straight-line termination, solar and other income adjustments, net	(360)		862		1,484		3,749
Amortization of above and below market leases, net	223		1,477		2,022		3,629
Cash net operating income	$	111,134	$	95,169	$	323,580	$	285,520

Cash net operating income	$	111,134
Cash NOI from acquisitions’ and dispositions’ timing	1,416
Cash termination, solar and other income	(2,306)
Run Rate Cash NOI	$	110,244

Same Store Portfolio NOI
Total NOI	$	115,372	$	96,478	$	335,436	$	290,304
Less: NOI non-same-store properties	(22,340)		(7,781)		(58,779)		(22,248)
Termination, solar and other adjustments, net	(1,951)		348		(2,254)		(441)
Same Store NOI	$	91,081	$	89,045	$	274,403	$	267,615
Less: straight-line rent adjustments, net	(2,494)		(3,207)		(8,874)		(11,596)
Amortization of above and below market leases, net	618		830		2,056		2,793
Same Store Cash NOI	$	89,205	$	86,668	$	267,585	$	258,812

EBITDA FOR REAL ESTATE (EBITDAre) RECONCILIATION
Net income	$	49,583	$	24,209	$	108,314	$	108,563
Depreciation and amortization	59,246		53,921		174,985		160,215
Interest and other income	(30)		(165)		(92)		(400)
Interest expense	15,746		15,928		46,377		46,125
Loss on impairments	—		3,172		—		3,172
Gain on the sales of rental property, net	(22,662)		(9,060)		(35,047)		(56,864)
EBITDAre	$	101,883	$	88,005	$	294,537	$	260,811

ADJUSTED EBITDAre RECONCILIATION
EBITDAre	$	101,883	$	88,005	$	294,537	$	260,811
Straight-line rent adjustments, net	(3,912)		(3,534)		(14,643)		(11,919)
Amortization of above and below market leases, net	223		1,477		2,022		3,629
Non-cash compensation expense	2,681		2,946		11,835		8,736
Termination, solar and other income, net	(2,666)		(149)		(3,220)		(1,477)
Transaction costs	110		23		189		82
Severance costs	2,148		—		2,148		—
Non-recurring other expenses	—		—		400		—
Gain on involuntary conversion	—		(1,500)		—		(2,157)
Debt extinguishment and modification expenses	—		—		679		834
Adjusted EBITDAre	$	100,467	$	87,268	$	293,947	$	258,539

Adjusted EBITDAre	$	100,467
Adjusted EBITDAre from acquisitions’ and dispositions’ timing	1,416
Run Rate Adjusted EBITDAre	$	101,883

RECONCILIATIONS OF GAAP TO NON-GAAP MEASURES STAG Industrial, Inc. (unaudited, in thousands, except per share data)
	Three months ended September 30,				Nine months ended September 30,
	2021		2020		2021		2020
CORE FUNDS FROM OPERATIONS RECONCILIATION
Net income	$	49,583	$	24,209	$	108,314	$	108,563
Rental property depreciation and amortization	59,195		53,853		174,825		160,007
Loss on impairments	—		3,172		—		3,172
Gain on the sales of rental property, net	(22,662)		(9,060)		(35,047)		(56,864)
Funds from operations	$	86,116	$	72,174	$	248,092	$	214,878
Preferred stock dividends	—		(1,289)		(1,289)		(3,867)
Redemption of preferred stock	—		—		(2,582)		—
Amount allocated to restricted shares of common stock and unvested units	(206)		(184)		(667)		(590)
Funds from operations attributable to common stockholders and unit holders	$	85,910	$	70,701	$	243,554	$	210,421

Funds from operations attributable to common stockholders and unit holders	$	85,910	$	70,701	$	243,554	$	210,421
Amortization of above and below market leases, net	223		1,477		2,022		3,629
Transaction costs	110		23		189		82
Non-recurring dead deal costs	—		40		412		347
Debt extinguishment and modification expenses	—		—		679		834
Gain on involuntary conversion	—		(1,500)		—		(2,157)
Redemption of preferred stock	—		—		2,582		—
Retirement plan adoption	(253)		—		2,650		—
Severance costs	2,148		—		2,148		—
Core funds from operations	$	88,138	$	70,741	$	254,236	$	213,156

Weighted average common shares and units
Weighted average common shares outstanding	162,652		148,997		160,288		148,412
Weighted average units outstanding	3,169		2,994		3,155		3,231
Weighted average common shares and units – basic	165,821		151,991		163,443		151,643
Dilutive shares	810		908		581		453
Weighted average common shares, units, and other dilutive shares – diluted	166,631		152,899		164,024		152,096
Core funds from operations per share / unit – basic	$	0.53	$	0.47	$	1.56	$	1.41
Core funds from operations per share / unit – diluted	$	0.53	$	0.46	$	1.55	$	1.40

CASH AVAILABLE FOR DISTRIBUTION RECONCILIATION
Core funds from operations	$	88,138	$	70,741	$	254,236	$	213,156
Non-rental property depreciation and amortization	51		68		160		208
Straight-line rent adjustments, net	(3,912)		(3,534)		(14,643)		(11,919)
Straight-line termination, solar and other income adjustments, net	(360)		862		1,484		3,749
Recurring capital expenditures	(1,842)		(502)		(2,105)		(973)
Non-recurring capital expenditures	(5,004)		(8,848)		(13,821)		(19,048)
Capital expenditures reimbursed by tenants	(760)		(349)		(2,395)		(3,712)
New lease commissions and tenant improvements	(3,104)		(4,695)		(6,225)		(8,213)
Renewal lease commissions and tenant improvements	(2,931)		(2,626)		(6,725)		(4,363)
Non-cash portion of interest expense	803		750		2,079		2,172
Non-cash compensation expense	2,934		2,946		9,185		8,736
Severance costs	(1,619)		—		(1,619)		—
Cash available for distribution	$	72,394	$	54,813	$	219,611	$	179,793

Non-GAAP Financial Measures and Other Definitions

Acquisition Capital Expenditures: We define Acquisition Capital Expenditures as Recurring and Non-Recurring Capital Expenditures identified at the time of acquisition. Acquisition Capital Expenditures also include new lease commissions and tenant improvements for space that was not occupied under the Company’s ownership.

Cash Available for Distribution: Cash Available for Distribution represents Core FFO, excluding non-rental property depreciation and amortization, straight-line rent adjustments, non-cash portion of interest expense, non-cash compensation expense, and deducts capital expenditures reimbursed by tenants, recurring and non-recurring capital expenditures, leasing commissions and tenant improvements, and severance costs.

Cash Available for Distribution should not be considered as an alternative to net income (determined in accordance with GAAP) as an indication of our performance, and we believe that to understand our performance further, these measurements should be compared with our reported net income or net loss in accordance with GAAP, as presented in our consolidated financial statements.

Cash Available for Distribution excludes, among other items, depreciation and amortization and capture neither the changes in the value of our buildings that result from use or market conditions of our buildings, all of which have real economic effects and could materially impact our results from operations, the utility of these measures as measures of our performance is limited. In addition, our calculation of Cash Available for Distribution may not be comparable to similarly titled measures disclosed by other REITs.

Cash Capitalization Rate: We define Cash Capitalization Rate as calculated by dividing (i) the Company’s estimate of year one cash net operating income from the applicable property’s operations stabilized for occupancy (post-lease-up for vacant properties), which does not include termination income, solar income, miscellaneous other income, capital expenditures, general and administrative costs, reserves, tenant improvements and leasing commissions, credit loss, or vacancy loss, by (ii) the GAAP purchase price plus estimated Acquisition Capital Expenditures. These Capitalization Rate estimates are subject to risks, uncertainties, and assumptions and are not guarantees of future performance, which may be affected by known and unknown risks, trends, uncertainties, and factors that are beyond our control, including those risk factors contained in our Annual Report on Form 10-K for the year ended December 31, 2020.

Cash Rent Change: We define Cash Rent Change as the percentage change in the base rent of the lease commenced during the period compared to the base rent of the Comparable Lease for assets included in the Operating Portfolio. The calculation compares the first base rent payment due after the lease commencement date compared to the base rent of the last monthly payment due prior to the termination of the lease, excluding holdover rent. Rent under gross or similar type leases are converted to a net rent based on an estimate of the applicable recoverable expenses.

Comparable Lease: We define a Comparable Lease as a lease in the same space with a similar lease structure as compared to the previous in-place lease, excluding new leases for space that was not occupied under our ownership.

Earnings before Interest, Taxes, Depreciation, and Amortization for Real Estate (EBITDAre), Adjusted EBITDAre, Annualized Adjusted EBITDAre, and Run Rate Adjusted EBITDAre: We define EBITDAre in accordance with the standards established by the National Association of Real Estate Investment Trusts (“NAREIT”). EBITDAre represents net income (loss) (computed in accordance with GAAP) before interest expense, interest and other income, tax, depreciation and amortization, gains or losses on the sale of rental property, and loss on impairments. Adjusted EBITDAre further excludes transaction costs, termination income, solar income, revenue associated with one-time tenant reimbursements of capital expenditures, straight-line rent adjustments, non-cash compensation expense, amortization of above and below market leases, net, gain (loss) on involuntary conversion, debt extinguishment and modification expenses, and other non-recurring items.

We define Annualized Adjusted EBITDAre as Adjusted EBITDAre multiplied by four.

We define Run Rate Adjusted EBITDAre as Adjusted EBITDAre plus incremental Adjusted EBITDAre adjusted for a full period of acquisitions and dispositions. Run Rate Adjusted EBITDAre does not reflect the Company’s historical results and does not predict future results, which may be substantially different.

EBITDAre, Adjusted EBITDAre, and Run Rate Adjusted EBITDAre should not be considered as an alternative to net income (determined in accordance with GAAP) as an indication of our performance, and we believe that to understand our performance further, EBITDAre, Adjusted EBITDAre, and Run Rate Adjusted EBITDAre should be compared with our reported net income or net loss in accordance with GAAP, as presented in our consolidated financial statements. We believe that EBITDAre, Adjusted EBITDAre, and Run Rate Adjusted EBITDAre are helpful to investors as supplemental measures of the operating performance of a real estate company because they are direct measures of the actual operating results of our properties. We also use these measures in ratios to compare our performance to that of our industry peers.

Funds from Operations (FFO) and Core FFO: We define FFO in accordance with the standards established by the National Association of Real Estate Investment Trusts (“NAREIT”). FFO represents net income (loss) (computed in accordance with GAAP), excluding gains (or losses) from sales of depreciable operating property, gains (losses) from sales of land, impairment write-downs of depreciable real estate, real estate related depreciation and amortization (excluding amortization of deferred financing costs and fair market value of debt adjustment) and after adjustments for unconsolidated partnerships and joint ventures. Core FFO excludes transaction costs, amortization of above and below market leases, net, debt extinguishment and modification expenses, gain (loss) on involuntary conversion, gain (loss) on swap ineffectiveness, and non-recurring other expenses.

None of FFO or Core FFO should be considered as an alternative to net income (determined in accordance with GAAP) as an indication of our performance, and we believe that to understand our performance further, these measurements should be compared with our reported net income or net loss in accordance with GAAP, as presented in our consolidated financial statements. We use FFO as a supplemental performance measure because it is a widely recognized measure of the performance of REITs. FFO may be used by investors as a basis to compare our operating performance with that of other REITs. We and investors may use Core FFO similarly as FFO.

However, because FFO and Core FFO exclude, among other items, depreciation and amortization and capture neither the changes in the value of our buildings that result from use or market conditions of our buildings, all of which have real economic effects and could materially impact our results from operations, the utility of these measures as measures of our performance is limited. In addition, other REITs may not calculate FFO in accordance with the NAREIT definition as we do, and, accordingly, our FFO may not be comparable to such other REITs’ FFO. Similarly, our calculation of Core FFO may not be comparable to similarly titled measures disclosed by other REITs.

GAAP: We define GAAP as generally accepted accounting principles in the United States.

Liquidity: We define Liquidity as the amount of aggregate undrawn nominal commitments the Company could immediately borrow under the Company’s unsecured debt instruments, consistent with the financial covenants, plus unrestricted cash balances.

Market: We define Market as the market defined by CoStar based on the building address. If the building is located outside of a CoStar defined market, the city and state is reflected.

Net operating income (NOI), Cash NOI, and Run Rate Cash NOI: We define NOI as rental income, including reimbursements, less property expenses, which excludes depreciation, amortization, loss on impairments, general and administrative expenses, interest expense, interest income, transaction costs, gain (loss) on involuntary conversion, debt extinguishment and modification expenses, gain on sales of rental property, and other expenses.

We define Cash NOI as NOI less straight-line rent adjustments and less amortization of above and below market leases, net.

We define Run Rate Cash NOI as Cash NOI plus Cash NOI adjusted for a full period of acquisitions and dispositions, less cash termination income, solar income and revenue associated with one-time tenant reimbursements of capital expenditures. Run Rate Cash NOI does not reflect the Company’s historical results and does not predict future results, which may be substantially different.

We consider NOI, Cash NOI and Run Rate Cash NOI to be appropriate supplemental performance measures to net income because we believe they help us, and investors understand the core operations of our buildings. None of these measures should be considered as an alternative to net income (determined in accordance with GAAP) as an indication of our performance, and we believe that to understand our performance further, these measurements should be compared with our reported net income or net loss in accordance with GAAP, as presented in our consolidated financial statements. Further, our calculations of NOI, Cash NOI and Run Rate NOI may not be comparable to similarly titled measures disclosed by other REITs.

Non-Recurring Capital Expenditures: We define Non-Recurring Capital Expenditures as capital items for upgrades or items that previously did not exist at a building or capital items which have a longer useful life, such as roof replacements. Non-Recurring Capital Expenditures funded by parties other than the Company or capital expenditures reimbursed by tenants in lump sum and Acquisition Capital Expenditures are excluded.

Occupancy Rate: We define Occupancy Rate as the percentage of total leasable square footage for which either revenue recognition has commenced in accordance with GAAP or the lease term has commenced as of the close of the reporting period, whichever occurs earlier.

Operating Portfolio: We define the Operating Portfolio as all warehouse and light manufacturing assets that were acquired stabilized or have achieved Stabilization. The Operating Portfolio excludes non-core flex/office assets, assets contained in the Value Add Portfolio, and assets classified as held for sale.

Pipeline: We define Pipeline as a point in time measure that includes all of the transactions under consideration by the Company’s acquisitions group that have passed the initial screening process. The pipeline also includes transactions under contract and transactions with non-binding LOIs.

Recurring Capital Expenditures: We define Recurring Capital Expenditures as capital items required to sustain existing systems and capital items which generally have a shorter useful life. Recurring Capital Expenditures funded by parties other than the Company are excluded.

Renewal Lease: We define a Renewal Lease as a lease signed by an existing tenant to extend the term for 12 months or more, including (i) a renewal of the same space as the current lease at lease expiration, (ii) a renewal of only a portion of the current space at lease expiration, or (iii) an early renewal or workout, which ultimately does extend the original term for 12 months or more.

Retention: We define Retention as the percentage determined by taking Renewal Lease square footage commencing in the period divided by square footage of leases expiring in the period for assets included in the Operating Portfolio.

Same Store: We define Same Store properties as properties that were in the Operating Portfolio for the entirety of the comparative periods presented. Same Store GAAP NOI and Same Store Cash NOI exclude termination fees, solar income, and revenue associated with one-time tenant reimbursements of capital expenditures.

Stabilization: We define Stabilization for assets under development or redevelopment to occur as the earlier of achieving 90% occupancy or 12 months after completion. Stabilization for assets that were acquired and immediately added to the Value Add Portfolio occurs under the following:

if acquired with less than 75% occupancy as of the acquisition date, Stabilization will occur upon the earlier of achieving 90% occupancy or 12 months from the acquisition date;
if acquired and will be less than 75% occupied due to known move-outs within two years of the acquisition date, Stabilization will occur upon the earlier of achieving 90% occupancy after the known move-outs have occurred or 12 months after the known move-outs have occurred.

Straight-Line Capitalization Rate: We define Straight-Line Capitalization Rate as calculated by dividing (i) the Company’s estimate of average annual net operating income from the applicable property’s operations stabilized for occupancy (post-lease-up for vacant properties), which does not include termination income, solar income, miscellaneous other income, capital expenditures, general and administrative costs, reserves, tenant improvements and leasing commissions, credit loss, or vacancy loss, by (ii) the GAAP purchase price plus estimated Acquisition Capital Expenditures. These Capitalization Rate estimates are subject to risks, uncertainties, and assumptions and are not guarantees of future performance, which may be affected by known and unknown risks, trends, uncertainties, and factors that are beyond our control, including those risk factors contained in our Annual Report on Form 10-K for the year ended December 31, 2020.

Straight-Line Rent Change (SL Rent Change): We define SL Rent Change as the percentage change in the average monthly base rent over the term of the lease that commenced during the period compared to the Comparable Lease for assets included in the Operating Portfolio. Rent under gross or similar type leases are converted to a net rent based on an estimate of the applicable recoverable expenses, and this calculation excludes the impact of any holdover rent.

Value Add Portfolio: We define the Value Add Portfolio as properties that meet any of the following criteria:

less than 75% occupied as of the acquisition date;
will be less than 75% occupied due to known move-outs within two years of the acquisition date;
out of service with significant physical renovation of the asset;
development.

Weighted Average Lease Term: We define Weighted Average Lease Term as the contractual lease term in years as of the lease start date weighted by square footage. Weighted Average Lease Term related to acquired assets reflects the remaining lease term in years as of the acquisition date weighted by square footage.

Forward-Looking Statements

This earnings release contains certain 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. STAG Industrial, Inc. (STAG) intends such forward-looking statements to be covered by the safe harbor provisions for forward-looking statements contained in the Private Securities Litigation Reform Act of 1995 and includes this statement for purposes of complying with these safe harbor provisions. Forward-looking statements, which are based on certain assumptions and describe STAG’s future plans, strategies and expectations, are generally identifiable by use of the words “believe,” “will,” “expect,” “intend,” “anticipate,” “estimate,” “should”, “project” or similar expressions. You should not rely on forward-looking statements since they involve known and unknown risks, uncertainties and other factors that are, in some cases, beyond STAG’s control and which could materially affect actual results, performances or achievements. Factors that may cause actual results to differ materially from current expectations include, but are not limited to, the risk factors discussed in STAG’s most recent Annual Report on Form 10-K for the year ended December 31, 2020, as updated by the Company’s subsequent reports filed with the Securities and Exchange Commission. Accordingly, there is no assurance that STAG’s expectations will be realized. Except as otherwise required by the federal securities laws, STAG disclaims any obligation or undertaking to publicly release any updates or revisions to any forward-looking statement contained herein (or elsewhere) to reflect any change in STAG’s expectations with regard thereto or any change in events, conditions or circumstances on which any such statement is based.

View original content to download multimedia:https://www.prnewswire.com/news-releases/stag-industrial-announces-third-quarter-2021-results-301411341.html

SOURCE STAG Industrial, Inc.

October 28, 2021 4:14 pm

SPS Commerce Reports Third Quarter 2021 Financial Results

Company delivers 83
^rd
consecutive quarter of topline growth with 23% growth in revenue and 20% growth in recurring revenue over third quarter 2020

Announces new Stock Repurchase Program

MINNEAPOLIS, Oct. 28, 2021 (GLOBE NEWSWIRE) — SPS Commerce, Inc. (Nasdaq: SPSC), a leader in retail cloud services, today announced financial results for the third quarter ended September 30, 2021.

Revenue was $97.9 million in the third quarter of 2021, compared to $79.6 million in the third quarter of 2020, reflecting 23% growth in revenue from the third quarter of 2020. Recurring revenue grew 20% from the third quarter of 2020.

Net income in the third quarter of 2021 and the third quarter of 2020 was $11.4 million or $0.31 per diluted share. Non-GAAP net income per diluted share was $0.47 in the third quarter of 2021, compared to non-GAAP net income per diluted share $0.39 in the third quarter of 2020. Adjusted EBITDA for the third quarter of 2021 increased 14% to $26.5 million compared to the third quarter of 2020.

“As the retail landscape continues to evolve, SPS Commerce is expanding its global market leadership in providing the easiest-to-use, full-service solutions that help retailers work efficiently with their suppliers,” said Archie Black, President and CEO of SPS Commerce. “Our network, world class technology, and partnerships continue to deliver and exceed our customers’ expectations as they transition to a true omnichannel fulfillment model.”

“With strong momentum in fulfillment, and large growth opportunities for our analytics solution as retailers and suppliers continue to improve efficiencies across the supply chain, we believe SPS Commerce is well positioned to capitalize on a multi-billion-dollar addressable market in front of us,” said Kim Nelson, CFO of SPS Commerce.

Stock Repurchase Program

The Company also announced today that the Board of Directors of SPS Commerce authorized a new program to repurchase up to $50.0 million of common stock. Under the program, purchases may be made from time to time in the open market, in privately negotiated purchases, or both. The timing and number of shares to be purchased will be based on the price of the Company’s common stock, general business and market conditions and other investment considerations and factors. The share repurchase program becomes effective on November 28, 2021 and expires on November 28, 2023. Our current stock repurchase plan expires on November 2, 2021.

The program does not obligate the Company to repurchase any specific number of shares and may be suspended or discontinued at any time without prior notice. The Company had 36.0 million shares of outstanding common stock as of September 30, 2021. The Company intends to finance the share repurchase program with cash on hand.

Guidance

Fourth quarter 2021 revenue is expected to be in the range of $99.9 million to $100.5 million. Fourth quarter net income per diluted share is expected to be in the range of $0.24 to $0.25 with fully diluted weighted average shares outstanding of approximately 37.3 million shares. Non-GAAP net income per diluted share is expected to be in the range of $0.41 to $0.42. Adjusted EBITDA is expected to be in the range of $26.3 million to $26.8 million. Non-cash, share-based compensation expense is expected to be approximately $6.5 million, depreciation expense is expected to be approximately $4.1 million and amortization expense is expected to be approximately $2.5 million.

For the full year of 2021, revenue is expected to be in the range of $382.4 million to $383.0 million, representing 22% to 23% growth over 2020. Full year net income per diluted share is expected to be in the range of $1.10 to $1.11, with fully diluted weighted average shares outstanding of approximately 37.0 million shares. Non-GAAP income per diluted share is expected to be in the range of $1.76 to $1.77. Adjusted EBITDA is expected to be in the range of $105.6 to $106.1 million, representing 21% to 22% growth over 2020. Non-cash, share-based compensation expense is expected to be approximately $27.8 million, depreciation expense is expected to be approximately $15.1 million and amortization expense is expected to be approximately $10.2 million.

Quarterly Conference Call

SPS Commerce will discuss its quarterly and annual results today via teleconference at 3:30 p.m. CT (4:30 p.m. ET). To access the call, please dial (877) 312-7508, or outside the U.S. (253) 237-1184, with Conference ID #8133049 at least fifteen minutes prior to the 3:30 p.m. CT start time. A live webcast of the call will also be available at http://investors.spscommerce.com under the Events and Presentations menu. The replay will also be available on our website at http://investors.spscommerce.com.

About SPS Commerce

SPS Commerce is the world’s leading retail network, connecting trading partners around the globe to optimize supply chain operations for all retail partners. We support data-driven partnerships with innovative cloud technology, customer-obsessed service and accessible experts so our customers can focus on what they do best. To date, more than 95,000 companies in retail, distribution, grocery and e-commerce have chosen SPS as their retail network. SPS has achieved 83 consecutive quarters of revenue growth and is headquartered in Minneapolis. For additional information, contact SPS at 866-245-8100 or visit www.spscommerce.com.

SPS COMMERCE, SPS, SPS logo, 1=INFINITY logo, AS THE NETWORK GROWS, SO DOES YOUR OPPORTUNITY, INFINITE RETAIL POWER, MASTERING THE RETAIL GAME and RSX are marks of SPS Commerce, Inc. and Registered in the U.S. Patent and Trademark Office. IN:FLUENCE, and others are further marks of SPS Commerce, Inc. These marks may be registered or otherwise protected in other countries.

SPS-F

Use of Non-GAAP Financial Measures

To supplement its financial statements, SPS Commerce also provides investors with Adjusted EBITDA, Adjusted EBITDA Margin, and non-GAAP net income per share, which are non-GAAP financial measures. SPS Commerce believes that these non-GAAP measures provide useful information to management, our board of directors, and investors regarding certain financial and business trends relating to its financial condition and results of operations. SPS Commerce’s management uses these non-GAAP measures to compare the Company’s performance to that of prior periods for trend analyses and planning purposes. Adjusted EBITDA is also used for purposes of determining executive and senior management incentive compensation.

Adjusted EBITDA consists of net income adjusted for income tax expense, depreciation and amortization expense, stock-based compensation expense, realized gain or loss from foreign currency on cash and investments held, investment income or loss, and other adjustments as necessary for a fair presentation.

Adjusted EBITDA Margin consists of Adjusted EBITDA divided by revenue. Margin, the comparable GAAP measure of financial performance, consists of net income divided by revenue.

SPS Commerce uses Adjusted EBITDA and Adjusted EBITDA Margin as measures of operating performance because they assist the Company in comparing performance on a consistent basis, as they remove from operating results the impact of the Company’s capital structure. SPS Commerce believes Adjusted EBITDA and Adjusted EBITDA Margin are useful to an investor in evaluating the Company’s operating performance because they are widely used to measure a company’s operating performance without regard to items such as depreciation and amortization, which can vary depending upon accounting methods and the book value of assets, and to present a meaningful measure of corporate performance exclusive of the Company’s capital structure and the method by which assets were acquired.

Non-GAAP income per share consists of net income adjusted for stock-based compensation expense, amortization expense related to intangible assets, realized gain or loss from foreign currency on cash and investments held, and other adjustments as necessary for a fair presentation, divided by the weighted average number of shares of common stock outstanding during each period. SPS Commerce believes non-GAAP income per share is useful to an investor because it is widely used to measure a company’s operating performance.

SPS Commerce includes an adjustment to non-GAAP income to reflect the income tax effects of the adjustments to GAAP net income, as discussed above. To quantify these tax effects, SPS Commerce recalculates income tax expense excluding the direct book and tax effects of the specific items constituting the non-GAAP adjustments (e.g., stock-based compensation expense). The difference between this recalculated income tax expense and GAAP income tax expense is presented as the income tax effect of the non-GAAP adjustments.

These non-GAAP measures should not be considered a substitute for, or superior to, financial measures calculated in accordance with generally accepted accounting principles in the United States. These non-GAAP financial measures exclude significant expenses and income that are required by GAAP to be recorded in the Company’s financial statements and are subject to inherent limitations. SPS Commerce urges investors to review the reconciliation of its non-GAAP financial measures to the comparable GAAP financial measures that are included in this press release.

Forward-Looking Statements

This press release may contain forward-looking statements, including information about management’s view of SPS Commerce’s future expectations, plans and prospects, including our views regarding future execution within our business, the opportunity we see in the retail supply chain world and our performance for the fourth quarter and full year of 2021, within the safe harbor provisions under The Private Securities Litigation Reform Act of 1995. These statements involve known and unknown risks, uncertainties and other factors which may cause the results of SPS Commerce to be materially different than those expressed or implied in such statements. Certain of these risk factors and others are included in documents SPS Commerce files with the Securities and Exchange Commission, including but not limited to, SPS Commerce’s Annual Report on Form 10-K for the year ended December 31, 2020, as well as subsequent reports filed with the Securities and Exchange Commission. Other unknown or unpredictable factors also could have material adverse effects on SPS Commerce’s future results. The forward-looking statements included in this press release are made only as of the date hereof. SPS Commerce cannot guarantee future results, levels of activity, performance, or achievements. Accordingly, you should not place undue reliance on these forward-looking statements. Finally, SPS Commerce expressly disclaims any intent or obligation to update or revise any forward-looking statements, whether as a result of new information, future events, or otherwise.

SPS COMMERCE, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited; in thousands, except shares)

	September 30,			December 31,
	2021			2020
ASSETS
CURRENT ASSETS
Cash and cash equivalents	$	195,803		$	149,692
Short-term investments		56,183			37,786
Accounts receivable		39,934			37,811
Allowance for credit losses		(4,604	)		(4,233	)
Accounts receivable, net		35,330			33,578
Deferred costs		41,593			37,988
Other assets		14,346			12,312
Total current assets		343,255			271,356
PROPERTY AND EQUIPMENT, less accumulated depreciation of $70,663 and $59,152, respectively		31,036			26,432
OPERATING LEASE RIGHT-OF-USE ASSETS		12,665			15,581
GOODWILL		134,680			134,853
INTANGIBLE ASSETS, net		52,471			60,230
INVESTMENTS		—			2,500
OTHER ASSETS
Deferred costs, non-current		14,500			12,607
Deferred income tax assets		189			194
Other assets, non-current		2,487			2,705
Total assets	$	591,283		$	526,458
LIABILITIES AND STOCKHOLDERS’ EQUITY
CURRENT LIABILITIES
Accounts payable	$	3,752		$	5,354
Accrued compensation		30,986			22,872
Accrued expenses		7,110			11,161
Deferred revenue		49,185			37,947
Operating lease liabilities		3,895			2,798
Total current liabilities		94,928			80,132
OTHER LIABILITIES
Deferred revenue, non-current		5,159			2,996
Operating lease liabilities, non-current		16,697			19,672
Deferred income tax liabilities		3,971			2,937
Total liabilities		120,755			105,737
COMMITMENTS and CONTINGENCIES
STOCKHOLDERS’ EQUITY
Preferred stock, $0.001 par value; 5,000,000 shares authorized; 0 shares issued and outstanding		—			—
Common stock, $0.001 par value; 110,000,000 shares authorized; 37,683,302 and 37,100,467 shares issued; and 35,964,238 and 35,487,217 shares outstanding, respectively		38			37
Treasury Stock, at cost; 1,719,064 and 1,613,250 shares, respectively		(75,908	)		(65,247	)
Additional paid-in capital		422,670			393,462
Retained earnings		125,322			93,490
Accumulated other comprehensive loss		(1,594	)		(1,021	)
Total stockholders’ equity		470,528			420,721
Total liabilities and stockholders’ equity	$	591,283		$	526,458

SPS COMMERCE, INC.
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(Unaudited; in thousands, except per share amounts)

	Three Months Ended					Nine Months Ended
	September 30,					September 30,
	2021			2020		2021			2020
Revenues	$	97,887		$	79,557	$	282,520		$	229,322
Cost of revenues		34,343			25,045		96,043			72,915
Gross profit		63,544			54,512		186,477			156,407
Operating expenses
Sales and marketing		22,079			19,233		65,386			56,143
Research and development		10,854			8,053		28,459			23,087
General and administrative		14,691			11,939		45,186			36,591
Amortization of intangible assets		2,399			1,333		7,734			3,985
Total operating expenses		50,023			40,558		146,765			119,806
Income from operations		13,521			13,954		39,712			36,601
Other income (expense), net		(716	)		423		(1,424	)		1,218
Income before income taxes		12,805			14,377		38,288			37,819
Income tax expense		1,356			2,970		6,456			5,703
Net income	$	11,449		$	11,407	$	31,832		$	32,116

Net income per share
Basic	$	0.32		$	0.32	$	0.89		$	0.91
Diluted	$	0.31		$	0.31	$	0.86		$	0.89

Weighted average common shares used to compute net income per share
Basic		35,961			35,295		35,873			35,133
Diluted		37,015			36,366		36,898			36,137

Per share amounts may not foot due to rounding.

SPS COMMERCE, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited; in thousands)

	Nine Months Ended
	September 30,
	2021			2020
Cash flows from operating activities
Net income	$	31,832		$	32,116
Reconciliation of net income to net cash provided by operating activities
Deferred income taxes		1,013			4,324
Change in earn-out liability		—			72
Depreciation and amortization of property and equipment		10,989			9,474
Amortization of intangible assets		7,734			3,985
Provision for credit losses		4,037			4,198
Stock-based compensation		21,273			14,246
Other, net		234			(16	)
Changes in assets and liabilities
Accounts receivable		(5,327	)		(4,551	)
Deferred costs		(5,686	)		(1,129	)
Other current and non-current assets		(3,893	)		2,612
Accounts payable		(1,518	)		1,357
Accrued compensation		6,617			(3,989	)
Accrued expenses		(174	)		(3	)
Deferred revenue		13,401			3,961
Operating leases		1,036			(1,128	)
Net cash provided by operating activities		81,568			65,529
Cash flows from investing activities
Purchases of property and equipment		(15,567	)		(11,639	)
Purchases of investments		(84,020	)		(67,636	)
Maturities of investments		67,500			47,300
Net cash used in investing activities		(32,087	)		(31,975	)
Cash flows from financing activities
Repurchases of common stock		(10,661	)		(18,950	)
Net proceeds from exercise of options to purchase common stock		7,027			14,143
Net proceeds from employee stock purchase plan		2,316			1,645
Payments for contingent consideration		(2,042	)		(688	)
Net cash used in financing activities		(3,360	)		(3,850	)
Effect of foreign currency exchange rate changes		(10	)		(26	)
Net increase in cash and cash equivalents		46,111			29,678
Cash and cash equivalents at beginning of period		149,692			179,252
Cash and cash equivalents at end of period	$	195,803		$	208,930

SPS COMMERCE, INC.
NON-GAAP RECONCILIATION
(Unaudited; in thousands, except per share amounts)

	Three Months Ended						Nine Months Ended
	September 30,						September 30,
	2021			2020			2021			2020

Adjusted EBITDA
Net income	$	11,449		$	11,407		$	31,832		$	32,116
Income tax expense		1,356			2,970			6,456			5,703
Depreciation and amortization of property
and equipment		3,695			3,198			10,989			9,474
Amortization of intangible assets		2,399			1,333			7,734			3,985
Stock-based compensation expense		6,849			4,893			21,273			14,246
Realized (gain) loss from foreign currency on cash and investments held		854			(559	)		1,492			(686	)
Investment income		(66	)		(107	)		(242	)		(1,079	)
Other		–			103			(213	)		257
Adjusted EBITDA	$	26,536		$	23,238		$	79,321		$	64,016

Adjusted EBITDA Margin
Net income	$	11,449		$	11,407		$	31,832		$	32,116
Revenue		97,887			79,557			282,520			229,322
Margin		12	%		14	%		11	%		14	%

Adjusted EBITDA	$	26,536		$	23,238		$	79,321		$	64,016
Revenue		97,887			79,557			282,520			229,322
Adjusted EBITDA Margin		27	%		29	%		28	%		28	%

Non-GAAP Income
Net income	$	11,449		$	11,407		$	31,832		$	32,116
Stock-based compensation expense		6,849			4,893			21,273			14,246
Amortization of intangible assets		2,399			1,333			7,734			3,985
Realized (gain) loss from foreign currency on cash and investments held		854			(559	)		1,492			(686	)
Other		–			103			(213	)		257
Income tax effects of adjustments		(4,178	)		(2,929	)		(12,152	)		(8,841	)
Non-GAAP income	$	17,373		$	14,248		$	49,966		$	41,077

Shares used to compute non-GAAP income per share
Basic		35,961			35,295			35,873			35,133
Diluted		37,015			36,366			36,898			36,137

Non-GAAP income per share
Basic	$	0.48		$	0.40		$	1.39		$	1.17
Diluted	$	0.47		$	0.39		$	1.35		$	1.14

Contact:
Investor Relations
The Blueshirt Group
Irmina Blaszczyk
Lisa Laukkanen
[email protected]
415-217-4962

October 28, 2021 4:14 pm

Power Integrations Reports Third-Quarter Financial Results

Power Integrations Reports Third-Quarter Financial Results

Revenues increased 46 percent year-over-year to $176.8 million; GAAP earnings were $0.69 per diluted share; non-GAAP earnings were $0.84 per diluted share

Quarterly dividend rises to $0.15 per share; $50M added to repurchase authorization

SAN JOSE, Calif.–(BUSINESS WIRE)–
Power Integrations (Nasdaq: POWI) today announced financial results for the quarter ended September 30, 2021. Net revenues for the third quarter of 2021 were $176.8 million, down two percent compared to the prior quarter and up 46 percent from the third quarter of 2020. Net income for the third quarter was $42.0 million or $0.69 per diluted share compared to $0.68 per diluted share in the prior quarter and $0.24 per diluted share in the third quarter of 2020. Cash flow from operations for the third quarter was $58.7 million.

In addition to its GAAP results, the company provided certain non-GAAP measures that exclude stock-based compensation, amortization of acquisition-related intangible assets and the tax effects of these items. Non-GAAP net income for the third quarter of 2021 was $51.8 million or $0.84 per diluted share compared with $0.83 per diluted share in the prior quarter and $0.40 per diluted share in the third quarter of 2020. A reconciliation of GAAP to non-GAAP financial results is included with the tables accompanying this press release.

Commented Balu Balakrishnan, president and CEO of Power Integrations: “We delivered another quarter of strong growth in revenues, earnings and cash flows. For the first nine months of 2021 our revenues were up 57 percent, and we are on track to outgrow the analog semiconductor industry by a wide margin this year thanks to broad market-share gains, strong uptake of our highly integrated GaN products, and secular trends such as energy efficiency, electrification, smart homes and appliances, and advanced chargers for mobile devices.”

Additional Highlights

The company paid a cash dividend of $0.13 per share on September 30, 2021. The company’s board of directors has declared a dividend of $0.15 per share to be paid on December 31, 2021 to stockholders of record as of November 30, 2021.
Power Integrations repurchased approximately 120,000 shares of its common stock during the quarter for $9.8 million. The company had approximately $55 million remaining on its repurchase authorization at quarter-end; the company’s board of directors has subsequently allocated an additional $50 million for share repurchases bringing the total allocation to approximately $105 million.

Financial Outlook

The company issued the following forecast for the fourth quarter of 2021:

Revenues are expected to be $170 million plus or minus $5 million.
Gross margins are expected to be similar to the third-quarter levels.
GAAP operating expenses are expected to be approximately $49.5 million; non-GAAP operating expenses are expected to be approximately $40 million. Non-GAAP expenses are expected to exclude approximately $9.3 million of stock-based compensation and $0.2 million of amortization of acquisition-related intangible assets.

Conference Call Today at 1:30 p.m. Pacific Time

Power Integrations management will hold a conference call today at 1:30 p.m. Pacific time. Members of the investment community can register for the call by visiting the following link: https://conferencingportals.com/event/iobnvsok. A live webcast of the call will also be available on the investor section of the company’s website, http://investors.power.com.

About Power Integrations

Power Integrations, Inc. is a leading innovator in semiconductor technologies for high-voltage power conversion. The company’s products are key building blocks in the clean-power ecosystem, enabling the generation of renewable energy as well as the efficient transmission and consumption of power in applications ranging from milliwatts to megawatts. For more information please visit www.power.com.

Note Regarding Use of Non-GAAP Financial Measures

In addition to the company’s consolidated financial statements, which are presented according to GAAP, the company provides certain non-GAAP financial information that excludes stock-based compensation expenses recorded under ASC 718-10, amortization of acquisition-related intangible assets, and the tax effects of these items. The company uses these measures in its financial and operational decision-making and, with respect to one measure, in setting performance targets for compensation purposes. The company believes that these non-GAAP measures offer important analytical tools to help investors understand its operating results, and to facilitate comparability with the results of companies that provide similar measures. Non-GAAP measures have limitations as analytical tools and are not meant to be considered in isolation or as a substitute for GAAP financial information. For example, stock-based compensation is an important component of the company’s compensation mix, and will continue to result in significant expenses in the company’s GAAP results for the foreseeable future, but is not reflected in the non-GAAP measures. Also, other companies, including companies in Power Integrations’ industry, may calculate non-GAAP measures differently, limiting their usefulness as comparative measures. Reconciliations of non-GAAP measures to GAAP measures are attached to this press release.

Note Regarding Forward-Looking Statements

The above statements regarding the company’s forecast for its fourth-quarter financial performance are forward-looking statements reflecting management’s current expectations and beliefs. These forward-looking statements are based on current information that is, by its nature, subject to rapid and even abrupt change. Due to risks and uncertainties associated with the company’s business, actual results could differ materially from those projected or implied by these statements. These risks and uncertainties include, but are not limited to: the impact of the COVID-19 pandemic on demand for the company’s products, its ability to supply products and its ability to conduct other aspects of its business such as competing for new design wins; changes in global macroeconomic conditions, including changing tariffs and uncertainty regarding trade negotiations, which may impact the level of demand for the company’s products; potential changes and shifts in customer demand away from end products that utilize the company’s integrated circuits to end products that do not incorporate the company’s products; the effects of competition, which may cause the company’s revenues to decrease or cause the company to decrease its selling prices for its products; unforeseen costs and expenses; and unfavorable fluctuations in component costs or operating expenses resulting from changes in commodity prices and/or exchange rates. In addition, new product introductions and design wins are subject to the risks and uncertainties that typically accompany development and delivery of complex technologies to the marketplace, including product development delays and defects and market acceptance of the new products. These and other risk factors that may cause actual results to differ are more fully explained under the caption “Risk Factors” in the company’s most recent Annual Report on Form 10-K, filed with the Securities and Exchange Commission (SEC) on February 5, 2021. The company is under no obligation (and expressly disclaims any obligation) to update or alter its forward-looking statements, whether as a result of new information, future events or otherwise, except as otherwise required by law.

Power Integrations and the Power Integrations logo are trademarks or registered trademarks of Power Integrations, Inc.

POWER INTEGRATIONS, INC.
CONSOLIDATED STATEMENTS OF INCOME
(in thousands, except per-share amounts)


	Three Months Ended									Nine Months Ended
	September 30, 2021			June 30, 2021			September 30, 2020			September 30, 2021			September 30, 2020
NET REVENUES	$	176,776		$	180,110		$	121,129		$	530,623		$	337,625

COST OF REVENUES		85,037			88,797			61,560			263,160			168,040

GROSS PROFIT		91,739			91,313			59,569			267,463			169,585

OPERATING EXPENSES:
Research and development		21,137			21,741			20,868			62,905			59,790
Sales and marketing		15,443			15,097			13,442			44,447			39,465
General and administrative		9,386			9,306			10,302			28,767			26,867
Amortization of acquisition-related intangible assets		181			193			216			590			703
Total operating expenses		46,147			46,337			44,828			136,709			126,825

INCOME FROM OPERATIONS		45,592			44,976			14,741			130,754			42,760

OTHER INCOME		206			173			877			976			4,134

INCOME BEFORE INCOME TAXES		45,798			45,149			15,618			131,730			46,894

PROVISION FOR INCOME TAXES		3,764			3,268			798			8,017			2,996

NET INCOME	$	42,034		$	41,881		$	14,820		$	123,713		$	43,898

EARNINGS PER SHARE:
Basic	$	0.70		$	0.69		$	0.25		$	2.05		$	0.74
Diluted	$	0.69		$	0.68		$	0.24		$	2.01		$	0.72

SHARES USED IN PER-SHARE CALCULATION:
Basic		60,319			60,544			59,823			60,350			59,582
Diluted		61,363			61,466			60,852			61,466			60,668



SUPPLEMENTAL INFORMATION:	Three Months Ended									Nine Months Ended
	September 30, 2021			June 30, 2021			September 30, 2020			September 30, 2021			September 30, 2020
Stock-based compensation expenses included in:
Cost of revenues	$	664		$	640		$	602		$	1,935		$	1,250
Research and development		3,055			3,159			2,976			8,605			7,436
Sales and marketing		2,201			1,725			1,900			5,540			4,550
General and administrative		3,725			3,676			3,880			11,245			8,813
Total stock-based compensation expense	$	9,645		$	9,200		$	9,358		$	27,325		$	22,049

Cost of revenues includes:
Amortization of acquisition-related intangible assets	$	552		$	619		$	799		$	1,925		$	2,397


	Three Months Ended									Nine Months Ended
REVENUE MIX BY END MARKET	September 30, 2021			June 30, 2021			September 30, 2020			September 30, 2021			September 30, 2020
Communications		25	%		35	%		32	%		33	%		28	%
Computer		11	%		8	%		9	%		9	%		6	%
Consumer		34	%		31	%		31	%		31	%		34	%
Industrial		30	%		26	%		28	%		27	%		32	%

POWER INTEGRATIONS, INC.
RECONCILIATION OF NON-GAAP FINANCIAL MEASURES TO GAAP RESULTS
(in thousands, except per-share amounts)

		Three Months Ended									Nine Months Ended
		September 30, 2021			June 30, 2021			September 30, 2020			September 30, 2021			September 30, 2020
RECONCILIATION OF GROSS PROFIT
GAAP gross profit		$	91,739		$	91,313		$	59,569		$	267,463		$	169,585
	GAAP gross margin		51.9	%		50.7	%		49.2	%		50.4	%		50.2	%

Stock-based compensation included in cost of revenues			664			640			602			1,935			1,250
Amortization of acquisition-related intangible assets			552			619			799			1,925			2,397

Non-GAAP gross profit		$	92,955		$	92,572		$	60,970		$	271,323		$	173,232
	Non-GAAP gross margin		52.6	%		51.4	%		50.3	%		51.1	%		51.3	%


		Three Months Ended									Nine Months Ended
RECONCILIATION OF OPERATING EXPENSES		September 30, 2021			June 30, 2021			September 30, 2020			September 30, 2021			September 30, 2020
GAAP operating expenses		$	46,147		$	46,337		$	44,828		$	136,709		$	126,825

Less:	Stock-based compensation expense included in operating expenses
	Research and development		3,055			3,159			2,976			8,605			7,436
	Sales and marketing		2,201			1,725			1,900			5,540			4,550
	General and administrative		3,725			3,676			3,880			11,245			8,813
	Total		8,981			8,560			8,756			25,390			20,799

	Amortization of acquisition-related intangible assets		181			193			216			590			703

Non-GAAP operating expenses		$	36,985		$	37,584		$	35,856		$	110,729		$	105,323


		Three Months Ended									Nine Months Ended
RECONCILIATION OF INCOME FROM OPERATIONS		September 30, 2021			June 30, 2021			September 30, 2020			September 30, 2021			September 30, 2020
GAAP income from operations		$	45,592		$	44,976		$	14,741		$	130,754		$	42,760
	GAAP operating margin		25.8	%		25.0	%		12.2	%		24.6	%		12.7	%

Add:	Total stock-based compensation		9,645			9,200			9,358			27,325			22,049
	Amortization of acquisition-related intangible assets		733			812			1,015			2,515			3,100

Non-GAAP income from operations		$	55,970		$	54,988		$	25,114		$	160,594		$	67,909
	Non-GAAP operating margin		31.7	%		30.5	%		20.7	%		30.3	%		20.1	%


		Three Months Ended									Nine Months Ended
RECONCILIATION OF PROVISION FOR INCOME TAXES		September 30, 2021			June 30, 2021			September 30, 2020			September 30, 2021			September 30, 2020
GAAP provision for income taxes		$	3,764		$	3,268		$	798		$	8,017		$	2,996
	GAAP effective tax rate		8.2	%		7.2	%		5.1	%		6.1	%		6.4	%

Tax effect of adjustments to GAAP results			(565	)		(1,101	)		(971	)		(4,244	)		(1,994	)

Non-GAAP provision for income taxes		$	4,329		$	4,369		$	1,769		$	12,261		$	4,990
	Non-GAAP effective tax rate		7.7	%		7.9	%		6.8	%		7.6	%		6.9	%


		Three Months Ended									Nine Months Ended
RECONCILIATION OF NET INCOME PER SHARE (DILUTED)		September 30, 2021			June 30, 2021			September 30, 2020			September 30, 2021			September 30, 2020
GAAP net income		$	42,034		$	41,881		$	14,820		$	123,713		$	43,898

Adjustments to GAAP net income
	Stock-based compensation		9,645			9,200			9,358			27,325			22,049
	Amortization of acquisition-related intangible assets		733			812			1,015			2,515			3,100
	Tax effect of items excluded from non-GAAP results		(565	)		(1,101	)		(971	)		(4,244	)		(1,994	)

Non-GAAP net income		$	51,847		$	50,792		$	24,222		$	149,309		$	67,053


Average shares outstanding for calculation of non-GAAP net income per share (diluted)			61,363			61,466			60,852			61,466			60,668

Non-GAAP net income per share (diluted)		$	0.84		$	0.83		$	0.40		$	2.43		$	1.11

GAAP net income per share (diluted)		$	0.69		$	0.68		$	0.24		$	2.01		$	0.72

POWER INTEGRATIONS, INC.
CONSOLIDATED BALANCE SHEETS
(in thousands)


		September 30, 2021			June 30, 2021			December 31, 2020
ASSETS
	CURRENT ASSETS:
	Cash and cash equivalents	$	262,435		$	297,481		$	258,874
	Short-term marketable securities		286,506			217,777			190,318
	Accounts receivable, net		38,872			41,352			35,910
	Inventories		91,814			89,643			102,878
	Prepaid expenses and other current assets		23,720			21,292			13,252
	Total current assets		703,347			667,545			601,232

	PROPERTY AND EQUIPMENT, net		168,498			167,079			166,188
	INTANGIBLE ASSETS, net		9,807			10,601			12,506
	GOODWILL		91,849			91,849			91,849
	DEFERRED TAX ASSETS		3,266			2,072			3,339
	OTHER ASSETS		28,223			28,703			28,225
	Total assets	$	1,004,990		$	967,849		$	903,339

LIABILITIES AND STOCKHOLDERS’ EQUITY
	CURRENT LIABILITIES:
	Accounts payable	$	40,390		$	41,898		$	34,712
	Accrued payroll and related expenses		14,064			16,652			14,806
	Taxes payable		970			989			902
	Other accrued liabilities		10,638			8,727			12,106
	Total current liabilities		66,062			68,266			62,526

	LONG-TERM LIABILITIES:
	Income taxes payable		14,644			14,340			15,588
	Other liabilities		15,928			14,899			14,814
	Total liabilities		96,634			97,505			92,928

STOCKHOLDERS’ EQUITY:
	Common stock		28			28			28
	Additional paid-in capital		189,790			185,878			190,920
	Accumulated other comprehensive loss		(3,249	)		(3,155	)		(2,163	)
	Retained earnings		721,787			687,593			621,626
	Total stockholders’ equity		908,356			870,344			810,411
	Total liabilities and stockholders’ equity	$	1,004,990		$	967,849		$	903,339

POWER INTEGRATIONS, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)

	Three Months Ended									Nine Months Ended
	September 30, 2021			June 30, 2021			September 30, 2020			September 30, 2021			September 30, 2020
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income	$	42,034		$	41,881		$	14,820		$	123,713		$	43,898
Adjustments to reconcile net income to cash provided by operating activities
Depreciation		8,126			7,821			6,002			23,400			17,071
Amortization of intangible assets		794			873			1,076			2,699			3,283
Loss on disposal of property and equipment		2,162			21			19			2,200			311
Stock-based compensation expense		9,645			9,200			9,358			27,325			22,049
Amortization of premium on marketable securities		475			124			204			775			525
Deferred income taxes		(1,194	)		(263	)		(1,179	)		(12	)		100
Increase (decrease) in accounts receivable allowance for credit losses		(74	)		93			309			17			155
Change in operating assets and liabilities:
Accounts receivable		2,554			812			(16,884	)		(2,979	)		(5,328	)
Inventories		(2,171	)		866			(842	)		11,064			(14,425	)
Prepaid expenses and other assets		(472	)		(1,248	)		2,041			(4,973	)		6,133
Accounts payable		(1,420	)		4,772			504			6,633			6,365
Taxes payable and other accrued liabilities		(1,724	)		1,896			801			(6,157	)		(864	)
Net cash provided by operating activities		58,735			66,848			16,229			183,705			79,273

CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of property and equipment		(11,011	)		(8,243	)		(14,116	)		(30,305	)		(35,738	)
Proceeds from sale of property and equipment		–			10			–			35			331
Purchases of marketable securities		(193,150	)		(166,782	)		(46,239	)		(381,903	)		(66,066	)
Proceeds from sales and maturities of marketable securities		123,953			96,617			28,033			284,036			86,995
Net cash used in investing activities		(80,208	)		(78,398	)		(32,322	)		(128,137	)		(14,478	)

CASH FLOWS FROM FINANCING ACTIVITIES:
Net proceeds from issuance of common stock		4,058			–			3,364			7,710			9,662
Repurchase of common stock		(9,791	)		(26,374	)		–			(36,165	)		(2,636	)
Payments of dividends to stockholders		(7,840	)		(7,867	)		(6,582	)		(23,552	)		(18,497	)
Net cash used in financing activities		(13,573	)		(34,241	)		(3,218	)		(52,007	)		(11,471	)

NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS		(35,046	)		(45,791	)		(19,311	)		3,561			53,324

CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD		297,481			343,272			251,325			258,874			178,690

CASH AND CASH EQUIVALENTS AT END OF PERIOD	$	262,435		$	297,481		$	232,014		$	262,435		$	232,014

View source version on businesswire.com: https://www.businesswire.com/news/home/20211028006185/en/

Joe Shiffler

Power Integrations, Inc.

(408) 414-8528

[email protected]

KEYWORDS: California United States North America

INDUSTRY KEYWORDS: Technology Hardware Semiconductor

MEDIA:

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October 28, 2021 4:14 pm

NextGenHealthcare Announces $60 Million Share Repurchase Program

NextGenHealthcare Announces $60 Million Share Repurchase Program

ATLANTA–(BUSINESS WIRE)–NextGen Healthcare, Inc. (Nasdaq: NXGN), a leading provider of ambulatory-focused technology solutions, today announced that its Board of Directors has authorized a share repurchase program under which the Company may repurchase up to $60 million of its outstanding shares of common stock through March 2023.

“We believe that the share repurchase program announced today represents an appropriate and strategic use of the company’s cash, while retaining sufficient flexibility to fund future expenditures, including acquisition and partnership opportunities as well as investments in research and development,” said David Sides, NextGen Healthcare President and CEO.

“NextGen Healthcare maintains a disciplined and thoughtful approach to capital allocation and is committed to strategically deploying capital where we believe we can drive the greatest value for our shareholders,” said Jamie Arnold, Chief Financial Officer of NextGen Healthcare. “We believe our positive business momentum, including strong cash flow generation, provides us with ample capacity to return cash to shareholders while continuing to execute on our growth strategy.”

The timing and amount of any share repurchases under the share repurchase program will be determined by NextGen Healthcare’s management at its discretion based on ongoing assessments of the capital needs of the business, the market price of NextGen Healthcare’s common stock and general market conditions. Share repurchases under the program may be made through a variety of methods, which may include open market purchases, in block trades, accelerated share repurchase transactions, exchange transactions, or any combination of such methods. The program does not obligate NextGen Healthcare to acquire any particular amount of its common stock, and the share repurchase program may be suspended or discontinued at any time at the Company’s discretion.

The Company currently has approximately 67 million shares outstanding.

About NextGen Healthcare, Inc.

NextGen Healthcare, Inc. (Nasdaq: NXGN) is a leading provider of ambulatory-focused technology solutions. We are empowering the transformation of ambulatory care—partnering with medical, behavioral and dental providers in their journey to value-based care to make healthcare better for everyone. We go beyond EHR and PM. Our integrated solutions help increase clinical productivity, enrich the patient experience, and ensure healthy financial outcomes. We believe in better. Learn more at nextgen.com, and follow us on Facebook, Twitter, LinkedIn, YouTube and Instagram.

View source version on businesswire.com: https://www.businesswire.com/news/home/20211028005943/en/

Investor Relations Contact

Matthew Scalo

(415) 370-9202

[email protected]

KEYWORDS: Georgia United States North America

INDUSTRY KEYWORDS: Data Management Health Technology Practice Management Other Health Software General Health

MEDIA:

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October 28, 2021 4:14 pm

Monolithic Power Systems Announces Results for the Third Quarter Ended September 30, 2021

KIRKLAND, Wash., Oct. 28, 2021 (GLOBE NEWSWIRE) — Monolithic Power Systems, Inc. (MPS) (Nasdaq: MPWR), a global company that provides high-performance, semiconductor-based power electronics solutions, today announced financial results for the quarter ended September 30, 2021.

Revenue was $323.5 million for the quarter ended September 30, 2021, a 10.3% increase from $293.3 million for the quarter ended June 30, 2021 and a 24.7% increase from $259.4 million for the quarter ended September 30, 2020.
GAAP gross margin was 57.6% for the quarter ended September 30, 2021, compared with 55.1% for the quarter ended September 30, 2020. GAAP gross margin included a one-time benefit of a $4.0 million litigation settlement for the quarter ended September 30, 2021.
Non-GAAP (1) gross margin was 57.8% for the quarter ended September 30, 2021, excluding the impact of $0.9 million for stock-based compensation expense and $0.2 million for deferred compensation plan income. Excluding the one-time benefit of a $4.0 million litigation settlement, non-GAAP (1) gross margin would have been 56.6% for the quarter ended September 30, 2021. This compares with 55.5% for the quarter ended September 30, 2020, excluding the impact of $0.7 million for stock-based compensation expense and $0.2 million for deferred compensation plan expense.
GAAP operating expenses were $109.2 million for the quarter ended September 30, 2021, compared with $83.1 million for the quarter ended September 30, 2020.
Non-GAAP (1) operating expenses were $78.7 million for the quarter ended September 30, 2021, excluding $30.7 million for stock-based compensation expense and $0.1 million for deferred compensation plan income, compared with $59.1 million for the quarter ended September 30, 2020, excluding $22.3 million for stock-based compensation expense and $1.7 million for deferred compensation plan expense.
GAAP operating income was $77.1 million for the quarter ended September 30, 2021, compared with $60.0 million for the quarter ended September 30, 2020.
Non-GAAP (1) operating income was $108.4 million for the quarter ended September 30, 2021, excluding $31.6 million for stock-based compensation expense and $0.3 million for deferred compensation plan income, compared with $84.9 million for the quarter ended September 30, 2020, excluding $23.0 million for stock-based compensation expense and $1.9 million for deferred compensation plan expense.
GAAP other income, net, was $0.8 million for the quarter ended September 30, 2021, compared with $2.5 million for the quarter ended September 30, 2020.
Non-GAAP (1) other income, net, was $1.2 million for the quarter ended September 30, 2021, excluding $0.4 million for deferred compensation plan expense, compared with $0.9 million for the quarter ended September 30, 2020, excluding $1.6 million for deferred compensation plan income.
GAAP income before income taxes was $77.9 million for the quarter ended September 30, 2021, compared with $62.5 million for the quarter ended September 30, 2020.
Non-GAAP (1) income before income taxes was $109.6 million for the quarter ended September 30, 2021, excluding $31.6 million for stock-based compensation expense and $0.1 million for deferred compensation plan expense, compared with $85.8 million for the quarter ended September 30, 2020, excluding $23.0 million for stock-based compensation expense, and $0.3 million for deferred compensation plan expense.
GAAP net income was $68.8 million and $1.44 per diluted share for the quarter ended September 30, 2021. Comparatively, GAAP net income was $55.6 million and $1.18 per diluted share for the quarter ended September 30, 2020.
Non-GAAP (1) net income was $98.6 million and $2.06 per diluted share for the quarter ended September 30, 2021, excluding stock-based compensation expense, net deferred compensation plan expense and related tax effects, compared with non-GAAP net income (1) of $79.4 million and $1.69 per diluted share for the quarter ended September 30, 2020, excluding stock-based compensation expense, net deferred compensation plan expense and related tax effects.

The financial results for the nine months ended September 30, 2021 are as follows:

Revenue was $871.3 million for the nine months ended September 30, 2021, a 42.5% increase from $611.4 million for the nine months ended September 30, 2020.
GAAP gross margin was 56.4% for the nine months ended September 30, 2021, compared with 55.1% for the nine months ended September 30, 2020.
Non-GAAP (1) gross margin was 56.7% for the nine months ended September 30, 2021, excluding the impact of $2.6 million for stock-based compensation expense and $0.1 million for deferred compensation plan expense, compared with 55.5% for the nine months ended September 30, 2020, excluding the impact of $1.9 million for stock-based compensation expense and $0.7 million for the deferred compensation plan expense.
GAAP operating expenses were $307.7 million for the nine months ended September 30, 2021, compared with $218.2 million for the nine months ended September 30, 2020.
Non-GAAP (1) operating expenses were $215.2 million for the nine months ended September 30, 2021, excluding $89.7 million for stock-based compensation expense and $2.8 million for deferred compensation plan expense, compared with $155.8 million for the nine months ended September 30, 2020, excluding $60.7 million for stock-based compensation expense and $1.7 million for deferred compensation plan expense.
GAAP operating income was $183.8 million for the nine months ended September 30, 2021, compared with $118.9 million for the nine months ended September 30, 2020.
Non-GAAP (1) operating income was $279.1 million for the nine months ended September 30, 2021, excluding $92.3 million for stock-based compensation expense and $2.9 million for deferred compensation plan expense, compared with $183.8 million for the nine months ended September 30, 2020, excluding $62.6 million for stock-based compensation expense and $2.3 million for deferred compensation plan expense.
GAAP other income, net, was $6.4 million for the nine months ended September 30, 2021, compared with $6.0 million for the nine months ended September 30, 2020.
Non-GAAP (1) other income, net was $3.8 million for the nine months ended September 30, 2021, excluding $2.6 million for deferred compensation plan income, compared with $4.6 million for the nine months ended September 30, 2020, excluding $1.4 million for deferred compensation plan income.
GAAP income before income taxes was $190.3 million for the nine months ended September 30, 2021, compared with $124.9 million for the nine months ended September 30, 2020.
Non-GAAP (1) income before income taxes was $282.9 million for the nine months ended September 30, 2021, excluding $92.3 million for stock-based compensation expense and $0.3 million for deferred compensation plan expense, compared with $188.4 million for the nine months ended September 30, 2020, excluding $62.6 million for stock-based compensation expense, and $0.9 million for deferred compensation plan expense.
GAAP net income was $169.4 million and $3.55 per diluted share for the nine months ended September 30, 2021. Comparatively, GAAP net income was $121.5 million and $2.59 per diluted share for the nine months ended September 30, 2020.
Non-GAAP (1) net income was $254.6 million and $5.33 per diluted share for the nine months ended September 30, 2021, excluding stock-based compensation expense, net deferred compensation plan expense and related tax effects, compared with non-GAAP net income (1) of $174.3 million and $3.72 per diluted share for the nine months ended September 30, 2020, excluding stock-based compensation expense, net deferred compensation plan expense and related tax effects.

The following is a summary of revenue by end market for the periods indicated (in thousands):

	Three Months Ended September 30,				Nine Months Ended September 30,
End Market	2021		2020		2021		2020
Computing and storage	$	98,601	$	75,301	$	253,819	$	191,345
Automotive		54,416		28,512		147,982		69,603
Industrial		52,185		30,658		135,296		82,487
Communications		44,687		54,705		118,215		112,670
Consumer		73,633		70,246		215,982		155,304
Total	$	323,522	$	259,422	$	871,294	$	611,409

The following is a summary of revenue by product family for the periods indicated (in thousands):

	Three Months Ended September 30,				Nine Months Ended September 30,
Product Family	2021		2020		2021		2020
DC to DC	$	307,368	$	247,561	$	827,605	$	580,549
Lighting Control		16,154		11,861		43,689		30,860
Total	$	323,522	$	259,422	$	871,294	$	611,409

“We are continuing to execute our strategy,” said Michael Hsing, CEO and founder of MPS.

Business Outlook

The following are MPS’s financial targets for the fourth quarter ending December 31, 2021:

Revenue in the range of $314.0 million to $326.0 million.
GAAP gross margin between 56.0% and 56.6%. Non-GAAP (1) gross margin between 56.3% and 56.9%, which excludes an estimated impact of stock-based compensation expenses of 0.3%.
GAAP research and development (“R&D”) and selling, general and administrative (“SG&A”) expenses between $107.8 million and $111.8 million. Non-GAAP (1) R&D and SG&A expenses between $77.9 million and $79.9 million, which excludes estimated stock-based compensation expenses in the range of $29.9 million to $31.9 million.
Total stock-based compensation expense of $30.8 million to $32.8 million.
Litigation expense is expected to be in the range of $3.5 million and $3.9 million.
Interest income of $1.0 million to $1.4 million.
Fully diluted shares outstanding between 47.9 million and 48.9 million.

(1) Non-GAAP net income, non-GAAP earnings per share, non-GAAP gross margin, non-GAAP R&D and SG&A expenses, non-GAAP operating expenses, non-GAAP other income, net, non-GAAP operating income and non-GAAP income before taxes differ from net income, earnings per share, gross margin, R&D and SG&A expenses, operating expenses, other income, net, operating income and income before taxes determined in accordance with Generally Accepted Accounting Principles in the United States (GAAP). Non-GAAP net income and non-GAAP earnings per share exclude the effect of stock-based compensation expense, deferred compensation plan income/expense and related tax effects. Non-GAAP gross margin excludes the effect of stock-based compensation expense and deferred compensation plan income/expense, and a one-time litigation settlement. Non-GAAP operating expenses exclude the effect of stock-based compensation expense and deferred compensation plan income/expense. Non-GAAP other income, net excludes the effect of deferred compensation plan income/expense. Non-GAAP operating income excludes the effect of stock-based compensation expense and deferred compensation plan income/expense. Non-GAAP income before taxes excludes the effect of stock-based compensation expense and deferred compensation plan income/expense. Projected non-GAAP gross margin excludes the effect of stock-based compensation expense. Projected non-GAAP R&D and SG&A expenses exclude the effect of stock-based compensation expense. These non-GAAP financial measures are not prepared in accordance with GAAP and should not be considered as a substitute for, or superior to, measures of financial performance prepared in accordance with GAAP. A schedule reconciling non-GAAP financial measures is included at the end of this press release. MPS utilizes both GAAP and non-GAAP financial measures to assess what it believes to be its core operating performance and to evaluate and manage its internal business and assist in making financial operating decisions. MPS believes that the inclusion of non-GAAP financial measures, together with GAAP measures, provides investors with an alternative presentation useful to investors’ understanding of MPS’s core operating results and trends. Additionally, MPS believes that the inclusion of non-GAAP measures, together with GAAP measures, provides investors with an additional dimension of comparability to similar companies. However, investors should be aware that non-GAAP financial measures utilized by other companies are not likely to be comparable in most cases to the non-GAAP financial measures used by MPS.

Earnings Webinar

MPS plans to host a Zoom webinar covering its financial results at 2:00 p.m. PT / 5:00 p.m. ET, October 28, 2021. You can access the webinar at: https://mpsic.zoom.us/j/97341463994. The webinar will be archived and available for replay for one year under the Investor Relations page on the MPS website.

Safe Harbor Statement

This press release contains, and statements that will be made during the accompanying teleconference will contain, forward-looking statements, as that term is defined in the Private Securities Litigation Reform Act of 1995, including, among other things, (i) projected revenues, GAAP and non-GAAP gross margin, GAAP and non-GAAP R&D and SG&A expenses, stock-based compensation expenses, litigation expenses, interest income, and diluted shares outstanding, (ii) our outlook for the long-term prospects of the company, including our performance against our business plan, revenue growth in certain of our market segments, our continued investment into R&D, expected revenue growth, customers’ acceptance of our new product offerings, the prospects of our new product development, and our expectations regarding market and industry segment trends and prospects, (iii) our ability to penetrate new markets and expand our market share, (iv) the seasonality of our business, (v) our ability to reduce our expenses, and (vi) statements of the assumptions underlying or relating to any statement described in (i), (ii), (iii), (iv), or (v). These forward-looking statements are not historical facts or guarantees of future performance or events, are based on current expectations, estimates, beliefs, assumptions, goals, and objectives, and involve significant known and unknown risks, uncertainties and other factors that may cause actual results to be materially different from the results expressed by these statements. Readers of this press release and listeners to the accompanying conference call are cautioned not to place undue reliance on any forward-looking statements, which speak only as of the date hereof. Factors that could cause actual results to differ include, but are not limited to, our ability to attract new customers and retain existing customers; acceptance of, or demand for, MPS’s products, in particular the new products launched recently, being different than expected; our ability to efficiently and effectively develop new products and receive a return on our R&D expense investment; our ability to increase market share in our targeted markets; our ability to meet customer demand for our products due to constraints on our third-party suppliers’ ability to manufacture sufficient quantities of our products or otherwise; competition generally and the increasingly competitive nature of our industry; any market disruptions or interruptions in MPS’s schedule of new product development releases; adverse changes in production and testing efficiency of our products; our ability to manage our inventory levels; our ability to effectively manage our growth and attract and retain qualified personnel; the effect of export controls, trade and economic sanctions regulations and other regulatory or contractual limitations on our ability to sell or develop our products in certain foreign markets, particularly in China; our ability to obtain governmental licenses and approvals for international trading activities or technology transfers, including export licenses; adverse changes in laws and government regulations such as tariffs on imports of foreign goods, export regulations and export classifications, including in foreign countries where MPS has offices or operations; adverse events arising from orders of governmental entities, including such orders that impact our customers, and adoption of new or amended accounting standards; the effect of epidemics and pandemics, such as the COVID-19 outbreak first identified in December 2019, on the global economy and on our business; adequate supply of our products from our third-party manufacturing partners; the risks, uncertainties and costs of litigation in which we are involved; the outcome of any upcoming trials, hearings, motions and appeals; the adverse impact on MPS’s financial performance if its tax and litigation provisions are inadequate; adverse changes or developments in the semiconductor industry generally, which is cyclical in nature, and our ability to adjust our operations to address such changes or developments; difficulty in predicting or budgeting for future customer demand and channel inventories, expenses and financial contingencies (including as a result of the COVID-19 pandemic); our ability to realize the anticipated benefits of companies and products that we acquire, and our ability to effectively and efficiently integrate these acquired companies and products into our operations; the ongoing consolidation of companies in the semiconductor industry; and other important risk factors identified in MPS’s Securities and Exchange Commission (SEC) filings, including, but not limited to, our Annual Report on Form 10-K filed with the SEC on March 1, 2021 and our quarterly report on Form 10-Q filed with the SEC on August 9, 2021. The forward-looking statements in this press release and statements made during the accompanying teleconference represent MPS’s projections and current expectations, as of the date hereof, not predictions of actual performance. MPS assumes no obligation to update the information in this press release or in the accompanying conference call.

About Monolithic Power Systems
Monolithic Power Systems, Inc. (MPS) is a global company that provides high-performance, semiconductor-based power electronics solutions. MPS’s mission is to reduce energy and material consumption to improve all aspects of quality of life. Founded in 1997 by Michael Hsing, MPS has three core strengths: deep system-level knowledge, strong semiconductor design expertise, and innovative proprietary semiconductor process and system integration technologies. These combined advantages enable MPS to provide customers with reliable, compact and monolithic solutions that offer highly energy-efficient and cost-effective products, as well as providing a consistent return on investment to our stockholders. MPS can be contacted through its website at www.monolithicpower.com or its support offices around the world.

Monolithic Power Systems, MPS, and the MPS logo are registered trademarks of Monolithic Power Systems, Inc. in the U.S. and trademarked in certain other countries.

Contact:

Bernie Blegen
Chief Financial Officer
Monolithic Power Systems, Inc.
408-826-0777
[email protected]

Monolithic Power Systems, Inc.

Condensed Consolidated Balance Sheets

(Unaudited, in thousands, except par value)

	September 30,		December 31,
	2021		2020
ASSETS
Current assets:
Cash and cash equivalents	$	226,091	$	334,944
Short-term investments		515,947		260,169
Accounts receivable, net		79,859		66,843
Inventories		208,062		157,062
Other current assets		34,535		22,980
Total current assets		1,064,494		841,998
Property and equipment, net		340,060		281,528
Goodwill		6,571		6,571
Deferred tax assets, net		17,726		18,556
Other long-term assets		67,050		59,838
Total assets	$	1,495,901	$	1,208,491

LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable	$	72,092	$	38,169
Accrued compensation and related benefits		75,815		45,840
Other accrued liabilities		79,756		62,960
Total current liabilities		227,663		146,969
Income tax liabilities		41,019		37,062
Other long-term liabilities		64,506		57,873
Total liabilities		333,188		241,904
Commitments and contingencies
Stockholders’ equity:
Common stock and additional paid-in capital: $0.001 par value; shares authorized: 150,000; shares issued and outstanding: 46,091 and 45,267, respectively		769,858		657,701
Retained earnings		381,193		298,746
Accumulated other comprehensive income		11,662		10,140
Total stockholders’ equity		1,162,713		966,587
Total liabilities and stockholders’ equity	$	1,495,901	$	1,208,491

Monolithic Power Systems, Inc.

Condensed Consolidated Statements of Operations

(Unaudited, in thousands, except per share amounts)

	Three Months Ended September 30,				Nine Months Ended September 30,
	2021		2020		2021		2020
Revenue	$	323,522	$	259,422	$	871,294	$	611,409
Cost of revenue		137,211		116,382		379,709		274,329
Gross profit		186,311		143,040		491,585		337,080
Operating expenses:
Research and development		49,468		37,717		136,113		95,346
Selling, general and administrative		56,291		43,503		164,982		116,550
Litigation expense		3,421		1,841		6,645		6,264
Total operating expenses		109,180		83,061		307,740		218,160
Income from operations		77,131		59,979		183,845		118,920
Other income, net		793		2,494		6,411		5,980
Income before income taxes		77,924		62,473		190,256		124,900
Income tax expense		9,154		6,907		20,904		3,412
Net income	$	68,770	$	55,566	$	169,352	$	121,488

Net income per share:
Basic	$	1.50	$	1.24	$	3.70	$	2.72
Diluted	$	1.44	$	1.18	$	3.55	$	2.59
Weighted-average shares outstanding:
Basic		45,970		44,970		45,754		44,737
Diluted		47,852		46,955		47,772		46,819

SUPPLEMENTAL FINANCIAL INFORMATION
STOCK-BASED COMPENSATION EXPENSE

(Unaudited, in thousands)

	Three Months Ended September 30,				Nine Months Ended September 30,
	2021		2020		2021		2020
Cost of revenue	$	922	$	707	$	2,622	$	1,906
Research and development		6,646		5,334		19,564		14,666
Selling, general and administrative		24,004		16,934		70,096		46,009
Total stock-based compensation expense	$	31,572	$	22,975	$	92,282	$	62,581

RECONCILIATION OF NET INCOME TO NON-GAAP NET INCOME
(Unaudited, in thousands, except per share amounts)

	Three Months Ended September 30,					Nine Months Ended September 30,
	2021			2020		2021			2020
Net income	$	68,770		$	55,566	$	169,352		$	121,488

Adjustments to reconcile net income to non-GAAP net income:
Stock-based compensation expense		31,572			22,975		92,282			62,581
Amortization of purchased intangible assets		11			–		11			–
Deferred compensation plan expense		76			347		309			901
Tax effect		(1,804	)		472		(7,382	)		(10,717	)
Non-GAAP net income	$	98,625		$	79,360	$	254,572		$	174,253

Non-GAAP net income per share:
Basic	$	2.15		$	1.76	$	5.56		$	3.90
Diluted	$	2.06		$	1.69	$	5.33		$	3.72

Shares used in the calculation of non-GAAP net income per share:
Basic		45,970			44,970		45,754			44,737
Diluted		47,852			46,955		47,772			46,819

RECONCILIATION OF GROSS MARGIN TO NON-GAAP GROSS MARGIN

(Unaudited, in thousands)

	Three Months Ended September 30,						Nine Months Ended September 30,
	2021			2020			2021			2020
Gross profit	$	186,311		$	143,040		$	491,585		$	337,080
Gross margin		57.6	%		55.1	%		56.4	%		55.1	%

Adjustments to reconcile gross profit to non-GAAP gross profit:
Stock-based compensation expense		922			707			2,622			1,906
Deferred compensation plan expense (income)		(190	)		244			100			650
Non-GAAP gross profit	$	187,043		$	143,991		$	494,307		$	339,636
Non-GAAP gross margin		57.8	%		55.5	%		56.7	%		55.5	%

Non-GAAP gross profit	$	187,043
One-time litigation settlement		(4,000	)
Non-GAAP gross profit, excluding litigation settlement	$	183,043
Non-GAAP gross margin, excluding litigation settlement		56.6	%

RECONCILIATION OF OPERATING EXPENSES TO NON-GAAP OPERATING EXPENSES
(Unaudited, in thousands)

	Three Months Ended September 30,						Nine Months Ended September 30,
	2021			2020			2021			2020
Total operating expenses	$	109,180		$	83,061		$	307,740		$	218,160

Adjustments to reconcile total operating expenses to non-GAAP total operating expenses:
Stock-based compensation expense		(30,650	)		(22,268	)		(89,660	)		(60,675	)
Amortization of purchased intangible assets		(11	)		–			(11	)		–
Deferred compensation plan income (expense)		134			(1,701	)		(2,847	)		(1,672	)
Non-GAAP operating expenses	$	78,653		$	59,092		$	215,222		$	155,813

RECONCILIATION OF OPERATING INCOME TO NON-GAAP OPERATING INCOME
(Unaudited, in thousands)

	Three Months Ended September 30,					Nine Months Ended September 30,
	2021			2020		2021		2020
Total operating income	$	77,131		$	59,979	$	183,845	$	118,920

Adjustments to reconcile total operating income to non-GAAP total operating income:
Stock-based compensation expense		31,572			22,975		92,282		62,581
Amortization of purchased intangible assets		11			–		11		–
Deferred compensation plan expense (income)		(324	)		1,946		2,948		2,322
Non-GAAP operating income	$	108,390		$	84,900	$	279,086	$	183,823

RECONCILIATION OF OTHER INCOME, NET, TO NON-GAAP OTHER INCOME, NET

(Unaudited, in thousands)

	Three Months Ended September 30,					Nine Months Ended September 30,
	2021		2020			2021			2020
Total other income, net	$	793	$	2,494		$	6,411		$	5,980

Adjustments to reconcile other income, net to non-GAAP other income, net:
Deferred compensation plan expense (income)		399		(1,598	)		(2,639	)		(1,421	)
Non-GAAP other income, net	$	1,192	$	896		$	3,772		$	4,559

RECONCILIATION OF INCOME BEFORE INCOME TAXES TO NON-GAAP INCOME BEFORE INCOME TAXES
(Unaudited, in thousands)

	Three Months Ended September 30,				Nine Months Ended September 30,
	2021		2020		2021		2020
Total income before income taxes	$	77,924	$	62,473	$	190,256	$	124,900

Adjustments to reconcile income before income taxes to non-GAAP income before income taxes:
Stock-based compensation expense		31,572		22,975		92,282		62,581
Amortization of purchased intangible assets		11		–		11		–
Deferred compensation plan expense		76		347		309		901
Non-GAAP income before income taxes	$	109,583	$	85,795	$	282,858	$	188,382

2021 FOURTH QUARTER OUTLOOK

RECONCILIATION OF GROSS MARGIN TO NON-GAAP GROSS MARGIN
(Unaudited)

	Three Months Ending
	December 31, 2021
	Low			High
Gross margin		56.0	%		56.6	%
Adjustment to reconcile gross margin to non-GAAP gross margin:
Stock-based compensation expense		0.3	%		0.3	%
Non-GAAP gross margin		56.3	%		56.9	%

RECONCILIATION OF R&D AND SG&A EXPENSES TO NON-GAAP R&D AND SG&A EXPENSES

(Unaudited, in thousands)

	Three Months Ending
	December 31, 2021
	Low			High
R&D and SG&A expense	$	107,800		$	111,800
Adjustments to reconcile R&D and SG&A expense to non-GAAP R&D and SG&A expense:
Stock-based compensation expense		(29,900	)		(31,900	)
Non-GAAP R&D and SG&A expense	$	77,900		$	79,900

October 28, 2021 4:14 pm

STAG Industrial Closes Sale of 350,000 Square Foot Facility Located in Taunton, Massachusetts

PR Newswire

BOSTON, Oct. 28, 2021 /PRNewswire/ — STAG Industrial, Inc. (the “Company”) (NYSE:STAG) today announced it has successfully closed the sale of its 350,326 square foot building located in Taunton, Massachusetts. The gross proceeds of $78.0 million represent a cash capitalization rate of 3.1%.

The Company acquired the building vacant in February 2019 and signed an 18-month known-vacate lease that same month. The Company then signed a new 10-year lease with a large investment grade rated e-commerce tenant and terminated the short-term lease in April 2020, adding significant value to the building.

“This round-trip investment is a great demonstration of the industrial real estate platform we have built – from sourcing the investment, repositioning and leasing the asset, and ultimately monetizing the value we created,” said Ben Butcher, Chief Executive Officer of the Company. “We continue to identify assets that add significant value to our portfolio. This is a great outcome and testimony to the hard work done by our team.”

About STAG Industrial, Inc.

STAG Industrial, Inc. is a real estate investment trust focused on the acquisition, ownership and operation of single-tenant, industrial properties throughout the United States. As of September 30, 2021, the Company’s portfolio consists of 517 buildings in 40 states with approximately 103.4 million rentable square feet.

For additional information, please visit the Company’s website at www.stagindustrial.com.

Forward-Looking Statements

This press release, together with other statements and information publicly disseminated by the Company, contains certain 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. The Company intends such forward-looking statements to be covered by the safe harbor provisions for forward-looking statements contained in the Private Securities Litigation Reform Act of 1995 and includes this statement for purposes of complying with these safe harbor provisions. Forward-looking statements, which are based on certain assumptions and describe the Company’s future plans, strategies and expectations, are generally identifiable by use of the words “believe,” “will,” “expect,” “intend,” “anticipate,” “estimate,” “should,” “project” or similar expressions. You should not rely on forward-looking statements since they involve known and unknown risks, uncertainties and other factors that are, in some cases, beyond the Company’s control and which could materially affect actual results, performances or achievements. Factors that may cause actual results to differ materially from current expectations include, but are not limited to, the risk factors discussed in the Company’s annual report on Form 10-K for the year ended December 31, 2020 as updated by the Company’s quarterly reports on Form 10-Q. Accordingly, there is no assurance that the Company’s expectations will be realized. Except as otherwise required by the federal securities laws, the Company disclaims any obligation or undertaking to publicly release any updates or revisions to any forward-looking statement contained herein (or elsewhere) to reflect any change in the Company’s expectations with regard thereto or any change in events, conditions or circumstances on which any such statement is based.

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SOURCE STAG Industrial, Inc.