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Titan Medical to Report First Quarter 2021 Financial Results May 17, 2021

Titan Medical to Report First Quarter 2021 Financial Results May 17, 2021

TORONTO–(BUSINESS WIRE)–Titan Medical Inc. (“Titan” or the “Company”) (TSX: TMD) (Nasdaq: TMDI), a medical device company focused on the design and development of surgical technologies for robotic single access surgery, announces that the Company plans to issue its first quarter financial results prior to market opening Monday, May 17, 2021 and management will host an investor audio webcast at 4:30 p.m. ET to discuss financial results and business highlights. Speakers will include David J. McNally, President and Chief Executive Officer, Monique L. Delorme, Chief Financial Officer, and Perry A. Genova, Ph.D., Senior Vice President, Research and Development.

A link to the live audio webcast will be made available on the “Investor Relations” section of the Company’s website, www.titanmedicalinc.com. A webcast replay will be archived and accessible on the Company’s website shortly after conclusion of the live audio webcast.

About Titan Medical

Titan Medical Inc., a medical device company headquartered in Toronto, is focused on developing robotic assisted technologies for application in single access surgery. The Enos™ system, by Titan Medical, is being developed with dual 3D and 2D high-definition vision systems, multi-articulating instruments, and an ergonomic surgeon workstation. With the Enos system, Titan intends to initially pursue gynecologic surgical indications.

Certain of Titan’s robotic assisted surgical technologies and related intellectual property have been licensed to Medtronic plc, while retaining world-wide rights to commercialize the technologies for use with the Enos system.

Enos™ is a trademark of Titan Medical Inc.

For more information, please visit www.titanmedicalinc.com.

Forward-Looking Statements

This news release contains “forward-looking statements” within the meaning of applicable Canadian and U.S. securities laws, which reflect the current expectations of management of the Company’s future growth, results of operations, performance, and business prospects and opportunities. Wherever possible, words such as “may”, “would”, “could”, “will”, “anticipate”, “believe”, “plan”, “expect”, “intend”, “estimate”, “potential for” and similar expressions have been used to identify these forward-looking statements, including, without limitation, references to: the Company’s focus on the design and development of surgical technologies for robotic single access surgery, the Enos system is being developed with dual 3D and 2D high-definition vision systems, multi-articulating instruments and an ergonomic surgeon workstation, and that Titan intends to initially pursue gynecologic surgical indications. These statements reflect management’s current beliefs and are based on information currently available to management. Forward-looking statements involve significant risks, uncertainties and assumptions. Many factors could cause the Company’s actual results, performance or achievements to be materially different from any future results, performance or achievements that may be expressed or implied by such forward-looking statements, including, without limitation, those listed in the “Risk Factors” section of the Company’s Annual Information Form and Form 40-F for the fiscal year ended December 31, 2020 (which may be viewed at www.sedar.com and at www.sec.gov). Should one or more of these risks or uncertainties materialize, or should assumptions underlying the forward-looking statements prove incorrect, actual results, performance, or achievements may vary materially from those expressed or implied by the forward-looking statements contained in this news release. These factors should be considered carefully, and prospective investors should not place undue reliance on the forward-looking statements. Although the forward-looking statements contained in the news release are based upon what management currently believes to be reasonable assumptions, the Company cannot assure prospective investors that actual results, performance or achievements will be consistent with these forward-looking statements. Except as required by law, the Company expressly disclaims any intention or obligation to update or revise any forward-looking statements whether as a result of new information, future events or otherwise.

Kristen Galfetti

Vice President Investor Relations

+1-781-869-2553

[email protected]

KEYWORDS: North America Canada

INDUSTRY KEYWORDS: General Health Health Surgery Medical Devices

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Achiko Appoints New Chief Financial Officer and Announces Changes to Senior Team

  • Appoints Robert Rieder as Chief Financial Officer
  • Chief Operating Officer Chris Young to Retire
  • Focus on Product Development, Lowering Cost Profile and Improved Alignment of Resources

ZURICH, Switzerland, May 04, 2021 (GLOBE NEWSWIRE) — Achiko AG (SWX:ACHI, ISIN CH0522213468) appoints Robert Rieder as Chief Financial Offer (“CFO”), replacing CFO ad interim Ruediger Petrikowski, who has done a phenomenal job driving results and accelerating the transformation since July 2020.

Mr. Rieder is a senior finance executive with over 20 years of experience in working with start-ups and high growth companies including several in the biotech and medtech space. Mr. Rieder has held influential roles in establishing and building finance teams, facilitating fundraising efforts and leading business and operations for domestic and international companies. He has extensive knowledge and experience in financial and cost accounting, budgeting, forecasting, financial planning and analysis within the United States, Europe and Asia.

Most recently, he has served as CFO at technology start-up emonitor AG in Zurich, Switzerland (real estate sector). Prior to this, Mr. Rieder held several positions as Director of Finance and Operations, Head of Finance and later Financial Controller – Senior Director at life sciences group Abzena in San Diego, California. Previously, he was the CEO of Rieder Enterprises Ltd in Hong Kong, China and supported multiple start-ups and SMEs in Silicon Valley at Ecosystem Ventures. He has served as a Senior Auditor at PricewaterhouseCoopers (PwC) in Basel, Switzerland and San Jose, California. He holds a B.Sc. in Accounting and Finance from the University of Applied Sciences and Arts Northwestern Switzerland FHNW.

“As the world is beginning to grasp the long-term impact of the current pandemic, I am excited to join Achiko. We have a unique opportunity to deliver an in-demand product to help manage Covid-19 in many countries around the globe and make a meaningful contribution,” said Robert Rieder.

Mr. Rieder will start as CFO on June 1, 2021 and will initially be supported by Ruediger Petrikowski to ensure a smooth hand-over. In addition, Chief Operating Officer Chris Young will retire on June 30, 2021. Advisory Board member Charles Pan, who is based in Taipei, Taiwan, will support the Company on a full-time basis to oversee the manufacturing and commercialization operations.

“As the Company transitions into healthcare technology, we are excited to welcome Mr. Rieder to our senior leadership team. The Board of Directors is grateful for the valuable contribution of Ruediger Petrikowski and Chris Young. We would like to thank them for their efforts and I myself would personally like to thank them especially for their professionalism and integrity,” Achiko CEO Steven Goh said. “We are focused on developing our product, lowering the cost profile of the Company and better aligning resources to the emerging opportunities, as we continue to pursue a leading position in diagnostics.”

ABOUT ACHIKO AG

Achiko creates and develops new innovations in healthcare technology through its biotechnology division, AptameX, and its sister digital mobile health technology division, Teman Sehat. The Company has created a unique telehealth capability that provides user-friendly diagnostic testing integrated with a digital passport solution for the management of Covid-19.

AptameX comprises of DNA aptamer-based technology that is cost-effective, chemically synthesized and widely applicable to the evolving diagnostic field of healthcare. Together with the digital mobile health app Teman Sehat, Achiko is developing potential technologies that seek to deliver rapid, affordable diagnostic testing for a range of pathogenic diseases and therapeutic indications. The AptameX technology is licensed from Regenacellx.sl and Achiko has exclusive commercialization rights.

Headquartered in Zurich, Achiko has offices in Hong Kong, Jakarta, Seoul and Singapore.

Further information can be found at www.achiko.com.

If you have any questions regarding the Company, please contact us.

Media contacts:

ACHIKO AG

Investor Relations
E: [email protected]

Switzerland

Marcus Balogh
Farner Consulting Ltd.
E: [email protected]
T: +41 44 266 67 67

Germany and Austria

Axel Mühlhaus / Dr Sönke Knop
edicto GmbH
E: [email protected]
T: +49 69 90 55 05-51

DISCLAIMER

This communication expressly or implicitly contains certain forward-looking statements concerning Achiko AG and its business. Such statements involve certain known and unknown risks, uncertainties and other factors, which could cause the actual results, financial condition, performance or achievements of Achiko AG to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. Achiko AG is providing this communication as of this date and does not undertake to update any forward-looking statements contained herein as a result of new information, future events or otherwise.



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Organicell Begins Up-Listing Process On NASDAQ Exchange

Organicell Begins Up-Listing Process On NASDAQ Exchange

MIAMI–(BUSINESS WIRE)–
Organicell Regenerative Medicine, Inc. (OTCMKTS: BPSR), a clinical-stage biopharmaceutical company dedicated to the development of regenerative therapies, today announced that it is currently exploring options to up-list its common stock to the NASDAQ Capital Market tier of the NASDAQ Stock Market, LLC.

To qualify and be approved for such up-listing, the Company would be required to meet all financial, share price and corporate governance listing requirements of NASDAQ, which for the NASDAQ Capital Market includes a minimum of $5 million in shareholder equity and a minimum trading price of $4.00 per share. In order to meet these criteria, the Company would likely need to raise additional capital in one or more private or public offerings, as well as implement a reverse stock split or other recapitalization to meet the minimum trading price requirement. There can be no assurance that the Company will be able to do so or, that NASDAQ will list our shares of common stock for trading even if we do meet the minimum listing requirements.

“Up-listing on the NASDAQ Exchange is a strategic priority for Organicell. We want to ensure liquidity for our shareholders, access to the capital markets to fund our clinical trials and a heightened visibility for our company,” said Albert Mitrani, CEO of Organicell.

ABOUT ORGANICELL REGENERATIVE MEDICINE, INC.

Organicell Regenerative Medicine, Inc. (OTCMKTS: BPSR) is a clinical-stage biopharmaceutical company that harnesses the power of exosomes to develop innovative biological therapeutics for the treatment of degenerative diseases. The Company’s proprietary products are derived from perinatal sources and manufactured to retain the naturally occurring exosomes, hyaluronic acid, and proteins without the addition or combination of any other substance or diluent. Based in South Florida, the company was founded in 2008 by Albert Mitrani, Chief Executive Officer and Dr. Mari Mitrani, Chief Scientific Officer. To learn more, please visit https://organicell.com/.

FORWARD-LOOKING STATEMENTS

Certain of the statements contained in this press release should be considered forward-looking statements within the meaning of the Securities Act of 1933, as amended (the “Securities Act”), the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and the Private Securities Litigation Reform Act of 1995. These forward-looking statements are often identified by the use of forward-looking terminology such as “will,” “believes,” “expects,” “potential” or similar expressions, involving known and unknown risks and uncertainties. Although the Company believes that the expectations reflected in these forward-looking statements are reasonable, they do involve assumptions, risks and uncertainties, and these expectations may prove to be incorrect. We remind you that actual results could vary dramatically as a result of known and unknown risks and uncertainties, including but not limited to: potential issues related to our financial condition, competition, the ability to retain key personnel, product safety, efficacy and acceptance, the commercial success of any new products or technologies, success of clinical programs, ability to retain key customers, our inability to expand sales and distribution channels, legislation or regulations affecting our operations including product pricing, reimbursement or access, the ability to protect our patents and other intellectual property both domestically and internationally and other known and unknown risks and uncertainties, including the risk factors discussed in the Company’s periodic reports that are filed with the SEC and available on the SEC’s website (http://www.sec.gov). You are cautioned not to place undue reliance on these forward-looking statements. All forward-looking statements attributable to the Company or persons acting on its behalf are expressly qualified in their entirety by these risk factors. Specific information included in this press release may change over time and may or may not be accurate after the date of the release. Organicell has no intention and specifically disclaims any duty to update the information in this press release.

Jeffrey Freedman

RooneyPartners

646-432-0191

[email protected]

KEYWORDS: United States North America Florida

INDUSTRY KEYWORDS: Science Other Science Biotechnology Research Pharmaceutical Health FDA Clinical Trials

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Survey Reveals Pregnant Women Lack Awareness About Preeclampsia, the #2 Cause of Maternal Death

Progenity survey shows
more women know their baby’s “fruit size” than the key indicator of a common pregnancy complication

Preeclampsia Awareness Month aims to educate women about the potentially deadly condition and recent advancements in diagnostic risk assessment

SAN DIEGO, May 04, 2021 (GLOBE NEWSWIRE) — May is Preeclampsia Awareness Month, and a recent survey is underscoring a stark need for more education around the second-most common cause of maternal mortality in the United States. The survey of nearly 800 women, including expectant mothers, new mothers within the last year, and those who are considering pregnancy, was conducted by Progenity, Inc. (Nasdaq: PROG), a biotechnology company with an established track record of success developing and commercializing molecular testing products in women’s health. The results showed less than half of respondents know that high blood pressure, the main sign of preeclampsia, is a key indicator of the condition. In contrast, more than 50 percent of respondents know the “fruit size” of a baby at 12 weeks, a popular milestone marker for moms-to-be. This survey points to the need for further patient awareness and education around the symptoms of preeclampsia, a potentially dangerous complication of pregnancy.

Nearly 30% of pregnant women in the United States experience signs and symptoms of possible preeclampsia, a condition that can occur during pregnancy or up to six weeks after. The condition is often missed or misdiagnosed because the symptoms are common and non-specific, making it difficult for doctors to clinically distinguish between those most at risk and those at a reduced risk. If undiagnosed or poorly managed, the condition can result in impaired organ function, seizures, stroke, and even death in the infant or mother, and may require pre-term delivery. In fact, approximately 5-8% of all pregnancies are complicated by preeclampsia.

“Early recognition of preeclampsia can save lives,” said Eleni Tsigas, CEO of the Preeclampsia Foundation. “This survey shows us how much work still needs to be done to educate pregnant women about the signs and symptoms of this devastating condition. All women need to know their risk for preeclampsia because timely diagnosis and management is critical.”

It can be difficult to evaluate suspected preeclampsia because there are more than a dozen signs and symptoms that can differ from woman to woman. The two main signs—high blood pressure and protein in the urine—typically aren’t noticed without a visit to the doctor. Additionally, risk factors vary, and include common features such as first pregnancy, obesity, diabetes, maternal age younger than 18 or older than 35, and family history of preeclampsia. Black women are also at higher risk, and new research points to an increase in preeclampsia and preterm birth in women diagnosed with COVID-19.

“I wish I would have known what preeclampsia is, what the symptoms are, and the impact that it could have on my son’s life and mine. Instead, I found out about preeclampsia through surviving it and delivering my son early at 28 weeks,” said preeclampsia survivor, Jasmine Mago. “Now I live to raise awareness, provide education, and support research in hope that mortality rates will decrease and that there will be more progress in treatment and diagnosis.”

Despite the increasing rates of preeclampsia, there have been no significant advancements in diagnostic assessment tools in the United States in decades. However, doctors may soon have a reliable way to rule out the risk of preeclampsia for up to 14 days, modernizing the way they evaluate patients. Developed by Progenity, a proprietary lab test—called Preecludia—could potentially be a tool to help providers differentiate patients with symptoms who are not at risk for preeclampsia from those who may be at increased risk. The test is designed to be run from a simple blood draw.

“There’s a clear unmet need for additional tools to help rule out possible preeclampsia in expectant mothers, and I know this first-hand after almost losing my wife to preeclampsia after a missed diagnosis,” said Matthew Cooper, Ph.D., Chief Scientific Officer, Progenity. “The Preecludia test would be the first of its kind in the United States and would help to fill a gap in the assessment and management of preeclampsia. We look forward to offering the test to physicians and patients to make a real difference in the lives of mothers and babies.”

For more information about preeclampsia and how to recognize its signs and symptoms, visit the Preeclampsia Foundation.

For more information about Progenity’s products and pipeline visit www.progenity.com, or follow the company on LinkedIn or Twitter.

About Preecludia

Progenity’s preeclampsia rule-out test, Preecludia, has the potential to be the first-of-its-kind test in the United States to help healthcare providers evaluate patients who have signs and symptoms of possible preeclampsia. This laboratory developed test (LDT) is a novel multi-analyte protein biomarker assay designed to examine markers from multiple pathophysiological pathways of preeclampsia to assess risk. It is run from a simple blood draw and is designed to address the unmet need for tools to aid in the assessment and management of preeclampsia. Positive performance data from the Preecludia verification study were presented April 30th at the American College of Obstetricians and Gynecologists (ACOG) Annual Meeting. The test is now in the final clinical validation testing phase, with a targeted launch expected in the second half of 2021   

About Progenity

Progenity, Inc. is a biotechnology company with an established track record of success in developing and commercializing molecular testing products, as well as innovating in the field of precision medicine. Progenity provides in vitro molecular tests designed to improve lives by providing actionable information that helps guide patients and physicians in making medical decisions during key life stages. The company applies a multi-omics approach, combining genomics, epigenomics, proteomics, and metabolomics to its molecular testing products and to the development of a suite of investigational ingestible devices designed to provide precise diagnostic sampling and drug delivery solutions. Progenity’s vision is to transform healthcare to become more precise and personal by improving diagnoses of disease and improving patient outcomes through localized treatment with targeted therapies. For more information on how Progenity is helping clinicians and patients prepare for life, please visit progenity.com.

About the Preeclampsia Foundation

The Preeclampsia Foundation is a U.S.-based 501(c)(3) not-for-profit organization established in 2000. Its purpose is to improve the outcomes of hypertensive disorders of pregnancy by educating, supporting and engaging the community, improving healthcare practices, and finding a cure. The Preeclampsia Foundation envisions a world where hypertensive disorders of pregnancy no longer threaten the lives of mothers and their babies. For more information, visit www.preeclampsia.org.

Forward Looking Statements

This press release contains “forward-looking statements,” which statements are subject to substantial risks and uncertainties and are based on estimates and assumptions. All statements, other than statements of historical facts included in this press release, including statements concerning the development progress of our preeclampsia rule-out test, and its future use by providers to rule out preeclampsia, are forward-looking statements. In some cases, you can identify forward-looking statements by terms such as “may,” “might,” “will,” “objective,” “intend,” “should,” “could,” “can,” “would,” “expect,” “believe,” “design,” “estimate,” “predict,” “potential,” “plan” or the negative of these terms, and similar expressions intended to identify forward-looking statements. These statements involve known and unknown risks, uncertainties and other factors that could cause the Company’s actual results to differ materially from the forward-looking statements expressed or implied in this press release, including acceptance and clinical utility of our products, regulatory developments in the United States and foreign countries, our ability to obtain and maintain regulatory approval or clearance of our products on expected timelines or at all, and those risks described in “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in our Annual Report on Form 10-K for the year ended December 31, 2020, filed with the SEC on March 18, 2021, and other subsequent documents we file with the SEC. We claim the protection of the Safe Harbor contained in the Private Securities Litigation Reform Act of 1995 for forward-looking statements. We expressly disclaim any obligation to update or alter any statements whether as a result of new information, future events or otherwise, except as required by law.

Investor Contact:

Robert Uhl
Managing Director, Westwicke ICR
[email protected]
(619) 228-5886

Media Contact:

Angela Salerno-Robin
dna Communications
[email protected]
(212) 445-8219



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Cummins Reports First Quarter 2021 Results

Cummins Reports First Quarter 2021 Results

  • First quarter revenues of $6.1 billion; GAAP1 Net Income of $603 million
  • First quarter EBITDA of 16.1 percent; Diluted EPS of $4.07
  • The company is raising its full year 2021 revenue guidance to be up 20 to 24 percent; up from 8 to 12 percent
  • EBITDA is now expected to be in the range of 15.5 to 16.0 percent; up from 15.0 to 15.5 percent

COLUMBUS, Ind.–(BUSINESS WIRE)–
Cummins Inc. (NYSE: CMI) today reported results for the first quarter of 2021.

First quarter revenues of $6.1 billion increased 22 percent from the same quarter in 2020. Sales in North America increased 7 percent while international revenues increased 45 percent driven by strong demand across all global markets as well as new product sales in China and India.

“Demand accelerated in the first quarter, as the global economy continued to improve, driving strong sales growth across most businesses and regions and resulting in solid profitability. The strength and breadth of the rebound in demand has surpassed our original expectations and we have raised our full year outlook,” said Chairman and CEO Tom Linebarger. “While we are encouraged by the rising demand, the pace of recovery has placed a strain on global supply chains leading to increased costs and challenges in fulfilling end-user demand. The shortage of key components such as semiconductor chips has been the primary challenge, with adverse weather conditions impacting the US, and bottlenecks in global logistics further adding to order backlogs. The ability to supply is our key focus now and we are doing everything we can to mitigate the impact. I want to thank our global employees, especially those in our supply chain and manufacturing operations, and our suppliers for their extraordinary efforts to manage through these challenges and support our customers.”

Earnings before interest, taxes, depreciation and amortization (EBITDA) in the first quarter were $980 million (16.1 percent of sales), compared to $846 million (16.9 percent of sales) a year ago.

Net income attributable to Cummins in the first quarter was $603 million ($4.07 per diluted share) compared to $511 million ($3.41 per diluted share) in 2020. The tax rate in the first quarter was 22.0 percent including $4 million, or $0.03 per share, of favorable discrete items.

2021 Outlook:

Based on the current forecast, Cummins is raising its full year 2021 revenue guidance to 20 to 24 percent, an increase from 8 to 12 percent due to stronger demand across all markets. EBITDA is expected to be in the range of 15.5 to 16.0 percent, an increase from the prior range of 15.0 and 15.5 percent of sales, primarily due to increased demand. The Company expects to return 75 percent of Operating Cash Flow to shareholders in 2021 in the form of dividends and share repurchases.

“We are raising our guidance for 2021 on both revenue and profitability. We continue to take necessary precautions at all our facilities to mitigate the spread of COVID-19 and our focus remains on the health and safety of our employees. We are optimistic that continued vaccination distribution globally will reduce the impact of the virus in the second half of the year, but there is still a risk of an increase in cases and the potential for new virus variants that could result in lower customer demand, additional facility shutdowns or additional supply chain constraints in the future. Cummins is in a strong position to keep investing in future growth, bringing new technologies to customers and returning cash to shareholders,” said Chairman and CEO Tom Linebarger.

First Quarter 2021 Highlights:

  • The Company announced a global strategic partnership with Daimler to provide medium duty powertrain systems for Daimler Trucks and Buses, allowing both companies to be more competitive, drive global innovation, expand offerings to customers and reduce emissions.
  • Cummins continued its commitment to gender equality on International Women’s Day. With a goal of having 24 hours of continuous conversations on gender equity, more than 5,000 employees participated in 47 conversations hosted in 22 countries around the world. The Cummins Powers Women program also continued its progress by forming a new partnership with Promundo in Europe to prevent violence against women.
  • Cummins Vice Chairman, Tony Satterthwaite, testified before Congress in the Hearing on Transportation Technologies, reinforcing Cummins’ commitment to achieve a net zero carbon emissions future through continued innovation in advanced internal combustion, battery, and fuel cell technologies. Satterthwaite urged the government to make the infrastructure investments required to support the successful market adoption of zero carbon emission technologies.
  • The Company announced employees, contingent workers and their spouses and dependents (ages 16+) could receive the Pfizer-BioNTech COVID-19 vaccine at several locations across the United States. Cummins continues to collaborate with health officials around the world to provide employees with access to COVID-19 vaccines.

1 Generally Accepted Accounting Principles in the U.S.

First quarter 2021 detail (all comparisons to same period in 2020):

Engine Segment

  • Sales – $2.5 billion, up 14 percent
  • Segment EBITDA – $354 million, or 14.4 percent of sales, compared to $365 million or 16.9 percent of sales
  • On-highway revenues increased 15 percent driven by strong demand in the North American truck and pickup markets and off-highway revenues increased 9 percent driven by strong demand in international construction markets
  • Sales increased 10 percent in North America and 24 percent in international markets

Distribution Segment

  • Sales – $1.8 billion, up 1 percent
  • Segment EBITDA – $160 million, or 8.7 percent of sales, compared to $158 million or 8.7 percent of sales
  • Revenues in North America were down 6 percent and international sales increased by 17 percent
  • Increased demand in power generation and engine markets offset by declines in parts and service as a result of supply chain constraints

Components Segment

  • Sales – $2.2 billion, up 43 percent
  • Segment EBITDA – $421 million, or 19.6 percent of sales, compared to $279 million or 18.6 percent of sales
  • Revenues in North America increased by 15 percent and international sales increased by 82 percent due to higher demand in China and India

Power Systems Segment

  • Sales – $1.0 billion, up 16 percent
  • Segment EBITDA – $126 million, or 12.3 percent of sales, compared to $77 million, or 8.7 percent of sales
  • Power generation revenues increased by 18 percent driven by growth in recreational vehicle and datacenter markets while industrial revenues increased 9 percent due to stronger demand in mining markets

New Power Segment

  • Sales – $35 million, up 250 percent
  • Segment EBITDA loss – $51 million
  • Revenues increased due to greater demand in transit and school bus markets in addition to the commissioning of electrolyzer projects and shipments of fuel cell systems to the rail market
  • Costs associated with the development of fuel cells and electrolyzers as well as products to support battery electric vehicles are contributing to EBITDA losses

About Cummins Inc.

Cummins Inc., a global power leader, is a corporation of complementary business segments that design, manufacture, distribute and service a broad portfolio of power solutions. The company’s products range from diesel, natural gas, electric and hybrid powertrains and powertrain-related components including filtration, aftertreatment, turbochargers, fuel systems, controls systems, air handling systems, automated transmissions, electric power generation systems, batteries, electrified power systems, hydrogen generation and fuel cell products. Headquartered in Columbus, Indiana (U.S.), since its founding in 1919, Cummins employs approximately 57,825 people committed to powering a more prosperous world through three global corporate responsibility priorities critical to healthy communities: education, environment and equality of opportunity. Cummins serves its customers online, through a network of company-owned and independent distributor locations, and through thousands of dealer locations worldwide and earned about $1.8 billion on sales of $19.8 billion in 2020. To learn more about Cummins visit cummins.com.

Forward-looking disclosure statement

Information provided in this release that is not purely historical are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, including statements regarding our forecasts, guidance, preliminary results, expectations, hopes, beliefs and intentions on strategies regarding the future. These forward-looking statements include, without limitation, statements relating to our plans and expectations for our revenues and EBITDA. Our actual future results could differ materially from those projected in such forward-looking statements because of a number of factors, including, but not limited to: any adverse results of our internal review into our emissions certification process and compliance with emission standards; increased scrutiny from regulatory agencies, as well as unpredictability in the adoption, implementation and enforcement of emission standards around the world; policy changes in international trade; the U.K.’s exit from the European Union; changes in taxation; global legal and ethical compliance costs and risks; increasingly stringent environmental laws and regulations; future bans or limitations on the use of diesel-powered products; supply shortages and supplier financial risk, particularly from any of our single-sourced suppliers, including suppliers that may be impacted by the COVID-19 pandemic; market slowdown due to the impacts from the COVID-19 pandemic, other public health crises, epidemics or pandemics; impacts to manufacturing and supply chain abilities from an extended shutdown or disruption of our operations due to the COVID-19 pandemic; aligning our capacity and production with our demand, including impacts of COVID-19; large truck manufacturers and original equipment manufacturers customers discontinuing outsourcing their engine supply needs or experiencing financial distress, particularly related to the COVID-19 pandemic, bankruptcy or change in control; a slowdown in infrastructure development and/or depressed commodity prices; failure to realize expected results from our investment in Eaton Cummins Automated Transmission Technologies joint venture; the actions of, and income from, joint ventures and other investees that we do not directly control; product recalls; the development of new technologies that reduce demand for our current products and services; lower than expected acceptance of new or existing products or services; variability in material and commodity costs; product liability claims; our sales mix of products; protection and validity of our patent and other intellectual property rights; disruptions in global credit and financial markets as the result of the COVID-19 pandemic; labor relations or work stoppages; reliance on our executive leadership team and other key personnel; climate change and global warming; our plan to reposition our portfolio of product offerings through exploration of strategic acquisitions and divestitures and related uncertainties of entering such transactions; exposure to potential security breaches or other disruptions to our information technology systems and data security; political, economic and other risks from operations in numerous countries; competitor activity; increasing competition, including increased global competition among our customers in emerging markets; foreign currency exchange rate changes; the performance of our pension plan assets and volatility of discount rates, particularly those related to the sustained slowdown of the global economy due to the COVID-19 pandemic; the price and availability of energy; the outcome of pending and future litigation and governmental proceedings; continued availability of financing, financial instruments and financial resources in the amounts, at the times and on the terms required to support our future business; and other risks detailed from time to time in our SEC filings, including particularly in the Risk Factors section of our 2020 Annual Report on Form 10-K and Quarterly Reports on Form 10-Q. Shareholders, potential investors and other readers are urged to consider these factors carefully in evaluating the forward-looking statements and are cautioned not to place undue reliance on such forward-looking statements. The forward-looking statements made herein are made only as of the date of this press release and we undertake no obligation to publicly update any forward-looking statements, whether as a result of new information, future events or otherwise. More detailed information about factors that may affect our performance may be found in our filings with the SEC, which are available at http://www.sec.gov or at http://www.cummins.com in the Investor Relations section of our website.

Presentation of Non-GAAP Financial Information

EBITDA is a non-GAAP measure used in this release and is defined and reconciled to what management believes to be the most comparable GAAP measure in a schedule attached to this release. Cummins presents this information as it believes it is useful to understanding the Company’s operating performance, and because EBITDA is a measure used internally to assess the performance of the operating units.

Webcast information

Cummins management will host a teleconference to discuss these results today at 10 a.m. EST. This teleconference will be webcast and available on the Investor Relations section of the Cummins website at www.cummins.com. Participants wishing to view the visuals available with the audio are encouraged to sign-in a few minutes prior to the start of the teleconference.

 

CUMMINS INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF NET INCOME

(Unaudited) (a)

 

 

Three months ended

In millions, except per share amounts

 

April 4,

2021

 

March 29,

2020

NET SALES

 

$

6,092

 

 

$

5,011

 

Cost of sales

 

 

4,606

 

 

 

3,717

 

GROSS MARGIN

 

 

1,486

 

 

 

1,294

 

OPERATING EXPENSES AND INCOME

 

 

 

 

Selling, general and administrative expenses

 

 

574

 

 

 

546

 

Research, development and engineering expenses

 

 

260

 

 

 

238

 

Equity, royalty and interest income from investees

 

 

166

 

 

 

129

 

Other operating expense, net

 

 

(8

)

 

 

(5

)

OPERATING INCOME

 

 

810

 

 

 

634

 

Interest expense

 

 

28

 

 

 

23

 

Other income, net

 

 

1

 

 

 

44

 

INCOME BEFORE INCOME TAXES

 

 

783

 

 

 

655

 

Income tax expense

 

 

172

 

 

 

127

 

CONSOLIDATED NET INCOME

 

 

611

 

 

 

528

 

Less: Net income attributable to noncontrolling interests

 

 

8

 

 

 

17

 

NET INCOME ATTRIBUTABLE TO CUMMINS INC.

 

$

603

 

 

$

511

 

 

 

 

 

 

EARNINGS PER COMMON SHARE ATTRIBUTABLE TO CUMMINS INC.

 

 

 

 

Basic

 

$

4.10

 

 

$

3.42

 

Diluted

 

$

4.07

 

 

$

3.41

 

 

 

 

 

 

WEIGHTED-AVERAGE COMMON SHARES OUTSTANDING

 

 

 

 

Basic

 

 

147.0

 

 

 

149.3

 

Diluted

 

 

148.3

 

 

 

149.7

 

 

 

 

 

 

(a) Prepared on an unaudited basis in accordance with accounting principles generally accepted in the United States of America.

 

 

 

 

CUMMINS INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(Unaudited) (a)

 

 

 

 

 

In millions, except par value

 

April 4,

2021

 

December 31,

2020

ASSETS

 

 

 

 

Current assets

 

 

 

 

Cash and cash equivalents

 

$

2,958

 

 

$

3,401

 

Marketable securities

 

 

397

 

 

 

461

 

Total cash, cash equivalents and marketable securities

 

 

3,355

 

 

 

3,862

 

Accounts and notes receivable, net

 

 

4,209

 

 

 

3,820

 

Inventories

 

 

3,753

 

 

 

3,425

 

Prepaid expenses and other current assets

 

 

805

 

 

 

790

 

Total current assets

 

 

12,122

 

 

 

11,897

 

Long-term assets

 

 

 

 

Property, plant and equipment, net

 

 

4,196

 

 

 

4,255

 

Investments and advances related to equity method investees

 

 

1,592

 

 

 

1,441

 

Goodwill

 

 

1,290

 

 

 

1,293

 

Other intangible assets, net

 

 

964

 

 

 

963

 

Pension assets

 

 

1,085

 

 

 

1,042

 

Other assets

 

 

1,713

 

 

 

1,733

 

Total assets

 

$

22,962

 

 

$

22,624

 

 

 

 

 

 

LIABILITIES

 

 

 

 

Current liabilities

 

 

 

 

Accounts payable (principally trade)

 

$

3,279

 

 

$

2,820

 

Loans payable

 

 

93

 

 

 

169

 

Commercial paper

 

 

317

 

 

 

323

 

Accrued compensation, benefits and retirement costs

 

 

393

 

 

 

484

 

Current portion of accrued product warranty

 

 

623

 

 

 

674

 

Current portion of deferred revenue

 

 

773

 

 

 

691

 

Other accrued expenses

 

 

1,121

 

 

 

1,112

 

Current maturities of long-term debt

 

 

61

 

 

 

62

 

Total current liabilities

 

 

6,660

 

 

 

6,335

 

Long-term liabilities

 

 

 

 

Long-term debt

 

 

3,620

 

 

 

3,610

 

Pensions and other postretirement benefits

 

 

621

 

 

 

630

 

Accrued product warranty

 

 

692

 

 

 

672

 

Deferred revenue

 

 

828

 

 

 

840

 

Other liabilities

 

 

1,510

 

 

 

1,548

 

Total liabilities

 

$

13,931

 

 

$

13,635

 

 

 

 

 

 

EQUITY

 

 

 

 

Cummins Inc. shareholders’ equity

 

 

 

 

Common stock, $2.50 par value, 500 shares authorized, 222.4 and 222.4 shares issued

 

$

2,393

 

 

$

2,404

 

Retained earnings

 

 

15,825

 

 

 

15,419

 

Treasury stock, at cost, 76.2 and 74.8 shares

 

 

(8,172

)

 

 

(7,779

)

Accumulated other comprehensive loss

 

 

(1,937

)

 

 

(1,982

)

Total Cummins Inc. shareholders’ equity

 

 

8,109

 

 

 

8,062

 

Noncontrolling interests

 

 

922

 

 

 

927

 

Total equity

 

$

9,031

 

 

$

8,989

 

Total liabilities and equity

 

$

22,962

 

 

$

22,624

 

 

 

 

 

 

(a) Prepared on an unaudited basis in accordance with accounting principles generally accepted in the United States of America

 

 

CUMMINS INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited) (a)

 

 

Three months ended

In millions

 

April 4,

2021

 

March 29,

2020

CASH FLOWS FROM OPERATING ACTIVITIES

 

 

 

 

Consolidated net income

 

$

611

 

 

$

528

 

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

 

 

 

 

Depreciation and amortization

 

 

170

 

 

 

168

 

Deferred income taxes

 

 

8

 

 

 

(11

)

Equity in income of investees, net of dividends

 

 

(136

)

 

 

(78

)

Pension and OPEB expense

 

 

20

 

 

 

27

 

Pension contributions and OPEB payments

 

 

(51

)

 

 

(60

)

Share-based compensation expense

 

 

8

 

 

 

4

 

Restructuring payments

 

 

—

 

 

 

(48

)

Loss (gain) on corporate owned life insurance

 

 

32

 

 

 

(17

)

Foreign currency remeasurement and transaction exposure

 

 

1

 

 

 

3

 

Changes in current assets and liabilities

 

 

 

 

Accounts and notes receivable

 

 

(374

)

 

 

107

 

Inventories

 

 

(336

)

 

 

(171

)

Other current assets

 

 

(24

)

 

 

79

 

Accounts payable

 

 

465

 

 

 

171

 

Accrued expenses

 

 

(24

)

 

 

(321

)

Changes in other liabilities

 

 

—

 

 

 

28

 

Other, net

 

 

(31

)

 

 

(30

)

Net cash provided by operating activities

 

 

339

 

 

 

379

 

 

 

 

 

 

CASH FLOWS FROM INVESTING ACTIVITIES

 

 

 

 

Capital expenditures

 

 

(87

)

 

 

(75

)

Investments in internal use software

 

 

(11

)

 

 

(8

)

Investments in and advances to equity investees

 

 

(24

)

 

 

(7

)

Investments in marketable securities—acquisitions

 

 

(143

)

 

 

(116

)

Investments in marketable securities—liquidations

 

 

207

 

 

 

95

 

Cash flows from derivatives not designated as hedges

 

 

14

 

 

 

6

 

Other, net

 

 

19

 

 

 

6

 

Net cash used in investing activities

 

 

(25

)

 

 

(99

)

 

 

 

 

 

CASH FLOWS FROM FINANCING ACTIVITIES

 

 

 

 

Net (payments) borrowings of commercial paper

 

 

(6

)

 

 

957

 

Payments on borrowings and finance lease obligations

 

 

(16

)

 

 

(10

)

Net (payments) borrowings under short-term credit agreements

 

 

(102

)

 

 

25

 

Distributions to noncontrolling interests

 

 

(13

)

 

 

(13

)

Dividend payments on common stock

 

 

(197

)

 

 

(195

)

Repurchases of common stock

 

 

(418

)

 

 

(550

)

Proceeds from issuing common stock

 

 

18

 

 

 

13

 

Other, net

 

 

(11

)

 

 

7

 

Net cash (used in) provided by financing activities

 

 

(745

)

 

 

234

 

EFFECT OF EXCHANGE RATE CHANGES ON CASH AND CASH EQUIVALENTS

 

 

(12

)

 

 

48

 

Net (decrease) increase in cash and cash equivalents

 

 

(443

)

 

 

562

 

Cash and cash equivalents at beginning of year

 

 

3,401

 

 

 

1,129

 

CASH AND CASH EQUIVALENTS AT END OF PERIOD

 

$

2,958

 

 

$

1,691

 

 

 

 

 

 

(a) Prepared on an unaudited basis in accordance with accounting principles generally accepted in the United States of America.

CUMMINS INC. AND SUBSIDIARIES

SEGMENT INFORMATION

(Unaudited)
 
In millions

 

Engine

 

Distribution

 

Components

 

Power Systems

 

New Power

 

Total Segments

 

Intersegment

Eliminations (1)

 

Total

Three months ended April 4, 2021

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Segment sales

 

$

2,459

 

 

$

1,835

 

 

$

2,152

 

 

$

1,022

 

 

$

35

 

 

$

7,503

 

 

$

(1,411

)

 

$

6,092

 

Less: Intersegment sales

 

564

 

 

8

 

 

428

 

 

410

 

 

1

 

 

1,411

 

 

(1,411

)

 

—

 

External sales

 

1,895

 

 

1,827

 

 

1,724

 

 

612

 

 

34

 

 

6,092

 

 

—

 

 

6,092

 

Research, development and engineering expenses

 

92

 

 

13

 

 

75

 

 

57

 

 

23

 

 

260

 

 

—

 

 

260

 

Equity, royalty and interest income from investees

 

113

 

 

17

 

 

19

 

 

12

 

 

5

 

 

166

 

 

—

 

 

166

 

Interest income

 

3

 

 

1

 

 

1

 

 

1

 

 

—

 

 

6

 

 

—

 

 

6

 

EBITDA (2)

 

354

 

 

160

 

 

421

 

 

126

 

 

(51

)

 

1,010

 

 

(30

)

 

980

 

Depreciation and amortization (3)

 

51

 

 

30

 

 

48

 

 

35

 

 

5

 

 

169

 

 

—

 

 

169

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

EBITDA as a percentage of segment sales

 

14.4

%

 

8.7

%

 

19.6

%

 

12.3

%

 

NM

 

 

13.5

%

 

 

 

16.1

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three months ended March 29, 2020

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Segment sales

 

$

2,158

 

 

$

1,814

 

 

$

1,502

 

 

$

884

 

 

$

10

 

 

$

6,368

 

 

$

(1,357

)

 

$

5,011

 

Less: Intersegment sales

 

579

 

 

7

 

 

387

 

 

384

 

 

—

 

 

1,357

 

 

(1,357

)

 

—

 

External sales

 

1,579

 

 

1,807

 

 

1,115

 

 

500

 

 

10

 

 

5,011

 

 

—

 

 

5,011

 

Research, development and engineering expenses

 

80

 

 

7

 

 

68

 

 

54

 

 

29

 

 

238

 

 

—

 

 

238

 

Equity, royalty and interest income from investees

 

78

 

 

21

 

 

21

 

 

9

 

 

—

 

 

129

 

 

—

 

 

129

 

Interest income

 

4

 

 

1

 

 

1

 

 

1

 

 

—

 

 

7

 

 

—

 

 

7

 

EBITDA (2)

 

365

 

 

158

 

 

279

 

 

77

 

 

(43

)

 

836

 

 

10

 

 

846

 

Depreciation and amortization (3)

 

53

 

 

31

 

 

48

 

 

32

 

 

4

 

 

168

 

 

—

 

 

168

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

EBITDA as a percentage of segment sales

 

16.9

%

 

8.7

%

 

18.6

%

 

8.7

%

 

NM

 

 

13.1

%

 

 

 

16.9

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

“NM” – not meaningful information

(1) Includes intersegment sales, intersegment profit in inventory eliminations and unallocated corporate expenses. There were no significant unallocated corporate expenses for the three months ended April 4, 2021 and March 29, 2020.

(2) EBITDA is defined as earnings or losses before interest expense, income taxes, depreciation and amortization and noncontrolling interests.

(3) Depreciation and amortization, as shown on a segment basis, excludes the amortization of debt discount and deferred costs included in the Condensed Consolidated Statements of Net Income as “Interest expense.” The amortization of debt discount and deferred costs was $1 million and less than $1 million for the three months ended April 4, 2021 and March 29, 2020, respectively. A portion of depreciation expense is included in “Research, development and engineering expenses.”

CUMMINS INC. AND SUBSIDIARIES

SEGMENT INFORMATION

(Unaudited)

A reconciliation of our segment information to the corresponding amounts in the Condensed Consolidated Statements of Net Income is shown in the table below:

 

 

Three months ended

In millions

 

April 4,

2021

 

March 29,

2020

TOTAL SEGMENT EBITDA

 

$

1,010

 

 

$

836

 

Add:

 

 

 

 

Intersegment elimination

 

(30

)

 

10

 

TOTAL EBITDA

 

980

 

 

846

 

Less:

 

 

 

 

Interest expense

 

28

 

 

23

 

Depreciation and amortization

 

169

 

 

168

 

INCOME BEFORE INCOME TAXES

 

783

 

 

655

 

Less: Income tax expense

 

172

 

 

127

 

CONSOLIDATED NET INCOME

 

611

 

 

528

 

Less: Net income attributable to noncontrolling interests

 

8

 

 

17

 

NET INCOME ATTRIBUTABLE TO CUMMINS INC.

 

$

603

 

 

$

511

 

 

 

 

 

 

CUMMINS INC. AND SUBSIDIARIES

SELECT FOOTNOTE DATA

(Unaudited)

EQUITY, ROYALTY AND INTEREST INCOME FROM INVESTEES

Equity, royalty and interest income from investees included in our Condensed Consolidated Statements of Net Income for the reporting periods was as follows:

 

 

 

Three months ended

In millions

 

April 4,

2021

 

March 29,

2020

Manufacturing entities

 

 

 

 

Beijing Foton Cummins Engine Co., Ltd.

 

$

39

 

$

17

Dongfeng Cummins Engine Company, Ltd.

 

 

31

 

 

8

Chongqing Cummins Engine Company, Ltd.

 

 

10

 

 

9

All other manufacturers

 

 

61

 

 

55

(1)

Distribution entities

 

 

 

 

Komatsu Cummins Chile, Ltda.

 

 

6

 

 

10

All other distributors

 

 

3

 

 

—

Cummins share of net income

 

 

150

 

 

99

Royalty and interest income

 

 

16

 

 

30

Equity, royalty and interest income from investees

 

$

166

 

$

129

 

 

 

 

 

(1) Includes $37 million in favorable adjustments related to tax changes within India’s 2020-2021 Union Budget of India (India Tax Law Changes) passed in March 2020.

CUMMINS INC. AND SUBSIDIARIES

FINANCIAL MEASURES THAT SUPPLEMENT GAAP

(Unaudited)

Reconciliation of Non GAAP measures – Earnings before interest, income taxes, depreciation and amortization and noncontrolling interests (EBITDA)

We believe EBITDA is a useful measure of our operating performance as it assists investors and debt holders in comparing our performance on a consistent basis without regard to financing methods, capital structure, income taxes or depreciation and amortization methods, which can vary significantly depending upon many factors.

EBITDA is not in accordance with, or an alternative for, accounting principles generally accepted in the United States (GAAP) and may not be consistent with measures used by other companies. It should be considered supplemental data; however, the amounts included in the EBITDA calculation are derived from amounts included in the Condensed Consolidated Statements of Net Income. Below is a reconciliation of “Net income attributable to Cummins Inc.” to EBITDA for each of the applicable periods:

 

 

Three months ended

In millions

 

April 4,

2021

 

March 29,

2020

Net income attributable to Cummins Inc.

 

$

603

 

 

$

511

 

 

 

 

 

 

Net income attributable to Cummins Inc. as a percentage of net sales

 

 

9.9

%

 

 

10.2

%

 

 

 

 

 

Add:

 

 

 

 

Net income attributable to noncontrolling interests

 

 

8

 

 

 

17

 

Consolidated net income

 

 

611

 

 

 

528

 

 

 

 

 

 

Add:

 

 

 

 

Interest expense

 

 

28

 

 

 

23

 

Income tax expense

 

 

172

 

 

 

127

 

Depreciation and amortization

 

 

169

 

 

 

168

 

EBITDA

 

$

980

 

 

$

846

 

 

 

 

 

 

EBITDA as a percentage of net sales

 

 

16.1

%

 

 

16.9

%
 

CUMMINS INC. AND SUBSIDIARIES

BUSINESS UNIT SALES DATA

(Unaudited)

Engine Segment Sales by Market and Unit Shipments by Engine Classification

Sales for our Engine segment by market were as follows:

 

2021

 

 

 

 

 

 

 

 

 

 

In millions

 

Q1

 

Q2

 

Q3

 

Q4

 

YTD

Heavy-duty truck

 

$

827

 

$

—

 

$

—

 

$

—

 

$

827

Medium-duty truck and bus

 

 

674

 

 

—

 

 

—

 

 

—

 

 

674

Light-duty automotive

 

 

481

 

 

—

 

 

—

 

 

—

 

 

481

Off-highway

 

 

477

 

 

—

 

 

—

 

 

—

 

 

477

Total sales

 

$

2,459

 

$

—

 

$

—

 

$

—

 

$

2,459

 

 

 

 

 

 

 

 

 

 

 

2020

 

 

 

 

 

 

 

 

 

 

In millions

 

Q1

 

Q2

 

Q3

 

Q4

 

YTD

Heavy-duty truck

 

$

750

 

$

415

 

$

694

 

$

789

 

$

2,648

Medium-duty truck and bus

 

 

618

 

 

391

 

 

492

 

 

565

 

 

2,066

Light-duty automotive

 

 

353

 

 

180

 

 

522

 

 

492

 

 

1,547

Off-highway

 

 

437

 

 

437

 

 

404

 

 

483

 

 

1,761

Total sales

 

$

2,158

 

$

1,423

 

$

2,112

 

$

2,329

 

$

8,022

 

Unit shipments by engine classification (including unit shipments to Power Systems and off-highway engine units included in their respective classification) were as follows:

 

2021

 

 

 

 

 

 

 

 

 

 

Units

 

Q1

 

Q2

 

Q3

 

Q4

 

YTD

Heavy-duty

 

30,700

 

—

 

—

 

—

 

30,700

Medium-duty

 

73,100

 

—

 

—

 

—

 

73,100

Light-duty

 

68,500

 

—

 

—

 

—

 

68,500

Total units

 

172,300

 

—

 

—

 

—

 

172,300

 

 

 

 

 

 

 

 

 

 

 

2020

 

 

 

 

 

 

 

 

 

 

Units

 

Q1

 

Q2

 

Q3

 

Q4

 

YTD

Heavy-duty

 

25,800

 

15,900

 

23,300

 

27,500

 

92,500

Medium-duty

 

61,200

 

44,900

 

50,100

 

64,700

 

220,900

Light-duty

 

49,400

 

29,800

 

67,200

 

69,400

 

215,800

Total units

 

136,400

 

90,600

 

140,600

 

161,600

 

529,200

 

Distribution Segment Sales by Product Line

Sales for our Distribution segment by product line were as follows:

 

2021

 

 

 

 

 

 

 

 

 

 

In millions

 

Q1

 

Q2

 

Q3

 

Q4

 

YTD

Parts

 

$

757

 

$

—

 

$

—

 

$

—

 

$

757

Power generation

 

 

418

 

 

—

 

 

—

 

 

—

 

 

418

Engines

 

 

334

 

 

—

 

 

—

 

 

—

 

 

334

Service

 

 

326

 

 

—

 

 

—

 

 

—

 

 

326

Total sales

 

$

1,835

 

$

—

 

$

—

 

$

—

 

$

1,835

 

 

 

 

 

 

 

 

 

 

 

2020

 

 

 

 

 

 

 

 

 

 

In millions

 

Q1

 

Q2

 

Q3

 

Q4

 

YTD

Parts

 

$

787

 

$

654

 

$

722

 

$

768

 

$

2,931

Power generation

 

 

376

 

 

377

 

 

416

 

 

523

 

 

1,692

Engines

 

 

323

 

 

277

 

 

279

 

 

371

 

 

1,250

Service

 

 

328

 

 

297

 

 

304

 

 

334

 

 

1,263

Total sales

 

$

1,814

 

$

1,605

 

$

1,721

 

$

1,996

 

$

7,136

 

Component Segment Sales by Business

Sales for our Components segment by business were as follows:

 

2021

 

 

 

 

 

 

 

 

 

 

In millions

 

Q1

 

Q2

 

Q3

 

Q4

 

YTD

Emission solutions

 

$

1,035

 

$

—

 

$

—

 

$

—

 

$

1,035

Filtration

 

 

372

 

 

—

 

 

—

 

 

—

 

 

372

Turbo technologies

 

 

367

 

 

—

 

 

—

 

 

—

 

 

367

Electronics and fuel systems

 

 

263

 

 

—

 

 

—

 

 

—

 

 

263

Automated transmissions

 

 

115

 

 

—

 

 

—

 

 

—

 

 

115

Total sales

 

$

2,152

 

$

—

 

$

—

 

$

—

 

$

2,152

 

 

 

 

 

 

 

 

 

 

 

2020

 

 

 

 

 

 

 

 

 

 

In millions

 

Q1

 

Q2

 

Q3

 

Q4

 

YTD

Emission solutions

 

$

664

 

$

472

 

$

665

 

$

831

 

$

2,632

Filtration

 

 

312

 

 

255

 

 

314

 

 

351

 

 

1,232

Turbo technologies

 

 

270

 

 

216

 

 

281

 

 

331

 

 

1,098

Electronics and fuel systems

 

 

174

 

 

164

 

 

187

 

 

229

 

 

754

Automated transmissions

 

 

82

 

 

43

 

 

94

 

 

89

 

 

308

Total sales

 

$

1,502

 

$

1,150

 

$

1,541

 

$

1,831

 

$

6,024

 

Power Systems Segment Sales by Product Line and Unit Shipments by Engine Classification

Sales for our Power Systems segment by product line were as follows:

2021

 

 

 

 

 

 

 

 

 

 

In millions

 

Q1

 

Q2

 

Q3

 

Q4

 

YTD

Power generation

 

$

611

 

$

—

 

$

—

 

$

—

 

$

611

Industrial

 

 

324

 

 

—

 

 

—

 

 

—

 

 

324

Generator technologies

 

 

87

 

 

—

 

 

—

 

 

—

 

 

87

Total sales

 

$

1,022

 

$

—

 

$

—

 

$

—

 

$

1,022

 

 

 

 

 

 

 

 

 

 

 

2020

 

 

 

 

 

 

 

 

 

 

In millions

 

Q1

 

Q2

 

Q3

 

Q4

 

YTD

Power generation

 

$

519

 

$

424

 

$

601

 

$

623

 

$

2,167

Industrial

 

 

296

 

 

291

 

 

309

 

 

292

 

 

1,188

Generator technologies

 

 

69

 

 

62

 

 

71

 

 

74

 

 

276

Total sales

 

$

884

 

$

777

 

$

981

 

$

989

 

$

3,631

 

High-horsepower unit shipments by engine classification were as follows:

 

2021

 

 

 

 

 

 

 

 

 

 

Units

 

Q1

 

Q2

 

Q3

 

Q4

 

YTD

Power generation

 

2,100

 

—

 

—

 

—

 

2,100

Industrial

 

1,000

 

—

 

—

 

—

 

1,000

Total units

 

3,100

 

—

 

—

 

—

 

3,100

 

 

 

 

 

 

 

 

 

 

 

2020

 

 

 

 

 

 

 

 

 

 

Units

 

Q1

 

Q2

 

Q3

 

Q4

 

YTD

Power generation

 

1,800

 

1,000

 

2,300

 

2,600

 

7,700

Industrial

 

1,000

 

1,000

 

1,200

 

1,100

 

4,300

Total units

 

2,800

 

2,000

 

3,500

 

3,700

 

12,000

 

 

Jon Mills

Cummins Inc.

Phone: 317-658-4540

[email protected]

KEYWORDS: United States North America Indiana

INDUSTRY KEYWORDS: Other Transport Automotive Transport Automotive Manufacturing Oil/Gas Manufacturing Other Automotive Alternative Energy Energy

MEDIA:

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Warner Music Group Corp. Reports Results for the Second Quarter Ended March 31, 2021

Financial Highlights:

  • Double-Digit Revenue Growth Highlighted by Strength across Recorded Music and Music Publishing
  • Recorded Music Streaming Revenue Grew 20% Driven by Chart-Topping New Music
  • Revenue Attributable to Emerging Streaming Platforms Continues to Show Accelerated Growth
  • Continued Margin Expansion and High Free Cash Flow Conversion

For the three months ended March 31, 2021

  • Total revenue grew 17% or 13% in constant currency
  • Digital revenue grew 23% or 20% in constant currency
  • Net income was $117 million versus net loss of $74 million in the prior-year quarter
  • OIBDA increased to $228 million versus $12 million in the prior-year quarter
  • Adjusted OIBDA increased 21% to $255 million versus $210 million in the prior-year quarter
  • Adjusted EBITDA increased 25% to $268 million versus $214 million in the prior-year quarter

NEW YORK, May 04, 2021 (GLOBE NEWSWIRE) — Warner Music Group Corp. today announced its second-quarter financial results for the period ended March 31, 2021.

“Following a strong first quarter, I’m happy to report that our momentum continued in Q2, and our business is stronger than ever. Despite the ongoing pandemic, we generated double-digit revenue growth in both Recorded Music and Music Publishing,” said Steve Cooper, CEO, Warner Music Group. “Our success was driven by chart-topping new releases from our incredible artists and songwriters, as well as bold and imaginative execution from our world-class operators. We’re excited about the rest of year, as we have a fantastic slate of new music coming from established superstars and emerging talent.”

“In the second quarter, the continued strength of our core streaming business was bolstered by impressive growth in revenue from emerging streaming platforms, which drove healthy margins and free cash flow,” added Eric Levin, Executive Vice President and CFO, Warner Music Group. “We look forward to delivering long-term value as we continue to invest in culture-shifting talent, innovative technology, and dynamic new partnerships.”

Total WMG

Total WMG Summary Results                    
(dollars in millions)                    
  For the Three Months Ended March 31, 2021   For the Three Months Ended March 31, 2020   % Change   For the Six Months Ended March 31, 2021   For the Six Months Ended March 31, 2020   % Change
  (unaudited)   (unaudited)       (unaudited)   (unaudited)    
Revenue $ 1,250     $ 1,071     17 %   $ 2,585     $ 2,327     11 %
Recorded Music revenue 1,059     907     17 %   2,220     1,991     12 %
Music Publishing revenue 192     166     16 %   367     339     8 %
Digital revenue 860     699     23 %   1,685     1,405     20 %
Operating income (loss) 151     (49 )   — %   347     116     — %
Adjusted operating income(1) 178     149     19 %   389     318     22 %
OIBDA(1) 228     12     — %   495     248     100 %
Adjusted OIBDA(1) 255     210     21 %   537     450     19 %
Net income (loss) 117     (74 )   — %   216     48     — %
Adjusted net income(1) 144     124     16 %   258     250     3 %
Net cash provided by operating activities 150     86     74 %   319     164     95 %
                       
(1) See “Supplemental Disclosures Regarding Non-GAAP Financial Measures” at the end of this release for details regarding these measures.

  For the Three Months Ended March 31, 2021   For the Three Months Ended March 31, 2020   % Change   For the Twelve Months Ended March 31, 2021   For the Twelve Months Ended March 31, 2020   % Change
  (unaudited)   (unaudited)       (unaudited)   (unaudited)    
Adjusted EBITDA(1) $ 268     $ 214     25 %   $ 943     $ 755     25 %
                       
(1) See “Supplemental Disclosures Regarding Non-GAAP Financial Measures” at the end of this release for details regarding these measures.

Revenue was up 16.7% (or 12.8% in constant currency). Revenue increases in the quarter were driven by robust digital revenue growth across Recorded Music and Music Publishing, strong Recorded Music physical revenue performance, and an increase in Music Publishing synchronization revenue, which were partially offset by a decline in Recorded Music licensing revenue and Music Publishing performance and mechanical revenue. Recorded Music artist services and expanded-rights revenue increased 2.6% on an as-reported basis and decreased 3.3% in constant currency. Excluding artist services and expanded-rights revenue in Recorded Music and performance revenue in Music Publishing, the areas most affected by COVID, total revenue would have increased 19.9% (or 16.3% in constant currency). Digital revenue grew 23.0% (or 19.8% in constant currency), and represented 68.8% of total revenue, compared to 65.3% in the prior-year quarter.

Operating income was $151 million compared to an operating loss of $49 million in the prior-year quarter. Net income was $117 million compared to a net loss of $74 million in the prior-year quarter. OIBDA was $228 million, an increase from $12 million in the prior-year quarter and OIBDA margin increased 17.1 percentage points to 18.2% from 1.1% in the prior-year quarter. The increase in operating income, net income, OIBDA and OIBDA margin was primarily due to strong operating performance, lower non-cash stock-based compensation and other related expenses in the quarter of $151 million and continued cost-management efforts.

Adjusted operating income, Adjusted OIBDA and Adjusted net income exclude costs related to non-cash stock-based compensation and other related expenses and restructuring and other transformation initiatives in both the quarter and the prior-year quarter. In the prior-year quarter, costs related to COVID and the Company’s IPO are also excluded. Adjusted EBITDA excludes these items and includes expected savings resulting from transformation initiatives and the pro forma impact of specified transactions. See below for calculations and reconciliations of Adjusted operating income, Adjusted OIBDA, Adjusted net income and Adjusted EBITDA.

Adjusted OIBDA increased 21.4% from $210 million to $255 million and Adjusted OIBDA margin increased 0.8 percentage points to 20.4% from 19.6% due to strong operating performance and margin improvement associated with revenue mix and continued cost-management efforts. Adjusted operating income increased 19.5% from $149 million to $178 million due to the same factors affecting Adjusted OIBDA, partially offset by higher depreciation and amortization expenses due to recent acquisitions and capital spending.

Adjusted EBITDA increased 25.2% from $214 million to $268 million with Adjusted EBITDA margins improving 1.4 percentage points from 20.0% to 21.4%. The increase was largely due to the same factors affecting Adjusted OIBDA.

Adjusted net income was $144 million compared to $124 million in the prior-year quarter. Adjusted net income grew due to increases in adjusted operating income, the favorable impact of exchange rates on the Company’s external Euro-denominated debt and non-cash gains on certain investments and hedging activity, partially offset by higher income tax expense in the quarter compared to the prior-year quarter.

Basic and Diluted earnings per share were $0.23 and $0.22 for the Class A and Class B shareholders, respectively, due to the net income attributable to the Company in the quarter of $117 million.

As of March 31, 2021, the Company reported a cash balance of $588 million, total debt of $3.354 billion and net debt (defined as total long-term debt, net of deferred financing costs, minus cash and equivalents) of $2.766 billion.

Cash provided by operating activities was $150 million compared to $86 million in the prior-year quarter. The change was largely a result of strong operating performance, timing of working capital, including payments from certain digital service providers and timing of royalty payments. Free Cash Flow, as defined below, increased to $89 million from $67 million in the prior-year quarter largely due to an increase in operating cash flow, partially offset by increases in investment activity and capital spending.

Recorded Music

Recorded Music Summary Results                    
(dollars in millions)                    
  For the Three Months Ended March 31, 2021   For the Three Months Ended March 31, 2020   % Change   For the Six Months Ended March 31, 2021   For the Six Months Ended March 31, 2020   % Change
  (unaudited)   (unaudited)       (unaudited)   (unaudited)    
Revenue $ 1,059     $ 907     17 %   $ 2,220     $ 1,991     12 %
Digital revenue 756     626     21 %   1,483     1,259     18 %
Operating income 184     36     — %   407     227     79 %
Adjusted operating income(1) 191     150     27 %   420     338     24 %
OIBDA(1) 235     76     — %   504     317     59 %
Adjusted OIBDA(1) 242     190     27 %   517     428     21 %
                       
(1) See “Supplemental Disclosures Regarding Non-GAAP Financial Measures” at the end of this release for details regarding these measures.

Recorded Music Revenue
(dollars in millions)          
           
  For the Three Months Ended
March 31, 2021 		  For the Three Months Ended
March 31, 2020 		  For the Three Months Ended
March 31, 2020
  As reported   As reported   Constant
  (unaudited)   (unaudited)   (unaudited)
Revenue by Segment:          
Recorded Music          
Digital $ 756     $ 626     $ 641  
Physical 118     94     99  
Total Digital and Physical 874     720     740  
Artist services and expanded-rights 118     115     122  
Licensing 67     72     76  
Total Recorded Music $ 1,059     $ 907     $ 938  

  For the Six Months Ended
March 31, 2021 		  For the Six Months Ended
March 31, 2020 		  For the Six Months Ended
March 31, 2020
  As reported   As reported   Constant
  (unaudited)   (unaudited)   (unaudited)
Revenue by Segment:          
Recorded Music          
Digital $ 1,483     $ 1,259     $ 1,282  
Physical 292     278     290  
Total Digital and Physical 1,775     1,537     1,572  
Artist services and expanded-rights 298     303     320  
Licensing 147     151     157  
Total Recorded Music $ 2,220     $ 1,991     $ 2,049  

Recorded Music revenue was up 16.8% (or 12.9% in constant currency). The revenue increase was primarily due to the continuing growth in streaming revenue—which grew 23.2% (or 20.3% in constant currency) over the prior-year quarter— reflecting accelerated revenue growth in emerging streaming platforms such as Facebook, TikTok, and Peloton. The increase in digital revenue reflects continuing growth in streaming, the Company’s largest and fastest-growing source of revenue. Physical revenue also grew, increasing 25.5% (or 19.2% in constant currency) primarily due to an increasing demand for vinyl products as well as success from new releases including The Yellow Monkey in Japan, Neil Young and Fleetwood Mac. Artist services and expanded-rights revenue increased on an as-reported basis by 2.6% and decreased 3.3% in constant currency, reflecting the impact of COVID on concert touring and live events, partially offset by an increase in direct-to-consumer merchandising revenue. Licensing revenue was down mainly due to lower broadcast fees resulting from COVID, partially offset by higher synchronization activity. Major sellers included Dua Lipa, Michael Bublé, Ed Sheeran, Ava Max and The Yellow Monkey.

Recorded Music operating income was $184 million, up from $36 million in the prior-year quarter and operating margin was up 13.4 percentage points to 17.4% versus 4.0% in the prior-year quarter. OIBDA increased to $235 million from $76 million in the prior-year quarter and OIBDA margin increased 13.8 percentage points to 22.2%. Adjusted OIBDA was $242 million versus $190 million in the prior-year quarter with Adjusted OIBDA margin up 2.0 percentage points to 22.9%. The increases in operating income and OIBDA were driven by increases in Adjusted OIBDA and a decrease in non-cash stock-based compensation and other related expenses. The increases in Adjusted OIBDA and Adjusted OIBDA margin were primarily due to strong operating performance, overall cost savings, revenue mix and impact from recent acquisitions.

Music Publishing

Music Publishing Summary Results                    
(dollars in millions)                    
  For the Three Months Ended March 31, 2021   For the Three Months Ended March 31, 2020   % Change   For the Six Months Ended March 31, 2021   For the Six Months Ended March 31, 2020   % Change
  (unaudited)   (unaudited)       (unaudited)   (unaudited)    
Revenue $ 192     $ 166     16 %   $ 367     $ 339     8 %
Digital revenue 104     74     41 %   203     147     38 %
Operating income 22     30     -27 %   40     44     -9 %
Adjusted operating income(1) 25     31     -19 %   44     46     -4 %
OIBDA(1) 43     48     -10 %   82     81     1 %
Adjusted OIBDA(1) 46     49     -6 %   86     83     4 %
                       
(1) See “Supplemental Disclosures Regarding Non-GAAP Financial Measures” at the end of this release for details regarding these measures.

Music Publishing Revenue
(dollars in millions)          
           
  For the Three Months Ended
March 31, 2021 		  For the Three Months Ended
March 31, 2020 		  For the Three Months Ended
March 31, 2020
  As reported   As reported   Constant
  (unaudited)   (unaudited)   (unaudited)
Revenue by Segment:          
Music Publishing          
Performance $ 35     $ 41     $ 43  
Digital 104     74     78  
Mechanical 12     15     15  
Synchronization 38     34     34  
Other 3     2     2  
Total Music Publishing $ 192     $ 166     $ 172  

  For the Six Months Ended
March 31, 2021 		  For the Six Months Ended
March 31, 2020 		  For the Six Months Ended
March 31, 2020
  As reported   As reported   Constant
  (unaudited)   (unaudited)   (unaudited)
Revenue by Segment:          
Music Publishing          
Performance $ 65     $ 87     $ 90  
Digital 203     147     151  
Mechanical 23     30     31  
Synchronization 71     70     71  
Other 5     5     5  
Total Music Publishing $ 367     $ 339     $ 348  

Music Publishing revenue increased 15.7% (or 11.6% in constant currency). Digital and synchronization revenue growth was partially offset by declines in performance and mechanical revenue. Digital revenue increased 40.5% (or 33.3% in constant currency) reflecting the continuing growth in streaming and timing of new deals with digital service providers. Digital revenue represented 54.2% of total Music Publishing revenue versus 44.6% in the prior-year quarter. Synchronization revenue increased due to growth in motion picture and commercial income. The decrease in performance revenue was primarily due to COVID. Mechanical revenue also decreased due to the continuing shift to streaming.

Music Publishing operating income was $22 million, down 26.7% from $30 million in the prior-year quarter largely driven by revenue mix, higher employee costs and increases in amortization. Operating margin was 11.5%, down 6.6 percentage points from 18.1% in the prior-year quarter. Music Publishing OIBDA decreased 10.4% to $43 million, and Music Publishing OIBDA margin decreased 6.5 percentage points to 22.4%. Adjusted OIBDA decreased 6.1% to $46 million and Adjusted OIBDA margin decreased to 24.0% due to revenue mix and timing of a non-recurring benefit in the prior-year quarter.

Financial details for the quarter can be found in the Company’s Quarterly Report on Form 10-Q for the period ended March 31, 2021, filed today with the Securities and Exchange Commission.

This morning, management will be hosting a conference call to discuss the results at 8:30 A.M. EST. The call will be webcast on www.wmg.com.

About Warner Music Group

With a legacy extending back over 200 years, Warner Music Group today is home to an unparalleled family of creative artists, songwriters, and companies that are moving culture across the globe. At the core of WMG’s Recorded Music division are four of the most iconic companies in history: Atlantic, Elektra, Parlophone and Warner Records. They are joined by renowned labels such as Asylum, Big Beat, Canvasback, East West, Erato, FFRR, Fueled by Ramen, Nonesuch, Reprise, Rhino, Roadrunner, Sire, Spinnin’ Records, Warner Classics and Warner Music Nashville. Warner Chappell Music – which traces its origins back to the founding of Chappell & Company in 1811 – is one of the world’s leading music publishers, with a catalog of more than one million copyrights spanning every musical genre from the standards of the Great American Songbook to the biggest hits of the 21st century.

“Safe Harbor” Statement under Private Securities Litigation Reform Act of 1995

This communication includes forward-looking statements that reflect the current views of Warner Music Group about future events and financial performance. Words such as “estimates,” “expects,” “anticipates,” “projects,” “plans,” “intends,” “believes,” “forecasts” and variations of such words or similar expressions that predict or indicate future events or trends, or that do not relate to historical matters, identify forward-looking statements. All forward-looking statements are made as of today, and we disclaim any duty to update such statements. Our expectations, beliefs and projections are expressed in good faith and we believe there is a reasonable basis for them. However, we cannot assure you that management’s expectations, beliefs and projections will result or be achieved. Investors should not rely on forward-looking statements because they are subject to a variety of risks, uncertainties, and other factors that could cause actual results to differ materially from our expectations. Please refer to our Form 10-K, Form 10-Qs and our other filings with the U.S. Securities and Exchange Commission concerning factors that could cause actual results to differ materially from those described in our forward-looking statements.

We maintain an Internet site at www.wmg.com. We use our website as a channel of distribution for material company information. Financial and other material information regarding Warner Music Group is routinely posted on and accessible at http://investors.wmg.com. In addition, you may automatically receive email alerts and other information about Warner Music Group by enrolling your email address through the “email alerts” section at http://investors.wmg.com. Our website and the information posted on it or connected to it shall not be deemed to be incorporated by reference into this communication.

Basis of Presentation

The Company maintains a 52-53 week fiscal year ending on the last Friday in each reporting period. As such, all references to March 31, 2021 and March 31, 2020 relate to the periods ended March 26, 2021 and March 27, 2020, respectively. For convenience purposes, the Company continues to date its financial statements as of March 31.

Figure 1. Warner Music Group Corp. – Consolidated Statements of Operations, Three and Six Months Ended March 31, 2021 versus March 31, 2020
(dollars in millions)          
           
  For the Three Months Ended
March 31, 2021 		  For the Three Months Ended
March 31, 2020 		  % Change
  (unaudited)   (unaudited)    
Revenue $ 1,250     $ 1,071     17 %
Cost and expenses:          
Cost of revenue (623 )   (535 )   16 %
Selling, general and administrative expenses (418 )   (538 )   -22 %
Amortization expense (58 )   (47 )   23 %
Total costs and expenses $ (1,099 )   $ (1,120 )   -2 %
Operating income (loss) $ 151     $ (49 )   — %
Interest expense, net (32 )   (33 )   -3 %
Other income (expense), net 49     (4 )   — %
Income (loss) before income taxes $ 168     $ (86 )   — %
Income tax (expense) benefit (51 )   12     — %
Net income (loss) $ 117     $ (74 )   — %
Less: Income attributable to noncontrolling interest —     —     — %
Net income (loss) attributable to Warner Music Group Corp. $ 117     $ (74 )   — %
           
Net income (loss) per share attributable to common stockholders:          
Class A – Basic and Diluted $ 0.23     $ —      
Class B – Basic and Diluted $ 0.22     $ (0.15 )    

  For the Six Months Ended
March 31, 2021 		  For the Six Months Ended
March 31, 2020 		  % Change
  (unaudited)   (unaudited)    
Revenue $ 2,585     $ 2,327     11 %
Cost and expenses:          
Cost of revenue (1,309 )   (1,200 )   9 %
Selling, general and administrative expenses (819 )   (917 )   -11 %
Amortization expense (110 )   (94 )   17 %
Total costs and expenses $ (2,238 )   $ (2,211 )   1 %
Operating income $ 347     $ 116     — %
Interest expense, net (63 )   (66 )   -5 %
Other income (expense), net 18     (9 )   — %
Income before income taxes $ 302     $ 41     — %
Income tax (expense) benefit (86 )   7     — %
Net income $ 216     $ 48     — %
Less: Income attributable to noncontrolling interest (1 )   (2 )   -50 %
Net income attributable to Warner Music Group Corp. $ 215     $ 46     — %
           
Net income per share attributable to common stockholders:          
Class A – Basic and Diluted $ 0.41     $ —      
Class B – Basic and Diluted $ 0.41     $ 0.09      

Figure 2. Warner Music Group Corp. – Consolidated Balance Sheets at March 31, 2021 versus September 30, 2020
(dollars in millions)          
           
  March 31, 2021   September 30, 2020   % Change
  (unaudited)        
Assets          
Current assets:          
Cash and equivalents $ 588     $ 553     6 %
Accounts receivable, net 783     771     2 %
Inventories 79     79     — %
Royalty advances expected to be recouped within one year 246     220     12 %
Prepaid and other current assets 60     55     9 %
Total current assets $ 1,756     $ 1,678     5 %
Royalty advances expected to be recouped after one year 301     269     12 %
Property, plant and equipment, net 339     331     2 %
Operating lease right-of-use assets, net 267     273     -2 %
Goodwill 1,842     1,831     1 %
Intangible assets subject to amortization, net 1,927     1,653     17 %
Intangible assets not subject to amortization 154     154     — %
Deferred tax assets, net 42     68     -38 %
Other assets 202     153     32 %
Total assets $ 6,830     $ 6,410     7 %
Liabilities and Equity (Deficit)          
Current liabilities:          
Accounts payable $ 235     $ 264     -11 %
Accrued royalties 1,752     1,628     8 %
Accrued liabilities 315     382     -18 %
Accrued interest 30     30     — %
Operating lease liabilities, current 42     39     8 %
Deferred revenue 298     297     — %
Other current liabilities 112     80     40 %
Total current liabilities $ 2,784     $ 2,720     2 %
Long-term debt 3,354     3,104     8 %
Operating lease liabilities, noncurrent 288     299     -4 %
Deferred tax liabilities, net 162     163     -1 %
Other noncurrent liabilities 169     169     — %
Total liabilities $ 6,757     $ 6,455     5 %
Equity (deficit):          
Class A common stock $ —     $ —     — %
Class B common stock 1     1     — %
Additional paid-in capital 1,924     1,907     1 %
Accumulated deficit (1,659 )   (1,749 )   -5 %
Accumulated other comprehensive loss, net (209 )   (222 )   -6 %
Total Warner Music Group Corp. equity (deficit) $ 57     $ (63 )   — %
Noncontrolling interest 16     18     -11 %
Total equity (deficit) 73     (45 )   — %
Total liabilities and equity (deficit) $ 6,830     $ 6,410     7 %

Figure 3. Warner Music Group Corp. – Summarized Statements of Cash Flows, Three and Six Months Ended March 31, 2021 versus March 31, 2020
(dollars in millions)      
       
  For the Three Months Ended
March 31, 2021 		  For the Three Months Ended
March 31, 2020
  (unaudited)   (unaudited)
Net cash provided by operating activities $ 150     $ 86  
Net cash used in investing activities (61 )   (19 )
Net cash used in financing activities (64 )   (38 )
Effect of foreign currency exchange rates on cash and equivalents (3 )   (7 )
Net increase in cash and equivalents $ 22     $ 22  
       
  For the Six Months Ended
March 31, 2021 		  For the Six Months Ended
March 31, 2020
  (unaudited)   (unaudited)
Net cash provided by operating activities $ 319     $ 164  
Net cash used in investing activities (404 )   (51 )
Net cash provided by (used in) financing activities 114     (245 )
Effect of foreign currency exchange rates on cash and equivalents 6     (3 )
Net increase (decrease) in cash and equivalents $ 35     $ (135 )

Figure 4. Warner Music Group Corp. – Recorded Music Digital Revenue Summary, Three and Six Months Ended March 31, 2021 versus March 31, 2020
(dollars in millions)      
       
  For the Three Months Ended
March 31, 2021 		  For the Three Months Ended
March 31, 2020
  (unaudited)   (unaudited)
Streaming $ 722     $ 586  
Downloads and Other Digital 34     40  
Total Recorded Music Digital Revenue $ 756     $ 626  
       
  For the Six Months Ended
March 31, 2021 		  For the Six Months Ended
March 31, 2020
  (unaudited)   (unaudited)
Streaming $ 1,414     $ 1,175  
Downloads and Other Digital 69     84  
Total Recorded Music Digital Revenue $ 1,483     $ 1,259  


Supplemental Disclosures Regarding Non-GAAP Financial Measures

We evaluate our operating performance based on several factors, including the following non-GAAP financial measures:


OIBDA

OIBDA reflects our operating income before non-cash depreciation of tangible assets and non-cash amortization of intangible assets. We consider OIBDA to be an important indicator of the operational strengths and performance of our businesses, and believe the presentation of OIBDA helps improve the ability to understand our operating performance and evaluate our performance in comparison to comparable periods. However, a limitation of the use of OIBDA as a performance measure is that it does not reflect the periodic costs of certain capitalized tangible and intangible assets used in generating revenue in our businesses. Accordingly, OIBDA should be considered in addition to, not as a substitute for, operating income (loss), net income (loss) and other measures of financial performance reported in accordance with U.S. GAAP. In addition, OIBDA, as we calculate it, may not be comparable to similarly titled measures employed by other companies.

Figure 5. Warner Music Group Corp. – Reconciliation of Net Income to OIBDA, Three and Six Months Ended March 31, 2021 versus March 31, 2020
(dollars in millions)          
           
  For the Three Months Ended
March 31, 2021 		  For the Three Months Ended
March 31, 2020 		  % Change
  (unaudited)   (unaudited)    
Net income (loss) attributable to Warner Music Group Corp. $ 117     $ (74 )   — %
Income attributable to noncontrolling interest —     —     — %
Net income (loss) $ 117     $ (74 )   — %
Income tax expense (benefit) 51     (12 )   — %
Income including income taxes $ 168     $ (86 )   — %
Other (income) expense, net (49 )   4     — %
Interest expense, net 32     33     -3 %
Operating income (loss) $ 151     $ (49 )   — %
Amortization expense 58     47     23 %
Depreciation expense 19     14     36 %
OIBDA $ 228     $ 12     — %
Operating income margin 12.1 %   -4.6 %    
OIBDA margin 18.2 %   1.1 %    
           
  For the Six Months Ended
March 31, 2021 		  For the Six Months Ended
March 31, 2020 		  % Change
  (unaudited)   (unaudited)    
Net income attributable to Warner Music Group Corp. $ 215     $ 46     — %
Income attributable to noncontrolling interest 1     2     -50 %
Net income $ 216     $ 48     — %
Income tax expense (benefit) 86     (7 )   — %
Income including income taxes $ 302     $ 41     — %
Other (income) expense, net (18 )   9     — %
Interest expense, net 63     66     -5 %
Operating income $ 347     $ 116     — %
Amortization expense 110     94     17 %
Depreciation expense 38     38     — %
OIBDA $ 495     $ 248     100 %
Operating income margin 13.4 %   5.0 %    
OIBDA margin 19.1 %   10.7 %    

Figure 6. Warner Music Group Corp. – Reconciliation of Segment Operating Income to OIBDA, Three and Six Months Ended March 31, 2021 versus March 31, 2020
(dollars in millions)          
           
  For the Three Months Ended
March 31, 2021 		  For the Three Months Ended
March 31, 2020 		  % Change
  (unaudited)   (unaudited)    
Total WMG operating income (loss) – GAAP $ 151     $ (49 )   — %
Depreciation and amortization expense (77 )   (61 )   26 %
Total WMG OIBDA $ 228     $ 12     — %
Operating income (loss) margin 12.1 %   -4.6 %    
OIBDA margin 18.2 %   1.1 %    
           
Recorded Music operating income – GAAP $ 184     $ 36     — %
Depreciation and amortization expense (51 )   (40 )   28 %
Recorded Music OIBDA $ 235     $ 76     — %
Recorded Music operating income margin 17.4 %   4.0 %    
Recorded Music OIBDA margin 22.2 %   8.4 %    
           
Music Publishing operating income – GAAP $ 22     $ 30     -27 %
Depreciation and amortization expense (21 )   (18 )   17 %
Music Publishing OIBDA $ 43     $ 48     -10 %
Music Publishing operating income margin 11.5 %   18.1 %    
Music Publishing OIBDA margin 22.4 %   28.9 %    
           
  For the Six Months Ended
March 31, 2021 		  For the Six Months Ended
March 31, 2020 		  % Change
  (unaudited)   (unaudited)    
Total WMG operating income – GAAP $ 347     $ 116     — %
Depreciation and amortization expense (148 )   (132 )   12 %
Total WMG OIBDA $ 495     $ 248     100 %
Operating income margin 13.4 %   5.0 %    
OIBDA margin 19.1 %   10.7 %    
           
Recorded Music operating income – GAAP $ 407     $ 227     79 %
Depreciation and amortization expense (97 )   (90 )   8 %
Recorded Music OIBDA $ 504     $ 317     59 %
Recorded Music operating income margin 18.3 %   11.4 %    
Recorded Music OIBDA margin 22.7 %   15.9 %    
           
Music Publishing operating income – GAAP $ 40     $ 44     -9 %
Depreciation and amortization expense (42 )   (37 )   14 %
Music Publishing OIBDA $ 82     $ 81     1 %
Music Publishing operating income margin 10.9 %   13.0 %    
Music Publishing OIBDA margin 22.3 %   23.9 %    


Adjusted Operating Income (Loss), Adjusted OIBDA and Adjusted Net Income (Loss)

Adjusted operating income (loss), Adjusted OIBDA and Adjusted net income (loss) is operating income (loss), OIBDA and net income (loss), respectively, adjusted to exclude the impact of certain items that affect comparability. Factors affecting period-to-period comparability of the unadjusted measures in the quarter included the items listed in Figure 7 below. We use Adjusted operating income (loss), Adjusted OIBDA and Adjusted net income (loss) to evaluate our actual operating performance. We believe that the adjusted results provide relevant and useful information for investors because they clarify our actual operating performance, make it easier to compare our results with those of other companies in our industry and allow investors to review performance in the same way as our management. Since these are not measures of performance calculated in accordance with U.S. GAAP, they should not be considered in isolation of, or as a substitute for, operating income (loss), OIBDA and net income (loss) attributable to Warner Music Group Corp. as indicators of operating performance, and they may not be comparable to similarly titled measures employed by other companies.

Figure 7. Warner Music Group Corp. – Reconciliation of Reported to Adjusted Results, Three and Six Months Ended March 31, 2021 versus March 31, 2020
(dollars in millions)                          
                           
For the Three Months Ended March 31, 2021                          
  Total WMG Operating Income   Recorded Music Operating Income   Music Publishing Operating Income   Total WMG OIBDA   Recorded Music OIBDA   Music Publishing OIBDA   Net Income
  (unaudited)   (unaudited)   (unaudited)   (unaudited)   (unaudited)   (unaudited)   (unaudited)
Reported Results $ 151     $ 184     $ 22     $ 228     $ 235     $ 43     $ 117  
Factors Affecting Comparability:                          
Restructuring and Other Transformation Related Costs 10     —     2     10     —     2     10  
COVID-19 Related Costs 1     —     —     1     —     —     1  
Non-Cash Stock-Based Compensation and Other Related Costs 16     7     1     16     7     1     16  
Adjusted Results $ 178     $ 191     $ 25     $ 255     $ 242     $ 46     $ 144  
                           
Adjusted Margin 14.2 %   18.0 %   13.0 %   20.4 %   22.9 %   24.0 %    
                           
For the Three Months Ended March 31, 2020                          
  Total WMG Operating (Loss) Income   Recorded Music Operating Income   Music Publishing Operating Income   Total WMG OIBDA   Recorded Music OIBDA   Music Publishing OIBDA   Net (Loss) Income
  (unaudited)   (unaudited)   (unaudited)   (unaudited)   (unaudited)   (unaudited)   (unaudited)
Reported Results $ (49 )   $ 36     $ 30     $ 12     $ 76     $ 48     $ (74 )
Factors Affecting Comparability:                          
Restructuring and Other Transformation Related Costs 14     —     1     14     —     1     14  
IPO Related Costs 4     —     —     4     —     —     4  
COVID-19 Related Costs 13     13     —     13     13     —     13  
Non-Cash Stock-Based Compensation and Other Related Costs 167     101     —     167     101     —     167  
Adjusted Results $ 149     $ 150     $ 31     $ 210     $ 190     $ 49     $ 124  
                           
Adjusted Margin 13.9 %   16.5 %   18.7 %   19.6 %   20.9 %   29.5 %    

For the Six Months Ended March 31, 2021                          
  Total WMG Operating Income   Recorded Music Operating Income   Music Publishing Operating Income   Total WMG OIBDA   Recorded Music OIBDA   Music Publishing OIBDA   Net Income
  (unaudited)   (unaudited)   (unaudited)   (unaudited)   (unaudited)   (unaudited)   (unaudited)
Reported Results $ 347     $ 407     $ 40     $ 495     $ 504     $ 82     $ 216  
Factors Affecting Comparability:                          
Restructuring and Other Transformation Related Costs 18     —     3     18     —     3     18  
COVID-19 Related Costs 2     1     —     2     1     —     2  
Non-Cash Stock-Based Compensation and Other Related Costs 22     12     1     22     12     1     22  
Adjusted Results $ 389     $ 420     $ 44     $ 537     $ 517     $ 86     $ 258  
                           
Adjusted Margin 15.0 %   18.9 %   12.0 %   20.8 %   23.3 %   23.4 %    
                           
For the Six Months Ended March 31, 2020                          
  Total WMG Operating Income   Recorded Music Operating Income   Music Publishing Operating Income   Total WMG OIBDA   Recorded Music OIBDA   Music Publishing OIBDA   Net Income
  (unaudited)   (unaudited)   (unaudited)   (unaudited)   (unaudited)   (unaudited)   (unaudited)
Reported Results $ 116     $ 227     $ 44     $ 248     $ 317     $ 81     $ 48  
Factors Affecting Comparability:                          
Restructuring and Other Transformation Related Costs 25     —     2     25     —     2     25  
IPO Related Costs 4     —     —     4     —     —     4  
COVID-19 Related Costs 13     13     —     13     13     —     13  
Non-Cash Stock-Based Compensation and Other Related Costs 160     98     —     160     98     —     160  
Adjusted Results $ 318     $ 338     $ 46     $ 450     $ 428     $ 83     $ 250  
                           
Adjusted Margin 13.7 %   17.0 %   13.6 %   19.3 %   21.5 %   24.5 %    


Constant Currency

Because exchange rates are an important factor in understanding period-to-period comparisons, we believe the presentation of revenue on a constant-currency basis in addition to reported revenue helps improve the ability to understand our operating results and evaluate our performance in comparison to prior periods. Constant-currency information compares results between periods as if exchange rates had remained constant period over period. We use results on a constant-currency basis as one measure to evaluate our performance. We calculate constant-currency results by applying current-year foreign currency exchange rates to prior-year results. However, a limitation of the use of the constant-currency results as a performance measure is that it does not reflect the impact of exchange rates on our revenue. These results should be considered in addition to, not as a substitute for, results reported in accordance with U.S. GAAP. Results on a constant-currency basis, as we present them, may not be comparable to similarly titled measures used by other companies and are not a measure of performance presented in accordance with U.S. GAAP.

Figure 8. Warner Music Group Corp. – Revenue by Geography and Segment, Three and Six Months Ended March 31, 2021 versus March 31, 2020 As Reported and Constant Currency
(dollars in millions)          
           
  For the Three Months Ended
March 31, 2021 		  For the Three Months Ended
March 31, 2020 		  For the Three Months Ended
March 31, 2020
  As reported   As reported   Constant
  (unaudited)   (unaudited)   (unaudited)
U.S. revenue          
Recorded Music $ 469     $ 380     $ 380  
Music Publishing 96     87     87  
International revenue          
Recorded Music 590     527     558  
Music Publishing 96     79     85  
Intersegment eliminations (1 )   (2 )   (2 )
Total Revenue $ 1,250     $ 1,071     $ 1,108  
           
Revenue by Segment:          
Recorded Music          
Digital $ 756     $ 626     $ 641  
Physical 118     94     99  
Total Digital and Physical 874     720     740  
Artist services and expanded-rights 118     115     122  
Licensing 67     72     76  
Total Recorded Music 1,059     907     938  
Music Publishing          
Performance 35     41     43  
Digital 104     74     78  
Mechanical 12     15     15  
Synchronization 38     34     34  
Other 3     2     2  
Total Music Publishing 192     166     172  
Intersegment eliminations (1 )   (2 )   (2 )
Total Revenue $ 1,250     $ 1,071     $ 1,108  
           
Total Digital Revenue $ 860     $ 699     $ 718  

  For the Six Months Ended
March 31, 2021 		  For the Six Months Ended
March 31, 2020 		  For the Six Months Ended
March 31, 2020
  As reported   As reported   Constant
  (unaudited)   (unaudited)   (unaudited)
U.S. revenue          
Recorded Music $ 950     $ 833     $ 833  
Music Publishing 187     168     168  
International revenue          
Recorded Music 1,270     1,158     1,216  
Music Publishing 180     171     180  
Intersegment eliminations (2 )   (3 )   (3 )
Total Revenue $ 2,585     $ 2,327     $ 2,394  
           
Revenue by Segment:          
Recorded Music          
Digital $ 1,483     $ 1,259     $ 1,282  
Physical 292     278     290  
Total Digital and Physical 1,775     1,537     1,572  
Artist services and expanded-rights 298     303     320  
Licensing 147     151     157  
Total Recorded Music 2,220     1,991     2,049  
Music Publishing          
Performance 65     87     90  
Digital 203     147     151  
Mechanical 23     30     31  
Synchronization 71     70     71  
Other 5     5     5  
Total Music Publishing 367     339     348  
Intersegment eliminations (2 )   (3 )   (3 )
Total Revenue $ 2,585     $ 2,327     $ 2,394  
           
Total Digital Revenue $ 1,685     $ 1,405     $ 1,432  


Free Cash Flow

Free Cash Flow reflects our cash flow provided by operating activities less capital expenditures and cash paid or received for investments. We use Free Cash Flow, among other measures, to evaluate our operating performance. Management believes Free Cash Flow provides investors with an important perspective on the cash available to fund our debt service requirements, ongoing working capital requirements, capital expenditure requirements, strategic acquisitions and investments, and any dividends, prepayments of debt or repurchases or retirement of our outstanding debt or notes in open market purchases, privately negotiated purchases or otherwise. As a result, Free Cash Flow is a significant measure of our ability to generate long-term value. It is useful for investors to know whether this ability is being enhanced or degraded as a result of our operating performance. We believe the presentation of Free Cash Flow is relevant and useful for investors because it allows investors to view performance in a manner similar to the method management uses.

Because Free Cash Flow is not a measure of performance calculated in accordance with U.S. GAAP, Free Cash Flow should not be considered in isolation of, or as a substitute for, net income (loss) as an indicator of operating performance or cash flow provided by operating activities as a measure of liquidity. Free Cash Flow, as we calculate it, may not be comparable to similarly titled measures employed by other companies. In addition, Free Cash Flow does not necessarily represent funds available for discretionary use and is not necessarily a measure of our ability to fund our cash needs. Because Free Cash Flow deducts capital expenditures and cash paid or received for investments from “net cash provided by operating activities” (the most directly comparable U.S. GAAP financial measure), users of this information should consider the types of events and transactions that are not reflected. We provide below a reconciliation of Free Cash Flow to the most directly comparable amount reported under U.S. GAAP, which is “net cash provided by operating activities.”

Figure 9. Warner Music Group Corp. – Calculation of Free Cash Flow, Three and Six Months Ended March 31, 2021 versus March 31, 2020
(dollars in millions)      
       
  For the Three Months Ended
March 31, 2021 		  For the Three Months Ended
March 31, 2020
  (unaudited)   (unaudited)
Net cash provided by operating activities $ 150     $ 86  
Less: Capital expenditures 20     13  
Less: Net cash paid for investments 41     6  
       
Free Cash Flow $ 89     $ 67  
       
  For the Six Months Ended
March 31, 2021 		  For the Six Months Ended
March 31, 2020
  (unaudited)   (unaudited)
Net cash provided by operating activities $ 319     $ 164  
Less: Capital expenditures 38     28  
Less: Net cash paid for investments 366     23  
       
Free Cash Flow $ (85 )   $ 113  


Adjusted EBITDA

Adjusted EBITDA is equivalent to “EBITDA” as defined in our Revolving Credit Facility and our 2020 indenture and substantially similar to “Consolidated EBITDA” as defined under our 2012 and 2014 indentures and “EBITDA” as defined under our Senior Term Loan Facility, respectively. Adjusted EBITDA differs from the term “EBITDA” as it is commonly used. The definition of Adjusted EBITDA, in addition to adjusting net income to exclude interest expense, income taxes, and depreciation and amortization, also adjusts net income by excluding items or expenses such as, among other items, (1) the amount of any restructuring charges or reserves; (2) any non-cash charges (including any impairment charges); (3) any net loss resulting from hedging currency exchange risks; (4) the amount of management, monitoring, consulting and advisory fees paid to Access under the Management Agreement or otherwise; (5) business optimization expenses (including consolidation initiatives, severance costs and other costs relating to initiatives aimed at profitability improvement); (6) transaction expenses; (7) equity-based compensation expense; and (8) certain extraordinary, unusual or non-recurring items. The definition of EBITDA under the Revolving Credit Facility also includes adjustments for the pro forma impact of certain projected cost savings, operating expense reductions and synergies and any quality of earnings analysis prepared by independent certified public accountants in connection with an acquisition, merger, consolidation or other investment.

Adjusted EBITDA is a key measure used by our management to understand and evaluate our operating performance, generate future operating plans and make strategic decisions regarding the allocation of capital. Adjusted EBITDA has limitations as an analytical tool, and you should not consider it in isolation or as a substitute for analysis of our results as reported under U.S. GAAP. Some of those limitations include: (1) it does not reflect the periodic costs of certain capitalized tangible and intangible assets used in generating revenue for our business; (2) it does not reflect the significant interest expense or cash requirements necessary to service interest or principal payments on our indebtedness; and (3) it does not reflect every cash expenditure, future requirements for capital expenditures or contractual commitments. In particular, this measure adds back certain non-cash, extraordinary, unusual or non-recurring charges that are deducted in calculating net income; however, these are expenses that may recur, vary greatly and are difficult to predict. In addition, Adjusted EBITDA is not the same as net income or cash flow provided by operating activities as those terms are defined by U.S. GAAP and does not necessarily indicate whether cash flows will be sufficient to fund cash needs. Accordingly, Adjusted EBITDA should be considered in addition to, not as a substitute for, net income (loss) and other measures of financial performance reported in accordance with U.S. GAAP.

Figure 10. Warner Music Group Corp. – Reconciliation of Net Income to Adjusted EBITDA, Three and Twelve Months Ended March 31, 2021 versus March 31, 2020
(dollars in millions)              
               
  For the Three Months Ended

March 31, 2021 		  For the Three Months Ended

March 31, 2020 		  For the Twelve Months Ended

March 31, 2021 		  For the Twelve Months Ended

March 31, 2020
  (unaudited)   (unaudited)   (unaudited)   (unaudited)
Net Income (Loss) $ 117     $ (74 )   $ (302 )   $ 153  
Income tax expense (benefit) 51     (12 )   116     (97 )
Interest expense, net 32     33     124     137  
Depreciation and amortization 77     61     277     264  
Loss on extinguishment of debt (a) —     —     34     4  
Net gain on divestitures and sale of securities (b) (1 )   (1 )   (1 )   (2 )
Restructuring costs (c) 3     2     21     25  
Net hedging and foreign exchange (gains) losses (d) (32 )   (10 )   82     (18 )
Management fees (e) —     3     14     11  
Transaction costs (f) 3     4     75     4  
Business optimization expenses (g) 10     13     34     37  
Non-cash stock compensation expense (h) 15     167     469     196  
Other non-cash charges (i) (16 )   27     (48 )   39  
Pro forma impact of cost savings initiatives and specified transactions (j) 9     1     48     2  
Adjusted EBITDA $ 268     $ 214     $ 943     $ 755  

______________________________________
(a)   For the twelve months ended March 31, 2021, reflects a net loss incurred on the early extinguishment of our debt incurred as part of the June 2020 redemption of our 4.125% Senior Secured Notes and 4.875% Senior Secured Notes, the June 2020 tender for and the August 2020 redemption of the 5.000% Senior Secured Notes and the August 2020 partial repayment of the Senior Term Loan Facility. For the twelve months ended March 31, 2020, reflects a net loss incurred on the early extinguishment of our debt incurred as part of the May 2019 redemption of the remaining 5.625% Secured Notes.
(b)   Reflects net gain on sale of securities and divestitures.
(c)   Reflects severance costs and other restructuring related expenses.
(d)   Reflects losses (gains) from hedging activities and unrealized losses (gains) due to foreign exchange on our Euro-denominated debt and intercompany transactions.
(e)   Reflects management fees and related expenses paid to Access. For the twelve months ended March 31, 2021, amounts mainly include a one-time fee of $13 million related to termination of the management agreement with Access upon completion of the IPO in June 2020. Prior to termination of the management agreement, the annual fee was equal to the greater of a base amount and 1.5% of EBITDA (as defined in the indenture governing the redeemed Holdings 13.75% Senior Notes due 2019) of the Company for the applicable fiscal year, plus expenses.
(f)   Reflects transaction costs, including Senior Term Loan Credit Agreement Amendment fees of $3 million and qualifying IPO costs of $72 million for the twelve months ended March 31, 2021.
(g)   Reflects costs associated with our transformation initiatives and IT system updates, which includes costs of $8 million and $25 million related to our finance transformation for the three and twelve months ended March 31, 2021, respectively, as well as $10 million and $31 million for the three and twelve months ended March 31, 2020, respectively.
(h)   Reflects non-cash stock-based compensation expense related to the Warner Music Group Corp. Senior Management Free Cash Flow Plan and the Omnibus Incentive Plan.
(i)   Reflects non-cash activity, including the unrealized losses (gains) on the mark-to-market of an equity method investment, investment losses (gains) and other non-cash impairments.
(j)   Reflects expected savings resulting from transformation initiatives and pro forma impact of specified transactions for the three and twelve months ended March 31, 2021. Certain of these cost savings initiatives and transactions impacted quarters prior to the quarter during which they were identified within the last twelve-month period. The pro forma impact of these specified transactions and initiatives resulted in a $24 million increase in the twelve months ended March 31, 2021 Adjusted EBITDA.

Media Contact: Investor Contact:
James Steven Kareem Chin
(212) 275-2213  
[email protected] [email protected]

 



Posted on

Kopin Reports Solid Results for First Quarter 2021

Kopin Reports Solid Results for First Quarter 2021

  • Q1 2021 Total Revenues Increase 48% Year over Year
  • Research & Development Revenues Increase 82% Year over Year
  • Net Cash Used in Operating Activities was $0.2 Million for Q1 2021 versus $3.9 million in Q1 2020

WESTBOROUGH, Mass.–(BUSINESS WIRE)–
Kopin Corporation (Nasdaq: KOPN), a leading provider of high-resolution micro-displays and sub-systems for defense, enterprise and consumer augmented reality (AR), virtual reality (VR) and mixed reality (MR) systems, today provided an update on its business initiatives and reported financial results for the first quarter ended March 27, 2021.

“We are pleased with the strong start to the year, reflecting increasing demand from customers in multiple market segments,” said Dr. John C.C. Fan, Kopin’s CEO. “Revenues increased by approximately 48% in the first quarter of 2021 as compared to the first quarter of 2020, primarily driven by our defense production and funded development programs where we now have more than 10 programs in various stages of development. Several of these are scheduled to reach initial production ramp and revenues in the second half of this year and beyond. Our active pipeline of development programs includes using our advanced display products in armored vehicle targeting and training systems, rotary-wing aircraft helmets, automatic and semi-automatic rifle day scopes and targeting systems, among others. These programs are all using our microdisplays and are increasingly utilizing our sophisticated optics systems and ruggedized assemblies. We believe we are the sole source supplier to most of these programs.

“Our R&D activities have been increasing in the past several quarters, reflecting the significant opportunities we see in the augmented and virtual reality space. In particular, our customer-funded R&D revenues jumped more than 80% year-over-year, primarily because of the accelerating interest in our efforts developing the next generation of displays and display technologies.”

Dr. Fan continued, “We also want to address the global semiconductor chip shortage that has impacted so many industries. While we do use semiconductor materials in our products, fortunately we did not experience any meaningful impact from the shortage in the first quarter of 2021. The current environment is dynamic, however, and we are working closely with our suppliers and customers to manage this potential issue.

“In short, we are continuing to make strong progress in executing our strategy and it is showing in our performance. We are experiencing the strongest defense segment activities in Kopin’s history and we expect to make a number of exciting announcements in the coming months. We believe that both AR and VR have gained tremendous traction in the past year and we expect this momentum to continue for some time, with Kopin positioned to capitalize on this opportunity,” concluded Dr. Fan.

First Quarter Financial Results

Total revenues for the first quarter ended March 27, 2021 was $11.7 million, compared with $7.9 million for the first quarter ended March 28, 2020, a 48% increase year over year.

Cost of Products Sold for the first quarter ended March 27, 2021 was $6.4 million, compared with $5.6 million for the first quarter ended March 28, 2020. Gross margin for the first quarter of 2021 was 15% compared with 5% for the first quarter of 2020.

Research and Development (R&D) expenses for the first quarter of 2021 were $3.6 million compared to $2.3 million for the first quarter of 2020, a 52% increase year over year. The increase was driven by the increase in funded research and development revenues.

Selling, General and Administrative (SG&A) expenses were $5.9 million for the first quarter of 2021, compared to $3.4 million for the first quarter of 2020. Non-GAAP SG&A expenses were $3.5 million for the first quarter of 2021, compared to $3.3 million for the first quarter of 2020, a 5% increase year over year. A table that reconciles this non-GAAP financial measure to SG&A expenses, as reported, is included below.

Net Loss Attributable to Kopin Corporation for the first quarter of 2021 was $4.1 million, or $0.05 per share, compared with Net Loss Attributable to Kopin Corporation of $3.6 million, or $0.04 per share, for the first quarter of 2020. Non-GAAP Net Loss Attributable to Kopin Corporation for the first quarter of 2021 was $1.8 million, or $0.02 per share, compared with Non-GAAP Net Loss Attributable to Kopin Corporation of $3.5 million, or $0.04 per share, for the first quarter of 2020. A table that reconciles these non-GAAP financial measures to Net Loss Attributable to Kopin Corporation and Net Loss Per Share, as reported, is included below.

Net Cash Used in Operating Activities for the first quarter ended March 27, 2021 was approximately $0.2 million. Kopin’s Cash and Equivalents and Marketable Securities were approximately $35.6 million at March 27, 2021 as compared to $20.7 million at December 26, 2020. During the quarter ended March 27, 2021, we issued 2.4 million shares under our then-existing At-The-Market (ATM) program and generated $15.5 million in net cash proceeds which concluded our initial $20 million ATM program.

We have no long-term debt.

All amounts above are estimates and readers should refer to our Form 10-Q for the quarter ended March 27, 2021, for final disposition as well as important risk factors.

Kopin Corporation

DISCUSSION REGARDING THE USE OF NON-GAAP FINANCIAL MEASURES

Our earnings release contains some or all of the following financial measures that have not been calculated in accordance with United States Generally Accepted Accounting Principles (“GAAP”): (i) non-GAAP SG&A expenses, (ii) non-GAAP Net Loss Attributable to Kopin Corporation, and (iii) non-GAAP Net Loss Per Share. A non-GAAP financial measure is a numerical measure of a company’s historical or future financial performance, financial position or cash flows that excludes amounts, or is subject to adjustments that have the effect of excluding amounts, that are included in the most directly comparable measure calculated and presented in accordance with GAAP in the statements of operation, balance sheets, or statements of cash flows of a company; or, includes amounts, or is subject to adjustments that have the effect of including amounts, that are excluded from the most directly comparable measure so calculated and presented. As set forth in the “Unaudited Reconciliations of Non-GAAP Financial Measures” table found below, we derive such non-GAAP financial measures by excluding stock-based compensation expenses from the respective GAAP financial measure that is most directly comparable to each non-GAAP financial measure. Management uses these non-GAAP financial measures to evaluate our operating performance and compare it against past periods, make operating decisions, forecast for future periods, and compare our operating performance against peer companies. These non-GAAP financial measures provide management with additional means to understand and evaluate the operating results and trends in our ongoing business by eliminating an item that management believes might otherwise make comparisons of our ongoing business with prior periods and competitors more difficult, obscure trends in ongoing operations or reduce management’s ability to make forecasts.

We provide investors with non-GAAP Net Loss Attributable to Kopin Corporation and non-GAAP Net Loss Per Share because we believe it is important for investors to be able to closely monitor and understand changes in our ability to generate income from ongoing business operations. We believe these non-GAAP financial measures give investors an additional method to evaluate historical operating performance and identify trends, an additional means of evaluating period-over-period operating performance and a method to facilitate certain comparisons of our operating results to those of our peer companies. We also believe that providing non-GAAP Net Loss Attributable to Kopin Corporation and non-GAAP Net Loss Per Share allows investors to assess the extent to which our ongoing operations impact our overall financial performance. We further believe that providing non-GAAP Net Loss Attributable to Kopin Corporation and non-GAAP Net Loss Per Share allows investors to assess the overall financial performance of our ongoing operations by eliminating the impact of stock-based compensation expense, which may not occur in each period presented and which may represent non-cash items unrelated to our ongoing operations.

We calculate non-GAAP SG&A expenses, non-GAAP Net Loss Attributable to Kopin Corporation and non-GAAP Net Loss Per Share by eliminating stock-based compensation expense from each of Selling, General and Administrative expenses, Net Loss Attributable to Kopin Corporation, and Net Loss Per Share, respectively, each of which is derived from our condensed consolidated statements of operations. We exclude stock-based compensation because (1) the total amount of expense is partially outside of our control because it is based on factors such as stock price, which may be unrelated to our performance during the period in which the expense is incurred and (2) the amount of the expense can vary significantly between companies due to factors that can be outside of the control of such companies.

The non-GAAP financial measures presented in the table below should not be considered in isolation and are not an alternative for the respective GAAP financial measure that is most directly comparable to each such non-GAAP financial measure. Readers are cautioned against placing undue reliance on these non-GAAP financial measures and are urged to review and consider carefully the adjustments made by management to the most directly comparable GAAP financial measures to arrive at these non-GAAP financial measures. Non-GAAP financial measures may have limited value as analytical tools because they may exclude certain expenses that some investors consider important in evaluating our operating performance or ongoing business performance. Further, non-GAAP financial measures are likely to have limited value for purposes of drawing comparisons between companies as a result of different companies potentially calculating similarly titled non-GAAP financial measures in different ways because non-GAAP measures are not based on any comprehensive set of accounting rules or principles.

Conference Call

Kopin will host a conference call this morning at 8:30am ET. To participate, please dial 1-800-437-2398 (U.S. and Canada) or 1-323-289-6576 (International). The call will also be available as a live and archived audio webcast on the Investor Relations section of Kopin’s website at www.kopin.com.

About Kopin

Kopin Corporation is a leading developer and provider of innovative wearable technologies and critical components for integration into wearable computing systems for defense, industrial and consumer products. Kopin’s technology portfolio includes ultra-small displays, optics, and low-power ASICs. For more information, please visit Kopin’s website at www.kopin.com.

Forward-Looking Statements

Statements in this press release may be considered “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended (the “Securities Act”), and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), which are subject to the safe harbor created by such sections. Words such as “expects,” “believes,” “can,” “will,” “estimates,” and variations of such words and similar expressions, and the negatives thereof, are intended to identify such forward-looking statements. We caution readers not to place undue reliance on any such “forward-looking statements,” which speak only as of the date made, and advise readers that these forward-looking statements are not guarantees of future performance and involve certain risks, uncertainties, estimates, and assumptions by us that are difficult to predict. These forward-looking statements may include statements with respect to: when our development programs will go into productionand generate revenues;our belief that we are the sole source supplier defense programs; our expectation that we will make a number of announcements in the coming months; and our belief that Kopin is in a great position to capitalize in the future. Various factors, some of which are beyond our control, could cause actual results to differ materially from those expressed in, or implied by, such forward-looking statements. All such forward-looking statements, whether written or oral, and whether made by us or on our behalf, are expressly qualified by these cautionary statements and any other cautionary statements that may accompany the forward-looking statements. In addition, we disclaim any obligation to update any forward-looking statements to reflect events or circumstances after the date of this press release, except as may otherwise be required by the federal securities laws. These forward-looking statements are only predictions, subject to risks and uncertainties, and actual results could differ materially from those discussed. Important factors that could affect performance and cause results to differ materially from management’s expectations are described in Part I, Item 1A. Risk Factors; Part II, Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations; and other parts of our Annual Report on Form 10-K for the fiscal year ended December 28, 2019, or as updated from time to time our Securities and Exchange Commission filings.

Kopin Corporation
Unaudited Reconciliations of Non-GAAP Financial Measures
(Unaudited)
 
Three Months Ended
 
March 27, 2021 March 28, 2020
 
GAAP Selling, general and administration

5,905,706

3,432,092

Stock-based compensation expense

2,382,329

89,356

Non-GAAP Selling, general and administration

3,523,377

3,342,736

Kopin Corporation
Supplemental Information
(Unaudited)
 
Three Months Ended
 
March 27, 2021 March 28, 2020
Display Revenues by Category (in millions)
Defense

$

5.0

$

3.5

Industrial/Enterprise

 

2.0

 

2.2

Consumer

 

0.5

 

0.2

R&D

 

3.6

 

2.0

License and Royalties

 

0.6

 

–

Total

$

11.7

$

7.9

 
Stock-Based Compensation Expense
Cost of product revenues

$

134,000

$

14,000

Research and development

 

94,000

 

55,000

Selling, general and administrative

 

2,382,000

 

89,000

$

2,610,000

$

158,000

 
 
Other Financial Information
Depreciation and amortization

$

205,000

$

171,000

Kopin Corporation
Condensed Consolidated Statements of Operations
(Unaudited)
 
Three Months Ended
March 27, 2021 March 28, 2020
Revenues:
Net product revenues

$

7,568,845

 

$

5,919,206

 

Research and development

 

3,560,743

 

$

1,959,399

 

Other revenues

 

546,781

 

 

–

 

 

11,676,369

 

 

7,878,605

 

Expenses:
Cost of product revenues

 

6,396,671

 

 

5,647,847

 

Research and development

 

3,563,300

 

 

2,339,748

 

Selling, general and administration

 

3,523,377

 

 

3,342,736

 

 

13,483,348

 

 

11,330,331

 

 
Loss from operations

 

(1,806,979

)

 

(3,451,726

)

 
Other income (expense), net

 

36,585

 

 

(86,909

)

 
Loss before provision for income taxes and net loss (income)

 

(1,770,394

)

 

(3,538,635

)

from noncontrolling interest
 
Tax provision

 

(33,000

)

 

(29,000

)

 
Net loss

 

(1,803,394

)

 

(3,567,635

)

 
Net loss (income) attributable to noncontrolling interest

 

39,485

 

 

61,472

 

 
Net loss attributable to Kopin Corporation

$

(1,763,909

)

$

(3,506,163

)

 
Net loss per share:
Basic and diluted

$

(0.02

)

$

(0.04

)

 
Weighted average number of common shares outstanding:
Basic and diluted

 

87,378,288

 

 

82,536,416

 

Kopin Corporation
Condensed Consolidated Statements of Operations
(Unaudited)
 
Three Months Ended
March 27, 2021 March 28, 2020
Revenues:
Net product revenues

$

7,568,845

 

$

5,919,206

 

Research and development

 

3,560,743

 

 

1,959,399

 

Other revenues

 

546,781

 

 

–

 

 

11,676,369

 

 

7,878,605

 

Expenses:
Cost of product revenues

 

6,396,671

 

 

5,647,847

 

Research and development

 

3,563,300

 

 

2,339,748

 

Selling, general and administration

 

5,905,706

 

 

3,432,092

 

 

15,865,677

 

 

11,419,687

 

 
Loss from operations

 

(4,189,308

)

 

(3,541,082

)

 
Other income (expense), net

 

36,585

 

 

(86,909

)

 
Loss before provision for income taxes and net loss (income)

 

(4,152,723

)

 

(3,627,991

)

from noncontrolling interest
 
Tax provision

 

(33,000

)

 

(29,000

)

 
Net loss

 

(4,185,723

)

 

(3,656,991

)

 
Net loss (income) attributable to noncontrolling interest

 

39,485

 

 

61,472

 

 
Net loss attributable to Kopin Corporation

$

(4,146,238

)

$

(3,595,519

)

 
Net loss per share:
Basic and diluted

$

(0.05

)

$

(0.04

)

 
Weighted average number of common shares outstanding:
Basic and diluted

 

87,378,288

 

 

82,536,416

 

Kopin Corporation
Condensed Consolidated Balance Sheets
(Unaudited)
 
March 27, 2021 December 26, 2020
ASSETS
Current assets:
Cash and marketable securities

$

35,633,682

 

$

20,748,550

 

Accounts receivable, net

 

7,807,465

 

 

9,260,865

 

Inventory

 

5,455,134

 

 

4,455,756

 

Contract assets and unbilled receivables

 

1,115,419

 

 

3,521,753

 

Prepaid and other current assets

 

2,036,754

 

 

1,469,256

 

 
Total current assets

 

52,048,454

 

 

39,456,180

 

 
Plant and equipment, net

 

1,662,315

 

 

1,626,930

 

Operating lease right-of-use assets

 

1,521,315

 

 

1,780,039

 

Equity investments

 

4,522,445

 

 

4,523,525

 

Other assets

 

162,473

 

 

162,473

 

 
Total assets

$

59,917,002

 

$

47,549,147

 

 
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable

$

5,594,876

 

$

5,606,910

 

Accrued expenses

 

4,523,189

 

 

4,295,315

 

Customer deposits

 

2,782,056

 

 

3,950,031

 

Deferred tax liabilities

 

538,826

 

 

554,031

 

Contract liabilities and billings in excess of revenue earned

 

1,176,872

 

 

1,493,847

 

Operating lease liabilities

 

886,609

 

 

982,375

 

 
Total current liabilities

 

15,502,428

 

 

16,882,509

 

 
Other long term liabilities

 

1,580,670

 

 

1,546,737

 

Operating lease liabilities, net of current portion

 

643,043

 

 

821,306

 

 
Total Kopin Corporation stockholders’ equity

 

42,367,182

 

 

28,435,431

 

Noncontrolling interest

 

(176,321

)

 

(136,836

)

Total stockholders’ equity

 

42,190,861

 

 

28,298,595

 

Total liabilities and stockholders’ equity

$

59,917,002

 

$

47,549,147

 

Richard Sneider, 508-870-5959

Treasurer and Chief Financial Officer

[email protected]

or

Market Street Partners

Joann Horne, 415-445-3233

[email protected]

KEYWORDS: United States North America Massachusetts

INDUSTRY KEYWORDS: Audio/Video Hardware Electronic Design Automation Engineering Chemicals/Plastics Technology Semiconductor Manufacturing

MEDIA:

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Accel Entertainment, Inc. to Announce First Quarter 2021 Financial Results

Accel Entertainment, Inc. to Announce First Quarter 2021 Financial Results

CHICAGO–(BUSINESS WIRE)–
Accel Entertainment, Inc. (NYSE: ACEL) today announced it will release its financial results for the first quarter ended March 31, 2021 after market close on May 10, 2021. The company will host a conference call at 11:00 AM CT / 12:00 PM ET on May 11, 2021 to discuss these operating and financial results.

Interested parties may join the live webcast by registering at http://www.directeventreg.com/registration/event/5265023. Registering in advance of the call will provide listeners with a personalized link to view the webcast and an individual dial-in for the call. This registration link to the live webcast will also be available on Accel’s investor relations website, as well as a replay of the webcast following completion of the call: ir.accelentertainment.com.

About Accel

Accel is a leading distributed gaming operator in the United States on an Adjusted EBITDA basis, and a preferred partner for local business owners in the Illinois market. Accel’s business consists of the installation, maintenance and operation of VGTs, redemption devices that disburse winnings and contain ATM functionality, and other amusement devices in authorized non-casino locations such as restaurants, bars, taverns, convenience stores, liquor stores, truck stops, and grocery stores.

Media:

Eric Bonach

Abernathy MacGregor

212-371-5999

[email protected]

KEYWORDS: United States North America Illinois

INDUSTRY KEYWORDS: Electronic Games Other Entertainment Casino/Gaming Entertainment

MEDIA:

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60% of School Apps are Sending Student Data to Potentially High-risk Third Parties Without Knowledge or Consent According to New Research from Me2B Alliance

Research uncovers disturbing findings around privacy concerns with the use of school applications

What you need to know:

  • 60% of school apps were sending student data to a variety of third parties, including advertising platforms like Google and Facebook
  • On average, there were more than 10 third-party data channels per app  
  • Public-school apps are more likely to send student data to third parties than private-school apps (67% public vs. 57% of private school apps)
  • 18% of public-school apps included very high-risk third parties – i.e., third parties that further share data with possibly hundreds or thousands of networked entities 
  • Android apps are much more likely than iOS apps to be sending data to third parties, and are much more likely to be sending to high or very high-risk third parties

SAN DIEGO, May 04, 2021 (GLOBE NEWSWIRE) — Me2B Alliance, a non-profit industry group focused on respectful technology, today published a research report to drive awareness to the data sharing practices of education apps associated with schools and school districts. According to the research findings, 60% of school apps were sending student data to a variety of third parties, including advertising platforms like Google and Facebook.

The Me2B Alliance Product Testing team audited a random sample of 73 apps from 38 schools in 14 states across the U.S., covering over half a million people (students, their families, educators, etc.). The audit methodology mainly consisted of examining data flow from the apps to external third-party vendors. The report, “School Mobile Apps Student Data Sharing Behavior,” is available for download at no charge.

Most mobile apps are built with software development kits (SDKs), which provide developers with pre-packaged functional modules of code and the potential of creating persistent data channels directly back to the third-party developer of the SDK. As part of the analysis, the magnitude of third-party data sharing in educational apps, as evidenced by the number of SDKs included in apps, was examined.

Key takeaways from the report:

  • There is an unacceptable amount of student data shared with third parties – particularly advertisers and analytics platforms – in school apps.
  • School apps – whether iOS or Android, public or private schools – should not include third-party data channels.
  • iOS apps were found to be safer than Android apps, and with ongoing improvements, the “privacy gap” will widen unless Google makes some changes.
  • People still have too little information about which third parties they’re sharing data with, and the app stores (Apple and Google Play) must make this information more clear.

“The findings from our research show the pervasiveness of data sharing with high-risk entities and the amount of people whose data could be compromised due to schools’ lack of resources,” said Lisa LeVasseur, executive director of Me2B Alliance. “The study aims to bring these concerns to light to ensure the right funding support and protections are in place to safeguard our most vulnerable citizens – our children.”

Download the report, “School Mobile Apps Student Data Sharing Behavior,” at no charge. School systems looking for more information can contact [email protected]. Organizations interested in advancing standards in ethical data and mobile and internet practices can visit the website to learn more about Me2B Alliance membership.

About the Me2B Alliance

The Me2B Alliance is a nonprofit fostering the respectful treatment of people by technology. We’re a new type of standards development organization – defining the standard for respectful technology. Scenarios like the ones described in this report – where user data is being abused, even inadvertently – highlight the types of issues we are driven to prevent through independent testing, as well as education, research, policy work, and advocacy.

PR Contact

Adrian Loth
Montner Tech PR
[email protected]



Posted on

Cresco Labs to Report First Quarter 2021 Financial Results on May 27th and Announces Conversion to U.S. GAAP Accounting

Cresco Labs to Report First Quarter 2021 Financial Results on May 27th and Announces Conversion to U.S. GAAP Accounting

CHICAGO–(BUSINESS WIRE)–
Cresco Labs Inc. (CSE:CL) (OTCQX:CRLBF) (“Cresco Labs” or the “Company”), a vertically integrated multistate operator and the number one wholesaler of branded cannabis products in the U.S., announced today that it will report financial results for the first quarter ended March 31st, 2021 on Thursday May 27th, 2021 before the market opens.

The Company also announced that it will, for the first time, report its financial results under accounting principles generally accepted in the United States (“U.S. GAAP”), resulting in a later reporting date than typical. This conversion from IFRS to U.S. GAAP is being made to further prepare Cresco Labs for future capital markets opportunities in the U.S. and to more closely align with reporting standards familiar to U.S. investors and stakeholders. The Company also plans to provide prior financial information recast under U.S. GAAP for the previous four quarters along with the release of its first quarter 2021 earnings.

The Company will host a conference call and webcast to discuss its financial results and provide investors with key business highlights on Thursday May 27th, 2021 at 8:30 am Eastern Time (7:30am Central Time).

Event: Cresco Labs First Quarter 2021 Earnings Conference Call

Date: Thursday May 27th, 2021

Time: 8:30am EST

Webcast: Link

Dial-in: 1-844-200-6205 (US Toll Free), 1-646-904-5544 (US Local), 44-208-0682-558 (Int’l)

Passcode: 354282

Archived access to the webcast will be available for one year on the Cresco investor relations website.

About Cresco Labs Inc.

Cresco Labs is one of the largest vertically integrated multistate cannabis operators in the United States, with a mission to normalize and professionalize the cannabis industry. Employing a consumer-packaged goods (“CPG”) approach, Cresco Labs is the largest wholesaler of branded cannabis products in the U.S. Its brands are designed to meet the needs of all consumer segments and comprised of some of the most recognized and trusted national brands including Cresco, High Supply, Mindy’s Edibles, Good News, Remedi, Wonder Wellness Co. and FloraCal Farms. Sunnyside, Cresco Labs’ national dispensary brand, is a wellness-focused retailer created to build trust, education and convenience for both existing and new cannabis consumers. Recognizing that the cannabis industry is poised to become one of the leading job creators in the country, Cresco Labs operates the industry’s largest Social Equity and Educational Development initiative, SEED, which was established to ensure that all members of society have the skills, knowledge and opportunity to work and own businesses in the cannabis industry. Learn more about Cresco Labs at www.crescolabs.com.

Forward Looking Statements

This press release contains “forward-looking information” within the meaning of applicable Canadian securities legislation and may also contain statements that may constitute “forward-looking statements” within the meaning of the safe harbor provisions of the United States Private Securities Litigation Reform Act of 1995. Such forward-looking information and forward-looking statements are not representative of historical facts or information or current condition, but instead represent only the Company’s beliefs regarding future events, plans or objectives, many of which, by their nature, are inherently uncertain and outside of the Company’s control. Generally, such forward-looking information or forward-looking statements can be identified by the use of forward-looking terminology such as, ‘may,’ ‘will,’ ‘should,’ ‘could,’ ‘would,’ ‘expects,’ ‘plans,’ ‘anticipates,’ ‘believes,’ ‘estimates,’ ‘projects,’ ‘predicts,’ ‘potential’ or ‘continue’ or the negative of those forms or other comparable terms. The Company’s forward-looking statements involve known and unknown risks, uncertainties and other factors which may cause the Company’s actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by the forward-looking statements, including but not limited to those risks discussed under “Risk Factors” in the Company’s Annual Information Form for the year ended December 31, 2020 filed on March 26, 2021, and other documents filed by the Company with Canadian securities regulatory authorities; and other factors, many of which are beyond the control of the Company. Readers are cautioned that the foregoing list of factors is not exhaustive. Because of these uncertainties, you should not place undue reliance on the Company’s forward-looking statements. No assurances are given as to the future trading price or trading volumes of Cresco Labs’ shares, nor as to the Company’s financial performance in future financial periods. The Company does not intend to update any of these factors or to publicly announce the result of any revisions to any of the Company’s forward-looking statements contained herein, whether as a result of new information, any future event or otherwise. Except as otherwise indicated, this press release speaks as of the date hereof. The distribution of this press release does not imply that there has been no change in the affairs of the Company after the date hereof or create any duty or commitment to update or supplement any information provided in this press release or otherwise.

Media:

Jason Erkes, Cresco Labs

Chief Communications Officer

[email protected]

Investors:

Jake Graves, Cresco Labs

Manager, Investor Relations

[email protected]

For general Cresco Labs inquiries:

312-929-0993

[email protected]

KEYWORDS: United States North America Canada Illinois

INDUSTRY KEYWORDS: Fitness & Nutrition Tobacco Specialty Alternative Medicine Food/Beverage Health Retail Agriculture Natural Resources

MEDIA:

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