Market Newsdesk

EMERYVILLE, Calif., May 04, 2021 (GLOBE NEWSWIRE) — NMI Holdings, Inc. (Nasdaq: NMIH) today reported net income of $52.9 million, or $0.61 per diluted share, for the first quarter ended March 31, 2021, which compares to $48.3 million, or $0.56 per diluted share, in the fourth quarter ended December 31, 2020 and $58.3 million, or $0.74 per diluted share, in the first quarter ended March 31, 2020. Adjusted net income for the quarter was $53.4 million, or $0.62 per diluted share, which compares to $50.8 million, or $0.59 per diluted share, in the fourth quarter ended December 31, 2020 and $52.7 million, or $0.75 per diluted share, in the first quarter ended March 31, 2020. The non-GAAP financial measures adjusted net income, adjusted diluted earnings per share and adjusted return on equity are presented in this release to enhance the comparability of financial results between periods. See “Use of Non-GAAP Financial Measures” and our reconciliation of such measures to their most comparable GAAP measures, below.

Claudia Merkle, CEO of National MI, said, “We achieved record NIW volume, significant growth in our insured portfolio and strong financial performance in the first quarter. We helped more borrowers than ever before gain access to housing and continued to differentiate with our lender customers. Our credit performance remained favorable and we are increasingly optimistic as the stress of the COVID pandemic has begun to recede, the outlook for the economy has improved sharply and the housing market continues to strengthen.”

Selected first quarter 2021 highlights include:

• New insurance written was $26.4 billion, up 33% compared to $19.8 billion in the fourth quarter and 134% compared to $11.3 billion in the first quarter of 2020
• Primary insurance-in-force at quarter end was $123.8 billion, up 11% from $111.3 billion at the end of the fourth quarter and 26% compared to the first quarter of 2020
• Net premiums earned were $105.9 million, up 5% compared to $100.7 million in the fourth quarter and 7% compared to $98.7 million in the first quarter of 2020
• Underwriting and operating expenses were $34.1 million, including $378 thousand of capital market transaction costs, compared to $35.0 million in the fourth quarter and $32.3 million in the first quarter of 2020
• Insurance claims and claim expenses were $5.0 million, compared to $3.5 million in the fourth quarter and $5.7 million in the first quarter of 2020
• At quarter-end, cash and investments were $1.9 billion and shareholders’ equity was $1.4 billion, equal to $16.13 per share
• Annualized return on equity for the quarter was 15.4% and annualized adjusted return on equity was 15.5%
• At quarter-end, the company reported total PMIERs available assets of $1.8 billion and net risk-based required assets of $1.3 billion

Concurrent with the release of first quarter earnings, the company has filed a Form 8-K that includes selected operating statistics for the month ended April 30, 2021. Investors may access the Form 8-K on the company’s website, www.nationalmi.com, in the “Investor Relations” section.

		Quarter Ended			Quarter Ended			Quarter Ended			Change (1)		Change (1)
		3/31/2021			12/31/2020			3/31/2020			Q/Q		Y/Y
INSURANCE METRICS ($billions)
Primary Insurance-in-Force		$	123.8		$	111.3		$	98.5		11	%	26	%
New Insurance Written – NIW
	Monthly premium	23.8			17.8			10.5			34	%	127	%
	Single premium	2.6			2.0			0.8			32	%	215	%
	Total	26.4			19.8			11.3			33	%	134	%
FINANCIAL HIGHLIGHTS ($millions, except per share amounts)
Net Premiums Earned		$	105.9		$	100.7		$	98.7		5	%	7	%
Insurance Claims and Claim Expenses		5.0			3.5			5.7			40	%	(13	)%
Underwriting and Operating Expenses		34.1			35.0			32.3			(3	)%	6	%
Net Income		52.9			48.3			58.3			10	%	(9	)%
Adjusted Net Income		53.4			50.8			52.7			5	%	1	%
Cash and Investments			1,947			1,931			1,180		1	%	65	%
Shareholders’ Equity		1,380			1,370			975			1	%	42	%
Book Value per Share			16.13			16.08			14.15		—	%	14	%
Loss Ratio		4.7		%	3.5		%	5.8		%
Expense Ratio		32.2		%	34.7		%	32.7		%

⁽¹⁾ Percentages may not be replicated based on the rounded figures presented in the table.

Conference Call and Webcast Details

   
The company will hold a conference call, which will be webcast live today, May 4, 2021, at 2:00 p.m. Pacific Time / 5:00 p.m. Eastern Time. The webcast will be available on the company’s website, www.nationalmi.com, in the “Investor Relations” section. The conference call can also be accessed by dialing (888) 734-0328 in the U.S., or (914) 495-8578 internationally, and using Conference ID: 1887668 or by referencing NMI Holdings, Inc.

About NMI Holdings, Inc.

NMI Holdings, Inc. (NASDAQ: NMIH), is the parent company of National Mortgage Insurance Corporation (National MI), a U.S.-based, private mortgage insurance company enabling low down payment borrowers to realize home ownership while protecting lenders and investors against losses related to a borrower’s default. To learn more, please visit www.nationalmi.com.

Cautionary Note Regarding Forward-Looking Statements

Certain statements contained in this press release or any other written or oral statements made by or on behalf of the Company in connection therewith may constitute forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended (the “Securities Act”), Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and the U.S. Private Securities Litigation Reform Act of 1995 (the “PSLRA”). The PSLRA provides a “safe harbor” for any forward-looking statements. All statements other than statements of historical fact included in or incorporated by reference in this release are forward-looking statements, including any statements about our expectations, outlook, beliefs, plans, predictions, forecasts, objectives, assumptions or future events or performance. These statements are often, but not always, made through the use of words or phrases such as “anticipate,” “believe,” “can,” “could,” “may,” “predict,” “assume,” “potential,” “should,” “will,” “estimate,” “plan,” “project,” “continuing,” “ongoing,” “expect,” “intend” and similar words or phrases. All forward-looking statements are only predictions and involve estimates, known and unknown risks, assumptions and uncertainties that may turn out to be inaccurate and could cause actual results to differ materially from those expressed in them. Many risks and uncertainties are inherent in our industry and markets. Others are more specific to our business and operations. Important factors that could cause actual events or results to differ materially from those indicated in such statements include, but are not limited to: uncertainty relating to the COVID-19 pandemic and the measures taken by governmental authorities and other third parties to combat it, including their impact on the global economy, the U.S. housing, real estate, housing finance and mortgage insurance markets, and the Company’s business, operations and personnel, changes in the business practices of Fannie Mae and Freddie Mac (collectively, the “GSEs”), including decisions that have the impact of decreasing or discontinuing the use of mortgage insurance as credit enhancement generally, or with first time homebuyers or on very high loan-to-value mortgages; our ability to remain an eligible mortgage insurer under the private mortgage insurer eligibility requirements (“PMIERs”) and other requirements imposed by the GSEs, which they may change at any time; retention of our existing certificates of authority in each state and the District of Columbia (“D.C.”) and our ability to remain a mortgage insurer in good standing in each state and D.C.; our future profitability, liquidity and capital resources; actions of existing competitors, including other private mortgage insurers and government mortgage insurers, such as the Federal Housing Administration, U.S. Department of Agriculture’s Rural Housing Service and the U.S. Department of Veterans Affairs, and potential market entry by new competitors or consolidation of existing competitors; developments in the world’s financial and capital markets and our access to such markets, including reinsurance; adoption of new or changes to existing laws and regulations that impact our business or financial condition directly or the mortgage insurance industry generally or their enforcement and implementation by regulators, including the timing and eventual implementation of the final rules concerning “Qualified Mortgage” and “Qualified Residential Mortgage” definitions and the expiration of the “QM Patch” under the Dodd-Frank Act Ability to Repay/Qualified Mortgage rule; legislative or regulatory changes to the GSEs’ role in the secondary mortgage market or other changes that could affect the residential mortgage industry generally or mortgage insurance industry in particular; potential future lawsuits, investigations or inquiries or resolution of current lawsuits or inquiries; changes in general economic, market and political conditions and policies, interest rates, inflation and investment results or other conditions that affect the housing market or the markets for home mortgages or mortgage insurance; our ability to successfully execute and implement our capital plans, including our ability to access the capital, credit and reinsurance markets and to enter into, and receive approval of, reinsurance arrangements on terms and conditions that are acceptable to us, the GSEs and our regulators; our ability to implement our business strategy, including our ability to write mortgage insurance on high quality low-down payment residential mortgage loans, implement successfully and on a timely basis, complex infrastructure, systems, procedures, and internal controls to support our business and regulatory and reporting requirements of the insurance industry; our ability to attract and retain a diverse customer base, including the largest mortgage originators; failure of risk management or pricing or investment strategies; emergence of unexpected claim and coverage issues, including claims exceeding our reserves or amounts we had expected to experience; potential adverse impacts arising from natural disasters, including, with respect to affected areas, a decline in new business, adverse effects on home prices, and an increase in notices of default on insured mortgages; the inability of our counterparties, including third party reinsurers, to meet their obligations to us; failure to maintain, improve and continue to develop necessary information technology systems or the failure of technology providers to perform; and, our ability to recruit, train and retain key personnel. These risks and uncertainties also include, but are not limited to, those set forth under the heading “Risk Factors” detailed in Item 1A of Part I of our Annual Report on Form 10-K for the year ended December 31, 2020, as subsequently updated through other reports we file with the SEC. All subsequent written and oral forward-looking statements attributable to the Company or persons acting on its behalf are expressly qualified in their entirety by these cautionary statements. We caution you not to place undue reliance on any forward-looking statement, which speaks only as of the date on which it is made, and we undertake no obligation to publicly update or revise any forward-looking statement to reflect new information, future events or circumstances that occur after the date on which the statement is made or to reflect the occurrence of unanticipated events except as required by law.

Use of Non-GAAP Financial Measures

We believe the use of the non-GAAP measures of adjusted income before tax, adjusted net income, adjusted diluted EPS, adjusted return-on-equity, adjusted expense ratio and adjusted combined ratio enhances the comparability of our fundamental financial performance between periods, and provides relevant information to investors. These non-GAAP financial measures align with the way the company’s business performance is evaluated by management. These measures are not prepared in accordance with GAAP and should not be viewed as alternatives to GAAP measures of performance. These measures have been presented to increase transparency and enhance the comparability of our fundamental operating trends across periods. Other companies may calculate these measures differently; their measures may not be comparable to those we calculate and present.

Adjusted income before tax is defined as GAAP income before tax, excluding the pre-tax effects of the gain or loss related to the change in fair value of our warrant liability, periodic costs incurred in connection with capital markets transactions, net realized gains or losses from our investment portfolio, and discrete, non-recurring and non-operating items in the periods in which such items are incurred.

Adjusted net income is defined as GAAP net income, excluding the after-tax effects of the gain or loss related to the change in fair value of our warrant liability, periodic costs incurred in connection with capital markets transactions, net realized gains or losses from our investment portfolio, and discrete, non-recurring and non-operating items in the periods in which such items are incurred. Adjustments to components of pre-tax income are tax effected using the applicable federal statutory tax rate for the respective periods.

Adjusted diluted EPS is defined as adjusted net income divided by adjusted weighted average diluted shares outstanding. Adjusted weighted average diluted shares outstanding is defined as weighted average diluted shares outstanding, adjusted for changes in the dilutive effect of non-vested shares that would otherwise have occurred had GAAP net income been calculated in accordance with adjusted net income. There will be no adjustment to weighted average diluted shares outstanding in the periods that non-vested shares are anti-dilutive under GAAP.

Adjusted return on equity is calculated by dividing adjusted net income on an annualized basis by the average shareholders’ equity for the period.

Adjusted expense ratio is defined as GAAP underwriting and operating expenses, excluding the pre-tax effects of periodic costs incurred in connection with capital markets transactions, divided by net premiums earned.

Adjusted combined ratio is defined as the total of GAAP underwriting and operating expenses, excluding the pre-tax effects of periodic costs incurred in connection with capital markets transactions and insurance claims and claims expenses, divided by net premiums earned.

Although adjusted income before tax, adjusted net income, adjusted diluted EPS, adjusted return-on-equity, adjusted expense ratio and adjusted combined ratio exclude certain items that have occurred in the past and are expected to occur in the future, the excluded items: (1) are not viewed as part of the operating performance of our primary activities; or (2) are impacted by market, economic or regulatory factors and are not necessarily indicative of operating trends, or both. These adjustments, and the reasons for their treatment, are described below.

(1) Change in fair value of warrant liability. Outstanding warrants at the end of each reporting period are revalued, and any change in fair value is reported in the statement of operations in the period in which the change occurred. The change in fair value of our warrant liability can vary significantly across periods and is influenced principally by equity market and general economic factors that do not impact or reflect our current period operating results. We believe trends in our operating performance can be more clearly identified by excluding fluctuations related to the change in fair value of our warrant liability.

(2) Capital markets transaction costs. Capital markets transaction costs result from activities that are undertaken to improve our debt profile or enhance our capital position through activities such as debt refinancing and capital markets reinsurance transactions that may vary in their size and timing due to factors such as market opportunities, tax and capital profile, and overall market cycles.

(3) Net realized investment gains and losses. The recognition of the net realized investment gains or losses can vary significantly across periods as the timing is highly discretionary and is influenced by factors such as market opportunities, tax and capital profile, and overall market cycles that do not reflect our current period operating results.

(4) Infrequent or unusual non-operating items. Items that are the result of unforeseen or uncommon events, which occur separately from operating earnings and are not expected to recur in the future. Identification and exclusion of these items provides clarity about the impact special or rare occurrences may have on our current financial performance. Past adjustments under this category include the effects of the release of the valuation allowance recorded against our net federal and certain state net deferred tax assets in 2016 and the re-measurement of our net deferred tax assets in connection with tax reform in 2017. We believe such items are non-recurring in nature, are not part of our primary operating activities and do not reflect our current period operating results.

Investor Contact

John M. Swenson
Vice President, Investor Relations and Treasury
[email protected]
(510) 788-8417

Press Contact

Mary McGarity
Strategic Vantage Mortgage Public Relations
(203) 513-2721
[email protected]

Consolidated statements of operations and comprehensive income	For the three months ended March 31,
	2021				2020
Revenues	(In Thousands, except for per share data)
Net premiums earned	$	105,879			$	98,717
Net investment income	8,814				8,104
Net realized investment losses	—				(72		)
Other revenues	501				900
Total revenues	115,194				107,649
Expenses
Insurance claims and claim expenses	4,962				5,697
Underwriting and operating expenses	34,065				32,277
Service expenses	591				734
Interest expense	7,915				2,744
Loss (gain) from change in fair value of warrant liability	205				(5,959		)
Total expenses	47,738				35,493
Income before income taxes	67,456				72,156
Income tax expense	14,565				13,885
Net income	$	52,891			$	58,271
Earnings per share
Basic	$	0.62			$	0.85
Diluted	$	0.61			$	0.74
Weighted average common shares outstanding
Basic	85,317				68,563
Diluted	86,487				70,401
Loss ratio(1)	4.7		%		5.8		%
Expense ratio(2)	32.2		%		32.7		%
Combined ratio	36.9		%		38.5		%
Net income	$	52,891			$	58,271
Other comprehensive loss, net of tax:
Unrealized losses in accumulated other comprehensive loss, net of tax benefit of $11,997 and $3,424 for the quarters ended March 31, 2021 and 2020, respectively	(45,133		)		(12,881		)
Reclassification adjustment for realized losses included in net income, net of tax benefit of $15 for the quarter ended March 31, 2020	—				57
Other comprehensive loss, net of tax	(45,133		)		(12,824		)
Comprehensive income	$	7,758			$	45,447

⁽¹⁾   Loss ratio is calculated by dividing insurance claims and claim expenses by net premiums earned.
⁽²⁾   Expense ratio is calculated by dividing other underwriting and operating expenses by net premiums earned.

Consolidated balance sheets	March 31, 2021				December 31, 2020
Assets	(In Thousands, except for share data)
Fixed maturities, available-for-sale, at fair value (amortized cost of $1,815,190 and $1,730,835 as of March 31, 2021 and December 31, 2020, respectively)	$	1,831,511			$	1,804,286
Cash and cash equivalents (including restricted cash of $4,868 and $5,555 as of March 31, 2021 and December 31, 2020, respectively)	115,517				126,937
Premiums receivable	52,206				49,779
Accrued investment income	10,495				9,862
Prepaid expenses	4,999				3,292
Deferred policy acquisition costs, net	62,294				62,225
Software and equipment, net	31,298				29,665
Intangible assets and goodwill	3,634				3,634
Prepaid reinsurance premiums	4,842				6,190
Reinsurance recoverable	18,686				17,608
Other assets	52,349				53,188
Total assets	$	2,187,831			$	2,166,666
Liabilities
Debt	$	393,622			$	393,301
Unearned premiums	127,407				118,817
Accounts payable and accrued expenses	57,139				61,716
Reserve for insurance claims and claim expenses	96,103				90,567
Reinsurance funds withheld	7,569				8,653
Warrant liability, at fair value	4,239				4,409
Deferred tax liability, net	115,150				112,586
Other liabilities	6,294				7,026
Total liabilities	807,523				797,075
Shareholders’ equity
Common stock – class A shares, $0.01 par value; 85,599,908 and 85,163,039 shares issued and outstanding as of March 31, 2021 and December 31, 2020, respectively (250,000,000 shares authorized)	856				852
Additional paid-in capital	940,827				937,872
Accumulated other comprehensive income, net of tax	8,723				53,856
Retained earnings	429,902				377,011
Total shareholders’ equity	1,380,308				1,369,591
Total liabilities and shareholders’ equity	$	2,187,831			$	2,166,666

Non-GAAP Financial Measure Reconciliations
	Quarter ended				Quarter ended				Quarter ended
	3/31/2021				12/31/2020				3/31/2020
As Reported	(In Thousands, except for per share data)
Revenues
Net premiums earned	$	105,879			$	100,709			$	98,717
Net investment income	8,814				8,386				8,104
Net realized investment gains (losses)	—				295				(72		)
Other revenues	501				513				900
Total revenues	115,194				109,903				107,649
Expenses
Insurance claims and claim expenses	4,962				3,549				5,697
Underwriting and operating expenses	34,065				34,994				32,277
Service expenses	591				459				734
Interest expense	7,915				7,906				2,744
Loss (gain) from change in fair value of warrant liability	205				1,379				(5,959		)
Total expenses	47,738				48,287				35,493
Income before income taxes	67,456				61,616				72,156
Income tax expense	14,565				13,348				13,885
Net income	$	52,891			$	48,268			$	58,271
Adjustments:
Net realized investment (gains) losses	—				(295		)		72
Loss (gain) from change in fair value of warrant liability	205				1,379				(5,959		)
Capital markets transaction costs	378				1,719				474
Adjusted income before taxes	68,039				64,419				66,743
Income tax expense on adjustments	79				299				115
Adjusted net income	$	53,395			$	50,772			$	52,743
Weighted average diluted shares outstanding	86,487				86,250				70,401
Diluted EPS (1)	$	0.61			$	0.56			$	0.74
Adjusted diluted EPS	$	0.62			$	0.59			$	0.75
Return-on-equity	15.4		%		14.4		%		24.5		%
Adjusted return-on-equity	15.5		%		15.2		%		22.1		%
Expense ratio (2)	32.2		%		34.7		%		32.7		%
Adjusted expense ratio (3)	31.8		%		33.0		%		32.2		%
Combined ratio (4)	36.9		%		38.3		%		38.5		%
Adjusted combined ratio (5)	36.5		%		36.6		%		38.0		%

⁽¹⁾ Diluted net income for the quarter ended March 30, 2020, excludes the impact of the warrant fair value change as it was anti-dilutive. For all other periods presented, diluted net income equals reported net income as the impact of the warrant fair value change was dilutive.
⁽²⁾ Expense ratio is calculated by dividing underwriting and operating expenses by net premiums earned.
⁽³⁾ Adjusted expense ratio is calculated by dividing adjusted underwriting and operating expense (underwriting and operating expenses excluding costs related to capital markets reinsurance transactions) by net premiums earned.
⁽⁴⁾ Combined ratio is calculated by dividing the total of underwriting and operating expenses and insurance claims and claims expense by net premiums earned.
⁽⁵⁾ Adjusted combined ratio is calculated by dividing the total of adjusted underwriting and operating expenses (underwriting and operating expenses excluding costs related to capital market reinsurance transaction) and insurance claims and claims expense by net premiums earned.

Historical Quarterly Data	2021				2020																2019
	March 31				December 31				September 30				June 30				March 31				December 31
Revenues	(In Thousands, except for per share data)
Net premiums earned	$	105,879			$	100,709			$	98,802			$	98,944			$	98,717			$	95,517
Net investment income	8,814				8,386				8,337				7,070				8,104				7,962
Net realized investment gains (losses)	—				295				(4		)		711				(72		)		264
Other revenues	501				513				648				1,223				900				1,154
Total revenues	115,194				109,903				107,783				107,948				107,649				104,897
Expenses
Insurance claims and claim expenses	4,962				3,549				15,667				34,334				5,697				4,269
Underwriting and operating expenses	34,065				34,994				33,969				30,370				32,277				31,296
Service expenses	591				459				557				1,090				734				937
Interest expense	7,915				7,906				7,796				5,941				2,744				2,974
Loss (gain) from change in fair value of warrant liability	205				1,379				437				1,236				(5,959		)		2,632
Total expenses	47,738				48,287				58,426				72,971				35,493				42,108
Income before income taxes	67,456				61,616				49,357				34,977				72,156				62,789
Income tax expense	14,565				13,348				11,178				8,129				13,885				12,594
Net income	$	52,891			$	48,268			$	38,179			$	26,848			$	58,271			$	50,195
Earnings per share
Basic	$	0.62			$	0.57			$	0.45			$	0.36			$	0.85			$	0.74
Diluted	$	0.61			$	0.56			$	0.45			$	0.36			$	0.74			$	0.71
Weighted average common shares outstanding
Basic	85,317				84,956				84,805				73,617				68,563				68,140
Diluted	86,487				86,250				85,599				74,174				70,401				70,276
Other data
Loss Ratio(1)	4.7		%		3.5		%		15.9		%		34.7		%		5.8		%		4.5		%
Expense Ratio(2)	32.2		%		34.7		%		34.4		%		30.7		%		32.7		%		32.8		%
Combined ratio (3)	36.9		%		38.3		%		50.2		%		65.4		%		38.5		%		37.2		%

⁽¹⁾   Loss ratio is calculated by dividing insurance claims and claim expenses by net premiums earned.
⁽²⁾   Expense ratio is calculated by dividing underwriting and operating expenses by net premiums earned.
⁽³⁾   Combined ratio may not foot due to rounding.

Portfolio Statistics

The table below highlights trends in our primary portfolio as of the date and for the periods indicated.

Primary portfolio trends	As of and for the three months ended
	March 31, 2021				December 31, 2020				September 30, 2020				June 30, 2020				March 31, 2020				December 31, 2019
	($ Values In Millions, except as noted below)
New insurance written	$	26,397			$	19,782			$	18,499			$	13,124			$	11,297			$	11,949
New risk written	6,531				4,868				4,577				3,260				2,897				3,082
Insurance in force (IIF) (1)	123,777				111,252				104,494				98,905				98,494				94,754
Risk in force (1)	31,206				28,164				26,568				25,238				25,192				24,173
Policies in force (count) (1)	436,652				399,429				381,899				372,934				376,852				366,039
Average loan size ($ value in thousands)(1)	$	283			$	279			$	274			$	265			$	261			$	259
Coverage percentage (2)	25.2		%		25.3		%		25.4		%		25.5		%		25.6		%		25.5		%
Loans in default (count) (1)	11,090				12,209				13,765				10,816				1,449				1,448
Default rate (1)	2.54		%		3.06		%		3.60		%		2.90		%		0.38		%		0.40		%
Risk in force on defaulted loans (1)	$	785			$	874			$	1,008			$	799			$	84			$	84
Net premium yield (3)	0.36		%		0.37		%		0.39		%		0.40		%		0.41		%		0.41		%
Earnings from cancellations	$	9.9			$	11.7			$	12.6			$	15.5			$	8.6			$	8.0
Annual persistency (4)	51.9		%		55.9		%		60.0		%		64.1		%		71.7		%		76.8		%
Quarterly run-off (5)	12.5		%		12.5		%		13.1		%		12.9		%		8.0		%		7.7		%

⁽¹⁾ Reported as of the end of the period.
⁽²⁾ Calculated as end of period risk-in-force (RIF) divided by end of period IIF.
⁽³⁾ Calculated as net premiums earned, divided by average primary IIF for the period, annualized.
⁽⁴⁾ Defined as the percentage of IIF that remains on our books after a given twelve-month period.
⁽⁵⁾ Defined as the percentage of IIF that is no longer on our books after a given three month period.

New Insurance Written (NIW), Insurance in Force (IIF) and Premiums

The tables below present primary NIW and primary and pool IIF, as of the dates and for the periods indicated.

Primary NIW	Three months ended
	March 31, 2021				December 31, 2020				September 30, 2020				June 30, 2020				March 31, 2020				December 31, 2019
	(In Millions)
Monthly	$	23,764			$	17,789			$	16,516			$	11,885			$	10,461			$	11,085
Single	2,633				1,993				1,983				1,239				836				864
Primary	$	26,397			$	19,782			$	18,499			$	13,124			$	11,297			$	11,949

Primary and pool IIF	As of
	March 31, 2021				December 31, 2020				September 30, 2020				June 30, 2020				March 31, 2020				December 31, 2019
	(In Millions)
Monthly	$	106,920			$	95,336			$	88,584			$	82,848			$	81,347			$	77,097
Single	16,857				15,916				15,910				16,057				17,147				17,657
Primary	123,777				111,252				104,494				98,905				98,494				94,754
Pool	1,642				1,855				2,115				2,340				2,487				2,570
Total	$	125,419			$	113,107			$	106,609			$	101,245			$	100,981			$	97,324

The following table presents the amounts related to the company’s quota-share reinsurance transactions (the 2016 QSR Transaction, 2018 QSR Transaction, 2020 QSR Transaction and 2021 QSR Transaction, and collectively, the QSR Transactions), and Insurance-Linked Note transactions (the 2017 ILN Transaction, 2018 ILN Transaction, 2019 ILN Transaction, 2020-1 ILN Transaction and 2020-2 ILN Transaction, and collectively, the ILN Transactions) for the periods indicated.

	For the three months ended
	March 31, 2021					December 31, 2020					September 30, 2020					June 30, 2020					March 31, 2020					December 31, 2019
	(In Thousands)
The QSR Transactions
Ceded risk-in-force	$	6,330,409				$	5,543,969				$	5,159,061				$	4,563,676				$	4,843,715				$	5,137,249
Ceded premiums earned	(25,747		)			(24,161		)			(24,517		)			(23,210		)			(23,011		)			(23,673		)
Ceded claims and claim expenses	1,180					601					3,200					8,669					1,532					1,030
Ceding commission earned	5,162					4,787					4,798					4,428					4,513					4,691
Profit commission	13,380					13,184					11,034					5,271					12,413					13,314
The ILN Transactions
Ceded premiums	$	(9,397	)			$	(9,422	)			$	(6,268	)			$	(3,267	)			$	(3,872	)			$	(4,263	)

The tables below present our total primary NIW by FICO, loan-to-value (LTV) ratio, and purchase/refinance mix for the periods indicated.

Primary NIW by FICO	For the three months ended
	March 31, 2021				December 31, 2020				March 31, 2020
	($ In Millions)
>= 760	$	12,914			$	11,495			$	6,290
740-759	5,312				3,387				1,615
720-739	3,963				2,447				1,579
700-719	2,358				1,430				1,038
680-699	1,360				820				565
<=679	490				203				210
Total	$	26,397			$	19,782			$	11,297
Weighted average FICO	755				761					757

Primary NIW by LTV	For the three months ended
	March 31, 2021				December 31, 2020				March 31, 2020
	(In Millions)
95.01% and above	$	2,451			$	1,877			$	721
90.01% to 95.00%	11,051				7,839				5,009
85.01% to 90.00%	7,848				6,239				4,082
85.00% and below	5,047				3,827				1,485
Total	$	26,397			$	19,782			$	11,297
Weighted average LTV	91.0		%		90.9		%		91.3		%

Primary NIW by purchase/refinance mix	For the three months ended
	March 31, 2021				December 31, 2020				March 31, 2020
	(In Millions)
Purchase	$	17,909			$	13,085			$	7,991
Refinance	8,488				6,697				3,306
Total	$	26,397			$	19,782			$	11,297

The table below presents a summary of our primary IIF and RIF by book year as of March 31, 2021.

Primary IIF and RIF	As of March 31, 2021
	IIF				RIF
	(In Millions)
March 31, 2021	$	26,296			$	6,508
2020	53,650				13,397
2019	20,402				5,342
2018	8,074				2,057
2017	6,700				1,678
2016 and before	8,655				2,224
Total	$	123,777			$	31,206

The tables below present our total primary IIF and RIF by FICO and LTV and total primary RIF by loan type as of the dates indicated.

Primary IIF by FICO	As of
	March 31, 2021				December 31, 2020				March 31, 2020
	(In Millions)
>= 760	$	63,919			$	58,368			$	47,340
740-759	20,537				17,442				16,060
720-739	17,167				15,091				14,002
700-719	11,536				10,442				10,518
680-699	7,329				6,777				6,879
<=679	3,289				3,132				3,695
Total	$	123,777			$	111,252			$	98,494

Primary RIF by FICO	As of
	March 31, 2021				December 31, 2020				March 31, 2020
	(In Millions)
>= 760	$	15,920			$	14,634			$	12,076
740-759	5,214				4,449				4,121
720-739	4,378				3,868				3,626
700-719	2,981				2,692				2,696
680-699	1,896				1,748				1,760
<=679	817				773				913
Total	$	31,206			$	28,164			$	25,192

Primary IIF by LTV	As of
	March 31, 2021				December 31, 2020				March 31, 2020
	(In Millions)
95.01% and above	$	10,616			$	9,129			$	8,838
90.01% to 95.00%	54,832				49,898				46,318
85.01% to 90.00%	40,057				36,972				31,729
85.00% and below	18,272				15,253				11,609
Total	$	123,777			$	111,252			$	98,494

Primary RIF by LTV	As of
	March 31, 2021				December 31, 2020				March 31, 2020
	(In Millions)
95.01% and above	$	3,106			$	2,637			$	2,478
90.01% to 95.00%	16,139				14,673				13,587
85.01% to 90.00%	9,818				9,067				7,767
85.00% and below	2,143				1,787				1,360
Total	$	31,206			$	28,164			$	25,192

Primary RIF by Loan Type	As of
	March 31, 2021			December 31, 2020			March 31, 2020
Fixed	99	%		99	%		98	%
Adjustable rate mortgages
Less than five years	—			—			—
Five years and longer	1			1			2
Total	100	%		100	%		100	%

The table below presents a summary of the change in total primary IIF during the periods indicated.

Primary IIF	For the three months ended
	March 31, 2021					December 31, 2020					March 31, 2020
	(In Millions)
IIF, beginning of period	$	111,252				$	104,494				$	94,754
NIW	26,397					19,782					11,297
Cancellations, principal repayments and other reductions	(13,872		)			(13,024		)			(7,557		)
IIF, end of period	$	123,777				$	111,252				$	98,494

Geographic Dispersion

The following table shows the distribution by state of our primary RIF as of the periods indicated.

Top 10 primary RIF by state	As of
	March 31, 2021			December 31, 2020			March 31, 2020
California	10.8	%		11.2	%		11.5	%
Texas	9.5			8.8			8.2
Florida	7.9			7.3			5.9
Virginia	5.0			5.1			5.3
Colorado	4.1			4.1			3.6
Maryland	3.8			3.7			3.4
Illinois	3.7			3.8			3.8
Washington	3.5			3.5			3.3
Georgia	3.3			3.2			2.7
Pennsylvania	3.3			3.4			3.7
Total	54.9	%		54.1	%		51.4	%

The table below presents selected primary portfolio statistics, by book year, as of March 31, 2021.

	As of March 31, 2021
Book year	Original Insurance Written				Remaining Insurance in Force				% Remaining of Original Insurance			Policies Ever in Force			Number of Policies in Force			Number of Loans in Default			# of Claims Paid			Incurred Loss Ratio (Inception to Date) (1)			Cumulative Default Rate (2)			Current default rate (3)
	($ Values in Millions)
2013	$	162			$	10			6	%		655			66			2			1			0.4	%		0.5	%		3.0	%
2014	3,451				414				12	%		14,786			2,452			114			48			4.2	%		1.1	%		4.6	%
2015	12,422				2,529				20	%		52,548			13,334			541			113			3.2	%		1.2	%		4.1	%
2016	21,187				5,702				27	%		83,626			27,332			1,256			122			2.8	%		1.6	%		4.6	%
2017	21,582				6,700				31	%		85,897			32,499			1,972			84			4.4	%		2.4	%		6.1	%
2018	27,295				8,074				30	%		104,043			38,090			2,679			64			8.5	%		2.6	%		7.0	%
2019	45,141				20,402				45	%		148,423			77,278			3,276			9			14.1	%		2.2	%		4.2	%
2020	62,702				53,650				86	%		186,174			163,626			1,247			—			8.3	%		0.7	%		0.8	%
2021	26,397				26,296				100	%		82,232			81,975			3			—			—	%		—	%		—	%
Total	$	220,339			$	123,777						758,384			436,652			11,090			441

⁽¹⁾   Calculated as total claims incurred (paid and reserved) divided by cumulative premiums earned, net of reinsurance.
⁽²⁾   Calculated as the sum of the number of claims paid ever to date and number of loans in default divided by policies ever in force.
⁽³⁾   Calculated as the number of loans in default divided by number of policies in force.

The following table provides a reconciliation of the beginning and ending reserve balances for primary insurance claims and claim expenses:

	For the three months ended
	March 31, 2021				March 31, 2020
	(In Thousands)
Beginning balance	$	90,567			$	23,752
Less reinsurance recoverables (1)	(17,608		)		(4,939		)
Beginning balance, net of reinsurance recoverables	72,959				18,813
Add claims incurred:
Claims and claim expenses incurred:
Current year (2)	10,557				7,558
Prior years (3)	(5,595		)		(1,861		)
Total claims and claim expenses incurred	4,962				5,697
Less claims paid:
Claims and claim expenses paid:
Current year (2)	12				—
Prior years (3)	492				1,224
Total claims and claim expenses paid	504				1,224
Reserve at end of period, net of reinsurance recoverables	77,417				23,286
Add reinsurance recoverables (1)	18,686				6,193
Ending balance	$	96,103			$	29,479

⁽¹⁾ Related to ceded losses recoverable under the QSR Transactions.
⁽²⁾ Related to insured loans with their most recent defaults occurring in the current year. For example, if a loan had defaulted in a prior year and subsequently cured and later re-defaulted in the current year, the default would be included in the current year. Amounts are presented net of reinsurance and included $5.3 million attributed to net case reserves and $5.3 million attributed to net IBNR reserves for the three months ended March 31, 2021 and $6.0 million attributed to net case reserves and $1.6 million attributed to net IBNR reserves for the three months ended March 31, 2020.
⁽³⁾ Related to insured loans with defaults occurring in prior years, which have been continuously in default before the start of the current year. Amounts are presented net of reinsurance and included $0.6 million attributed to net case reserves and $5.0 million attributed to net IBNR reserves for the three months ended March 31, 2021 and $0.6 million attributed to net case reserves and $1.3 million attributed to net IBNR reserves for the three months ended March 31, 2020.

The following table provides a reconciliation of the beginning and ending count of loans in default for the periods indicated.

	For the three months ended
	March 31, 2021			March 31, 2020
Beginning default inventory	12,209			1,448
Plus: new defaults	1,767			512
Less: cures	(2,868	)		(475	)
Less: claims paid	(16	)		(34	)
Less: claims denied	(2	)		(2	)
Ending default inventory	11,090			1,449

The following table provides details of our claims paid, before giving effect to claims ceded under the QSR Transactions, for the periods indicated.

	For the three months ended
	March 31, 2021				March 31, 2020
	(In Thousands)
Number of claims paid (1)	16				34
Total amount paid for claims	$	606			$	1,503
Average amount paid per claim	$	38			$	44
Severity(2)	61		%		83		%

⁽¹⁾ Count includes one claim settled without payment for the three months ended March 31, 2021 and 2020.
⁽²⁾ Severity represents the total amount of claims paid including claim expenses divided by the related RIF on the loan at the time the claim is perfected, and is calculated including claims settled without payment.

The following table shows our average reserve per default, before giving effect to reserves ceded under the QSR Transactions, as of the periods indicated.

Average reserve per default:	As of March 31, 2021				As of March 31, 2020
	(In Thousands)
Case (1)	$	7.9			$	18.6
IBNR (1)(2)	0.8				1.7
Total	$	8.7			$	21.3

⁽¹⁾   Defined as the gross reserve per insured loan in default.
⁽²⁾   Amount includes claims adjustment expenses.

The following table provides a comparison of the PMIERs financial requirements as reported by NMIC as of the dates indicated.

	As of
	March 31, 2021				December 31, 2020				March 31, 2020
	(In Thousands)
Available Assets	$	1,809,589			$	1,750,668			$	1,069,695
Risk-Based Required Assets	1,261,015				984,372				912,321

 

– U.S. Product Revenue of $6.4 Million, Growing Demand Offset by Lower Net Price –

– Prescriptions Grew 46% Sequentially; More Than 35,000 Patients now on NEXLETOL^® (bempedoic acid) Tablets and NEXLIZET^® (bempedoic acid and ezetimibe) Tablets –

– Secured Major Medicare Part D Contract Covering Approximately 8.5 Million Lives –

– Strengthened Balance Sheet with $80 Million from Expanded Daiichi Sankyo Agreement and Exercise of Third Tranche of the Oberland Capital Funding Agreement –

ANN ARBOR, Mich., May 04, 2021 (GLOBE NEWSWIRE) — ESPERION (NASDAQ:ESPR), the lipid management company, today reported financial results for the first quarter ended March 31, 2021 and provided a business update.

“In the first quarter our team was focused on driving new prescription growth and executing on strategic initiatives that will enhance our ability to bring our medicines to as many patients as possible. This includes improving Medicare Part D coverage and positioning for NEXLETOL^® and NEXLIZET^®, as well as building our scientific, health economics and outcomes research platform, all while ensuring our landmark CLEAR cardiovascular outcomes trial remains on track for the second half of 2022,” said Tim M. Mayleben, president and chief executive officer of ESPERION. “The first quarter was a challenging period, but we are encouraged by both our refined product positioning and data indicating that patients are returning to their physician offices, which together are expected to translate into accelerated prescription growth in the second half of the year. Our momentum has continued in the early days of the second quarter as we expanded key agreements with Daiichi Sankyo and Oberland Capital, adding $80 million in cash to the balance sheet while deepening our relationships with these committed and collaborative partners.”

2021 Key Accomplishments and Recent Highlights

• Secured multi-year Medicare Part D agreement with one of the largest payers in the U.S. to place NEXLETOL^® and NEXLIZET^® on formulary, effective May 1, 2021
• Daiichi Sankyo off to a strong start in Germany with 14,000 patients now taking NILEMDO^® and NUSTENDI^® at the end of first quarter 2021
• Expanded commercialization agreement with partner Daiichi Sankyo to additional countries across Asia, Middle East and Latin America with a $30 million upfront and up to $175 million in future milestones
• Exercised the third and final tranche of the Oberland Capital RIPA Agreement, bolstering the balance sheet with $50 million
• Otsuka dosed first patient in Japanese Phase II clinical trial of bempedoic acid

First Quarter 2021 Financial Results

Total revenue for the first quarter ended March 31, 2021 was $8.0 million compared to $1.8 million for the first quarter of 2020. U.S. product revenue for the first quarter ended March 31, 2021 was $6.4 million, compared to $0.9 million for the comparable period in 2020. Royalty revenue for the first quarter ended March 31, 2021 was $0.6 million. The increase in total revenue was primarily due to NEXLETOL and NEXLIZET being available for sale during the entire first quarter of 2021. NEXLETOL and NEXLIZET became commercially available in the U.S. on March 30, 2020 and June 4, 2020, respectively.

Research and development expenses were $28.0 million for the first quarter of 2021, compared to $34.7 million for the comparable period in 2020. The decrease in expense during the first quarter was primarily attributable to a decline in manufacturing costs which were previously classified as research and development expense prior to FDA approval of NEXLETOL and NEXLIZET in the first quarter of 2020.

Selling, general and administrative expenses were $61.1 million for the first quarter of 2021, compared to $41.6 million for the comparable period in 2020. The increase in expense was primarily attributable to salaries and benefits from the build out of our customer-facing team and other costs to support the commercialization of NEXLETOL and NEXLIZET in the U.S, as well as a $13.3 million one-time charge associated with a legal settlement.

ESPERION had a net loss of $90.9 million for the first quarter of 2021, compared to a net loss of $78.2 million for the comparable period in 2020. ESPERION had a basic and diluted net loss per share of $3.50 for the first quarter of 2021, compared to $2.84 for the comparable period in 2020.

As of March 31, 2021, cash, cash equivalents and investment securities available-for-sale totaled $217.9 million compared with $305.0 million at December 31, 2020. This amount does not include the $30 million upfront payment resulting from the expanded Daiichi Sankyo collaboration partnership or the $50 million third and final tranche from Oberland Capital.

ESPERION ended the quarter with approximately 26.2 million shares of common stock outstanding, excluding the 2.0 million treasury shares to be purchased in the prepaid forward transaction as part of the convertible debt financing with another 4.7 million issuable upon exercise of stock options and vesting of restricted stock units.

2021 Financial Outlook

Esperion’s pro-forma cash balance as of March 31, 2021 was $297.9 million as a result of the $30 million upfront payment from Daiichi Sankyo and the $50 million payment from Oberland Capital to be received in May 2021.

Research and development expenses for the full year 2021 are expected to be $120 million to $130 million. Selling, general and administrative expenses for the full year 2021 are expected to be $200 million to $210 million.

ESPERION continues to expect full-year 2021 operating expenses to be approximately $320 million to $340 million, inclusive of $30 million of non-cash, stock-based compensation.

Conference Call and Webcast Information

ESPERION will host a conference call and webcast today, May 4, 2021 at 4:30 P.M. Eastern Time to provide a first quarter 2021 financial results and company update. The call can be accessed by dialing (877) 831-3840 (domestic) or (253) 237-1184 (international) five minutes prior to the start of the call and providing the access code 6373518.

A live audio webcast can be accessed on the investors and media section of the ESPERION website at investor.esperion.com. Access to the webcast replay will be available approximately two hours after completion of the call and will be archived on the ESPERION website for approximately 90 days.

CLEAR Cardiovascular Outcomes Trial

The effect of bempedoic acid on cardiovascular morbidity and mortality has not been determined. ESPERION initiated a global cardiovascular outcomes trial (CVOT) to assess the effects of bempedoic acid on the occurrence of major cardiovascular events in patients with, or at high risk for, cardiovascular disease (CVD) who are only able to tolerate less than the lowest approved daily starting dose of a statin and are considered “statin averse.” The CVOT — known as CLEAR Cardiovascular Outcomes Trial — is an event-driven, global, randomized, double-blind, placebo-controlled study that completed enrollment in August 2019 of over 14,000 patients with hypercholesterolemia and high CVD risk at over 1,200 sites in 32 countries.

ESPERION Therapeutics

ESPERION is The Lipid Management Company. Our goal is lipid management for everybody, that’s why we work hard to make our medicines easy to get, easy to take and easy to have. We discover, develop and commercialize innovative medicines and combinations to lower cholesterol, especially for patients whose needs aren’t being met by the status quo. Our entrepreneurial team of industry leaders is inclusive, passionate and resourceful. We are singularly focused on managing cholesterol so you can improve your health easily. For more information, please visit www.esperion.com and follow us on Twitter at www.twitter.com/EsperionInc.

ESPERION Therapeutics’ Commitment to Patients with Hyperlipidemia

High levels of LDL-C can lead to a build-up of fat and cholesterol in and on artery walls (known as atherosclerosis), potentially leading to cardiovascular events, including heart attack and stroke. In the U.S., 96 million people, or more than 37 percent of the adult population, have elevated LDL-C. There are approximately 18 million people in the U.S. living with elevated levels of LDL-C despite taking maximally tolerated lipid-modifying therapy — including individuals considered statin averse — leaving them at high risk for cardiovascular events¹. In the United States, more than 50 percent of atherosclerotic cardiovascular disease (ASCVD) patients and heterozygous familial hypercholesterolemia (HeFH) patients who are not able to reach their guideline recommended LDL-C levels with statins alone need less than a 40 percent reduction to reach their LDL-C threshold goal².

ESPERION’s mission as the Lipid Management Company is to deliver oral, once-daily medicines that complement existing oral drugs to provide the additional LDL-C lowering that these patients need.

Forward-Looking Statements

This press release contains forward-looking statements that are made pursuant to the safe harbor provisions of the federal securities laws, including statements regarding the global clinical development and commercialization plans for bempedoic acid tablet and the bempedoic acid / ezetimibe fixed dose combination tablet, including ESPERION’s timing, designs, plans for announcement of results regarding its CLEAR Outcomes study and other ongoing clinical studies for bempedoic acid tablet and the bempedoic acid / ezetimibe combination fixed dose tablet, timing for the review and approval of expanded indications for their effect on cardiovascular events, ESPERION’s expectations for the market for medicines to lower LDL-C, including the prospects for success of the commercial launch and market adoption of bempedoic acid tablet and the bempedoic acid / ezetimibe fixed dose combination tablet in the United States and European Union, the development of ESPERION’s in-licensed pre-clinical oral PCSK9 inhibitor program, and ESPERION’s financial outlook, including expectations for future revenues from its product sales, partnership collaborations and other sources. Any express or implied statements contained in this press release that are not statements of historical fact may be deemed to be forward-looking statements. Forward-looking statements involve risks and uncertainties that could cause ESPERION’s actual results to differ significantly from those projected, including, without limitation, delays or failures in ESPERION’s clinical development and the commercialization plans of both ESPERION and Daiichi Sankyo group, failure to obtain the approval of bempedoic acid or the bempedoic acid / ezetimibe combination tablet or expanded indications in countries outside of the U.S., or approval of expanded indications, that existing cash resources may be used more quickly than anticipated, that Otsuka and Daiichi Sankyo are able to successfully commercialize its products, the impact of COVID-19 on our business, clinical activities, supply chain, commercial development and launch plans, and the risks detailed in ESPERION’s filings with the Securities and Exchange Commission. Any forward-looking statements contained in this press release speak only as of the date hereof, and ESPERION disclaims any obligation or undertaking to update or revise any forward-looking statements contained in this press release, other than to the extent required by law.

References

(1) ESPERION market research on file: research project interviewing 350 physicians. ESPERION Therapeutics, Inc. Sept-Oct 2018.
(2) Data on file: analysis of NHANES database. ESPERION Therapeutics, Inc. 2018.

ESPERION Therapeutics, Inc.

Balance Sheet Data

(In thousands)

(Unaudited)

	March 31, 2021				December 31, 2020
Cash and cash equivalents	$	217,939			$	304,962
Working capital	174,682				251,827
Total assets	278,606				353,258
Revenue interest liability	180,956				176,604
Convertible notes, net of issuance costs	271,694				179,367
Common stock	26				26
Accumulated deficit	(928,204		)		(838,817		)
Total stockholders’ deficit	(269,394		)		(96,134		)

ESPERION Therapeutics, Inc.

Statement of Operations

(In thousands, except share and per share data)

(Unaudited)

​	Three Months Ended March 31,
​		2021					2020
Revenues:	​					​
Product sales, net	$	6,350				$	858
Collaboration revenue		1,628					982
Total Revenues		7,978					1,840
​
Operating expenses:
Cost of goods sold		1,784					31
Research and development		27,954					34,702
Selling, general and administrative		61,064					41,553
Total operating expenses		90,802					76,286
​
Loss from operations		(82,824		)			(74,446		)
​
Interest expense		(8,125		)			(4,171		)
Other income, net		14					368
Net loss	$	(90,935		)		$	(78,249		)
​
Net loss per common share – basic and diluted	$	(3.50		)		$	(2.84		)
​
Weighted-average shares outstanding – basic and diluted		25,991,817					27,519,229

Contact:
Kaitlyn Brosco
ESPERION
[email protected]

REDWOOD CITY, Calif., May 04, 2021 (GLOBE NEWSWIRE) — Pulmonx Corporation (Nasdaq: LUNG) (“Pulmonx”) a global leader in minimally invasive treatments for severe lung disease, today announced the appointment of Michael Ryan as Vice President, Corporate Strategy and Business Development, and the earlier appointments of David Lehman as General Counsel, and Mahtab Fatemi as Vice President, Regulatory Affairs and Quality Assurance.

“We could not be more excited to have these three deeply experienced professionals on the Pulmonx team. Each of these individuals is uniquely qualified and brings a wealth of insight and knowledge about the medical device business to their respective areas of responsibility,” said Glen French, President and CEO of Pulmonx. 

Mr. Ryan, who will lead all corporate strategy and business development initiatives for the company, joins Pulmonx from Boston Scientific Corporation (BSC) where he was Vice President, Business Development. At BSC, Mr. Ryan led a team directing all business development and investment efforts across five of BSC’s seven business units.  He has been deeply involved in BSC’s interests in the pulmonary space for more than a decade, including leading its prior investments in Pulmonx, and was an Observer on the Pulmonx Board of Directors for more than five years. Mr. Ryan holds a B.A. in Biological Sciences from Cornell University.

Mr. Lehman oversees all aspects of the company’s legal activities and joined Pulmonx after General Counsel roles at Intersect ENT and before that Thoratec Corporation. Mr. Lehman has been General Counsel and Secretary of public medical device companies for nearly 20 years; during which time he has provided legal counsel to management teams and boards of directors on a wide range of legal, strategic and compliance matters. Mr. Lehman holds a J.D. from Cornell Law School, and a B.A. in Political Science from University of California at San Diego, Muir College.

Ms. Fatemi leads all aspects of Regulatory Affairs and Quality Assurance (RA/QA) at Pulmonx. She is a Food and Drug Attorney with more than 20 years’ experience in the medical device and pharmaceutical industries. Ms. Fatemi joined Pulmonx from Nuvaira, which is developing a novel technology for the treatment of COPD, where she was VP, RA/QA for more than seven years. Before Nuvaira, she was an RA/QA consultant for more than six years during which she worked with Broncus Technologies on its pulmonary diagnostic and therapeutic devices. Ms. Fatemi holds a J.D. from Santa Clara University, a M.S. in Physiology from Georgetown University, and a B.S. in Biology from the University of California at Irvine.

About Pulmonx

Pulmonx Corporation (Nasdaq: LUNG) is a global leader in minimally invasive treatments for severe lung disease. Pulmonx’s Zephyr® Endobronchial Valve, Chartis® Pulmonary Assessment System and StratX® Lung Analysis Platform are designed to assess and treat patients with severe emphysema/COPD who despite medical management are still profoundly symptomatic. Pulmonx received FDA pre-market approval to commercialize the Zephyr Valve following its designation as a “breakthrough device.” The Zephyr Valve is commercially available in more than 25 countries, with over 80,000 valves used to treat more than 20,000 patients. For more information on the Zephyr Valves, please visit www.MyLungsMyLife.com. For more information on the company, please visit www.Pulmonx.com.

Media Contact:

Meghan Oreste
Director of Marketing Communications
Pulmonx
[email protected]
617-823-1441

Investor Relations Contact

Brian Johnston
Gilmartin Group
[email protected]

• Achieves Record First Quarter Sales and Earnings Results
• Same Store Sales Increased 31.8% in FY 2021 First Quarter versus Guidance of 20%
• EPS of $0.96 for FY 2021 First Quarter versus Guidance Range of $0.47 to $0.53
• Ends FY 2021 First Quarter with $100.1 Million in Cash and Cash Equivalents, No Debt
• Increases Quarterly Cash Dividend by 20% to $0.18 per Share
• Declares Special Cash Dividend of $1.00 per Share

EL SEGUNDO, Calif., May 04, 2021 (GLOBE NEWSWIRE) — Big 5 Sporting Goods Corporation (Nasdaq: BGFV) (the “Company,” “we,” “our,” “us,” “Big 5”), a leading sporting goods retailer, today reported financial results for the fiscal 2021 first quarter ended April 4, 2021.

Steven G. Miller, the Company’s Chairman, President and Chief Executive Officer, said, “We are pleased to report record first quarter results driven by a combination of top line sales strength, merchandise margin expansion and an improved cost structure. Our team continues to do a tremendous job satisfying the incredible consumer demand we are seeing across our diverse product mix.”

Mr. Miller continued, “Same store sales were up 31.8% for the fiscal 2021 first quarter reflecting broad-based strength across apparel, footwear and hardgoods, including very robust demand for winter-related products. These results were especially remarkable given the headwinds impacting sales of team sports products due to the widespread suspension of league play over most of the quarter. Our sales accelerated beyond expectations in March, benefitting from the resumption of team sports activities, along with school re-openings and stimulus checks. Our strong sales momentum has continued into the second quarter with sales performing at historically high levels for the quarter to date. We are excited by the strength in our business, which has translated to our balance sheet, as we continue to operate with zero debt while growing our cash position.   In light of this strength and to continue to return value to shareholders, our Board of Directors has declared a 20% increase in our regular cash dividend to an annual rate of $0.72 per share and also has declared a special cash dividend of $1.00 per share.”

Net sales for the fiscal 2021 first quarter were $272.8 million compared to net sales of $217.7 million for the first quarter of fiscal 2020, which included significant store closures due to COVID-19 over the last ten days of the period. Same store sales increased 31.8% for the first quarter of fiscal 2021. The increase in net sales was partially offset by an approximately $10.0 million unfavorable impact from the calendar shift related to the Company’s 53-week fiscal 2020 that caused fiscal 2021 to begin one week later than fiscal 2020, as well as an unfavorable impact from the calendar shift related to the Easter holiday, during which the Company’s stores are closed, from the second quarter in fiscal 2020 to the first quarter in fiscal 2021. Same store sales comparisons are made on a comparable-week basis and the calendar shifts did not have a material impact on same store sales comparisons.

Gross profit for the fiscal 2021 first quarter increased to $97.9 million from $64.6 million in the first quarter of the prior year. The Company’s gross profit margin was 35.9% in the fiscal 2021 first quarter versus 29.6% in the first quarter of the prior year. The increase in gross profit margin largely reflects a 350-basis point increase in merchandise margins, lower store occupancy and warehousing costs as a percentage of net sales and, to a lesser degree, the favorable impact from an insurance settlement, partially offset by lower distribution costs capitalized into inventory for the quarter.

Selling and administrative expense as a percentage of net sales was 25.7% in the fiscal 2021 first quarter versus 32.8% in the fiscal 2020 first quarter. Overall selling and administrative expense for the quarter decreased $1.3 million from the prior year primarily due to lower print advertising expense and the elimination of a liability for an employment agreement, partially offset by higher performance-based incentive compensation accruals.

Net income for the first quarter of fiscal 2021 was $21.5 million, or $0.96 per diluted share, which includes a benefit of $0.06 per diluted share related to the elimination of the employment agreement liability and the insurance settlement.   Net loss for the first quarter of fiscal 2020 was $4.6 million, or $0.22 per basic share.

Adjusted EBITDA for the first quarter of fiscal 2021 was $30.3 million, compared to a loss of $2.2 million in the prior year period. EBITDA and Adjusted EBITDA are non-GAAP financial measures. See “Non-GAAP Financial Measures” below for more details and a reconciliation of non-GAAP Adjusted EBITDA and EBITDA to the most comparable GAAP measure, net income.

Balance Sheet

The Company ended the fiscal 2021 first quarter with no borrowings under its credit facility and with cash and cash equivalents of $100.1 million. This compares to zero borrowings and $64.7 million of cash and cash equivalents as of the end of the 2020 fiscal year and to $124.3 million of borrowings and $44.2 million of cash as of the end of the fiscal 2020 first quarter, reflecting a $180.2 million improvement in net cash (cash less revolver borrowings) on a year-over-year basis and a $35.4 million improvement in net cash compared to the end of fiscal 2020. Total merchandise inventories decreased by approximately 20.8% as of the end of the fiscal 2021 first quarter versus the first quarter of the prior year.

Quarterly Cash Dividend and Special Cash Dividend

In light of the continued strength of the Company’s business, cash flow generation and improved balance sheet, the Company’s Board of Directors has declared a 20% increase in its quarterly cash dividend from $0.15 per share of outstanding common stock to $0.18 per share of outstanding common stock, which will be paid on June 15, 2021 to stockholders of record as of June 1, 2021. Additionally, to further return value to shareholders, the Company’s Board of Directors has declared a special cash dividend of $1.00 per share of outstanding common stock, which will be paid on June 1, 2021 to stockholders of record as of May 17, 2021.

Second Quarter Guidance
For the fiscal 2021 second quarter, the Company expects same store sales to increase in the range of 22% to 27% and expects to realize earnings per diluted share in the range of $1.05 to $1.25. Fiscal 2021 second quarter guidance reflects the combined positive impact of calendar shifts of the Easter holiday, during which the Company’s stores are closed, from the second quarter of fiscal 2020 into the first quarter of fiscal 2021, and the Fourth of July holiday from the third quarter of fiscal 2020 into the second quarter of fiscal 2021. The Company’s second quarter guidance compares to a same store sales decrease of 4.2% and earnings per diluted share of $0.52 in the second quarter of fiscal 2020, which included a net benefit of approximately $0.13 per diluted share related to rent abatement savings and a recovery in eminent domain litigation, partially offset by expense associated with special employee recognition bonus awards.  

Store Openings

The Company currently has 430 stores in operation. During fiscal 2021, the Company expects to open approximately five stores and close approximately two stores.

Conference Call Information

The Company will host a conference call and audio webcast today, May 4, 2021, at 2:00 p.m. Pacific (5:00 p.m. Eastern), to discuss financial results for the first quarter of fiscal 2021. To access the conference call, participants in North America may dial (877) 407-9039 and international participants may dial (201) 689-8470. Participants are encouraged to dial in to the conference call ten minutes prior to the scheduled start time. The call will also be broadcast live over the Internet and accessible through the Investor Relations section of the Company’s website at www.big5sportinggoods.com. Visitors to the website should select the “Investor Relations” link to access the webcast. The webcast will be archived and accessible on the same website for 30 days following the call. A telephonic replay will be available through May 11, 2021 by calling (844) 512-2921 to access the playback; the passcode is 13719234.

About Big 5 Sporting Goods Corporation 
Big 5 is a leading sporting goods retailer in the western United States, operating 430 stores under the “Big 5 Sporting Goods” name as of the fiscal quarter ended April 4, 2021. Big 5 provides a full-line product offering in a traditional sporting goods store format that averages 11,000 square feet. Big 5’s product mix includes athletic shoes, apparel and accessories, as well as a broad selection of outdoor and athletic equipment for team sports, fitness, camping, hunting, fishing, home recreation, tennis, golf, and winter and summer recreation.

Except for historical information contained herein, the statements in this release are forward-looking and made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Forward-looking statements involve known and unknown risks and uncertainties and other factors that may cause Big 5’s actual results in current or future periods to differ materially from forecasted results. These risks and uncertainties include, among other things, the economic impacts of COVID-19 on Big 5’s business operations, including as a result of regulations that may be issued in response to COVID-19, changes in the consumer spending environment, fluctuations in consumer holiday spending patterns, increased competition from e-commerce retailers, breach of data security or other unauthorized disclosure of sensitive personal or confidential information, the competitive environment in the sporting goods industry in general and in Big 5’s specific market areas, inflation, product availability and growth opportunities, changes in the current market for (or regulation of) firearm-related products, a reduction or loss of product from a key supplier, disruption in product flow, seasonal fluctuations, weather conditions, changes in cost of goods, operating expense fluctuations, increases in labor and benefit-related expense, changes in laws or regulations, including those related to tariffs and duties, public health issues (including those caused by COVID-19), impacts from civil unrest or widespread vandalism, lower than expected profitability of Big 5’s e-commerce platform or cannibalization of sales from Big 5’s existing store base which could occur as a result of operating the e-commerce platform, litigation risks, stockholder campaigns and proxy contests, risks related to Big 5’s historically leveraged financial condition, changes in interest rates, credit availability, higher expense associated with sources of credit resulting from uncertainty in financial markets and economic conditions in general. Those and other risks and uncertainties are more fully described in Big 5’s filings with the Securities and Exchange Commission, including its Annual Reports on Form 10-K and Quarterly Reports on Form 10-Q. Big 5 conducts its business in a highly competitive and rapidly changing environment. Accordingly, new risk factors may arise. It is not possible for management to predict all such risk factors, nor to assess the impact of all such risk factors on Big 5’s business or the extent to which any individual risk factor, or combination of factors, may cause results to differ materially from those contained in any forward-looking statement. Big 5 undertakes no obligation to revise or update any forward-looking statement that may be made from time to time by it or on its behalf.

Non-GAAP Financial Measures 
In addition to reporting our financial results in accordance with generally accepted accounting principles (“GAAP”), we are providing non-GAAP adjusted earnings before interest, income tax expense, depreciation and amortization (“EBITDA”) and other adjustments (“Adjusted EBITDA”). EBITDA and Adjusted EBITDA are not prepared in accordance with GAAP and exclude certain items presented below. We use EBITDA and Adjusted EBITDA internally for forecasting purposes and as factors to evaluate our operating performance. We believe that Adjusted EBITDA provides useful information to both management and investors by excluding certain expenses, gains and losses that may not be indicative of core operating results and business outlook. While we believe that EBITDA and Adjusted EBITDA can be useful to investors in evaluating our period-to-period operating results, this information should be considered supplemental and is not a substitute for financial information prepared in accordance with GAAP. In addition, our definition or calculation of these non-GAAP measures may differ from similarly titled measures used by other companies, limiting the usefulness of this financial measure for comparison to other companies. We believe the GAAP measure that is most comparable to non-GAAP EBITDA and Adjusted EBITDA is net income, and a reconciliation of our non-GAAP EBITDA and Adjusted EBITDA to GAAP net income is provided below.

		13 Weeks Ended
		April 4, 2021					March 29, 2020
		(In thousands)
GAAP net income (loss) (as reported)		$	21,546				$	(4,611	)
+ Interest (as reported)			342					735
+ Income tax expense (benefit) (as reported)			5,861					(2,939	)
+ Depreciation and amortization (as reported)			4,259					4,606
EBITDA		$	32,008				$	(2,209	)
– Elimination of liability for an employment agreement			(995	)				—
– Gain on recovery of insurance settlement related to civil unrest			(709	)				—
Adjusted EBITDA		$	30,304				$	(2,209	)

FINANCIAL TABLES FOLLOW

BIG 5 SPORTING GOODS CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
(In thousands, except share amounts)
		April 4, 2021			January 3, 2021
ASSETS
Current assets:
Cash and cash equivalents	$	100,097		$	64,654
Accounts receivable, net of allowances of $80 and $58, respectively		11,399			19,879
Merchandise inventories, net		247,287			251,180
Prepaid expenses		10,513			11,684
Total current assets		369,296			347,397
Operating lease right-of-use assets, net		271,964			278,607
Property and equipment, net		58,710			57,245
Deferred income taxes		12,532			13,831
Other assets, net of accumulated amortization of $594 and $2,407, respectively		3,610			2,914
Total assets	$	716,112		$	699,994
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable	$	88,613		$	80,882
Accrued expenses		78,351			82,877
Current portion of operating lease liabilities		73,196			73,737
Current portion of finance lease liabilities		2,664			2,089
Total current liabilities		242,824			239,585
Operating lease liabilities, less current portion		210,891			217,788
Finance lease liabilities, less current portion		4,332			2,504
Other long-term liabilities		6,865			7,479
Total liabilities		464,912			467,356
Commitments and contingencies
Stockholders’ equity:
Common stock, $0.01 par value, authorized 50,000,000 shares; issued 25,938,473 and
25,580,541 shares, respectively; outstanding 22,288,260 and 21,930,328 shares, respectively		259			255
Additional paid-in capital		122,188			121,837
Retained earnings		171,280			153,073
Less: Treasury stock, at cost; 3,650,213 shares		(42,527	)		(42,527	)
Total stockholders’ equity		251,200			232,638
Total liabilities and stockholders’ equity	$	716,112		$	699,994

BIG 5 SPORTING GOODS CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
(In thousands, except per share data)
		13 Weeks Ended
		April 4, 2021		March 29, 2020
Net sales	$	272,806	$	217,736
Cost of sales		174,913		153,181
Gross profit		97,893		64,555
Selling and administrative expense		70,144		71,370
Operating income (loss)		27,749		(6,815	)
Interest expense		342		735
Income (loss) before taxes		27,407		(7,550	)
Income tax expense (benefit)		5,861		(2,939	)
Net income (loss)	$	21,546	$	(4,611	)
Earnings (loss) per share:
Basic	$	1.01	$	(0.22	)
Diluted	$	0.96	$	(0.22	)
Weighted-average shares of common stock outstanding:
Basic		21,417		21,149
Diluted		22,371		21,149

Contact:

Big 5 Sporting Goods Corporation
Barry Emerson
Executive Vice President and Chief Financial Officer
(310) 536-0611

ICR, Inc.
John Mills
Managing Partner
(646) 277-1254