Market Newsdesk

Holly Energy Partners, L.P. Reports First Quarter Results

• Reported net income attributable to HEP of $64.4 million or $0.61 per unit
• Announced quarterly distribution of $0.35 per unit
• Reported EBITDA of $96.2 million and Adjusted EBITDA of $87.9 million

DALLAS–(BUSINESS WIRE)–
Holly Energy Partners, L.P. (“HEP” or the “Partnership”) (NYSE: HEP) today reported financial results for the first quarter of 2021. Net income attributable to HEP for the first quarter was $64.4 million ($0.61 per basic and diluted limited partner unit), compared to $24.9 million ($0.24 per basic and diluted limited partner unit) for the first quarter of 2020.

The first quarter results reflect special items that collectively increased net income attributable to HEP by a total of $13.6 million. These items included a gain on sales-type leases of $24.7 million and a goodwill impairment charge of $11.0 million related to our Cheyenne assets. In addition, net income attributable to HEP for the first quarter of 2020 included a loss on early extinguishment of debt of $25.9 million. Excluding these items, net income attributable to HEP for both the first quarters of 2021 and 2020 was $50.8 million ($0.48 per basic and diluted limited partner unit).

Distributable cash flow was $73.2 million for the quarter, an increase of $2.5 million, or 3.5% compared to the first quarter of 2020. HEP declared a quarterly cash distribution of $0.35 per unit on April 22, 2021.

Commenting on our 2021 first quarter results, Michael Jennings, Chief Executive Officer, stated, “HEP delivered solid results for the quarter, underpinned by our long-term minimum volume commitment contracts across our asset base. During the quarter, refined product volumes improved and we are optimistic for continued improvement of refined product demand in our markets as we head into the summer driving season. Looking forward, we believe we are well positioned to continue reducing leverage after capital investments and distributions.”

Impact of COVID-19 on Our Business

Our business depends in large part on the demand for the various petroleum products we transport, terminal and store in the markets we serve. The impact of the COVID-19 pandemic on the global macroeconomy has created diminished demand, as well as lack of forward visibility, for refined products and crude oil transportation, and for the terminalling and storage services that we provide. Over the course of the last three quarters, demand for transportation fuels showed incremental improvement over the second quarter of 2020. We expect our customers will continue to adjust refinery production levels commensurate with market demand and ultimately expect demand to return to pre-COVID-19 levels. For additional details of the impact of COVID-19 on our business, please see our Form 10-Q for the quarter ended March 31, 2021.

First Quarter 2021 Revenue Highlights

Revenues for the first quarter were $127.2 million, a decrease of $0.7 million compared to the first quarter of 2020. The decrease was mainly due to a 9% reduction in overall crude and product pipeline volumes. Revenues did not decrease in proportion to the decrease in volumes mainly due to contractual minimum volume guarantees as well as the recognition in revenue of $6.5 million of the $10 million termination fee related to the termination of HFC’s existing minimum volume commitment on our Cheyenne assets.

• Revenues from our refined product pipelines were $28.5 million, a decrease of $6.4 million compared to the first quarter of 2020. Shipments averaged 164.0 thousand barrels per day (“mbpd”) compared to 179.6 mbpd for the first quarter of 2020. The volume and revenue decreases were mainly due to lower volumes on pipelines servicing HFC’s Navajo refinery, Delek’s Big Spring refinery and our UNEV pipeline. Revenue also decreased due to a reclassification of certain pipeline income from revenue to interest income under sales-type lease accounting.

• Revenues from our intermediate pipelines were $7.5 million, consistent with the first quarter of 2020. Shipments averaged 115.2 mbpd for the first quarter of 2021 compared to 142.1 mbpd for the first quarter of 2020. The decrease in volumes was mainly due to lower throughputs on our intermediate pipelines servicing HFC’s Navajo refinery while revenue remained relatively constant mainly due to contractual minimum volume guarantees.

• Revenues from our crude pipelines were $30.5 million, an increase of $2.4 million compared to the first quarter of 2020, and shipments averaged 373.9 mbpd compared to 397.2 mbpd for the first quarter of 2020. The revenue increase was mainly attributable to higher volumes on our crude pipeline systems in Wyoming and Utah. Those volume increases were more than offset by decreased volumes on our crude pipeline systems in New Mexico and Texas. Revenues did not decrease in proportion to the decrease in volumes mainly due to contractual minimum volume guarantees.

• Revenues from terminal, tankage and loading rack fees were $38.2 million, an increase of $0.7 million compared to the first quarter of 2020. Refined products and crude oil terminalled in the facilities averaged 369.0 mbpd compared to 475.7 mbpd for the first quarter of 2020. The volume decrease was mainly the result of lower throughputs at HFC’s Tulsa refinery as well as the cessation of petroleum refinery operations at HFC’s Cheyenne refinery. Revenues did not decrease in proportion to the decrease in volumes mainly due to the recognition of $6.5 million of the $10 million termination fee related to the termination of HFC’s existing minimum volume commitment on our Cheyenne assets and contractual minimum volume guarantees partially offset by lower on-going revenues on our Cheyenne assets as a result of the conversion of the HFC Cheyenne refinery to renewable diesel production.

• Revenues from refinery processing units were $22.5 million, an increase of $2.6 million compared to the first quarter of 2020, and throughputs averaged 60.7 mbpd compared to 69.8 mbpd for the first quarter of 2020. The decrease in volumes was mainly due to reduced throughput for both our Woods Cross and El Dorado processing units largely as a result of extreme weather while revenue increased due to higher recovery of natural gas costs.

Operating Costs and Expenses Highlights

Operating costs and expenses were $80.4 million for the three months ended March 31, 2021, representing an increase of $18.8 million from the three months ended March 31, 2020. The increase was mainly due to the goodwill impairment charge related to our Cheyenne reporting unit and higher natural gas costs, partially offset by lower maintenance costs, materials and supplies, and property tax.

Interest expense was $13.2 million for the three months ended March 31, 2021, representing a decrease of $4.5 million over the same period of 2020. The decrease was mainly due to market interest rate decreases under our senior secured revolving credit facility and refinancing our $500 million aggregate principal amount of 6.0% senior notes due 2024 with $500 million aggregate principal amount of 5.0% senior notes due 2028.

We have scheduled a webcast conference call today at 4:00 PM Eastern Time to discuss financial results. This webcast may be accessed at:

https://event.on24.com/wcc/r/3079844/D06584BC4076CF9EE6D14C88ED60E588

An audio archive of this webcast will be available using the above noted link through May 18, 2021.

About Holly Energy Partners, L.P.

Holly Energy Partners, L.P., headquartered in Dallas, Texas, provides petroleum product and crude oil transportation, terminalling, storage and throughput services to the petroleum industry, including HollyFrontier Corporation (“HollyFrontier” or “HFC”) subsidiaries. The Partnership, through its subsidiaries and joint ventures, owns and/or operates petroleum product and crude pipelines, tankage and terminals in Texas, New Mexico, Washington, Idaho, Oklahoma, Utah, Nevada, Wyoming and Kansas, as well as refinery processing units in Utah and Kansas.

HollyFrontier Corporation, headquartered in Dallas, Texas, is an independent petroleum refiner and marketer that produces high value light products such as gasoline, diesel fuel, jet fuel and other specialty products. HollyFrontier owns and operates refineries located in Kansas, Oklahoma, New Mexico and Utah and markets its refined products principally in the Southwest U.S., the Rocky Mountains extending into the Pacific Northwest and in other neighboring Plains states. In addition, HollyFrontier produces base oils and other specialized lubricants in the U.S., Canada and the Netherlands, and exports products to more than 80 countries. HollyFrontier also owns a 57% limited partner interest and a non-economic general partner interest in Holly Energy Partners, L.P.

The statements in this press release relating to matters that are not historical facts are “forward-looking statements” within the meaning of the federal securities laws. Forward-looking statements use words such as “anticipate,” “project,” “expect,” “plan,” “goal,” “forecast,” “intend,” “should,” “would,” “could,” “believe,” “may,” and similar expressions and statements regarding our plans and objectives for future operations are intended to identify forward-looking statements. These statements are based on our beliefs and assumptions and those of our general partner using currently available information and expectations as of the date hereof, are not guarantees of future performance and involve certain risks and uncertainties. Our forward-looking statements are subject to a variety of risks, uncertainties and assumptions. Although we and our general partner believe that such expectations reflected in such forward-looking statements are reasonable, neither we nor our general partner can give any assurances that our expectations will prove to be correct. Therefore, actual outcomes and results could materially differ from what is expressed, implied or forecast in these statements. Any differences could be caused by a number of factors including, but not limited to:

• the extraordinary market environment and effects of the COVID-19 pandemic, including a significant decline in demand for refined petroleum products in markets we serve;
• risks and uncertainties with respect to the actual quantities of petroleum products and crude oil shipped on our pipelines and/or terminalled, stored or throughput in our terminals and refinery processing units;
• the economic viability of HollyFrontier, our other customers and our joint ventures’ other customers, including any refusal or inability of our or our joint ventures’ customers or counterparties to perform their obligations under their contracts;
• the demand for refined petroleum products in the markets we serve;
• our ability to purchase and integrate future acquired operations;
• our ability to complete previously announced or contemplated acquisitions;
• the availability and cost of additional debt and equity financing;
• the possibility of temporary or permanent reductions in production or shutdowns at refineries utilizing our pipelines, terminal facilities and refinery processing units, due to reasons such as infection in the workforce, in response to reductions in demand or lower gross margins due to the economic impact of the COVID-19 pandemic, and any potential asset impairments resulting from such actions;
• the effects of current and future government regulations and policies, including the effects of current and future restrictions on various commercial and economic activities in response to the COVID-19 pandemic;
• delay by government authorities in issuing permits necessary for our business or our capital projects;
• our and our joint venture partners’ ability to complete and maintain operational efficiency in carrying out routine operations and capital construction projects;
• the possibility of terrorist or cyberattacks and the consequences of any such attacks;
• general economic conditions, including uncertainty regarding the timing, pace and extent of an economic recovery in the United States;
• the impact of recent or proposed changes in the tax laws and regulations that affect master limited partnerships; and
• other financial, operational and legal risks and uncertainties detailed from time to time in our Securities and Exchange Commission filings.

The forward-looking statements speak only as of the date made and, other than as required by law, we undertake no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.

RESULTS OF OPERATIONS (Unaudited)

Income, Distributable Cash Flow and Volumes

The following tables present income, distributable cash flow and volume information for the three months ended March 31, 2021 and 2020.

	Three Months Ended March 31,										Change from
	2021					2020					2020
	(In thousands, except per unit data)
Revenues
Pipelines:
Affiliates – refined product pipelines	$	18,606				$	20,083				$	(1,477	)
Affiliates – intermediate pipelines	7,506					7,474					32
Affiliates – crude pipelines	19,454					20,393					(939		)
	45,566					47,950					(2,384		)
Third parties – refined product pipelines	9,863					14,798					(4,935		)
Third parties – crude pipelines	11,076					7,724					3,352
	66,505					70,472					(3,967		)
Terminals, tanks and loading racks:
Affiliates	33,864					33,594					270
Third parties	4,318					3,904					414
	38,182					37,498					684
Refinery processing units – Affiliates	22,496					19,884					2,612
Total revenues	127,183					127,854					(671		)
Operating costs and expenses
Operations	41,365					34,981					6,384
Depreciation and amortization	25,065					23,978					1,087
General and administrative	2,968					2,702					266
Goodwill impairment	11,034					—					11,034
	80,432					61,661					18,771
Operating income	46,751					66,193					(19,442		)
Equity in earnings of equity method investments	1,763					1,714					49
Interest expense, including amortization	(13,240		)			(17,767		)			4,527
Interest income	6,548					2,218					4,330
Loss on early extinguishment of debt	—					(25,915		)			25,915
Gain on sales-type leases	24,650					—					24,650
Other income	502					506					(4		)
	20,223					(39,244		)			59,467
Income before income taxes	66,974					26,949					40,025
State income tax benefit (expense)	(37		)			(37		)			—
Net income	66,937					26,912					40,025
Allocation of net income attributable to noncontrolling interests	(2,540		)			(2,051		)			(489		)
Net income attributable to Holly Energy Partners	$	64,397				$	24,861				$	39,536
Limited partners’ earnings per unit – basic and diluted	$	0.61				$	0.24				$	0.37
Weighted average limited partners’ units outstanding	105,440					105,440					—
EBITDA(1)	$	96,191				$	64,425				$	31,766
Adjusted EBITDA(1)	$	87,936				$	91,109				$	(3,173	)
Distributable cash flow(2)	$	73,218				$	70,708				$	2,510

Volumes (bpd)
Pipelines:
Affiliates – refined product pipelines		119,590				129,966				(10,376)
Affiliates – intermediate pipelines		115,225				142,112				(26,887)
Affiliates – crude pipelines		250,647				305,031				(54,384)
		485,462				577,109				(91,647)
Third parties – refined product pipelines		44,428				49,637				(5,209)
Third parties – crude pipelines		123,232				92,203				31,029
		653,122				718,949				(65,827)
Terminals and loading racks:
Affiliates		323,286				429,730				(106,444)
Third parties		45,753				45,945				(192)
		369,039				475,675				(106,636)
Refinery processing units – Affiliates		60,699				69,795				(9,096)
Total for pipelines and terminal assets (bpd)		1,082,860				1,264,419				(181,559)

 

(1)

Earnings before interest, taxes, depreciation and amortization (“EBITDA”) is calculated as net income attributable to Holly Energy Partners plus (i) interest expense, net of interest income, (ii) state income tax and (iii) depreciation and amortization. Adjusted EBITDA is calculated as EBITDA plus (i) loss on early extinguishment of debt, (ii) goodwill impairment and (iii) pipeline tariffs not included in revenues due to impacts from lease accounting for certain pipeline tariffs minus (iv) gain on sales-type leases, and (v) pipeline lease payments not included in operating costs and expenses. Portions of our minimum guaranteed pipeline tariffs for assets subject to sales-type lease accounting are recorded as interest income with the remaining amounts recorded as a reduction in net investment in leases. These pipeline tariffs were previously recorded as revenues prior to the renewal of the throughput agreement, which triggered sales-type lease accounting. Similarly, certain pipeline lease payments were previously recorded as operating costs and expenses, but the underlying lease was reclassified from an operating lease to a financing lease, and these payments are now recorded as interest expense and reductions in the lease liability. EBITDA and Adjusted EBITDA are not calculations based upon generally accepted accounting principles (“GAAP”). However, the amounts included in the EBITDA and Adjusted EBITDA calculations are derived from amounts included in our consolidated financial statements. EBITDA and Adjusted EBITDA should not be considered as alternatives to net income attributable to Holly Energy Partners or operating income, as indications of our operating performance or as alternatives to operating cash flow as a measure of liquidity. EBITDA and Adjusted EBITDA are not necessarily comparable to similarly titled measures of other companies. EBITDA and Adjusted EBITDA are presented here because they are widely used financial indicators used by investors and analysts to measure performance. EBITDA and Adjusted EBITDA are also used by our management for internal analysis and as a basis for compliance with financial covenants.

 Set forth below is our calculation of EBITDA and Adjusted EBITDA.

		Three Months Ended March 31,
		2021					2020
		(In thousands)
Net income attributable to Holly Energy Partners		$	64,397				$	24,861
Add (subtract):
Interest expense		13,240					17,767
Interest Income		(6,548		)			(2,218		)
State income tax (benefit) expense		37					37
Depreciation and amortization		25,065					23,978
EBITDA		96,191					64,425
Loss on early extinguishment of debt		—					25,915
Gain on sales-type leases		(24,650		)			—
Goodwill impairment		11,034					—
Pipeline tariffs not included in revenues		6,967					2,375
Lease payments not included in operating costs		(1,606		)			(1,606		)
Adjusted EBITDA		$	87,936				$	91,109

(2)

Distributable cash flow is not a calculation based upon GAAP. However, the amounts included in the calculation are derived from amounts presented in our consolidated financial statements, with the general exception of maintenance capital expenditures. Distributable cash flow should not be considered in isolation or as an alternative to net income attributable to Holly Energy Partners or operating income, as an indication of our operating performance, or as an alternative to operating cash flow as a measure of liquidity. Distributable cash flow is not necessarily comparable to similarly titled measures of other companies. Distributable cash flow is presented here because it is a widely accepted financial indicator used by investors to compare partnership performance.  It is also used by management for internal analysis and our performance units. We believe that this measure provides investors an enhanced perspective of the operating performance of our assets and the cash our business is generating.

Set forth below is our calculation of distributable cash flow.

		Three Months Ended March 31,
		2021					2020
		(In thousands)
Net income attributable to Holly Energy Partners		$	64,397				$	24,861
Add (subtract):
Depreciation and amortization		25,065					23,978
Amortization of discount and deferred debt charges		844					799
Loss on early extinguishment of debt		—					25,915
Customer billings greater than revenue recognized		3,394					264
Maintenance capital expenditures (3)		(1,372		)			(2,487		)
Increase (decrease) in environmental liability		(156		)			1
Decrease in reimbursable deferred revenue		(4,014		)			(2,800		)
Gain on sales-type leases		(24,650		)			—
Goodwill impairment		11,034					—
Other		(1,324		)			177
Distributable cash flow		$	73,218				$	70,708

(2)

Maintenance capital expenditures are capital expenditures made to replace partially or fully depreciated assets in order to maintain the existing operating capacity of our assets and to extend their useful lives. Maintenance capital expenditures include expenditures required to maintain equipment reliability, tankage and pipeline integrity, safety and to address environmental regulations.

Set forth below is certain balance sheet data.

		March 31,				December 31,
		2021				2020
		(In thousands)
Balance Sheet Data
Cash and cash equivalents		$	19,753			$	21,990
Working capital		$	20,275			$	14,247
Total assets		$	2,170,526			$	2,167,565
Long-term debt		$	1,388,335			$	1,405,603
Partners’ equity		$	405,976			$	379,292

 

View source version on businesswire.com: https://www.businesswire.com/news/home/20210504005495/en/

John Harrison, Senior Vice President and

Chief Financial Officer and Treasurer

Craig Biery, Vice President, Investor Relations

Holly Energy Partners, L.P.

214-954-6511

KEYWORDS: United States North America Texas

INDUSTRY KEYWORDS: Oil/Gas Energy

MEDIA:

Logo

New AbCellera-Discovered Antibody that Neutralizes Viral Variants of COVID-19, LY-CoV1404, Enters Clinical Trials

–        New preclinical data show that LY-CoV1404 binds and neutralizes all currently known circulating SARS-CoV-2 variants of concern

–        LY-CoV1404 binds to a rarely mutated region of the SARS-CoV-2 spike protein, suggesting effectiveness against emerging variants

–        LY-CoV1404 neutralizes authentic SARS-CoV-2 with high potency in vitro

–        LY-CoV1404 enters clinical trials as part of Lilly’s BLAZE-4 study in patients with mild-to-moderate COVID-19 illness

VANCOUVER, British Columbia–(BUSINESS WIRE)–AbCellera (Nasdaq: ABCL) today announced that a second antibody from its collaboration with Eli Lilly and Company (Lilly), LY-CoV1404, has entered clinical trials in patients with mild-to-moderate COVID-19. Lilly has expanded its ongoing BLAZE-4 trials to evaluate LY-CoV1404 alone and together with other monoclonal antibodies.

This press release features multimedia. View the full release here: https://www.businesswire.com/news/home/20210504005494/en/

In support of this clinical study, AbCellera released preclinical data showing LY-CoV1404 binds to a rarely mutated region of the SARS-CoV-2 spike protein and neutralizes all currently known variants of concern, including those first identified in the UK (B.1.1.7), South Africa (B.1.351), Brazil (P.1), California (B.1.426 and B.1.429), and New York (B.1.526). LY-CoV1404 is highly potent, which could have implications for reducing the amount of antibody necessary for clinical dosing, and potentially enabling a subcutaneous route of administration for either treatment or prophylaxis of COVID-19.

“When we first mobilized against COVID-19 in March of last year, we made a decision to develop a single antibody, emphasizing speed and scalability so that we could help as many patients as possible, as quickly as possible. That antibody, bamlanivimab (LY-CoV555), was the first to receive FDA Emergency Use Authorization and has treated more patients than any other neutralizing antibody – preventing more than 22,000 hospitalizations and 11,000 deaths in the U.S. alone,” said Carl Hansen, Ph.D., CEO of AbCellera. “Knowing that additional neutralizing antibodies would be needed to combat emerging variants, we continued to screen patient samples, and identified LY-CoV1404. Our analysis of LY-CoV1404 shows that it is exceptionally potent and neutralizes currently known variants of concern. We are encouraged by the potential of LY-CoV1404 to provide a long-term complement to vaccines in the likely event that COVID-19 becomes endemic. Our partner Lilly, who has been a leader in rapidly developing, testing, and globally supplying COVID-19 antibody treatments, has advanced LY-CoV1404 into the clinic as part of its ongoing BLAZE-4 trial.”

LY-CoV1404 is developed from a fully human monoclonal antibody identified from a blood sample obtained approximately 60 days after symptom onset from a convalescent COVID-19 patient. Preclinical data show LY-CoV1404 potently neutralizes SARS-CoV-2 and all current variants identified and reported to be of concern in this pandemic. LY-CoV1404 blocks viral binding to ACE2 by targeting a highly conserved epitope on the SARS-CoV-2 spike glycoprotein receptor binding domain (RBD), providing a strong, well-documented mechanism for the potent neutralizing activity. Furthermore, LY-CoV1404 is substantially more potent in viral neutralization assays compared to other broadly neutralizing antibodies.

“The ability of SARS-CoV-2 variants to negatively alter the trajectory of the pandemic emphasizes the essential need for antibody therapies that can be developed in real time to combat the virus as it evolves,” said Bo Barnhart, Ph.D., Scientific Director at AbCellera. “LY-CoV1404’s powerful neutralization of SARS-CoV-2 allows for exploration of lower clinical doses, which may support subcutaneous administration and availability of more doses to treat patients around the world.”

LY-CoV1404 uniquely binds a conserved region of the SARS-CoV-2 RBD that is distinct from other neutralizing antibodies. While the LY-CoV1404 binding epitope includes amino acid residues N501 and N439, LY-CoV1404 neutralizes B.1.1.7 and B.1.351, which both carry the N501Y mutation, as potently as wild type virus in pseudovirus assays and retains full functional neutralization against pseudovirus with the N439K mutant. An in-depth assessment of mutations that could inhibit neutralization of LY-CoV1404 identified two specific amino acid positions that are very rarely mutated in the general population (0.027%), as reported in the GISAID database as of April 2021. The potent activity of LY-CoV1404 against the currently known variants of concern and against pseudoviruses carrying various single amino acid mutations suggests that LY-CoV1404 binds to an epitope that is highly conserved across all SARS-CoV-2 isolates that have been collected worldwide.

“Since the identification of bamlanivimab in our first response, we have continued our efforts to build a panel of well-characterized antibodies that have the potential to be deployed rapidly to address emerging variants,” said Ester Falconer, Ph.D., Chief Technology Officer at AbCellera. “This strategy and the ability of our tech stack to deeply search and efficiently analyze human immune responses to COVID-19 enabled the discovery of LY-CoV1404. The high neutralization potency of LY-CoV1404 to known SARS-CoV-2 variants and a variety of single amino acid mutations that have been shown to diminish the activity of several other neutralizing antibodies, supports the therapeutic potential of LY-CoV1404 to address current and emerging variants and reduce COVID-19-related illness and death.”

The preclinical data for LY-CoV1404 can be found at https://doi.org/10.1101/2021.04.30.442182.

About AbCellera’s Response to COVID-19

AbCellera initially mobilized its pandemic response platform against COVID-19 in March of 2020, resulting in the discovery of bamlanivimab, the first monoclonal antibody therapy for COVID-19 to reach human testing and to be authorized for emergency use by the U.S. FDA. Bamlanivimab alone and together with other antibodies has treated hundreds of thousands of patients, preventing COVID-19-related hospitalizations and death.  Bamlanivimab alone and together with other antibodies has been authorized under emergency/special use pathways by more than 15 countries worldwide. In the U.S., bamlanivimab is currently only authorized for emergency use with etesevimab.

AbCellera’s ongoing efforts to respond to the COVID-19 pandemic have identified thousands of unique anti-SARS-CoV-2 human antibodies. These include bamlanivimab, LY-CoV1404, and other antibodies that are in various stages of testing by AbCellera and its partners.

AbCellera’s pandemic response capabilities were developed over the past three years as part of the Defense Advanced Research Projects Agency (DARPA) Pandemic Prevention Platform (P3) program. The goal of the P3 program is to establish a robust technology platform for pandemic response capable of developing field-ready medical countermeasures within 60 days of isolation of an unknown viral pathogen.

About AbCellera Biologics Inc.

AbCellera is a technology company that searches, decodes, and analyzes natural immune systems to find antibodies that its partners can develop into drugs to prevent and treat disease. AbCellera partners with drug developers of all sizes, from large pharmaceutical to small biotechnology companies, empowering them to move quickly, reduce cost, and tackle the toughest problems in drug development. For more information, visit www.abcellera.com.

AbCellera Forward-looking Statements

This press release contains forward-looking statements, including statements made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. The forward-looking statements are based on management’s beliefs and assumptions and on information currently available to management. All statements contained in this release other than statements of historical fact are forward-looking statements, including statements regarding our ability to develop, commercialize and achieve market acceptance of our current and planned products and services, our research and development efforts, and other matters regarding our business strategies, use of capital, results of operations and financial position, and plans and objectives for future operations.

In some cases, you can identify forward-looking statements by the words “may,” “will,” “could,” “would,” “should,” “expect,” “intend,” “plan,” “anticipate,” “believe,” “estimate,” “predict,” “project,” “potential,” “continue,” “ongoing” or the negative of these terms or other comparable terminology, although not all forward-looking statements contain these words. These statements involve risks, uncertainties and other factors that may cause actual results, levels of activity, performance, or achievements to be materially different from the information expressed or implied by these forward-looking statements. These risks, uncertainties and other factors are described under “Risk Factors,” “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and elsewhere in the documents we file with the Securities and Exchange Commission from time to time. We caution you that forward-looking statements are based on a combination of facts and factors currently known by us and our projections of the future, about which we cannot be certain. As a result, the forward-looking statements may not prove to be accurate. The forward-looking statements in this press release represent our views as of the date hereof. We undertake no obligation to update any forward-looking statements for any reason, except as required by law.

Source: AbCellera Biologics Inc.

View source version on businesswire.com: https://www.businesswire.com/news/home/20210504005494/en/

Media: Jessica Yingling, Ph.D.; [email protected], +1(236)521-6774

Business Development: Kevin Heyries, Ph.D.; [email protected], +1(604)559-9005

Investor Relations: Melanie Solomon; [email protected], +1(778)729-9116

KEYWORDS: North America Canada

INDUSTRY KEYWORDS: Biotechnology Infectious Diseases Health Pharmaceutical Clinical Trials

MEDIA:

Logo

Photo

Top: Side view of a model of LY-COV1404 Fabs (target-binding fragments of the antibody, green) bound to SARS-CoV-2 spike protein (grey) mapped with key mutations from all six variants of concern (red). Bottom: Top views of a model of LY-CoV1404 Fabs (target-binding fragments of the antibody, green) bound to SARS-CoV-2 spike protein (grey) mapped with key mutations of each variant of concern (red). (Photo: AbCellera)

Henry Schein Reports Record First-Quarter 2021 Financial Results from Continuing Operations

• Total net sales of $2.9 billion up 20.4% versus prior year
• GAAP diluted EPS from continuing operations of $1.16 versus prior-year GAAP diluted EPS from continuing operations of $0.91
• Non-GAAP diluted EPS from continuing operations of $1.24 versus prior-year non-GAAP diluted EPS from continuing operations of $0.94
• Reflecting strong first-quarter results, the Company raises guidance for 2021 non-GAAP diluted EPS from continuing operations to be at or above $3.70

MELVILLE, N.Y.–(BUSINESS WIRE)–
Henry Schein, Inc. (Nasdaq: HSIC), the world’s largest provider of health care solutions to office-based dental and medical practitioners, today reported record first-quarter financial results from continuing operations. Results from continuing operations exclude contributions from Henry Schein’s former Animal Health business, which was spun off in February 2019 to form a new publicly traded company, Covetrus (Nasdaq: CVET).

Total net sales for the quarter ended March 27, 2021, were $2.9 billion, up 20.4% compared with the first quarter of 2020. The 20.4% increase included 14.9% internal growth in local currencies, 3.3% growth from acquisitions, and 2.2% growth related to foreign currency exchange. (See Exhibit A for details of sales growth).

GAAP net income attributable to Henry Schein, Inc. from continuing operations for the first quarter of 2021 was $166.0 million, or $1.16 per diluted share, compared with prior-year GAAP net income from continuing operations of $130.5 million, or $0.91 per diluted share. Non-GAAP net income from continuing operations for the first quarter of 2021 was $177.7 million, or $1.24 per diluted share, compared with prior-year non-GAAP net income from continuing operations of $134.1 million, or $0.94 per diluted share. Exhibit B provides a reconciliation of GAAP net income and diluted EPS from continuing operations to non-GAAP net income and diluted EPS from continuing operations.

“We are pleased with exceptional first-quarter global financial performance versus the comparable prior-year period, and also compared to the first quarter of 2019, which is the result of planning and excellent execution across all of our businesses. We also delivered a very strong operating margin for the quarter. While end markets in most geographies still face challenges due to the ongoing pandemic, the overall market recovery and our improving financial results have continued. Our positive momentum reflects the adaptiveness of our business model as well as the commitment of Team Schein Members to our customers and our communities,” said Stanley M. Bergman, Chairman of the Board and Chief Executive Officer of Henry Schein. “Throughout these unprecedented times, Henry Schein has remained focused on the safety of our team and on responding to our customers’ needs, as well as on driving innovation, gaining market share, enhancing our margin profile, and optimizing our cost structure. We believe all of this positions us well to continue to drive earnings growth and create value over the long-term.”

Global Dental sales for the first quarter of 2021 of $1.8 billion increased 21.3% versus the prior-year period. In local currencies, internally generated sales increased 13.7% with 4.2% growth from acquisitions and 3.4% growth related to foreign currency exchange. The 13.7% internal growth in local currencies included an increase of 10.9% in North America and an increase of 17.9% internationally.

Global Dental consumable merchandise internal sales increased by 13.2% in local currencies. Excluding sales of personal protective equipment (PPE) and COVID-19 related products, growth was 10.9%. In North America, dental consumable merchandise internal sales in local currencies increased 9.3%, or 6.9% excluding sales of PPE and COVID-19 related products, and dental equipment internal sales in local currencies increased 17.4%. Internationally, dental consumable merchandise internal sales in local currencies increased 19.2%, or 16.7% excluding sales of PPE and COVID-19 related products, and dental equipment internal sales in local currencies increased 12.9%.

“For the first quarter, our dental sales in both North America and international markets were strong, including significant growth in North America dental equipment sales versus the fourth quarter of 2020,” noted Mr. Bergman. “Global Dental Specialty sales were also strong with year-over-year internal growth of 18.3% in local currencies. We remain optimistic about the stability and health of the global dental markets we serve, despite rising COVID-19 cases in certain geographies, as patient traffic and practice spending have steadily improved since the first few months of the pandemic.”

Global Medical sales for the first quarter of 2021 of $993.0 million increased 24.0% versus the comparable period last year, consisting of 22.1% internal growth in local currencies, 1.6% growth from acquisitions and 0.3% growth related to foreign currency exchange. Excluding sales of PPE and COVID-19 related products, internal sales in local currencies decreased 6.8%, in part resulting from an extremely mild influenza season that impacted diagnostic and consumable merchandise sales, as well as from lower pharmaceutical sales related to fewer patient office visits due to COVID-19.

“We are pleased to report strong double-digit global Medical sales growth during the first quarter. We expect the physician, ambulatory surgery center, alternate care and home health markets to improve over time as infection levels abate and patient volumes normalize. That said, we expect COVID-19 test sales to decline, primarily as a result of unit price erosion,” remarked Mr. Bergman.

“While sales of PPE products have begun to moderate from recent quarterly growth rates in both our Dental and Medical businesses, we expect PPE sales will remain at elevated levels as dentists and physicians implement new standard-of-care best practices,” said Mr. Bergman.

Global Technology and Value-Added Services sales of $143.0 million increased 8.4% versus the prior-year quarter and included 3.6% internal sales growth in local currencies, 3.4% growth from acquisitions and 1.4% growth related to foreign currency exchange.

“Global Technology and Value-Added Services sales have steadily improved over the last several quarters, with Henry Schein One internal sales in local currencies increasing by 2.6% in the first quarter, representing continued sequential-quarter growth. In addition, financial services internal sales in local currencies increased by 22.5%, in part driven by higher sales of dental equipment,” noted Mr. Bergman.

Stock Repurchase Plan

During the first quarter of 2021, the Company repurchased approximately 1.3 million shares of its common stock at an average price of $66.90 per share, for a total of approximately $88.7 million. The impact of the repurchase of shares on first-quarter diluted EPS was immaterial. At the end of the first quarter, Henry Schein had approximately $112.6 million authorized and available for future stock repurchases.

Financial Guidance

Henry Schein today raised guidance for 2021 non-GAAP diluted EPS from continuing operations. At this time, the Company is not providing guidance for 2021 GAAP diluted EPS from continuing operations as it is unable to provide an accurate estimate of expenses related to the ongoing restructuring initiative. Financial guidance is as follows:

• 2021 non-GAAP diluted EPS from continuing operations attributable to Henry Schein, Inc. is expected to be at or above $3.70, representing a floor for fiscal 2021.
• Guidance for 2021 non-GAAP diluted EPS attributable to Henry Schein, Inc. is for current continuing operations as well as completed or previously announced acquisitions, and does not include the impact of future share repurchases, potential future acquisitions, if any, or restructuring expenses. Guidance also assumes foreign exchange rates that are generally consistent with current levels, and that end markets remain stable and are consistent with current market conditions. Guidance does not assume any material adverse market changes associated with COVID-19.

Adjustments to Projected 2021 Non-GAAP Diluted EPS

The Company has provided guidance for 2021 non-GAAP diluted EPS from continuing operations, as noted above. A reconciliation to the Company’s projected 2021 diluted EPS from continuing operations prepared on a GAAP basis is not provided because the Company is unable to provide without unreasonable effort an estimate of costs related to an ongoing restructuring program to mitigate stranded costs and drive additional operating efficiencies, including the corresponding tax effect that will be included in the Company’s 2021 diluted EPS from continuing operations prepared on a GAAP basis. The inability to provide these reconciliations is due to the uncertainty and inherent difficulty of predicting the occurrence, magnitude, financial impact and the timing of related costs. Management does not believe these items are representative of the Company’s underlying business performance. For the same reasons, the Company is unable to address the probable significance of the unavailable information, which could be material to future results.

First Quarter 2021 Conference Call Webcast

The Company will hold a conference call to discuss first-quarter 2021 financial results today, beginning at 10:00 a.m. Eastern time. Individual investors are invited to listen to the conference call through Henry Schein’s website by visiting www.henryschein.com/IRwebcasts. In addition, a replay will be available beginning shortly after the call has ended for a period of one week.

About Henry Schein, Inc.

Henry Schein, Inc. (Nasdaq: HSIC) is a solutions company for health care professionals powered by a network of people and technology. With more than 20,000 Team Schein Members worldwide, the Company’s network of trusted advisors provides more than 1 million customers globally with more than 300 valued solutions that help improve operational success and clinical outcomes. Our Business, Clinical, Technology, and Supply Chain solutions help office-based dental and medical practitioners work more efficiently so they can provide quality care more effectively. These solutions also support dental laboratories, government and institutional health care clinics, as well as other alternate care sites.

Henry Schein operates through a centralized and automated distribution network, with a selection of more than 120,000 branded products and Henry Schein private-brand products in stock, as well as more than 180,000 additional products available as special-order items.

A FORTUNE 500 Company and a member of the S&P 500® index, Henry Schein is headquartered in Melville, N.Y., and has operations or affiliates in 31 countries and territories. The Company’s sales reached $10.1 billion in 2020, and have grown at a compound annual rate of approximately 12 percent since Henry Schein became a public company in 1995.

For more information, visit Henry Schein at www.henryschein.com, Facebook.com/HenrySchein, and @HenrySchein on Twitter.

Cautionary Note Regarding Forward-Looking Statements and Use of Non-GAAP Financial Information

In accordance with the “Safe Harbor” provisions of the Private Securities Litigation Reform Act of 1995, we provide the following cautionary remarks regarding important factors that, among others, could cause future results to differ materially from the forward-looking statements, expectations and assumptions expressed or implied herein. All forward-looking statements made by us are subject to risks and uncertainties and are not guarantees of future performance. These forward-looking statements involve known and unknown risks, uncertainties and other factors that may cause our actual results, performance and achievements or industry results to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. These statements include EPS guidance and are generally identified by the use of such terms as “may,” “could,” “expect,” “intend,” “believe,” “plan,” “estimate,” “forecast,” “project,” “anticipate,” “to be,” “to make” or other comparable terms. A fuller discussion of our operations, financial condition and status of litigation matters, including factors that may affect our business and future prospects, is contained in documents we have filed with the United States Securities and Exchange Commission, or SEC, including our Annual Report on Form 10-K, and will be contained in all subsequent periodic filings we make with the SEC. These documents identify in detail important risk factors that could cause our actual performance to differ materially from current expectations. Forward looking statements include the overall impact of the Novel Coronavirus Disease 2019 (COVID-19) on the Company, its results of operations, liquidity, and financial condition (including any estimates of the impact on these items), the rate and consistency with which dental and other practices resume or maintain normal operations in the United States and internationally, expectations regarding personal protective equipment (“PPE”) and COVID-19 related product sales and inventory levels and whether additional resurgences of the virus will adversely impact the resumption of normal operations, the impact of restructuring programs as well as of any future acquisitions, and more generally current expectations regarding performance in current and future periods. Forward looking statements also include the (i) ability of the Company to make additional testing available, the nature of those tests and the number of tests intended to be made available and the timing for availability, the nature of the target market, as well as the efficacy or relative efficacy of the test results given that the test efficacy has not been, or will not have been, independently verified under normal FDA procedures and (ii) potential for the Company to distribute the COVID-19 vaccines and ancillary supplies.

Risk factors and uncertainties that could cause actual results to differ materially from current and historical results include, but are not limited to: risks associated with COVID-19, as well as other disease outbreaks, epidemics, pandemics, or similar wide spread public health concerns and other natural disasters or acts of terrorism; our dependence on third parties for the manufacture and supply of our products; our ability to develop or acquire and maintain and protect new products (particularly technology products) and technologies that achieve market acceptance with acceptable margins; transitional challenges associated with acquisitions, dispositions and joint ventures, including the failure to achieve anticipated synergies/benefits; financial and tax risks associated with acquisitions, dispositions and joint ventures; certain provisions in our governing documents that may discourage third-party acquisitions of us; effects of a highly competitive (including, without limitation, competition from third-party online commerce sites) and consolidating market; the potential repeal or judicial prohibition on implementation of the Affordable Care Act; changes in the health care industry; risks from expansion of customer purchasing power and multi-tiered costing structures; increases in shipping costs for our products or other service issues with our third-party shippers; general global macro-economic and political conditions, including international trade agreements and potential trade barriers; failure to comply with existing and future regulatory requirements; risks associated with the EU Medical Device Regulation; failure to comply with laws and regulations relating to health care fraud or other laws and regulations; failure to comply with laws and regulations relating to the confidentiality of sensitive personal information or standards in electronic health records or transmissions; changes in tax legislation; litigation risks; new or unanticipated litigation developments and the status of litigation matters; cyberattacks or other privacy or data security breaches; risks associated with our global operations; our dependence on our senior management, as well as employee hiring and retention; and disruptions in financial markets. The order in which these factors appear should not be construed to indicate their relative importance or priority.

We caution that these factors may not be exhaustive and that many of these factors are beyond our ability to control or predict. Accordingly, any forward-looking statements contained herein should not be relied upon as a prediction of actual results. We undertake no duty and have no obligation to update forward-looking statements.

Included within the press release are non-GAAP financial measures that supplement the Company’s Consolidated Statements of Income prepared under generally accepted accounting principles (GAAP). These non-GAAP financial measures adjust the Company’s actual results prepared under GAAP to exclude certain items. In the schedules attached to this press release, the non-GAAP measures have been reconciled to and should be considered together with the Consolidated Statements of Income. Management believes that non-GAAP financial measures provide investors with useful supplemental information about the financial performance of our business, enable comparison of financial results between periods where certain items may vary independent of business performance and allow for greater transparency with respect to key metrics used by management in operating our business. These non-GAAP financial measures are presented solely for informational and comparative purposes and should not be regarded as a replacement for corresponding, similarly captioned, GAAP measures.

(TABLES TO FOLLOW)

HENRY SCHEIN, INC.
CONSOLIDATED STATEMENTS OF INCOME
(in thousands, except per share data)
(unaudited)
		Three Months Ended
		March 27,			March 28,
		2021			2020
Net sales		$	2,924,961		$	2,428,871
Cost of sales			2,034,110			1,682,857
Gross profit			890,851			746,014
Operating expenses:
Selling, general and administrative			657,992			567,362
Restructuring costs			2,931			4,787
Operating income			229,928			173,865
Other income (expense):
Interest income			1,983			3,190
Interest expense			(6,485)			(7,812)
Other, net			309			(220)
Income from continuing operations before taxes, equity in earnings of affiliates and noncontrolling interests			225,735			169,023
Income taxes			(56,685)			(37,910)
Equity in earnings of affiliates			5,878			2,734
Net income from continuing operations			174,928			133,847
Loss from discontinued operations			–			(282)
Net Income			174,928			133,565
Less: Net income attributable to noncontrolling interests			(8,931)			(3,304)
Net income attributable to Henry Schein, Inc.		$	165,997		$	130,261
Amounts attributable to Henry Schein, Inc.:
Continuing operations		$	165,997		$	130,543
Discontinued operations			–			(282)
Net income attributable to Henry Schein, Inc.		$	165,997		$	130,261
Earnings per share from continuing operations attributable to Henry Schein, Inc.:
Basic		$	1.17		$	0.91
Diluted		$	1.16		$	0.91
Loss per share from discontinued operations attributable to Henry Schein, Inc.:
Basic		$	–		$	0.00
Diluted		$	–		$	0.00
Earnings per share attributable to Henry Schein, Inc.:
Basic		$	1.17		$	0.91
Diluted		$	1.16		$	0.91
Weighted-average common shares outstanding:
Basic			142,298			142,967
Diluted			143,398			143,095

HENRY SCHEIN, INC.
CONSOLIDATED BALANCE SHEETS
(in thousands, except share and per share data)
		March 27,			December 26,
		2021			2020
		(unaudited)
ASSETS
Current assets:
Cash and cash equivalents		$	144,538		$	421,185
Accounts receivable, net of reserves of $79,936 and $88,030			1,317,546			1,424,787
Inventories, net			1,626,185			1,512,499
Prepaid expenses and other			482,356			432,944
Total current assets			3,570,625			3,791,415
Property and equipment, net			353,248			342,004
Operating lease right-of-use assets			301,759			288,847
Goodwill			2,587,438			2,504,392
Other intangibles, net			597,619			479,429
Investments and other			369,231			366,445
Total assets		$	7,779,920		$	7,772,532
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable		$	909,575		$	1,005,655
Bank credit lines			67,415			73,366
Current maturities of long-term debt			111,176			109,836
Operating lease liabilities			68,580			64,716
Accrued expenses:
Payroll and related			286,106			295,329
Taxes			146,755			138,671
Other			533,161			595,529
Total current liabilities			2,122,768			2,283,102
Long-term debt			506,461			515,773
Deferred income taxes			42,254			30,065
Operating lease liabilities			248,624			238,727
Other liabilities			410,184			392,781
Total liabilities			3,330,291			3,460,448
Redeemable noncontrolling interests			452,899			327,699
Commitments and contingencies
Stockholders’ equity:
Preferred stock, $.01 par value, 1,000,000 shares authorized, none outstanding			–			–
Common stock, $.01 par value, 480,000,000 shares authorized, 141,310,113 outstanding on March 27, 2021 and 142,462,571 outstanding on December 26, 2020			1,413			1,425
Additional paid-in capital			–			–
Retained earnings			3,493,060			3,454,831
Accumulated other comprehensive loss			(136,305)			(108,084)
Total Henry Schein, Inc. stockholders’ equity			3,358,168			3,348,172
Noncontrolling interests			638,562			636,213
Total stockholders’ equity			3,996,730			3,984,385
Total liabilities, redeemable noncontrolling interests and stockholders’ equity		$	7,779,920		$	7,772,532

HENRY SCHEIN, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands, unaudited)
		Three Months Ended
		March 27,			March 28,
		2021			2020
Cash flows from operating activities:
Net income		$	174,928		$	133,565
Loss from discontinued operations			–			(282)
Income from continuing operations			174,928			133,847
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization			49,363			46,983
Impairment charge on intangible assets			–			2,000
Stock-based compensation (credit) expense			12,790			(17,514)
Provision for (benefit from) losses on trade and other accounts receivable			(2,696)			14,543
Provision for deferred income taxes			11,171			2,645
Equity in earnings of affiliates			(5,878)			(2,734)
Distributions from equity affiliates			5,139			2,413
Changes in unrecognized tax benefits			2,804			(1,575)
Other			35			(13,924)
Changes in operating assets and liabilities, net of acquisitions:
Accounts receivable			118,795			(1,283)
Inventories			(78,085)			73,038
Other current assets			(45,310)			(22,002)
Accounts payable and accrued expenses			(179,725)			(137,680)
Net cash provided by operating activities from continuing operations			63,331			78,757
Net cash used in operating activities from discontinued operations			–			(282)
Net cash provided by operating activities			63,331			78,475
Cash flows from investing activities:
Purchases of fixed assets			(13,843)			(23,008)
Payments related to equity investments and business acquisitions, net of cash acquired			(204,027)			(37,947)
Proceeds from sale of equity investment			–			12,000
Repayments from loan to affiliate			139			1,137
Other			(5,513)			(5,787)
Net cash used in investing activities from continuing operations			(223,244)			(53,605)
Net cash used in investing activities from discontinued operations			–			–
Net cash used in investing activities			(223,244)			(53,605)
Cash flows from financing activities:
Net change in bank borrowings			(241)			358,639
Proceeds from issuance of long-term debt			–			250,000
Principal payments for long-term debt			(17,781)			(8,478)
Debt issuance costs			(85)			(58)
Payments for repurchases of common stock			(88,659)			(73,789)
Payments for taxes related to shares withheld for employee taxes			(6,158)			(13,155)
Distributions to noncontrolling shareholders			(6,520)			(3,664)
Acquisitions of noncontrolling interests in subsidiaries			–			(14,925)
Payments to Henry Schein Animal Health Business			–			(2,962)
Net cash provided by (used in) financing activities from continuing operations			(119,444)			491,608
Net cash provided by financing activities from discontinued operations			–			282
Net cash provided by (used in) financing activities			(119,444)			491,890
Effect of exchange rate changes on cash and cash equivalents from continuing operations			2,710			(5,489)
Effect of exchange rate changes on cash and cash equivalents from discontinued operations			–			–
Net change in cash and cash equivalents from continuing operations			(276,647)			511,271
Net change in cash and cash equivalents from discontinued operations			–			–
Cash and cash equivalents, beginning of period			421,185			106,097
Cash and cash equivalents, end of period		$	144,538		$	617,368

Exhibit A – First Quarter Sales
Henry Schein, Inc.
2021 First Quarter
Sales Summary
(in thousands)
(unaudited)
Q1 2021 over Q1 2020
Global		Q1 2021			Q1 2020			Total Sales Growth		Foreign Exchange Growth		Local Currency Growth		Acquisition Growth		Local Internal Growth
Dental		$	1,788,928		$	1,475,076		21.3%		3.4%		17.9%		4.2%		13.7%
Medical			993,037			800,688		24.0%		0.3%		23.7%		1.6%		22.1%
Total Health Care Distribution			2,781,965			2,275,764		22.2%		2.3%		19.9%		3.3%		16.6%
Technology and value-added services			142,996			131,965		8.4%		1.4%		7.0%		3.4%		3.6%
Total excluding Corporate TSA Revenue			2,924,961			2,407,729		21.5%		2.3%		19.2%		3.3%		15.9%
Corporate TSA revenues (1)			–			21,142		n/a		n/a		n/a		n/a		n/a
Total Global		$	2,924,961		$	2,428,871		20.4%		2.2%		18.2%		3.3%		14.9%
North America		Q1 2021			Q1 2020			Total Sales Growth		Foreign Exchange Growth		Local Currency Growth		Acquisition Growth		Local Internal Growth
Dental		$	1,044,783		$	888,372		17.6%		0.6%		17.0%		6.1%		10.9%
Medical			965,127			778,028		24.0%		0.0%		24.0%		1.6%		22.4%
Total Health Care Distribution			2,009,910			1,666,400		20.6%		0.3%		20.3%		4.0%		16.3%
Technology and value-added services			121,937			113,498		7.4%		0.1%		7.3%		3.3%		4.0%
Total excluding Corporate TSA Revenue			2,131,847			1,779,898		19.8%		0.3%		19.5%		4.0%		15.5%
Corporate TSA revenues (1)			–			–		n/a		n/a		n/a		n/a		n/a
Total North America		$	2,131,847		$	1,779,898		19.8%		0.3%		19.5%		4.0%		15.5%
International		Q1 2021			Q1 2020			Total Sales Growth		Foreign Exchange Growth		Local Currency Growth		Acquisition Growth		Local Internal Growth
Dental		$	744,145		$	586,704		26.8%		7.7%		19.1%		1.2%		17.9%
Medical			27,910			22,660		23.2%		10.6%		12.6%		0.0%		12.6%
Total Health Care Distribution			772,055			609,364		26.7%		7.8%		18.9%		1.2%		17.7%
Technology and value-added services			21,059			18,467		14.0%		8.8%		5.2%		4.1%		1.1%
Total excluding Corporate TSA Revenue			793,114			627,831		26.3%		7.8%		18.5%		1.3%		17.2%
Corporate TSA revenues (1)			–			21,142		n/a		n/a		n/a		n/a		n/a
Total International		$	793,114		$	648,973		22.2%		7.6%		14.6%		1.2%		13.4%
(1) Corporate TSA revenues represents sales of certain animal health products to Covetrus under the transition services agreement entered into in connection with the Animal Health Spin-off, which ended in December 2020.

Exhibit B
Henry Schein, Inc.
2021 First Quarter
Reconciliation of reported GAAP net income from continuing operations and
diluted EPS from continuing operations attributable to Henry Schein, Inc.
to non-GAAP net income from continuing operations and
diluted EPS from continuing operations attributable to Henry Schein, Inc.
(in thousands, except per share data)
(unaudited)
		First Quarter
							%
		2021			2020		Growth
Net Income from continuing operations attributable to Henry Schein, Inc.	$	165,997		$	130,543		27.2	%
Diluted EPS from continuing operations attributable to Henry Schein, Inc.	$	1.16		$	0.91		27.5	%
Non-GAAP Adjustments
Restructuring costs – Pre-tax (1)	$	2,931		$	4,787
Income tax benefit for restructuring costs (1)		(733)			(1,197)
Settlement and litigation costs – Pre-tax (2)		12,750			–
Income tax benefit for settlement and litigation costs (2)		(3,202)			–
Total non-GAAP adjustments to Net Income from continuing operations	$	11,746		$	3,590
Non-GAAP adjustments to diluted EPS from continuing operations	$	0.08		$	0.03
Non-GAAP Net Income from continuing operations attributable to Henry Schein, Inc.	$	177,743		$	134,133		32.5	%
Non-GAAP diluted EPS from continuing operations attributable to Henry Schein, Inc.	$	1.24		$	0.94		31.9	%

Management believes that non-GAAP financial measures provide investors with useful supplemental information about the financial performance of our business, enable comparison of financial results between periods where certain items may vary independent of business performance and allow for greater transparency with respect to key metrics used by management in operating our business. These non-GAAP financial measures are presented solely for informational and comparative purposes and should not be regarded as a replacement for corresponding, similarly captioned, GAAP measures. Earnings per share numbers may not sum due to rounding.

(1)		Represents Q1 2021 restructuring costs of $2,931, net of $733 tax benefit, resulting in an after-tax effect of $2,198, Q1 2020 restructuring costs of $4,787, net of $1,197 tax benefit, resulting in an after-tax effect of $3,590.
(2)		Represents a Q1 2021 pre-tax charge of $12,750 related to settlement and litigation costs, net of a tax benefit of $3,202, resulting in a net after-tax charge of $9,548.

 

View source version on businesswire.com: https://www.businesswire.com/news/home/20210504005622/en/

Investors

Steven Paladino

Executive Vice President and Chief Financial Officer

[email protected]

(631) 843-5500

Carolynne Borders

Vice President, Investor Relations

[email protected]

(631) 390-8105

Media

Ann Marie Gothard

Vice President, Corporate Media Relations

[email protected]

(631) 390-8169

KEYWORDS: United States North America New York

INDUSTRY KEYWORDS: Medical Supplies Medical Devices Health Practice Management Dental Veterinary

MEDIA:

Logo