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Zebra Technologies Announces First-Quarter 2021 Results

First-Quarter Financial Highlights

• Net sales of $1,347 million; year-over-year increase of 28.0%
• Net income of $228 million and net income per diluted share of $4.22, year-over-year increases of 156.2% and 155.8%, respectively
• Non-GAAP diluted EPS increases 79.4% year-over-year to $4.79
• Adjusted EBITDA increases 69.7% year-over-year to $341 million 

LINCOLNSHIRE, Ill.–(BUSINESS WIRE)–Zebra Technologies Corporation (NASDAQ: ZBRA), an innovator at the edge of the enterprise with solutions and partners that enable businesses to gain a performance edge, today announced results for the first quarter ended April 3, 2021.

“I’m proud of our teams’ exceptional first quarter performance as we continue to realize a strong recovery from the pandemic. We achieved record quarterly sales and earnings which exceeded our expectations, despite industry supply chain challenges,” said Anders Gustafsson, Chief Executive Officer of Zebra Technologies. “We enter Q2 with a strong order backlog as we see global business demand recover and customers prioritizing spending on our solutions. This momentum drives our exceptionally strong Q2 sales growth expectation, and coupled with our encouraging pipeline of business, enables us to raise our full year 2021 outlook for both sales and profitability. We continue to be excited about our growing portfolio of solutions that digitize and automate our customers’ workflows in an increasingly on-demand economy.”

$ in millions, except per share amounts	1Q21			1Q20			Change
Select reported measures:
Net sales	$	1,347		$	1,052		28.0	%
Gross profit	655			473			38.5	%
Gross margin	48.6		%	45.0		%	360 bps
Net income	228			89			156.2	%
Net income margin	16.9		%	8.5		%	840 bps
Net income per diluted share	$	4.22		$	1.65		155.8	%
Select Non-GAAP measures:
Adjusted net sales	$	1,350		$	1,052		28.3	%
Organic net sales growth							25.0	%
Adjusted gross profit	660			475			38.9	%
Adjusted gross margin	48.9		%	45.2		%	370 bps
Adjusted EBITDA	341			201			69.7	%
Adjusted EBITDA margin	25.3		%	19.1		%	620 bps
Non-GAAP net income	$	258		$	145		77.9	%
Non-GAAP earnings per diluted share	$	4.79		$	2.67		79.4	%

Net sales were $1,347 million in the first quarter of 2021 compared to $1,052 million in the first quarter of 2020. Net sales in the Enterprise Visibility & Mobility (“EVM”) segment were $914 million in the first quarter of 2021 compared with $697 million in the first quarter of 2020. Asset Intelligence & Tracking (“AIT”) segment net sales were $436 million in the first quarter of 2021 compared to $355 million in the prior year period. Consolidated organic net sales for the first quarter increased 25.0%. First-quarter year-over-year organic net sales increased by 26.8% in the EVM segment and increased by 21.4% in the AIT segment.

First-quarter 2021 gross profit was $655 million compared to $473 million in the prior year period. Gross margin increased to 48.6% for the first quarter of 2021, compared to 45.0% in the prior year period. This increase was primarily due to favorable business mix, higher service and software margin, $10 million net favorability in Chinese import tariffs, and contribution from higher margin business acquisitions. This favorability was partially offset by $11 million of incremental premium freight expense, and surcharges on certain component parts. Adjusted gross margin was 48.9% in the first quarter of 2021, compared to 45.2% in the prior year period.

Operating expenses increased in the first quarter of 2021 to $383 million from $322 million in the prior year period, primarily due to higher employee incentive-based compensation associated with improved financial performance; the inclusion of operating and amortization expenses associated with recently acquired businesses; and increased investment in research and development programs principally within our EVM segment. These increases were partially offset by lower travel expenses in the current year and the prior year costs associated with the 2019 Productivity Plan and product sourcing geographic diversification initiative. Adjusted operating expenses increased in the first quarter of 2021 to $337 million from $292 million in the prior year period.

Net income for the first quarter of 2021 was $228 million, or $4.22 per diluted share, compared to net income of $89 million, or $1.65 per diluted share, for the first quarter of 2020. Non-GAAP net income for the first quarter of 2021 increased to $258 million, or $4.79 per diluted share, compared to $145 million, or $2.67 per diluted share, for the prior year period.

Adjusted EBITDA for the first quarter of 2021 increased to $341 million, or 25.3% of adjusted net sales, compared to $201 million, or 19.1% of adjusted net sales, for the first quarter of 2020 due to higher gross margin and lower operating expenses as a percentage of sales.

Balance Sheet and Cash Flow

As of April 3, 2021, the company had cash and cash equivalents of $177 million and total debt of $1,096 million.

For the first three months of 2021, the company generated $224 million of operating cash flow and incurred capital expenditures of $10 million, resulting in free cash flow of $214 million. The company also made $13 million in venture investments.

For the first three months of 2021, the company made debt repayments of $156 million and cash interest payments of $9 million.

Outlook

Second Quarter 2021

The company expects second-quarter 2021 adjusted net sales to increase 38% to 42% from the second quarter of 2020 as the global economy continues to recover and we continue to realize pent-up demand from many customers. This expectation includes an approximately 450-500 basis point additive impact from the Reflexis acquisition and foreign currency translation, and reflects industry supply chain challenges.

Adjusted EBITDA margin for the second quarter of 2021 is expected to be in the range of 21% to 22%, which includes approximately $18 million of premium freight expense. Non-GAAP earnings per diluted share are expected to be in the range of $4.00 to $4.20. This assumes an adjusted effective tax rate of approximately 18%.

Full-Year 2021

The Company now expects adjusted net sales to increase 18% to 22% from 2020, which includes an approximately 3 percentage point additive impact from the Reflexis acquisition and foreign currency translation, and reflects industry supply chain challenges.

Adjusted EBITDA margin is now expected to be approximately 22% to 23%.

Free cash flow is now expected to be at least $850 million.

The company does not provide a reconciliation for non-GAAP estimates on a forward-looking basis where it is unable to provide a meaningful or accurate calculation or estimation of reconciling items and the information is not available without unreasonable effort. This is due to the inherent difficulty of forecasting the timing or amount of the most directly comparable forward-looking GAAP financial measure as discussed under the “Forward-Looking Statements” caption below. This would include items that have not yet occurred, are out of the company’s control and/or cannot be reasonably predicted, and that would impact diluted net earnings per share. For the same reasons, the company is unable to address the probable significance of the unavailable information. Forward-looking non-GAAP financial measures provided without the most directly comparable GAAP financial measures may vary materially from the corresponding GAAP financial measures.

Conference Call Notification

Investors are invited to listen to a live webcast of Zebra’s conference call regarding the company’s financial results for the first quarter of 2021. The conference call will be held today, Tuesday, May 4, at 7:30 a.m. Central Time (8:30 a.m. Eastern Time). To view the webcast, visit the investor relations section of the company’s website at investors.zebra.com.

About Zebra

Zebra (NASDAQ: ZBRA) empowers the front line in retail/e-commerce, manufacturing, transportation and logistics, healthcare, public sector and other industries to achieve a performance edge. With more than 10,000 partners across 100 countries, Zebra delivers industry-tailored, end-to-end solutions to enable every asset and worker to be visible, connected and fully optimized. The company’s market-leading solutions elevate the shopping experience, track and manage inventory as well as improve supply chain efficiency and patient care. In 2020, Zebra made Forbes Global 2000 list for the second consecutive year and was listed among Fast Company’s Best Companies for Innovators. For more information, visit www.zebra.com or sign up for news alerts. Participate in Zebra’s Your Edge blog, follow the company on LinkedIn, Twitter and Facebook, and check out our Story Hub: Zebra Perspectives.

Forward-Looking Statements

This press release contains forward-looking statements, as defined by the Private Securities Litigation Reform Act of 1995, including, without limitation, the statements regarding the company’s outlook. Actual results may differ from those expressed or implied in the company’s forward-looking statements. These statements represent estimates only as of the date they were made. Zebra undertakes no obligation, other than as may be required by law, to publicly update or revise any forward-looking statements, whether as a result of new information, future events, changed circumstances or any other reason after the date of this release.

These forward-looking statements are based on current expectations, forecasts and assumptions and are subject to the risks and uncertainties inherent in Zebra’s industry, market conditions, general domestic and international economic conditions, and other factors. These factors include customer acceptance of Zebra’s hardware and software products and competitors’ product offerings, and the potential effects of technological changes. The continued uncertainty over future global economic conditions, the availability of credit and capital markets volatility may have adverse effects on Zebra, its suppliers and its customers. In addition, a disruption in our ability to obtain products from vendors as a result of supply chain constraints, natural disasters, public health issues (including pandemics), or other circumstances could restrict sales and negatively affect customer relationships. Profits and profitability will be affected by Zebra’s ability to control manufacturing and operating costs. Because of its debt, interest rates and financial market conditions will also have an impact on results. Foreign exchange rates will have an effect on financial results because of the large percentage of our international sales. The outcome of litigation in which Zebra may be involved is another factor. The success of integrating acquisitions could also affect profitability, reported results and the company’s competitive position in its industry. These and other factors could have an adverse effect on Zebra’s sales, gross profit margins and results of operations and increase the volatility of our financial results. When used in this release and documents referenced, the words “anticipate,” “believe,” “outlook,” and “expect” and similar expressions, as they relate to the company or its management, are intended to identify such forward-looking statements, but are not the exclusive means of identifying these statements. Descriptions of the risks, uncertainties and other factors that could affect the company’s future operations and results can be found in Zebra’s filings with the Securities and Exchange Commission, including the company’s most recent Form 10-K and Form 10-Q.

Use of Non-GAAP Financial Information

This press release contains certain Non-GAAP financial measures, consisting of “adjusted net sales,” “adjusted gross profit,” “EBITDA,” “Adjusted EBITDA,” “Non-GAAP net income,” “Non-GAAP earnings per share,” “free cash flow,” “organic net sales growth,” and “adjusted operating expenses.” Management presents these measures to focus on the on-going operations and believes it is useful to investors because they enable them to perform meaningful comparisons of past and present operating results. The company believes it is useful to present non-GAAP financial measures, which exclude certain significant items, as a means to understand the performance of its ongoing operations and how management views the business. Please see the “Reconciliation of GAAP to Non-GAAP Financial Measures” tables and accompanying disclosures at the end of this press release for more detailed information regarding non-GAAP financial measures herein, including the items reflected in adjusted net earnings calculations. These measures, however, should not be construed as an alternative to any other measure of performance determined in accordance with GAAP.

The company does not provide a reconciliation for non-GAAP estimates on a forward-looking basis (including the information under “Outlook” above) where it is unable to provide a meaningful or accurate calculation or estimation of reconciling items and the information is not available without unreasonable effort. This is due to the inherent difficulty of forecasting the timing or amount of various items that have not yet occurred, are out of the company’s control and/or cannot be reasonably predicted, and that would impact diluted net earnings per share, the most directly comparable forward-looking GAAP financial measure. For the same reasons, the company is unable to address the probable significance of the unavailable information. Forward-looking non-GAAP financial measures provided without the most directly comparable GAAP financial measures may vary materially from the corresponding GAAP financial measures.

As a global company, Zebra’s operating results reported in U.S. dollars are affected by foreign currency exchange rate fluctuations because the underlying foreign currencies in which the company transacts change in value over time compared to the U.S. dollar; accordingly, the company presents certain organic growth financial information, which includes impacts of foreign currency translation, to provide a framework to assess how the company’s businesses performed excluding the impact of foreign currency exchange rate fluctuations. Foreign currency impact represents the difference in results that are attributable to fluctuations in the currency exchange rates used to convert the results for businesses where the functional currency is not the U.S. dollar. This impact is calculated by translating current period results at the currency exchange rates used in the comparable period in the prior year, rather than the exchange rates in effect during the current period. In addition, the company excludes the impact of its foreign currency hedging program in the prior year periods. The company believes these measures should be considered a supplement to and not in lieu of the company’s performance measures calculated in accordance with GAAP.

ZEBRA TECHNOLOGIES CORPORATION AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS (In millions, except share data)
	April 3, 2021				December 31, 2020
	(Unaudited)
Assets
Current assets:
Cash and cash equivalents	$	177			$	168
Accounts receivable, net of allowances for doubtful accounts of $1 million as of April 3, 2021 and December 31, 2020	521				508
Inventories, net	528				511
Income tax receivable	7				16
Prepaid expenses and other current assets	110				70
Total Current assets	1,343				1,273
Property, plant and equipment, net	269				274
Right-of-use lease assets	129				135
Goodwill	2,989				2,988
Other intangibles, net	376				402
Deferred income taxes	133				139
Other long-term assets	172				164
Total Assets	$	5,411			$	5,375
Liabilities and Stockholders’ Equity
Current liabilities:
Current portion of long-term debt	$	134			$	364
Accounts payable	573				601
Accrued liabilities	457				559
Deferred revenue	344				308
Income taxes payable	38				19
Total Current liabilities	1,546				1,851
Long-term debt	956				881
Long-term lease liabilities	122				129
Long-term deferred revenue	287				273
Other long-term liabilities	89				97
Total Liabilities	3,000				3,231
Stockholders’ Equity:
Preferred stock, $.01 par value; authorized 10,000,000 shares; none issued	—				—
Class A common stock, $.01 par value; authorized 150,000,000 shares; issued 72,151,857 shares	1				1
Additional paid-in capital	405				395
Treasury stock at cost, 18,641,691 and 18,689,775 shares as of April 3, 2021 and December 31, 2020, respectively	(919		)		(919		)
Retained earnings	2,964				2,736
Accumulated other comprehensive loss	(40		)		(69		)
Total Stockholders’ Equity	2,411				2,144
Total Liabilities and Stockholders’ Equity	$	5,411			$	5,375

ZEBRA TECHNOLOGIES CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF OPERATIONS (In millions, except share data) (Unaudited)
	Three Months Ended
	April 3, 2021			March 28, 2020
Net sales:
Tangible products	$	1,153		$	901
Services and software	194			151
Total Net sales	1,347			1,052
Cost of sales:
Tangible products	591			486
Services and software	101			93
Total Cost of sales	692			579
Gross profit	655			473
Operating expenses:
Selling and marketing	134			122
Research and development	140			105
General and administrative	82			74
Amortization of intangible assets	26			16
Acquisition and integration costs	1			1
Exit and restructuring costs	—			4
Total Operating expenses	383			322
Operating income	272			151
Other income (expense):
Foreign exchange gain (loss)	2			(3		)
Interest income (expense), net	2			(45		)
Total Other income (expense), net	4			(48		)
Income before income tax	276			103
Income tax expense	48			14
Net income	$	228		$	89
Basic earnings per share	$	4.26		$	1.66
Diluted earnings per share	$	4.22		$	1.65

ZEBRA TECHNOLOGIES CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS (In millions) (Unaudited)
	Three Months Ended
	April 3, 2021				March 28, 2020
Cash flows from operating activities:
Net income	$	228			$	89
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization	44				34
Share-based compensation	16				7
Deferred income taxes	(2		)		(2		)
Unrealized (gain) loss on forward interest rate swaps	(12		)		34
Other, net	(1		)		—
Changes in operating assets and liabilities:
Accounts receivable, net	(15		)		108
Inventories, net	(17		)		33
Other assets	(18		)		(4		)
Accounts payable	(30		)		(109		)
Accrued liabilities	(47		)		(87		)
Deferred revenue	50				19
Income taxes	28				(16		)
Other operating activities	—				2
Net cash provided by operating activities	224				108
Cash flows from investing activities:
Purchases of property, plant and equipment	(10		)		(13		)
Purchases of long-term investments	(13		)		(2		)
Net cash used in investing activities	(23		)		(15		)
Cash flows from financing activities:
Payments of long-term debt	(156		)		(36		)
Proceeds from issuance of long-term debt	—				157
Payments for repurchases of common stock	—				(200		)
Net payments related to share-based compensation plans	(6		)		(1		)
Change in unremitted cash collections from servicing factored receivables	(19		)		(22		)
Other financing activities	—				4
Net cash used in financing activities	(181		)		(98		)
Effect of exchange rate changes on cash and cash equivalents, including restricted cash	(2		)		(1		)
Net increase (decrease) in cash and cash equivalents, including restricted cash	18				(6		)
Cash and cash equivalents, including restricted cash, at beginning of period	192				30
Cash and cash equivalents, including restricted cash, at end of period	$	210			$	24
Less restricted cash, included in Prepaid expenses and other current assets	(33		)		—
Cash and cash equivalents at end of period	$	177			$	24
Supplemental disclosures of cash flow information:
Income taxes paid	$	22			$	30
Interest paid	$	9			$	9

ZEBRA TECHNOLOGIES CORPORATION AND SUBSIDIARIES RECONCILIATION OF ORGANIC NET SALES GROWTH (Unaudited)
	Three Months Ended
	April 3, 2021
	AIT			EVM			Consolidated
Reported GAAP Consolidated Net sales growth	22.8	%		31.1	%		28.0	%
Adjustments:
Impact of foreign currency translation (1)	(1.4)	%		(1.7)	%		(1.6)	%
Impact of acquisitions (2)	—	%		(2.6)	%		(1.4)	%
Consolidated Organic Net sales growth	21.4	%		26.8	%		25.0	%

(1)

Operating results reported in U.S. Dollars are affected by foreign currency exchange rate fluctuations. Foreign currency translation impact represents the difference in results that are attributable to fluctuations in the currency exchange rates used to convert the results for businesses where the functional currency is not the U.S. Dollar. This impact is calculated by translating the current period results at the currency exchange rates used in the comparable prior year period, inclusive of the Company’s foreign currency hedging program.

(2)

For purposes of computing Organic Net sales growth, amounts directly attributable to the acquisition of Reflexis are excluded for twelve months following the September 1, 2020 acquisition date.

ZEBRA TECHNOLOGIES CORPORATION AND SUBSIDIARIES RECONCILIATION OF GAAP TO NON-GAAP GROSS MARGIN (In millions) (Unaudited)
	Three Months Ended
	April 3, 2021												March 28, 2020
	AIT				EVM				Consolidated				AIT				EVM				Consolidated
GAAP
Reported Net sales (1)	$	436			$	914			$	1,347			$	355			$	697			$	1,052
Reported Gross profit (1)	210				448				655				171				303				473
Gross Margin	48.2		%		49.0		%		48.6		%		48.2		%		43.5		%		45.0		%
Non-GAAP
Adjusted Net sales	$	436			$	914			$	1,350			$	355			$	697			$	1,052
Adjusted Gross profit (2)	210				450				660				171				304				475
Adjusted Gross Margin	48.2		%		49.2		%		48.9		%		48.2		%		43.6		%		45.2		%

(1)	Consolidated results include corporate eliminations related to business acquisition purchase accounting adjustments that are not reported in segment results.
(2)	Adjusted Gross profit excludes business acquisition purchase accounting adjustments, share-based compensation expense, and product sourcing diversification costs.

ZEBRA TECHNOLOGIES CORPORATION AND SUBSIDIARIES RECONCILIATION OF GAAP TO NON-GAAP NET INCOME (In millions, except share data) (Unaudited)
	Three Months Ended
	April 3, 2021				March 28, 2020
Net income	$	228			$	89
Adjustments to Net sales(1)
Purchase accounting adjustments	3				—
Total adjustments to Net sales	3				—
Adjustments to Cost of sales(1)
Share-based compensation	2				1
Product sourcing diversification initiative	—				1
Total adjustments to Cost of sales	2				2
Adjustments to Operating expenses(1)
Amortization of intangible assets	26				16
Acquisition and integration costs	1				1
Share-based compensation	19				5
Exit and restructuring costs	—				4
Product sourcing diversification initiative	—				4
Total adjustments to Operating expenses	46				30
Adjustments to Other income (expense), net(1)
Amortization of debt issuance costs and discounts	1				1
Investment gain	(1		)		—
Foreign exchange (gain) loss	(2		)		3
Forward interest rate swap (gain) loss	(8		)		35
Total adjustments to Other income (expense), net	(10		)		39
Income tax effect of adjustments(2)
Reported income tax expense	48				14
Less: Adjusted income tax expense	(59		)		(29		)
Total adjustments to income tax	(11		)		(15		)
Total adjustments	30				56
Non-GAAP Net income	$	258			$	145
GAAP earnings per share
Basic	$	4.26			$	1.66
Diluted	$	4.22			$	1.65
Non-GAAP earnings per share
Basic	$	4.83			$	2.70
Diluted	$	4.79			$	2.67
Basic weighted average shares outstanding	53,484,265				53,760,873
Diluted weighted average and equivalent shares outstanding	53,964,330				54,318,044

(1)	Presented on a pre-tax basis.
(2)	Represents adjustments to GAAP income tax expense commensurate with pre-tax non-GAAP adjustments (including the resulting impacts to U.S. BEAT/GILTI provisions), as well as adjustments to exclude the impacts of certain discrete income tax items and incorporate the anticipated annualized effects of current year tax planning.

ZEBRA TECHNOLOGIES CORPORATION AND SUBSIDIARIES GAAP to NON-GAAP RECONCILIATION TO EBITDA (In millions) (Unaudited)
	Three Months Ended
	April 3, 2021				March 28, 2020
Net income	$	228			$	89
Add back:
Depreciation (excluding exit and restructuring costs)	18				18
Amortization of intangible assets	26				16
Total Other (income) expense, net	(4		)		48
Income tax expense	48				14
EBITDA (Non-GAAP)	316				185
Adjustments to Net sales
Purchase accounting adjustments	3				—
Total adjustments to Net sales	3				—
Adjustments to Cost of sales
Share-based compensation	2				1
Product sourcing diversification initiative	—				1
Total adjustments to Cost of sales	2				2
Adjustments to Operating expenses
Acquisition and integration costs	1				1
Share-based compensation	19				5
Exit and restructuring costs	—				4
Product sourcing diversification initiative	—				4
Total adjustments to Operating expenses	20				14
Total adjustments to EBITDA	25				16
Adjusted EBITDA (Non-GAAP)	$	341			$	201
Adjusted EBITDA % of Adjusted Net Sales	25.3		%		19.1		%

FREE CASH FLOW
	Three Months Ended
	April 3, 2021				March 28, 2020
Net cash provided by operating activities	$	224			$	108
Less: Purchases of property, plant and equipment	(10		)		(13		)
Free cash flow (Non-GAAP)(1)	$	214			$	95

(1)

Free cash flow is defined as Net cash provided by operating activities in a period minus purchases of property plant and equipment (capital expenditures) made in that period. This measure does not represent residual cash flows available for discretionary expenditures as the measure does not deduct the payments required for debt service and other contractual obligations or payments for future business acquisitions. Therefore we believe it is important to view free cash flow as a measure that provides supplemental information to our entire statements of cash flows.

ZEBRA TECHNOLOGIES CORPORATION AND SUBSIDIARIES SEGMENT INFORMATION   Effective January 1, 2021, we moved the retail solutions offering from our AIT segment into our EVM segment contemporaneous with a change in our organizational structure and management of the business. Prior period results have been revised to conform to the current segment presentation. This change does not have an impact to the Consolidated Financial Statements. The revised prior period results set forth below are GAAP measures. The effects of our segment change similarly impacted the Company’s relevant Non-GAAP measures.
	2020															2019
	Q1 2020 QTD			Q2 2020 QTD			Q3 2020 QTD			Q4 2020 QTD			Q4 2020 YTD			Q1 2019 QTD			Q2 2019 QTD			Q3 2019 QTD			Q4 2019 QTD			Q4 2019 YTD
Net sales:
AIT Tangible products	$	333		$	251		$	314		$	400		$	1,298		$	320		$	344		$	337		$	346		$	1,347
AIT Services and software	22			22			25			25			94			23			21			29			27			100
Total AIT sales	355			273			339			425			1,392			343			365			366			373			1,447
EVM Tangible products	568			560			658			729			2,515			604			619			644			693			2,560
EVM Services and software	129			123			137			159			548			119			113			120			126			478
Total EVM sales	697			683			795			888			3,063			723			732			764			819			3,038
Total segment Net sales	1,052			956			1,134			1,313			4,455			1,066			1,097			1,130			1,192			4,485
Corporate, eliminations Tangible products	—			—			—			—			—			—			—			—			—			—
Corporate, eliminations Services and software	—			—			(2		)	(5		)	(7		)	—			—			—			—			—
Total Net sales	1,052			956			1,132			1,308			4,448			1,066			1,097			1,130			1,192			4,485
Gross profit:
AIT	171			125			158			204			658			174			180			184			182			720
EVM	303			296			338			421			1,358			328			342			354			363			1,387
Corporate, eliminations	(1		)	(2		)	(3		)	(7		)	(13		)	(1		)	(2		)	(3		)	(1		)	(7		)
Total Gross profit	473			419			493			618			2,003			501			520			535			544			2,100
Gross margin
AIT	48.2		%	45.8		%	46.6		%	48.0		%	47.3		%	50.7		%	49.3		%	50.3		%	48.8		%	49.8		%
EVM	43.5		%	43.3		%	42.5		%	47.4		%	44.3		%	45.4		%	46.7		%	46.3		%	44.3		%	45.7		%
Operating expenses
AIT	89			73			80			98			340			89			95			91			94			369
EVM	208			207			217			256			888			220			230			221			229			900
Corporate, eliminations	25			20			46			33			124			33			35			38			33			139
Total Operating expenses	322			300			343			387			1,352			342			360			350			356			1,408
Operating income:
AIT	82			52			78			106			318			85			85			93			88			351
EVM	95			89			121			165			470			108			112			133			134			487
Total segment operating income	177			141			199			271			788			193			197			226			222			838
Corporate, eliminations	(26		)	(22		)	(49		)	(40		)	(137		)	(34		)	(37		)	(41		)	(34		)	(146		)
Total Operating income	$	151		$	119		$	150		$	231		$	651		$	159		$	160		$	185		$	188		$	692

 

View source version on businesswire.com: https://www.businesswire.com/news/home/20210504005169/en/

Investors

Michael Steele, CFA, IRC

Vice President, Investor Relations

Phone: + 1 847 793 6707

[email protected]

Media

Therese Van Ryne

Director, Global Public Relations

Phone: + 1 847 370 2317

[email protected]

KEYWORDS: Illinois United States North America

INDUSTRY KEYWORDS: Software Supply Chain Management Networks Online Retail Other Retail Hardware Technology Other Transport Retail Transport Other Technology Logistics/Supply Chain Management

MEDIA:

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Humana Inc. to Present at the BoA Securities 2021 Health Care Conference

LOUISVILLE, Ky.–(BUSINESS WIRE)–
Humana Inc. (NYSE: HUM) announced today that Brian A. Kane, Chief Financial Officer, will make a presentation to investors at the BoA Securities Health Care Conference on Tuesday, May 11, 2021, at 11:45 a.m. Eastern time.

A live audio webcast of the presentation will be available via Humana’s Investor Relations page at humana.com. The company suggests webcast participants sign on approximately 15 minutes in advance of the presentation to allow time to run a system test and download any free software needed for access purposes.

About Humana

Humana Inc. (NYSE: HUM) is committed to helping our millions of medical and specialty members achieve their best health. Our successful history in care delivery and health plan administration is helping us create a new kind of integrated care with the power to improve health and well-being and lower costs. Our efforts are leading to a better quality of life for people with Medicare, families, individuals, military service personnel, and communities at large.

To accomplish that, we support physicians and other health care professionals as they work to deliver the right care in the right place for their patients, our members. Our range of clinical capabilities, resources and tools – such as in-home care, behavioral health, pharmacy services, data analytics and wellness solutions – combine to produce a simplified experience that makes health care easier to navigate and more effective.

More information regarding Humana is available to investors via the Investor Relations page of the company’s web site at humana.com, including copies of:

• Annual reports to stockholders
• Securities and Exchange Commission filings
• Most recent investor conference presentations
• Quarterly earnings news releases
• Calendar of events
• Corporate Governance information

View source version on businesswire.com: https://www.businesswire.com/news/home/20210504005114/en/

Amy Smith

Humana Investor Relations

(502) 580-2811

e-mail: [email protected]

Kelley Murphy

Humana Corporate Communications

(502) 224-1755

e-mail: [email protected]

KEYWORDS: United States North America Kentucky

INDUSTRY KEYWORDS: Professional Services Health Insurance Other Health Managed Care General Health

MEDIA:

Posted on May 4, 2021 6:33 am

Westlake Chemical Corporation Reports First Quarter 2021 Results

Westlake Chemical Corporation Reports First Quarter 2021 Results

• 154% increase in first quarter 2021 operating income of $346 million vs first quarter 2020

HOUSTON–(BUSINESS WIRE)–
Westlake Chemical Corporation (NYSE: WLK) (the “Company” or “Westlake”) today reported net income attributable to Westlake for the three months ended March 31, 2021 of $242 million, or $1.87 per diluted share, on net sales of $2,357 million. Net income in the first quarter of 2021 increased by $97 million from first quarter 2020 net income of $145 million, or $1.13 per share, on net sales of $1,932 million. Income from operations of $346 million for the first quarter of 2021 increased by $210 million from income from operations of $136 million for the first quarter of 2020. The increases in net income and income from operations were primarily driven by higher sales prices and integrated margins for most of our major products including polyethylene and PVC, as well as higher earnings resulting from strong demand in our downstream building products business. These increases in demand were driven by rebounding global economic activity in packaging consumption combined with the strength in the North American residential construction and the repair and remodeling markets. These increases were partially offset by lost sales and production volumes, increased maintenance expense and higher ethane and ethylene feedstock and natural gas fuel costs related to the severe winter storm. Compared to the prior-year period, net income was also impacted by higher income tax expense as the first quarter of 2020 included a tax benefit from the CARES Act of $62 million, or $0.48 per share.

First quarter 2021 net income of $242 million, or $1.87 per share, increased by $129 million from fourth quarter 2020 net income of $113 million, or $0.87 per share. Income from operations of $346 million for the first quarter of 2021 increased by $168 million from income from operations of $178 million for the fourth quarter of 2020. The increases in net income and income from operations versus the prior quarter were primarily due to continuing strength in demand for packaging products and construction activity which drove higher prices, integrated margins and volumes for most of our major products including polyethylene and PVC, in addition to strong earnings in our downstream building products business. These increases were partially offset by lower caustic soda prices as well as higher feedstock and fuel costs.

“Westlake had a strong start to 2021 as we experienced solid financial performance as we benefitted from the continuing global economic recovery and robust product demand paired with higher prices and margins for many of our products. The severe winter storm caused widespread industry disruption, including Westlake. Through the efforts of our employees, we quickly responded to the disruptions caused by the storm and fully resumed operations by the end of the quarter. We have worked tirelessly to address strong customer demand during the quarter,” said Albert Chao, President and Chief Executive Officer. “As we look further into the year, we see continuing strong global demand in our PVC, polyethylene and downstream building products business driven by solid markets for the downstream uses of our products including residential construction, packaging and healthcare. We will remain focused on our strategy of safely and efficiently operating our facilities, while making disciplined investments, launching new and sustainable products, furthering our chain integration, lowering our costs and leveraging our current products and footprint around the world, while being a good steward of the environment in the communities in which we operate.”

Net cash provided by operating activities was $265 million for the first quarter of 2021. As of March 31, 2021, cash and cash equivalents were $1,393 million and long-term debt was $3,547 million. Capital expenditures were $141 million for the first quarter of 2021.

EBITDA (earnings before interest expense, income taxes, depreciation and amortization) of $553 million for first quarter 2021 increased by $216 million compared to first quarter 2020 EBITDA of $337 million. First quarter 2021 EBITDA increased by $167 million compared to fourth quarter 2020 EBITDA of $386 million. A reconciliation of EBITDA to net income, income from operations, and net cash provided by operating activities can be found in the financial schedules at the end of this press release.

VINYLS SEGMENT

First quarter 2021 income from operations for the Vinyls segment of $200 million increased by $127 million from first quarter 2020 income from operations of $73 million. This increase in income from operations versus the prior-year period was primarily due to higher sales prices and integrated margins for PVC resin and higher earnings in our downstream building products business. The increase in operating income was partially offset by lower sales volumes and production and increased maintenance expense resulting from the severe winter storm, higher feedstock and fuel costs, as well as lower sales prices for caustic soda.

Vinyls income from operations for the first quarter of 2021 of $200 million increased by $34 million from fourth quarter 2020 income from operations of $166 million primarily due to strong sales prices for PVC resin, higher sales volumes for most of our major products and higher earnings in our downstream building products business, partially offset by higher feedstock and fuel costs as well as lower sales prices for caustic soda.

OLEFINS SEGMENT

First quarter 2021 income from operations for the Olefins segment of $180 million increased by $118 million from first quarter 2020 income from operations of $62 million. This increase in income from operations versus the prior-year period was primarily due to higher sales prices and integrated margins for all of our products, driven by continuing strong global demand, partially offset by lower sales volumes and lost production and increased maintenance expense resulting from the impact of the severe winter storm, as well as higher feedstock costs and fuel costs.

Olefins income from operations of $180 million in the first quarter of 2021 increased by $158 million from fourth quarter 2020 income from operations of $22 million. This increase in income from operations versus the prior quarter was primarily due to higher sales prices and integrated margins, driven by continuing strong global demand, as well as increased sales volumes for our products resulting from the hurricane impacts in late 2020, partially offset by higher feedstock and fuel costs.

The statements in this release and the related teleconference relating to matters that are not historical facts, including statements regarding continued improvement of our performance in 2021, demand for polyethylene, PVC and downstream business products, results of investments in initiatives and our focus on our strategy of safely and efficiently operating our facilities, while making disciplined investments, launching new and sustainable products, furthering our chain integration, lowering our costs and leveraging our current products and footprint around the world, and being a good steward of the environment in the communities in which we operate, are forward-looking statements. These forward-looking statements are subject to significant risks and uncertainties. Actual results could differ materially, based on factors including, but not limited to: the COVID-19 pandemic and the response thereto; general economic and business conditions; the cyclical nature of the chemical industry; availability, cost and volatility of raw materials and utilities, including natural gas and natural gas liquids from shale production; the price of crude oil; uncertainties associated with the United States and worldwide economies, including those due to global economic and financial conditions; governmental regulatory actions, including environmental regulation and changes in trade policies; political unrest; industry production capacity and operating rates; the supply/demand balance for Westlake’s products; competitive products and pricing pressures; access to capital markets; technological developments; the effect and results of litigation and settlements of litigation; operating interruptions; and other risk factors. For more detailed information about the factors that could cause actual results to differ materially, please refer to Westlake’s Annual Report on Form 10-K for the year ended December 31, 2020, which was filed with the SEC in February 2021.

Use of Non-GAAP Financial Measures

This release makes reference to certain “non-GAAP” financial measures, such as EBITDA, as defined in Regulation G of the U.S. Securities Exchange Act of 1934, as amended. For this purpose, a non-GAAP financial measure is generally defined by the Securities and Exchange Commission (“SEC”) as a numerical measure of a registrant’s historical or future financial performance, financial position or cash flows that (1) excludes amounts, or is subject to adjustments that have the effect of excluding amounts, that are included in the most directly comparable measure calculated and presented in accordance with GAAP in the statement of income, balance sheet or statement of cash flows (or equivalent statements) of the registrant; or (2) includes amounts, or is subject to adjustments that have the effect of including amounts, that are excluded from the most directly comparable measure so calculated and presented. We report our financial results in accordance with U.S. generally accepted accounting principles (“U.S. GAAP”), but believe that certain non-GAAP financial measures, such as EBITDA, provide useful supplemental information to investors regarding the underlying business trends and performance of the Company’s ongoing operations and are useful for period-over-period comparisons of such operations. These non-GAAP financial measures should be considered as a supplement to, and not as a substitute for, or superior to, the financial measures prepared in accordance with U.S. GAAP. A reconciliation of EBITDA to net income, income from operations and net cash provided by operating activities can be found in the financial schedules at the end of this press release.

About Westlake:

Westlake is a global manufacturer and supplier of materials and innovative products that enhance life every day. Headquartered in Houston, we provide the building blocks for vital solutions — from packaging and healthcare products to automotive and consumer goods, to building and construction products. For more information, visit the company’s web site at www.westlake.com.

Westlake Chemical Corporation Conference Call Information:

A conference call to discuss Westlake Chemical Corporation’s first quarter 2021 results will be held Tuesday, May 4, 2021 at 11:00 AM Eastern Time (10:00 AM Central Time). To access the conference call, dial (855) 760-8160 or (704) 288-0624 for international callers, approximately 10 minutes prior to the scheduled start time and reference passcode 467 76 49.

A replay of the conference call will be available beginning two hours after its conclusion until 11:59 p.m. Eastern Time on May 11, 2021. To hear a replay, dial (855) 859-2056 or (404) 537-3406 for international callers. The replay passcode is 467 76 49.

The conference call will also be available via webcast at https://edge.media-server.com/mmc/p/fmi27wgt and the earnings release can be obtained via the Company’s web page at: http://www.westlake.com/investor-relations.

WESTLAKE CHEMICAL CORPORATION CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited)
		Three Months Ended March 31,
		2021				2020
		(In millions of dollars, except per share data)
Net sales		$	2,357			$	1,932
Cost of sales		1,848				1,649
Gross profit		509				283
Selling, general and administrative expenses		136				120
Amortization of intangibles		27				27
Income from operations		346				136
Interest expense		(33		)		(31		)
Other income, net		12				11
Income before income taxes		325				116
Provision for (benefit from) income taxes		72				(41		)
Net income		253				157
Net income attributable to noncontrolling interests		11				12
Net income attributable to Westlake Chemical Corporation		$	242			$	145
Earnings per common share attributable to Westlake Chemical Corporation:
Basic		$	1.88			$	1.13
Diluted		$	1.87			$	1.13

WESTLAKE CHEMICAL CORPORATION CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited)
		March 31, 2021				December 31, 2020
		(In millions of dollars)
ASSETS
Current assets
Cash and cash equivalents		$	1,393			$	1,313
Accounts receivable, net		1,327				1,214
Inventories		955				918
Prepaid expenses and other current assets		59				32
Total current assets		3,734				3,477
Property, plant and equipment, net		6,921				6,920
Other assets, net		3,395				3,438
Total assets		$	14,050			$	13,835
LIABILITIES AND EQUITY
Current liabilities (accounts payable and accrued and other liabilities)		$	1,326			$	1,357
Long-term debt, net		3,547				3,566
Other liabilities		2,352				2,334
Total liabilities		7,225				7,257
Total Westlake Chemical Corporation stockholders’ equity		6,261				6,043
Noncontrolling interests		564				535
Total equity		6,825				6,578
Total liabilities and equity		$	14,050			$	13,835

WESTLAKE CHEMICAL CORPORATION CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)
		Three Months Ended March 31,
		2021				2020
		(In millions of dollars)
Cash flows from operating activities
Net income		$	253			$	157
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization		195				190
Deferred income taxes		10				126
Net loss on disposition and others		15				9
Other balance sheet changes		(208		)		(421		)
Net cash provided by operating activities		265				61
Cash flows from investing activities
Additions to property, plant and equipment		(141		)		(164		)
Return of (additions to) investment from unconsolidated subsidiaries		(7		)		39
Other, net		13				(7		)
Net cash used for investing activities		(135		)		(132		)
Cash flows from financing activities
Distributions to noncontrolling interests		(11		)		(10		)
Dividends paid		(35		)		(34		)
Proceeds from debt issuance		4				—
Net proceeds from (repayment of) short-term notes payable		—				(21		)
Proceeds from drawdown of revolver		—				1,000
Repurchase of common stock for treasury		—				(54		)
Other, net		8				2
Net cash provided by (used for) financing activities		(34		)		883
Effect of exchange rate changes on cash, cash equivalents and restricted cash		(3		)		(3		)
Net increase in cash, cash equivalents and restricted cash		93				809
Cash, cash equivalents and restricted cash at beginning of period		1,337				750
Cash, cash equivalents and restricted cash at end of period		$	1,430			$	1,559

WESTLAKE CHEMICAL CORPORATION SEGMENT INFORMATION (Unaudited)
		Three Months Ended March 31,
		2021				2020
		(In millions of dollars)
Net external sales
Vinyls		$	1,820			$	1,505
Olefins		537				427
		$	2,357			$	1,932
Income (loss) from operations
Vinyls		$	200			$	73
Olefins		180				62
Corporate and other		(34		)		1
		$	346			$	136
Depreciation and amortization
Vinyls		$	157			$	153
Olefins		36				35
Corporate and other		2				2
		$	195			$	190
Other income, net
Vinyls		$	10			$	6
Olefins		—				1
Corporate and other		2				4
		$	12			$	11

WESTLAKE CHEMICAL CORPORATION RECONCILIATION OF EBITDA TO NET INCOME, INCOME FROM OPERATIONS AND NET CASH PROVIDED BY OPERATING ACTIVITIES (Unaudited)
		Three Months Ended December 31,				Three Months Ended March 31,
		2020				2021				2020
		(In millions of dollars)
Net cash provided by operating activities		$	431			$	265			$	61
Changes in operating assets and liabilities and other		(316		)		(2		)		222
Deferred income taxes		8				(10		)		(126		)
Net income		123				253				157
Less:
Other income, net		12				12				11
Interest expense		(34		)		(33		)		(31		)
Benefit from (provision for) income taxes		(33		)		(72		)		41
Income from operations		178				346				136
Add:
Depreciation and amortization		196				195				190
Other income, net		12				12				11
EBITDA		$	386			$	553			$	337

WESTLAKE CHEMICAL CORPORATION SUPPLEMENTAL INFORMATION Product Sales Price and Volume Variance by Operating Segments
		First Quarter 2021 vs. First Quarter 2020				First Quarter 2021 vs. Fourth Quarter 2020
		Average Sales Price		Volume		Average Sales Price		Volume
Vinyls		+19.1%		+1.8%		+7.3%		+7.2%
Olefins		+35.2%		-9.4%		+27.7%		+15.3%
Company		+22.7%		-0.7%		+11.2%		+8.8%

Average Quarterly Industry Prices (1)
		Quarter Ended
		March 31, 2020		June 30, 2020		September 30, 2020		December 31, 2020		March 31, 2021
Average domestic prices
Natural gas ($/MMBtu) (2)		2.0		1.8		2.0		2.7		2.8
Ethane (cents/lb) (3)		4.7		6.4		7.4		7.1		8.1
Propane (cents/lb) (4)		8.8		9.6		11.9		13.5		21.2
Ethylene (cents/lb) (5)		15.8		11.0		19.3		24.0		45.1
Polyethylene (cents/lb) (6)		52.3		49.0		61.0		67.7		78.0
Styrene (cents/lb) (7)		62.3		48.3		53.8		59.6		76.5
Caustic soda ($/short ton) (8)		648		698		697		653		648
Chlorine ($/short ton) (9)		176		175		176		193		234
PVC (cents/lb) (10)		71.8		66.5		73.3		84.5		92.8
Average export prices
Polyethylene (cents/lb) (11)		39.4		38.5		45.7		53.2		76.3
Caustic soda ($/short ton) (12)		203		319		260		219		249
PVC (cents/lb) (13)		36.9		27.5		38.5		55.4		67.8

________________

(1)		Industry pricing data was obtained through IHS Markit (“IHS”). We have not independently verified the data.
(2)		Average Burner Tip contract prices of natural gas over the period.
(3)		Average Mont Belvieu spot prices of purity ethane over the period.
(4)		Average Mont Belvieu spot prices of non-TET propane over the period.
(5)		Average North American spot prices of ethylene over the period.
(6)		Average North American Net Transaction prices of polyethylene low density GP-Film grade over the period.
(7)		Average North American contract prices of styrene over the period.
(8)		Average USGC-CSLi index values for caustic soda over the period. As stated by IHS, “the caustic soda price listing represents the USGC-CSLi values. USGC-CSLi does not reflect contract price discounts, implementation lags, caps or other adjustments factors. Additionally, it is not intended to represent a simple arithmetic average of all market transactions occurring during the month. Rather, the USGC-CSLi is most representative of the month-to-month caustic soda price movement for contract volumes of liquid 50% caustic soda rather than the absolute value of contract prices at a particular point in time. It is intended to serve only as a benchmark.”
(9)		Average North American contract prices of chlorine over the period.
(10)		Average North American contract prices of pipe grade polyvinyl chloride (“PVC”) over the period. As stated by IHS, “the contract resin prices posted reflect an “index” or “market” for prices before discounts, rebates, incentives, etc.”
(11)		Average North American export price for low density polyethylene GP-Film grade over the period.
(12)		Average North American low spot export prices of caustic soda over the period.
(13)		Average North American spot export prices of PVC over the period.

 

View source version on businesswire.com: https://www.businesswire.com/news/home/20210504005137/en/

Contact—(713) 960-9111

Investors—Steve Bender

Media—L. Benjamin Ederington

KEYWORDS: United States North America Texas

INDUSTRY KEYWORDS: Chemicals/Plastics Manufacturing

MEDIA:

Posted on May 4, 2021 6:33 am

Jounce Therapeutics Reports First Quarter 2021 Financial Results

– Enrollment on track in both the Phase 1 INNATE trial of JTX-8064 (LILRB2 / ILT4) and the biomarker selected Phase 2 SELECT trial of Vopratelimab in combination with Pimivalimab –

– Ended the quarter with $271.3 million in cash, cash equivalents and investments –

– Company to host conference call and webcast today at 8:00 AM ET –

CAMBRIDGE, Mass., May 04, 2021 (GLOBE NEWSWIRE) — Jounce Therapeutics, Inc. (NASDAQ: JNCE), a clinical-stage company focused on the discovery and development of novel cancer immunotherapies and predictive biomarkers, today reported financial results for the first quarter ended March 31, 2021 and provided a corporate update.

“Jounce made meaningful progress this quarter as we continue to advance our two proof of concept studies, grow our discovery and development IO pipeline, and add to our strong balance sheet. We also welcomed a new Chief Scientific Officer, Dr. Dmitri Wiederschain, who brings more than 15 years of pharmaceutical industry experience and a broad knowledge of contemporary immuno-oncology approaches,” said Richard Murray, Ph.D., chief executive officer and president of Jounce Therapeutics. “We are at an exciting point in Jounce’s development, with the leadership, capital and resources, and scientific and clinical development acumen needed to move beyond our next set of inflection points. We remain committed to our core strategy of translational science, biomarker approaches, and targeting new immune mechanisms in our goal of bringing the right immunotherapies to the right patients.”

Pipeline Update & Highlights:

JTX-8064 (LILRB2 / ILT4)

• Initiated enrollment in the Phase 1 INNATE trial of JTX-8064: In January 2021, Jounce initiated enrollment in INNATE, a Phase 1 clinical trial of JTX-8064 alone and in combination with its PD-1 inhibitor, JTX-4014, now known as pimivalimab, or an approved PD-1 inhibitor. INNATE remains on track for the opening of eight expansion cohorts in the second half of the year, one with JTX-8064 monotherapy, and seven in combination with a PD-1 inhibitor.
• Presented JTX-8064 preclinical data at the American Association for Cancer Research (AACR) Annual Meeting: In April 2021 at AACR, Jounce presented data describing how expression profiles of LILRB2 mRNA, the proprietary Tumor Associated Macrophage (“TAM”) signature, and an interferon gamma signature were used to identify tumor types that may benefit most from JTX-8064 treatment, alone or in combination with a PD-1 inhibitor. This data was used to inform the tumor types in the expansion cohorts of the INNATE trial.
• Trial in progress posters to be presented at the American Society of Clinical Oncology (ASCO) 2021 Annual Meeting: On June 4, 2021 Jounce will present a trial in progress poster at the ASCO Annual Meeting on INNATE. The poster will include the study design and the rationale for indications chosen for the expansion cohorts. Eight expansion cohorts will be opening for enrollment in the second half of 2021, one with JTX-8064 and seven with JTX-8064 plus a PD-1 inhibitor.

Vopratelimab (ICOS) and Pimivalimab (PD-1)

• Continued enrollment in the Phase 2 SELECT trial of vopratelimab: Enrollment continues in SELECT, a randomized Phase 2 trial to evaluate vopratelimab in combination with pimivalimab versus pimivalimab alone in immunotherapy naïve, TISvopra biomarker-selected, second line non-small cell lung cancer patients. Jounce is on track to report data from the SELECT trial in 2022. The SELECT trial will also provide additional important single agent data for pimivalimab in a new biomarker selection paradigm.
• Trial in progress poster to be presented at the ASCO 2021 Annual Meeting: On June 4, 2021 Jounce will present a trial in progress poster at the ASCO Annual Meeting on SELECT. The poster will describe the study design, TISvopra biomarker, and patient selection strategy of the SELECT trial.

JTX-1811 (CCR8)

• Progressed JTX-1811 toward IND: Jounce continues to progress JTX-1811, a potential first-in-class antibody designed to bind to CCR8 and selectively deplete immunosuppressive tumor-infiltrating T regulatory cells. JTX-1811 remains on track for an investigational new drug application (“IND”) clearance in 2021 at which point Gilead Sciences, Inc. will take over clinical development and potential commercialization.

Discovery Pipeline

• Productive discovery engine with the goal of an IND every 12 to 18 months: Jounce continues to invest in and advance its growing immuno-oncology pipeline. The broad discovery pipeline includes multiple programs targeting diverse immune cell types and PD-(L)1 inhibitor resistance mechanisms.

First Quarter 2021 Financial Results:

• Cash position: As of March 31, 2021, cash, cash equivalents and investments increased to $271.3 million, compared to $213.2 million as of December 31, 2020. The increase was primarily due to receipt of $60.6 million in net proceeds from the follow-on public offering completed in March 2021 and receipt of $30.2 million in net proceeds from sales under Jounce’s at-the-market offering program (“ATM”), offset by operating expenses incurred during the period.
• License and collaboration revenue: License revenue of $1.5 million was recognized during the first quarter of 2021 and was comprised solely of non-cash revenue related to research and transition services performed under the Gilead License Agreement. Jounce did not recognize any license or collaboration revenue in the first quarter of 2020.
• Research and development expenses: Research and development expenses were $20.5 million for the first quarter of 2021, compared to $19.6 million for the same period in 2020. The increase in research and development expenses was primarily due to increased manufacturing and IND-enabling activities performed for our development programs, offset by decreased clinical and regulatory costs attributable to reduced spend on vopratelimab.
• General and administrative expenses: General and administrative expenses were $7.6 million for the first quarter of 2021, compared to $7.5 million for the same period in 2020. The increase in general and administrative expenses was primarily due to increased stock-based compensation expense.
• Net loss: Net loss was $26.5 million for the first quarter of 2021, resulting in basic and diluted net loss per share of $0.58. Net loss was $26.4 million for the same period in 2020, resulting in a basic and diluted net loss per share of $0.78. The increase in net loss was primarily attributable to increased operating expenses, offset by revenue recognized in the first quarter of 2021.

Financial Guidance:

Based on its current operating and development plans, Jounce continues to expect gross cash burn on operating expenses and capital expenditures for the full year 2021 to be approximately $95.0 million to $110.0 million.

Given the strength of its balance sheet, Jounce expects its existing cash, cash equivalents and investments to be sufficient to enable the funding of its operating expenses and capital expenditure requirements through the second quarter of 2023.

Conference Call and Webcast Information:

Jounce Therapeutics will host a live conference call and webcast today at 8:00 a.m. ET. To access the conference call, please dial (866) 916-3380 (domestic) or (210) 874-7772 (international) and refer to conference ID 1389694. The live webcast can be accessed under “Events & Presentations” in the Investors and Media section of Jounce’s website at www.jouncetx.com. The webcast will be archived and made available for replay on Jounce’s website approximately two hours after the call and will be available for 30 days.

About Jounce Therapeutics:

Jounce Therapeutics, Inc. is a clinical-stage immunotherapy company dedicated to transforming the treatment of cancer by developing therapies that enable the immune system to attack tumors and provide long-lasting benefits to patients through a biomarker-driven approach. Jounce currently has multiple development stage programs ongoing while simultaneously advancing additional early-stage assets from its robust discovery engine based on its Translational Science Platform. Jounce’s highest priority program, JTX-8064, is a LILRB2 (ILT4) receptor antagonist shown to reprogram immune-suppressive tumor associated macrophages to an anti-tumor state in preclinical studies. A Phase 1 clinical trial, named INNATE, of JTX-8064 as a monotherapy and in combination with pimivalimab (formerly JTX-4014), Jounce’s internal PD-1 inhibitor, or an approved PD-1 inhibitor is currently enrolling patients with advanced solid tumors. Jounce’s most advanced product candidate, vopratelimab, is a monoclonal antibody that binds to and activates ICOS, and is currently being studied in the SELECT Phase 2 trial. Pimivalimab is a PD-1 inhibitor intended for combination use in the INNATE and SELECT trials and with Jounce’s broader pipeline. Additionally, Jounce exclusively licensed worldwide rights to JTX-1811, a monoclonal antibody targeting CCR8 and designed to selectively deplete T regulatory cells in the tumor microenvironment, to Gilead Sciences, Inc. For more information, please visit www.jouncetx.com.

Cautionary Note Regarding Forward-Looking Statements:

Various statements in this release concerning Jounce’s future expectations, plans and prospects, including without limitation, Jounce’s expectations regarding financial guidance, operating expenses and capital expenditures; the timing, progress, results and release of data for clinical trials of vopratelimab, pimivalimab and JTX-8064; identification, selection and enrollment of patients for Jounce’s clinical trials; the use of pimivalimab in combination with Jounce’s other product candidates; and the timing, progress and results of preclinical studies and development of Jounce’s product candidates, including JTX-1811, and any future product candidates may constitute forward-looking statements for the purposes of the safe harbor provisions under The Private Securities Litigation Reform Act of 1995 and other federal securities laws and are subject to substantial risks, uncertainties and assumptions. You should not place reliance on these forward-looking statements, which often include words such as “expect,” “goal,” “plan,” “on track,” “will” or similar terms, variations of such terms or the negative of those terms. Although Jounce believes that the expectations reflected in the forward-looking statements are reasonable, Jounce cannot guarantee such outcomes. Actual results may differ materially from those indicated by these forward-looking statements as a result of various important factors, including, without limitation, Jounce’s ability to successfully demonstrate the efficacy and safety of its product candidates and future product candidates; the preclinical and clinical results for its product candidates, which may not support further development and marketing approval; the potential advantages of Jounce’s product candidates; Jounce’s ability to successfully manage its clinical trials; the development plans of its product candidates and any companion or complementary diagnostics; actions of regulatory agencies, which may affect the initiation, timing and progress of preclinical studies and clinical trials of Jounce’s product candidates; Jounce’s ability to obtain, maintain and protect its intellectual property; Jounce’s ability to manage operating expenses and capital expenditures; and those risks more fully discussed in the section entitled “Risk Factors” in Jounce’s most recent Annual Report on Form 10-K filed with the Securities and Exchange Commission as well as discussions of potential risks, uncertainties, and other important factors in Jounce’s subsequent filings with the Securities and Exchange Commission. All such statements speak only as of the date made, and Jounce undertakes no obligation to update or revise publicly any forward-looking statements, whether as a result of new information, future events or otherwise.

Jounce Therapeutics, Inc. Condensed Consolidated Statements of Operations (unaudited) (amounts in thousands, except per share data)
	Three Months Ended March 31,
	2021				2020
Revenue:
License and collaboration revenue—related party	$	1,539			$	—
Operating expenses:
Research and development	20,507				19,646
General and administrative	7,615				7,539
Total operating expenses	28,122				27,185
Operating loss	(26,583		)		(27,185		)
Other income, net	49				750
Loss before provision for income taxes	(26,534		)		(26,435		)
Provision for income taxes	1				8
Net loss	$	(26,535	)		$	(26,443	)
Net loss per share, basic and diluted	$	(0.58	)		$	(0.78	)
Weighted-average common shares outstanding, basic and diluted	45,962				34,029
Jounce Therapeutics, Inc. Selected Condensed Consolidated Balance Sheet Data (unaudited) (amounts in thousands)
	March 31,				December 31,
	2021				2020
Cash, cash equivalents and investments	$	271,286			$	213,188
Working capital	$	254,088			$	192,067
Total assets	$	305,153			$	244,236
Total stockholders’ equity	$	279,454			$	211,294

Investor and Media Contacts:

Malin Deon
Jounce Therapeutics, Inc.
+1-857-259-3843
[email protected]

Mark Yore
Jounce Therapeutics, Inc.
+1-857-200-1255
[email protected]