Market Newsdesk

Highlights for the quarter vs Q
3
F
Y
2
0
:

• Revenues of $1,674.7 million, an increase of $31.1 million or 1.9%;
• Gross profit of $486.9 million representing 29.1% of revenues, an increase of $45.0 million;
• Net income of $198.7 million, an increase of $63.4 million, which resulted in a diluted earnings per share of $2.22, an increase of $0.73 per share;
• Normalized net income^[1] of $190.6 million, an increase of $53.9 million, which resulted in a normalized diluted earnings per share^[1] of $2.13, an increase of $0.62 per share or 41.1%;
• Normalized EBITDA^[1] of $348.6 million representing 20.8% of revenues, an increase of $80.4 million or 30.0%;
• FY21 Normalized EPS^[1] guidance increased from $3.65-$3.95 to $5.00-$5.25, an expected growth of 31% to 37% compared to FY20. 

Recent events

• On November 24, 2020, the Company’s Board of Directors authorized the renewal of its normal course issuer bid program which, subject to approval by the TSX, allows for the purchase for cancellation of up to approximately 4.3M subordinate voting shares over the next 12 months, representing approximately 10% of the Company’s public float.
• The Company’s Board of Directors declared a quarterly dividend of $0.11 per share.

^[1]See “Non-IFRS Measures” section of this press release.

VALCOURT, Quebec, Nov. 25, 2020 (GLOBE NEWSWIRE) — BRP Inc. (TSX:DOO; NASDAQ:DOOO) today reported its financial results for the three- and nine-month periods ended October 31, 2020. All financial information is in Canadian dollars unless otherwise noted. The complete financial results are available at Sedar, as well as in the Quarterly Reports section of BRP’s website.

“We are very pleased with our results as our strong line-up continues to gain market share globally. The surge in demand for our products has offered a major opportunity for us to continue this pace and we are working hard to maintain it. We expect this positive trend to continue over the next quarter, and based on this, we are increasing our year-end guidance with Normalized EPS now expected to be up 31% to 37% vs. last year”,said José Boisjoli, President and CEO. 

“I would also like to thank the remarkable dedication of our employees, dealers and suppliers who have risen to the occasion and allowed us to continue to deliver exceptional results while still ensuring the health and safety of our people everywhere around the world,” concluded Boisjoli.

Highlights for the Three-
and
Nine
–
Month Period
s
Ended
October
31
, 20
20

Revenues increased by $31.1 million, or 1.9%, to $1,674.7 million for the three-month period ended October 31, 2020, compared with $1,643.6 million for the corresponding period ended October 31, 2019. The revenue increase was mainly driven by lower sales programs due to a favourable retail environment and a favourable product mix, partially offset by a lower volume of products sold due to the replenishment of inventory at International.
        
The Company’s North American retail sales for powersports vehicles increased by 16% for the three-month period ended October 31, 2020 compared with the three-month period ended October 31, 2019. The increase was driven by Year-Round Products and snowmobile, partially offset by PWC. North American boat retail sales increased by 4% compared with the three-month period ended October 31, 2019.

Gross profit increased by $45.0 million, or 10.2%, to $486.9 million for the three-month period ended October 31, 2020, compared with $441.9 million for the corresponding period ended October 31, 2019. The gross profit increase includes an unfavourable foreign exchange rate variation of $15 million. Gross profit margin percentage increased by 220 basis points to 29.1% from 26.9% for the three-month period ended October 31, 2019. The increase of 220 basis points was primarily due to a positive pricing and sales programs variation due to the favourable retail environment, partially offset by the under-absorption of fixed costs resulting from a lower level of production in Seasonal Products and an unfavourable foreign exchange rate variation.

Operating expenses decreased by $31.3 million, or 13.4%, to $202.6 million for the three-month period ended October 31, 2020, compared with $233.9 million for the three-month period ended October 31, 2019. This decrease was mainly attributable to cost reduction initiatives to mitigate the COVID-19 impact.

Revenues decreased by $299.0 million, or 6.7%, to $4,137.8 million for the nine-month period ended October 31, 2020, compared with $4,436.8 million for the corresponding period ended October 31, 2019. The revenue decrease was primarily attributable to a lower volume of Seasonal Products due to the temporary suspension of production during part of the first half of Fiscal 2021 following government measures adopted in response to COVID-19 and to a lower volume of Marine products sold due to the wind-down of the Evinrude outboard engines production, partially offset by a favourable foreign exchange rate variation of $23 million.
        
The Company’s North American retail sales for powersports vehicles increased by 23% for the nine-month period ended October 31, 2020 compared with the nine-month period ended October 31, 2019, mainly due to an increase in SSV and ATV. North American boat retail sales increased by 8% compared with the nine-month period ended October 31, 2019.

Gross profit decreased by $99.9 million, or 9.3%, to $970.4 million for the nine-month period ended October 31, 2020, compared with $1,070.3 million for the corresponding period ended October 31, 2019. The gross profit decrease includes a favourable foreign exchange rate variation of $1 million. Gross profit margin percentage decreased by 60 basis points to 23.5% from 24.1% for the nine-month period ended October 31, 2019. The decrease was primarily due to the under-absorption of fixed costs resulting from the temporary suspension of production, the costs related to the wind-down of the Evinrude outboard engines production and higher labour costs. The decrease was partially offset by a positive pricing and sales programs variation due to the favourable retail environment.

Operating expenses increased by $90.5 million, or 13.6%, to $753.9 million for the nine-month period ended October 31, 2020, compared with $663.4 million for the nine-month period ended October 31, 2019. The increase was mainly attributable to the impairment charge recorded during the first quarter of Fiscal 2021 for the Marine segment and the restructuring costs for a total of $214.5 million, partially offset by cost reduction initiatives to mitigate the COVID-19 impact.

QUARTERLY REVIEW BY
SEGMENT

Powersports

Year-Round Products

Revenues from Year-Round Products increased by $78.0 million, or 10.8%, to $803.0 million for the three-month period ended October 31, 2020, compared with $725.0 million for the corresponding period ended October 31, 2019. The increase resulted mainly from lower sales programs due to a favourable retail environment and a favourable product mix in SSV and 3WV. The increase was partially offset by a lower volume of SSV sold due to the replenishment of inventory at International.

North American Year-Round Products retail sales increased on a percentage basis in the low-thirties range compared with the three-month period ended October 31, 2019.

Seasonal Products

Revenues from Seasonal Products decreased by $46.5 million, or 8.4%, to $508.3 million for the three-month period ended October 31, 2020, compared with $554.8 million for the corresponding period ended October 31, 2019. The decrease was driven by a lower volume of products sold due to a change in the production schedule compare to the third quarter of Fiscal 2020, partially offset by lower sales programs due to favourable retail environment.

North American Seasonal Products retail sales decreased on a percentage basis by high-single digits compared with the three-month period ended October 31, 2019.

Powersports
PA
&A
and OEM Engines

        
Revenues from Powersports PA&A and OEM Engines increased by $33.3 million, or 14.7%, to $259.9 million for the three-month period ended October 31, 2020, compared with $226.6 million for the corresponding period ended October 31, 2019. The increase was mainly attributable to a higher volume of PA&A coming from strong unit retail sales and higher replacement parts revenue driven by an increase usage of products by consumers.

Marine

Revenues from the Marine segment decreased by $34.0 million, or 23.9%, to $108.4 million for the three-month period ended October 31, 2020, compared with $142.4 million for the corresponding period ended October 31, 2019. The decrease was mainly due to the wind-down of the Evinrude outboard engines production resulting in a lower volume of outboard engines sold.

DECLARATION OF DIVIDEND

The Board of Directors approved a quarterly dividend of $0.11 per share for holders of its multiple voting shares and subordinate voting shares. The dividend will be paid on January 14, 2021 to shareholders of record at the close of business on December 31, 2020. The payment of each quarterly dividend remains subject to the declaration of that dividend by the Board of Directors.

The actual amount, the declaration date, the record date and the payment date of each quarterly dividend are subject to the discretion of the Board of Directors.

Fiscal Year 2021 Guidance

The financial guidance targets have been adjusted as follows:

Financial Metric		FY20		FY21 Guidance [ 3] vs FY20 (vs. Previous Guidance)
Revenues
	Year-Round Products	$2,791.7		Down 2% to up 2% (previously ‘’Flat to down 4%”)
	Seasonal Products	$1,901.4		Down 2 % to 5% (previously ‘’Down 12% to 15%”)
	Powersports PAA and OEM Engines	$799.8		Up 5% to 7% (previously ‘’Flat to up 5%”)
	Marine	$559.8		Down 25% to 30%
Total Company Revenues		$6,052.7		Down 1% to 5% (previously ‘’Down 5% to 9%”)
Normalized EBITDA [ 1]		$804.4		Up 20% to 24% (previously ‘’Flat to up 5%”)
Effective Tax Rate[1][2]		26.1%		26.0% to 26.5% (previously ‘’26.5%’’)
Normalized Earnings per Share – Diluted [ 1]		$3.83		Up 31% to 37% ($5.00 to $5.25) (previously ‘’$3.65 to $3.95”)
Net Income		370.6		$225M to $250M

Other assumptions for FY21 Guidance:

• Depreciation expense: ~$260M
• Net Financing Costs Adjusted: ~$105M
• Weighted average number of shares – diluted: ~89M shares
• Capital Expenditures: ~$275M to $300M

^[1] Please refer to “Non-IFRS Measures” section.
^[2] Effective tax rate based on Normalized Earnings before Normalized Income Tax.
^[3] Please refer to the “Caution Concerning Forward-Looking Statements” and “Key assumptions” sections of this press release for a summary of important risk factors that could affect the above guidance and of the assumptions underlying this Fiscal Year 2021 financial guidance.

Net Income data
	Three-month periods ended				Nine-month periods ended
(in millions of Canadian dollars)	October 31, 2020		October 31, 2019		October 31, 2020		October 31, 2019
Revenues by category
Powersports
Year-Round Products	$ 803.0		$725.0		$ 2,064.5		$2,086.6
Seasonal Products	508.3		554.8		1,153.6		1,358.7
Powersports PA&A and OEM Engines	259.7		225.7		626.0		584.4
Marine	103.7		138.1		293.7		407.1
Total Revenues	1,674.7		1,643.6		4,137.8		4,436.8
Cost of sales	1,187.8		1,201.7		3,167.4		3,366.5
Gross profit	486.9		441.9		970.4		1,070.3
As a percentage of revenues	29.1	%	26.9	%	23.5	%	24.1	%
Operating expenses
Selling and marketing	84.6		104.6		230.3		293.6
Research and development	66.0		60.3		163.4		173.7
General and administrative	60.6		70.3		159.3		188.4
Other operating expenses (income)	(8.6	)	(1.3	)	23.8		7.7
Impairment charge	—		—		177.1		—
Total operating expenses	202.6		233.9		753.9		663.4
Operating income	284.3		208.0		216.5		406.9
Net financing costs	26.0		23.8		76.7		64.1
Foreign exchange (gain) loss on long-term debt	(9.4	)	—		(19.6	)	0.4
Income before income taxes	267.7		184.2		159.4		342.4
Income tax expense	69.0		48.9		60.7		90.0
Net income	$ 198.7		$135.3		$ 98.7		$252.4
Attributable to shareholders	$ 198.8		$135.6		$ 99.1		$253.0
Attributable to non-controlling interest	$ (0.1	)	$(0.3	)	$ (0.4	)	$(0.6	)
Normalized EBITDA [1]	$ 348.6		$268.2		$ 685.9		$582.6
Normalized net income [1]	$ 190.6		$136.7		$ 314.2		$258.2

^[1] See “Non-IFRS Measures” section.

Other Financial data
	Three-month periodsended		Nine-month periodsended
(in millions of Canadian dollars, except per share data)	October 31, 2020	October 31, 2019	October 31, 2020	October 31, 2019
Revenues by geography
United States	$ 952.3	$890.5	$ 2,361.9	$2,465.0
Canada	298.5	281.6	626.5	712.9
International [1]	423.9	471.5	1,149.4	1,258.9
	$ 1,674.7	$1,643.6	$ 4,137.8	$4,436.8
Weighted average number of shares – basic	87,690,498	89,684,315	87,546,386	94,157,306
Weighted average number of shares – diluted	89,607,635	90,829,230	88,379,007	95,121,505
Earnings per share – basic	$ 2.27	$1.51	$ 1.13	$2.69
Earnings per share – diluted	2.22	1.49	1.12	2.66
Normalized earnings per share – basic [2]	2.17	1.53	3.59	2.75
Normalized earnings per share – diluted [2]	2.13	1.51	3.56	2.72

^[
1
] International is defined as all jurisdictions except the United States and Canada.

^[
2
] See “Non-IFRS Measures” section.

Conference
C
all and Webcast
P
resentation

Today at 9 a.m. EST, BRP Inc. will host a conference call and webcast to discuss its FY21 third quarter results. The call will be hosted by José Boisjoli, President and CEO, and Sébastien Martel, CFO. To listen to the conference call by phone (event number 4344421), please dial 514-392-0235 or 1-800-564-3880 (toll-free in North America). Click here for international dial-in numbers.

The Company’s third quarter FY21 MD&A, financial statements and webcast presentation will be posted in the Quarterly Reports section of BRP’s website.

About BRP
We are a global leader in the world of powersports vehicles, propulsion systems and boats built on over 75 years of ingenuity and intensive consumer focus. Our portfolio of industry-leading and distinctive products includes Ski-Doo and Lynx snowmobiles, Sea-Doo watercraft, Can-Am on- and off-road vehicles, Alumacraft, Manitou, Quintrex, Stacer and Savage boats, Evinrude and Rotax marine propulsion systems as well as Rotax engines for karts, motorcycles and recreational aircraft. We complete our lines of products with a dedicated parts, accessories and apparel business to fully enhance the riding experience. With annual sales of CA$6.1 billion from over 120 countries, our global workforce is made up of approximately 12,600 driven, resourceful people.

www.brp.com

@
BRPNews

Ski-Doo, Lynx, Sea-Doo, Can-Am, Rotax, Alumacraft, Manitou, Quintrex, Stacer, Savage, Evinrude and the BRP logo are trademarks of Bombardier Recreational Products Inc. or its affiliates. All other trademarks are the property of their respective owners.

CAUTION CONCERNING FORWARD-LOOKING STATEMENTS


Certain statements in this press release
,
including, but not limited to, statements relating to our Fiscal Year 2021 financial outlook and related assumptions of the Company (including revenues, Normalized EBITDA, Effective Tax Rate, Normalized earnings per share, net income, depreciation expense, net financing costs adjusted and capital expenditures),
the declaration and payment of dividends, statements relating to the renewal of the normal course issuer bid and potential purchases of subordinate voting shares by BRP thereunder
, the Company’s ability to achieve its Fiscal Year 2021 guidance, statements
about the Company’s current and future plans,
including
its ability to address the COVID-19 pandemic and other statements about
t
he Company’s
prospects, expectations, anticipations, estimates and intentions, results, levels of activity, performance, objectives, targets, goals or achievements, priorities and strategies, financial position, market position, capabilities, competitive strengths, beliefs, the prospects and trends of the industries in which the Company operates, the expected growth in demand for products and services in the markets in which the Company competes, research and product development activities, including projected design, characteristics, capacity or performance of future products and their expected scheduled entry to market expected financial requirements and the availability of capital resources and liquidities or any other future events or developments and other statements that are not historical facts constitute forward-looking statements within the meaning of
Canadian and United States
securities laws. The words “may”, “will”, “would”, “should”, “could”, “expects”, “forecasts”, “plans”, “intends”, “trends”, “indications”, “anticipates”, “believes”, “estimates”, “outlook”, “predicts”, “projects”, “likely” or “potential” or the negative or other variations of these words or other comparable words or phrases, are intended to identify forward-looking statements.

Forward-looking statements are presented for the purpose of assisting readers in understanding certain key elements of the Company’s current objectives, goals, targets, strategic priorities, expectations and plans, and in obtaining a better understanding of the Company’s business and anticipated operating environment. Readers are cautioned that such information may not be appropriate for other purposes; readers should not place undue reliance on forward-looking statements contained herein.

Forward-looking statements, by their very nature, involve inherent risks and uncertainties and are based on a number of assumptions, both general and specific, made by the Company in light of its experience and perception of historical trends, current conditions and expected future developments, as well as other factors that the Company believes are appropriate and reasonable in the circumstances, but there can be no assurance that such estimates and assumptions will prove to be correct or that the Company’s business guidance, objectives, plans and strategic priorities will be achieved
.

Many factors could cause the Company’s actual results, level of activity, performance or
achievements or future events or developments to differ materially from those expressed or implied by the forward-looking statements, including, without limitation, the following factors, which are discussed in greater detail under the heading “Risk Factors” of its Annual Information Form: the impact of adverse economic conditions such as those resulting from the ongoing
COVID-19
health crisis (including on consumer spending, the Company’s operations and supply and distribution chains, the availability of credit and the Company’s workforce); any decline in social acceptability of the Company’s products; fluctuations in foreign currency exchange rates; high levels of indebtedness; any unavailability of additional capital;
unfavourable
weather conditions; seasonal sales fluctuations; any inability to comply with product safety, health, environmental and noise pollution laws; the Company’s large fixed cost base; any inability of dealers and distributors to secure adequate access to capital; any supply problems, termination or interruption of supply arrangements or increases in the cost of materials; the Company’s competition in product lines; the Company’s inability to successfully execute its growth strategy; the Company’s international sales and operations; any failure of information technology systems or security breach; any failure to maintain an effective system of internal control over financial reporting and to produce accurate and timely financial statements; any loss of members of the Company’s management team or employees who possess specialized market knowledge and technical skills; any inability to maintain and enhance the Company’s reputation and brands; any significant product liability claim; any significant product repair and/or replacement due to product warranty claims or product recalls; the Company’s reliance on a network of independent dealers and distributors; the Company’s inability to successfully manage inventory levels; any intellectual property infringement and litigation; the Company’s inability to successfully execute its manufacturing strategy; increased freight and
shipping costs or disruptions in transportation and shipping infrastructure; any failure to comply with covenants in financing and other material agreements; any changes in tax laws and unanticipated tax liabilities; any impairment in the carrying value of goodwill and trademarks; any deterioration in relationships with employees; pension plan liabilities; natural disasters; any failure to carry proper insurance coverage; volatility in the market price for BRP’s subordinate voting shares; the Company’s conduct of business through subsidiaries; the significant influence by
Beaudier
Inc. and 4338618 Canada Inc. (together the “
Beaudier
Group”) and Bain Capital Luxembourg Investments S. à r. l. (“Bain Capital”); and future sales of BRP’s shares by
Beaudier
Group, Bain Capital, directors, officers or senior management of the Company. These factors are not intended to represent a complete list of
the factors that could affect the Company; however, these factors should be considered carefully.

Unless otherwise stated, the forward-looking statements contained in this press release are made as of the date of this press release and the Company has no intention and undertakes no obligation to update or revise any forward-looking statements to reflect future events, changes in circumstances, or changes in beliefs, unless required by applicable securities regulations.
In the event that
the Company does update any forward-looking statements contained in this press release, no inference should be made that the Company will make additional updates with respect to that statement, related matters or any other forward-looking statement. The forward-looking statements contained in this press release are expressly qualified by this cautionary statement.

KEY ASSUMPTIONS


The Company made a number of economic, market and operational assumptions in preparing and making certain forward-looking statements contained in this pre
ss release
and in preparing its Fiscal Year 2021 guidance
, including the following: reasonable industry growth ranging from flat to double digit; market share that will remain constant or moderately increase; no further deterioration and a relatively rapid stabilization of global and North American economic conditions, including with respect to the ongoing
COVID-19
health crisis; any increase in interest rates will be modest; currencies will remain at near current levels; inflation will remain in line with central bank expectations in countries where the Company is doing business; the Company’s current margins excluding the impact of the wind-down of Evinrude outboard engines and COVID-19 will remain at current or improved levels; the supply base will remain able to support product development and planned production rates on commercially acceptable terms in a timely manner;
there will be no significant changes in tax laws or free trade arrangements or treaties applicable to the Company; no trade barriers will be imposed amongst jurisdictions in which the Company carries operations; the absence of unusually adverse weather conditions, especially in peak seasons. BRP cautions that its assumptions may not materialize and that current economic conditions, including all of the current uncertainty resulting from the ongoing COVID-19 health crisis and its broader repercussions on the global economy, render such assumptions, although believed reasonable at the time they were made, subject to greater uncertainty.

NON-IFRS MEASURES


This press release
makes reference
to certain non-IFRS measures. These measures are not recognized measures under IFRS, do not have a standardized meaning prescribed by IFRS and are therefore unlikely to be comparable to similar measures presented by other companies. Rather, these measures are provided as additional information to complement those IFRS measures by providing further understanding of the Company’s results of operations from management’s perspective. Accordingly, they should not be considered in isolation nor as a substitute for analysis of the Company’s financial information reported under IFRS. The Company uses non-IFRS measures including Normalized EBITDA, Normalized net income, Normalized income tax expense,
Normalized
effective tax rate, Normalized basic earnings per share and Normalized diluted earnings per share.

Normalized EBITDA is provided to assist investors in determining the financial performance of the Company’s operating activities on a consistent basis by excluding certain non-cash elements such as depreciation expense, impairment charge, foreign exchange gain or loss on the Company’s long-term debt denominated in U.S. dollars and foreign exchange gain or loss on certain of the Company’s lease liabilities.
Other elements, such as restructuring and wind-down costs, gain or loss on litigation and acquisition-related costs, may also be excluded from net income in the determination of Normalized EBITDA as they are
considered not being reflective of the operational performance of the Company.
Normalized net income, Normalized income tax expense, Normalized effective tax rate, Normalized basic earnings per share and Normalized diluted earnings per share, in addition to the financial performance of operating activities, take into account the impact of investing activities, financing activities and income taxes on the Company’s financial results.         

The Company believes non-IFRS measures are important supplemental measures of financial performance because they eliminate items that have less bearing on the Company’s financial performance and thus highlight trends in its core business that may not otherwise be apparent when relying solely on IFRS measures. The Company also believes that securities analysts, investors and other interested parties frequently use non-IFRS measures in the evaluation of companies, many of which present similar metrics when reporting their results. Management also uses non-IFRS measures in order to facilitate financial performance comparisons from period to period, prepare annual operating budgets, assess the Company’s ability to meet its future debt service, capital expenditure and working capital requirements and also as a component in the determination of the short-term incentive compensation for the Company’s employees. Because other companies may calculate these non-IFRS measures differently than the Company does, these metrics are not comparable to similarly titled measures reported by other companies.

Normalized EBITDA is defined as net income before financing costs, financing income, income tax expense (recovery), depreciation expense and normalized elements.
Normalized net income is defined as net income before normalized elements adjusted to reflect the tax effect on these elements. Normalized income tax expense is defined as income tax expense adjusted to reflect the tax effect on normalized elements and to normalize specific tax elements. Normalized effective tax rate is based on Normalized net income before Normalized income tax expense. Normalized earnings per share – basic and Normalized earnings per share – diluted are calculated respectively by dividing the Normalized net income by the weighted average number of shares – basic and the weighted average number of shares – diluted. The Company refers the reader to the “
Reconciliation Tables
” section of this press release for the reconciliations of Normalized EBITDA and Normalized net income presented by the Company to the most directly comparable IFRS measure.

Reconciliation Tables
The following table presents the reconciliation of Net income to Normalized net income [1] and Normalized EBITDA [1].
	Three-month periods ended				Nine-month periods ended
(in millions of Canadian dollars)	October 31, 2020		October 31, 2019		October 31, 2020		October 31, 2019
Net income	$ 198.7		$135.3		$ 98.7		$252.4
Normalized elements
Foreign exchange (gain) loss on long-term debt and lease liabilities	(9.8	)	0.1		(18.8	)	0.5
Transaction costs and other related expenses [2]	0.4		0.6		1.3		2.3
Restructuring and related costs [3]	—		0.1		7.5		2.0
Impairment charge [4]	—		—		177.1		—
(Gain) loss on litigation [5]	(4.0	)	—		(4.0	)	0.4
Transaction costs on long-term debt	—		—		12.7		—
Evinrude outboard engine wind-down [6]	13.5		—		94.1		—
COVID-19 pandemic impact [7]	2.7		—		12.3		—
Gain on disposal of property, plant and equipment	(12.7	)	—		(12.7	)	—
Gain on NCIB	—		—		(12.2	)	—
Depreciation of intangible assets related to business combinations	1.2		1.1		3.3		2.4
Other elements	0.6		—		0.6		—
Income tax adjustment	—		(0.5	)	(45.7	)	(1.8	)
Normalized net income [1]	190.6		136.7		314.2		258.2
Normalized income tax expense [1]	69.0		49.4		106.4		91.8
Financing costs adjusted [1] [8]	28.0		24.1		81.1		66.0
Financing income adjusted [1] [8]	(2.0	)	(0.3	)	(4.9	)	(1.9	)
Depreciation expense adjusted [1] [9]	63.0		58.3		189.1		168.5
Normalized EBITDA [1]	$ 348.6		$268.2		$ 685.9		$582.6

^[1] See “Non-IFRS Measures” section.
^[2] Costs related to business combinations.
^[3] The Company is involved, from time to time, in restructuring and reorganization activities in order to gain flexibility and improve efficiency. The costs related to these activities are mainly composed of severance costs and retention salaries.
^[4] During the nine-month period ended October 31, 2020, the Company recorded an impairment charge of $177.1 million related to its Marine segment.
^[5] The Company was involved in patent infringement litigation cases with one of its competitors.
^[6] During the three-month period ended October 31, 2020, the Company incurred costs related to the wind-down of the outboard engine production such as, but not limited to, retail sales incentives, idle costs and other exit costs.
^[7] Incremental costs associated with the COVID-19 pandemic such as, but not limited to, labour cost related to furloughs.
^[8] Adjusted for transaction costs on long-term debt and normal course issuer bid program (“NCIB”) gains and losses in net income.
^[9] Adjusted for depreciation of intangible assets acquired through business combinations.

For media enquiries:	For investor relations:
Elaine Arsenault	Philippe Deschênes
Senior Advisor, Media Relations	Investor Relations
Tel.: 514.238.3615	Tel.: 450.532.6462
[email protected]	[email protected]

A photo accompanying this announcement is available at https://www.globenewswire.com/NewsRoom/AttachmentNg/0afd92ea-065e-4c5c-99fe-91f9b139f411  

Vancouver, BC, Nov. 25, 2020 (GLOBE NEWSWIRE) — Implementing a new national child care system would generate several important benefits for Canada’s economy as it recovers from the COVID-19 pandemic and recession, according to new research from the Centre for Future Work in Vancouver.

A universal national early learning and child care (ELCC) program would create over 200,000 direct jobs in child care centres, nearly 80,000 more jobs in industries which will get new business from an expanded ELCC sector, and facilitate increased labour force participation and employment by up to 725,000 Canadian women in prime parenting years.

The report, prepared by economist Dr. Jim Stanford (Director of the Centre for Future Work), also projects large increases in Canadian GDP as a result of direct ELCC provision and increased female labour force participation. By the end of a 10-year implementation period, annual Canadian GDP would be $63-107 billion greater than it would have been without expanded child care.

Extra government revenues collected as a result of increased economic activity would add $17 to $29 billion to government coffers per year – split between the federal and provincial governments. That would be more than enough to cover the total costs of a national ELCC program.

“By substantially boosting employment and output, at a moment in history when Canada’s economy needs all the stimulus it can get, universal ELCC is a social program that quite literally pays for itself,” said Stanford.

The recent federal Throne Speech committed to a rapid roll-out of a new national ELCC plan. This research indicates that such a plan would add significant momentum to Canada’s macroeconomy in the wake of the pandemic.

Other key findings from the report include:

• A ten-year phase-in of universal ELCC would power the creation of 20,000 new direct jobs in child care centres per year.
• Upstream and downstream businesses will receive almost $10 billion in additional annual revenue as a result of expanded demand from the child care sector, supporting an additional 78,000 new jobs after 10 years. This includes an estimated 8,300 ongoing construction jobs building or retrofitting ELCC facilities.
• While most of the fiscal support for universal ELCC would come from the federal government, provincial governments would benefit enormously from the new system. Provincial government revenues would grow by $8-14 billion per year.
• The biggest employment gains from universal ELCC would be experienced in regions with the weakest existing ELCC systems: in particular, the prairie provinces and Ontario.

“Economists have known for many years that high-quality, affordable early learning and child care generates economic benefits that far exceed its costs. With the economic and social crisis caused by COVID-19, those benefits are needed more than ever,” Stanford said.

“The federal and provincial governments need to move forward with this plan as fast as they can,” Stanford concluded. “It’s an economic no-brainer.”

The full report, The Role of Early Learning and Child Care in Rebuilding Canada’s Economy after COVID-19, can be accessed at http://centreforfuturework.ca/2020/11/17/child-care-expansion/. The report was commissioned by the Child Care Now coalition.

For further information or to arrange comment, please contact Morna Ballantyne at 613-791-3411 or [email protected].

Attachment

• ELCC Report

Morna Ballantyne
Child Care Now
613-791-3411
[email protected]

• Revenue of US$1.6 million compared to
  US$2.2 million for the
  prior year period
  
• Completed
  restructuring
  and realignment
  program targeting approximately $680,000 in cost reductions, bringing total annualized savings to approximately $1,080,000 when combined with
  Second Quarter Fiscal 2020
  reductions
• Paycheck Protection Program loan forgiveness application submitted
• Liquidity of US$2.9
  million
  <sup>(
  
  2)</sup>
  
  , including US$1.5 million of undrawn
  revolving credit facility
  borrowing capacity
• Net working capital
  of US$
  5.8
   million
  , representing a
  strong
  current ratio of
  11.5

TSXV: OML

OTCQX: OLNCF

CERRITOS, Calif., Nov. 25, 2020 (GLOBE NEWSWIRE) — Omni-Lite Industries Canada Inc. (the “Company”) (TSXV: OML; OTCQX: OLNCF) reported financial and operating results for its fiscal third quarter ended September 30, 2020. Full financial statements can be found on sedar.com or on our website at www.Omni-Lite.com.

Third Quarter
Fiscal
2020 Results

Omni-Lite today reported third quarter fiscal 2020 results, with revenues of US$1.6 million, representing a decline of 23% compared to the year ago period, due to disruptions in the commercial aerospace market, primarily driven by the COVID-19 pandemic. The third quarter fiscal 2020 net loss was US$(410,266), or US$(0.04) per diluted share, as compared to the third quarter fiscal 2019 net loss of US$1.5 million, or US$(0.13) per diluted common share.

Third quarter fiscal 2020 Adjusted EBITDA⁽¹⁾ was US$(271,870), as compared to US$(29,435) in the comparable year ago period. Fiscal third quarter results included a severance charge of US$55,000. Also, the Company had to cease manufacturing operations at its California facility for 2 weeks due to a COVID-19 incident which resulted in an adverse impact on Adjusted EBITDA of approximately US$225,000.

Free cash flow⁽¹⁾, defined as cash flows from operating activities less capital expenditures for property and equipment, was US$(0.2) million for the third quarter of fiscal 2020, as compared to US$5,507 for the third quarter of fiscal 2019. Net debt outstanding, excluding the Paycheck Protection Program Loan that is subject to pending forgiveness, at the end of the third quarter of fiscal 2020 was US$.8 million; and the Company’s liquidity was US$2.9 million⁽²⁾, which includes US$1.5 million of undrawn revolving credit facility borrowing capacity. Net working capital as of September 30, 2020 was US$5.8 million, representing a current ratio of 11.5, as compared to a current ratio of 4.7 at September 30, 2019.

Year
–
to
–
Date September
30, 2020
Fiscal Results

Year-to-date fiscal 2020 revenue was US$5.4 million, a 24% decrease as compared to US$7.1 million in the first nine months of fiscal 2019, due to disruptions in the commercial aerospace market, primarily driven by the COVID-19 pandemic that began late in the Company’s fiscal first quarter of 2020.

Year-to-date fiscal 2020 Adjusted EBITDA⁽¹⁾ was US$(217,807), as compared to US$1.1 million in the comparable year ago period. The year-to-date fiscal 2020 net loss was US$760,756 or US$(0.07) per diluted share as compared to a net loss of US$1.1 million, or US($0.10) in the first nine months of fiscal 2019.

Free cash flow⁽¹⁾ was US$(0.2) million for the nine-months ended September 30, 2020, as compared to US$(0.6) million for the comparable year ago period.

Omni-Lite’s Chief Executive Officer David Robbins stated, “The third quarter 2020 financial performance was affected by low demand for commercial aircraft fastener components due to effects of COVID-19 on commercial aerospace market. During the quarter the Company implemented a repositioning and alignment plan in the metal forming operations that will result in approximately $680,000 in annual cost reductions at the facility. Had these cost savings been implemented at the beginning of the third fiscal quarter of 2020, EBITDA would have been enhanced by approximately $55,000. Moving forward, we are prioritizing our efforts on maximizing the efficiency of our operations, converting inventory to cash and growing our product portfolio in the defense aerospace market.”

“2020 has been a difficult year, generally, and, in particular, for the commercial aerospace business. While our results this fiscal year are not what we would like them to be, the Company is well positioned for the future when the market recovers. We have a substantial asset base, including our Company-owned California manufacturing facility that is invested with state-of-the-art cold and hot forging systems, which we believe is worth well in excess of its book value. We are also encouraged by the ongoing gradual improvement in the prospects for our minority-owned affiliate, California Nanotechnologies Corp.,” said David Robbins.

Financial Summary

All figures in US dollars unless noted

For the three months ended September 30
Revenue	$1,630,536	$2,213,087
Adjusted EBITDA(1)	(271,870)	(29,435)
Free Cash Flow(1)	(216,730)	5,507
Net income	(410,265)	119,320
Diluted EPS	($0.04)	$0.01

For the nine months ended September 30
	2020	2019
Revenue	$5,399,056	$7,141,121
Adjusted EBITDA(1)	(217,807)	1,081,965
Free Cash Flow(1)	(242,473)	(555,068)
Net loss	(760,756)	(1,113,433)
Diluted EPS	$(0.07)	$(0.10)

⁽¹⁾ Adjusted EBITDA is a non-IFRS financial measure defined as earnings before interest income, interest expense, taxes, depreciation, amortization, stock-based compensation, and non-recurring items, if any. Free Cash Flow is a non-IFRS financial measure defined as cash flow from operations minus capital expenditures.

⁽²⁾ Excludes US$819,700 Paycheck Protection Program Loan pursuant to the CARES Act, subject to pending application and approval for forgiveness in its entirety.

Investor Conference Call

Omni-Lite will host a conference call for investors on Monday, November 30^th, beginning at 4:30 PM Eastern Time to discuss our third quarter and year to date September 2020 results. To join the conference call, dial (888) 645-4404 in the USA and Canada, or (404) 267-0372 for all other countries. Please call five to ten minutes prior to the scheduled start time. A replay of the conference call will be available 48 hours after the call and archived on the Company’s investors page of the Company’s website at www.omni-lite.com for 12 months.

About Omni-Lite Industries Canada Inc.

Omni-Lite Industries Canada Inc. is an innovative company that develops and manufactures mission critical, precision components utilized by Fortune 100 companies in the aerospace and defense industries.

For further information, please contact:

Mr. David Robbins
President and Chief Executive Officer
Tel. No. (562) 404-8510 or (800) 577-6664
Email: [email protected]
Website: www.omni-lite.com

Forward Looking Statements

Except for statements of historical fact, this news release contains certain “forward-looking information” within the meaning of applicable securities law. Forward-looking information is frequently characterized by words such as “plan”, “expect”, “project”, “intent”, “believe”, “anticipate”, “estimate” and other similar words, or statements that certain events or conditions “may” or “will” occur. Forward-looking information in this press release includes, but is not limited to, the expect future performance of the Company. Although we believe that the expectations reflected in the forward-looking information are reasonable, there can be no assurance that such expectations will prove to be correct. We cannot guarantee future results, performance or achievements. Consequently, there is no representation that the actual results achieved will be the same, in whole or in part, as those set out in the forward-looking information. Forward-looking information is based on the opinions and estimates of management at the date the statements are made, and are subject to a variety of risks and uncertainties and other factors that could cause actual events or results to differ materially from those anticipated in the forward-looking information. Some of the risks and other factors that could cause the results to differ materially from those expressed in the forward-looking information include, but are not limited to: general economic conditions in Canada, the United States and globally; industry conditions, governmental regulation, including environmental consents and approvals, if and when required; stock market volatility; competition for, among other things, capital, skilled personnel and supplies; changes in tax laws; and the other risk factors disclosed under our profile on SEDAR at www.sedar.com. Readers are cautioned that this list of risk factors should not be construed as exhaustive.

The forward-looking information contained in this news release is expressly qualified by this cautionary statement. We undertake no duty to update any of the forward-looking information to conform such information to actual results or to changes in our expectations except as otherwise required by applicable securities legislation. Readers are cautioned not to place undue reliance on forward-looking information.

Neither TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release.

BEIJING, Nov. 25, 2020 (GLOBE NEWSWIRE) — Quhuo Limited (NASDAQ: QH) (“Quhuo” or the “Company”), a leading tech-enabled workforce operational solution platform in China, announced today that it will release its unaudited financial results for the third quarter ended September 30, 2020 before the open of U.S. markets on Thursday, December 3, 2020.

The Company will hold a conference call on Thursday, December 3, 2020 at 7:00 a.m. U.S. Eastern Time (8:00 p.m. Beijing/Hong Kong time on the same day) to discuss the financial results.

Due to the outbreak of COVID-19, operator assisted conference calls are not available at the moment. All participants who wish to join the call must preregister online prior to the call to receive the dial-in details.

Conference Call Preregistration

Participants can register for the conference call by navigating to http://apac.directeventreg.com/registration/event/8088221. Once preregistration has been completed, participants will receive dial-in numbers, a direct event passcode, and a unique registrant ID.

To join the conference, please dial the number you receive, enter the direct event passcode followed by your unique registrant ID, and you will be joined to the conference instantly.

A live and archived webcast of the conference call will also be available at the Company’s investor relations website at https://ir.quhuo.cn/.

A replay will be accessible through 7:59 a.m. Eastern Time on December 11, 2020 by dialing the following numbers:

United States: International: China Domestic: Hong Kong: Conference ID:		+1-646-254-3697 +61-2-8199-0299 400-6322-162 +852-3051-2780 8088221#

About
Quhuo
Limited

Quhuo Limited (NASDAQ: QH) (“Quhuo” or the “Company”) was the largest workforce operational solution platform in China in 2019*. Quhuo provides tech-enabled, end-to-end operational solutions to blue-chip on-demand consumer service businesses in industries with significant e-commerce exposure, including food delivery, ride-hailing, housekeeping and bike-sharing. Quhuo’s platform helps its industry customers mobilize a large team of workers and utilizes a combination of training, performance monitoring and refinement, and incentives to transform them into skilled workers who can follow industry-specific, standardized and highly efficient service procedures. Within the on-demand consumer service ecosystem, the Company plays a unique and indispensable role as the link between consumer service businesses and the end consumers to enable the delivery of goods, services and experiences to consumers.

* According to an industry report prepared by Frost & Sullivan in 2019, as measured by the number of average monthly active workers in 2019.

For more information about Quhuo, please visit https://ir.quhuo.cn/.

For investor and media enquiries, please contact:

Quhuo Limited
Annia Sun
E-mail: [email protected]

Christensen

In China
Mr. Eric Yuan
Phone: +86-13801110739
E-mail: [email protected]

In US
Ms. Linda Bergkamp
Phone: +1-480-614-3004
E-mail: [email protected]

LOS ANGELES, Nov. 25, 2020 (GLOBE NEWSWIRE) — RadNet, Inc. (NASDAQ: RDNT), a national leader in providing high-quality, cost-effective diagnostic imaging services through a network of fully-owned and operated outpatient imaging centers, today announced that Mark Stolper, Executive Vice President and Chief Financial Officer, will be presenting at the BofA Securities 2020 Virtual Leveraged Finance Conference on Monday, November 30, 2020 at 12:45 p.m. Pacific Time (3:45 p.m. Eastern Time)  

There will be simultaneous and archived webcasts available at http://www.veracast.com/webcasts/bofa/levfin2020/id72111248588.cfm

and www.radnet.com under the “About RadNet” menu section and “News and Press Releases” sub-menu of the website.           

Details for RadNet ‘s Presentation :
Date:	Monday, November 30, 2020
Time:	12:45 p.m. Pacific Time (3:45 p.m. Eastern Time)

About RadNet, Inc.

RadNet, Inc. is the leading national provider of freestanding, fixed-site diagnostic imaging services in the United States based on the number of locations and annual imaging revenue. RadNet has a network of 334 owned and/or operated outpatient imaging centers. RadNet’s core markets include California, Maryland, Delaware, New Jersey, New York and Arizona. In addition, RadNet provides radiology information technology solutions, teleradiology professional services and other related products and services to customers in the diagnostic imaging industry. Together with affiliated radiologists, and inclusive of full-time and per diem employees and technicians, RadNet has a total of approximately 8,600 employees. For more information, visit http://www.radnet.com.

Contact:

RadNet, Inc.
Mark Stolper, Executive Vice President and Chief Financial Officer
310-445-2928

BEIJING, Nov. 25, 2020 (GLOBE NEWSWIRE) — So-Young International Inc. (Nasdaq: SY) (“So-Young” or the “Company”), the largest and most vibrant social community in China for consumers, professionals and service providers in the medical aesthetics industry, today announced its unaudited financial results for the three months ended September 30, 2020.

Third Quarter 2020 Financial Highlights

• Total revenues were RMB359.6 million (US$53.0 million¹), an increase of 18.9% from RMB302.4 million in the same period of 2019, in line with our previous guidance.
• Net income was RMB0.9 million (US$0.1 million), compared with a net income RMB31.6 million in the same period of 2019.
• Non-GAAP net income² was RMB26.4 million (US$3.9 million), compared with a non-GAAP net income of RMB40.5 million in the same period of 2019.

Third Quarter 2020 Operational Highlights

• Average mobile MAUs were 8.7 million, an increase of 153.7% from 3.4 million in the third quarter of 2019.
• Total number of users purchasing reservation service were 251,928 and the aggregate value of medical aesthetic treatment transactions facilitated by So-Young’s platform was RMB1,110.1 million.
• Number of paying medical service providers on So-Young’s platform were 4,096, an increase of 26.8% from 3,230 in the third quarter of 2019.

Mr. Xing Jin, Co-Founder and Chief Executive Officer of So-Young, commented, “We are pleased to report solid results for the third quarter, as the pandemic situation became more effectively controlled in China and the medical aesthetics and wellness industry is recovering. We also made significant progress in expanding our vibrant community of users and medical aesthetic professionals, where our strategy for engagement was simple: improve users’ trust in our platform and try to facilitate rational decision-making by providing reliable doctors, multi-layer content, and supportive medical treatment plans. Our efforts yielded results and during the quarter, mobile MAUs increased to 8.7 million, up 153.7% year over year, while the number of paying medical service providers on our platform increased to 4,096, up 26.8% year-over-year.”

Mr. Jin added, “During the quarter, one of our main initiatives for driving user growth and engagement was the release of our second version of the Emerald Doctor lists. This feature is becoming a standard of quality in the medical aesthetics industry. Monthly visits to the homepages of listed doctors were up 40%. In addition, we’re addressing user education and building a content ecosystem through our So-Young Ambassadors program that generated nearly 8,500 premium articles since launch, with 481,000 sign-ups. We also reinforced our reputation as the first choice of both users and medical professionals among medical aesthetics platforms, especially for non-surgical treatments. To do this, we focused on improving performance in customer service and the overall user experience. We believe we have the right strategy to maintain our leadership, through the excellence of our management, strategy, and innovative approach.” 

Mr. Min Yu, Chief Financial Officer of So-Young, also commented, “We are closely monitoring the recovery of the industry and consumer sentiment across our core target market and are pleased with our results during the third quarter as we position the Company to capitalize on the eventual post-pandemic recovery. We will continue to focus on streamlining resources to drive engagement, platform stickiness and traffic growth while generating real value-added support for medical professionals and merchants. We believe that focused investments in elevating the So-Young brand and making our ecosystem synonymous with trust and high-quality user experiences is critical for creating sustainable long-term growth.”

Third Quarter 2020 Financial Results

Revenues

Total revenues were RMB359.6 million (US$53.0 million), an increase of 18.9% from RMB302.4 million in the same period of 2019. The increase was primarily due to increases in number of paying medical service providers which gradually recovered operation after the COVID-19 pandemic becomes better controlled in China.

• Information services revenues were RMB265.7 million (US$39.1 million), an increase of 23.9% from RMB214.3 million in the same period of 2019. The increase was mainly due to increases in average revenue per paying medical service provider. Total number of paying medical service providers subscribing to information services on So-Young’s platform were 2,146.
   
• Reservation services revenues were RMB93.9 million (US$13.8 million), an increase of 6.6% from RMB88.1 million in the same period of 2019. The increase was primarily due to an increase in the number of purchasing users. 

Costs of Revenues

Costs of revenues were RMB54.7 million (US$8.1 million), an increase of 1.6% from RMB53.9 million in the third quarter of 2019. Cost of revenues included share-based compensation expenses of RMB5.1 million (US$0.8 million) during the third quarter of 2020, compared with RMB1.6 million in the corresponding period of 2019.

Operating Expenses

Total operating expenses were RMB335.1 million (US$49.4 million), an increase of 46.6% from RMB228.5 million in the third quarter of 2019.

• Sales and marketing expenses were RMB221.6 million (US$32.6 million), an increase of 41.5% from RMB156.6 million in the third quarter of 2019. The increase was primarily due to an increase in expenses associated with branding and user acquisition initiatives and payroll costs due to increased number of employees in the business development team. Sales and marketing expenses for the third quarter of 2020 included share-based compensation expenses of RMB2.2 million (US$0.3 million), compared with RMB1.1 million in the corresponding period of 2019.
   
• General and administrative expenses were RMB50.3 million (US$7.4 million), an increase of 55.4% from RMB32.4 million in the third quarter of 2019. The increase was primarily due to an increase in payroll costs associated with the expansion of administrative employees. General and administrative expenses for the third quarter of 2020 included share-based compensation expenses of RMB12.2 million (US$1.8 million), compared with RMB6.4 million in the corresponding period of 2019.
   
• Research and development expenses were RMB63.2 million (US$9.3 million), an increase of 59.7% from RMB39.5 million in the third quarter of 2019. The increase was primarily attributable to an increase in payroll costs. Research and development expenses for the third quarter of 2020 included share-based compensation expenses of RMB6.0 million (US$0.9 million).  

Income Tax (Expenses)/Benefit

Income tax benefit was RMB16.3 million (US$2.4 million), compared with a RMB2.9 million income tax expenses in the same period of 2019. The income tax benefit was derived from a change in the preferential income tax rate of one of So-Young’s subsidiaries which resulted in a refund of RMB16.4 million (US$2.4 million) for tax paid in previous periods.

Net income

Net income was RMB0.9 million (US$0.1 million), compared with a net income RMB31.6 million in the third quarter of 2019.

Non-GAAP net income

Non-GAAP net income, which excludes the impact of share-based compensation expenses was RMB26.4 million (US$3.9 million), compared with RMB40.5 million non-GAAP net income in the same period of 2019.

Basic and Diluted Earnings per ADS

Basic and diluted income per ADS attributable to ordinary shareholders were RMB0.01 (US$0.0015) and RMB0.01 (US$0.0015), compared with basic and diluted earnings per ADS attributable to ordinary shareholders of RMB0.31 and RMB0.29 in the same period of 2019.

Cash and Cash Equivalents, Restricted Cash and Term Deposits, Term Deposits and Short-Term Investments

As of September 30, 2020, cash and cash equivalents, restricted cash and term deposits, term deposits and short-term investments were RMB2,809.7 million (US$413.8 million), compared with RMB2,844.0 million as of December 31, 2019.

Business Outlook

For the fourth quarter of 2020, So-Young expects total revenues to be between RMB420 million (US$61.9 million) and RMB450 million (US$66.3 million), representing a 17.3% to 25.6% increase from the same period in 2019. The above outlook is based on the current market conditions and reflects the Company’s preliminary estimates of market and operating conditions, and customer demand, particularly in view of the potential continuing impact of the COVID-19, the effects of which are difficult to analyze and predict, which are all subject to change.

Non-GAAP Financial Measures

To supplement the financial measures prepared in accordance with generally accepted accounting principles in the United States, or GAAP, this press release presents non-GAAP income from operations and non-GAAP net income by excluding share-based compensation expenses from income from operations and net income, respectively. The Company believes these non-GAAP financial measures are important to help investors understand the Company’s operating and financial performance, compare business trends among different reporting periods on a consistent basis and assess the Company’s core operating results, as they exclude certain expenses that are not expected to result in cash payments.  The use of the above non-GAAP financial measures has certain limitations. Share-based compensation expenses have been and will continue to be incurred in the future and are not reflected in the presentation of the non-GAAP financial measures, but should be considered in the overall evaluation of the Company’s results. The Company compensates for these limitations by providing the relevant disclosure of its share-based compensation expenses in the reconciliations to the most directly comparable GAAP financial measures, which should be considered when evaluating the Company’s performance. These non-GAAP financial measures should be considered in addition to financial measures prepared in accordance with GAAP, but should not be considered a substitute for, or superior to, financial measures prepared in accordance with GAAP.  Reconciliation of each of these non-GAAP financial measures to the most directly comparable GAAP financial measure is set forth at the end of this release.

Conference Call Information

So-Young’s management will hold an earnings conference call on Wednesday, November 25, 2020, at 7:00 AM U.S. Eastern Time (8:00 PM on the same day, Beijing/Hong Kong Time). Participants can register for the conference call by navigating to https://apac.directeventreg.com/registration/event/2689544.

Once preregistration has been completed, participants will receive dial-in numbers, an event passcode, and a unique registrant ID.

To join the conference, please dial the number you receive, enter the event passcode followed by your unique registrant ID, and you will be joined to the conference instantly.

A telephone replay will be available two hours after the conclusion of the conference call through 7:59 AM U.S. Eastern Time, December 3, 2020. The dial-in details are:

International:	+61-2-8199-0299
US:	+1-646-254-3697
Passcode:	2689544

Additionally, a live and archived webcast of this conference call will be available at http://ir.soyoung.com.

About So-Young International Inc.

So-Young International Inc. (Nasdaq: SY) (“So-Young” or the “Company”) is the largest and most vibrant social community in China for consumers, professionals and service providers in the medical aesthetics industry. The Company presents users with reliable information through offering high quality and trustworthy content together with a multitude of social functions on its platform, as well as by curating medical aesthetic service providers that are carefully selected and vetted. Leveraging So-Young’s strong brand image, extensive audience reach, trust from its users, highly engaging social community and data insights, the Company is well-positioned to expand both along the medical aesthetic industry value chain and into the massive, fast-growing consumption healthcare service market.

Safe Harbor Statement

This announcement contains forward-looking statements. These statements are made under the “safe harbor” provisions of the U.S. Private Securities Litigation Reform Act of 1995. These forward-looking statements can be identified by terminology such as “will,” “expects,” “anticipates,” “future,” “intends,” “plans,” “believes,” “estimates,” “confident” and similar statements. Among other things, the Financial Guidance and quotations from management in this announcement, as well as So-Young’s strategic and operational plans, contain forward-looking statements. So-Young may also make written or oral forward-looking statements in its periodic reports to the U.S. Securities and Exchange Commission, in its annual report to shareholders, in press releases and other written materials and in oral statements made by its officers, directors or employees to third parties. Statements that are not historical facts, including but not limited to statements about So-Young’s beliefs and expectations, are forward-looking statements. Forward looking statements involve inherent risks and uncertainties. A number of factors could cause actual results to differ materially from those contained in any forward-looking statement, including but not limited to the following: So-Young’s strategies; So-Young’s future business development, financial condition and results of operations; So-Young’s ability to retain and increase the number of users and medical service providers, and expand its service offerings; competition in the online medical aesthetic service industry; changes in So-Young’s revenues, costs or expenditures; Chinese governmental policies and regulations relating to the online medical aesthetic service industry, general economic and business conditions globally and in China; the impact of the COVID-19 pandemic to So-Young’s business operations and the economy in China and elsewhere generally; and assumptions underlying or related to any of the foregoing. Further information regarding these and other risks is included in the Company’s filings with the Securities and Exchange Commission. All information provided in this press release and in the attachments is as of the date of the press release, and So-Young undertakes no duty to update such information, except as required under applicable law.

For more information, please contact:

So-Young

Investor Relations
Ms. Vivian XU
Phone: +86-10-8790-2012
E-mail: [email protected]

Christensen

In China
Mr. Eric Yuan
Phone: +86-10-5900-1548
E-mail: [email protected]

In US
Ms. Linda Bergkamp
Phone: +1-480-614-3004
Email: [email protected]

____________________________

¹ This press release contains translations of certain Renminbi (RMB) amounts into U.S. dollars (US$) solely for the convenience of the reader. Unless otherwise specified, all translations of Renminbi amounts into U.S. dollar amounts in this press release are made at RMB6.7896 to US$1.00, which was the U.S. dollars middle rate announced by the Board of Governors of the Federal Reserve System of the United States on September 30, 2020.

² Non-GAAP net income is defined as net income excluding share-based compensation expenses. See “Reconciliation of GAAP and Non-GAAP Results” at the end of this press release.

SO-YOUNG INTERNATIONAL INC.

UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS

(Amounts in thousands, except for share and per share data)

	As of
	December 31, 2019			September 30, 2020			September 30, 2020
	RMB			RMB			US$
Assets
Current assets:
Cash and cash equivalents	884,676			552,153			81,323
Restricted cash and term deposits	16,509			25,176			3,709
Trade receivables	26,110			46,110			6,791
Receivables from online payment platforms	13,429			15,416			2,271
Amounts due from related parties	5,815			8,186			1,206
Term deposits and short-term investments	1,942,860			2,232,412			328,799
Prepayment and other current assets	67,628			51,427			7,574
Total current assets	2,957,027			2,930,880			431,673
Non-current assets:
Long-term investments	45,980			41,235			6,073
Intangible assets	726			41,166			6,063
Property and equipment, net	32,341			32,181			4,740
Deferred tax assets	35,208			37,708			5,554
Operating lease right-of-use assets	144,488			127,885			18,835
Prepayment for long-term investment	–			14,380			2,118
Other non-current assets	14,184			14,737			2,171
Total non-current assets	272,927			309,292			45,554
Total assets	3,229,954			3,240,172			477,227
Liabilities
Current liabilities:
Taxes payable	65,605			39,289			5,788
Contract liabilities	93,725			116,627			17,177
Salary and welfare payables	100,676			77,880			11,470
Amounts due to related parties	2,620			2,379			350
Accrued expenses and other current liabilities	166,088			228,912			33,716
Operating lease liabilities-current	37,799			39,696			5,847
Total current liabilities	466,513			504,783			74,348
Non-current liabilities:
Operating lease liabilities-non current	120,803			102,124			15,041
Deferred tax liabilities	–			8,797			1,296
Total non-current liabilities	120,803			110,921			16,337
Total liabilities	587,316			615,704			90,685
Shareholders ’ equity:
Class A Ordinary shares (US$ 0.0005 par value; 750,000,000 shares authorized as of December 31, 2019 and September 30, 2020; 69,371,718 and 70,130,618 shares issued and outstanding as of December 31, 2019 and September 30, 2020, respectively)	221			224			33
Class B Ordinary shares (US$ 0.0005 par value; 20,000,000 shares authorized as of December 31, 2019 and September 30, 2020; 12,000,000 shares issued and outstanding as of December 31, 2019 and September 30, 2020)	37			37			5
Additional paid-in capital	2,799,336			2,867,740			422,372
Statutory reserves	10,562			10,562			1,556
Accumulated deficit	(259,251	)		(292,875	)		(43,136	)
Accumulated other comprehensive income	91,733			38,780			5,712
Total shareholders ’ equity	2,642,638			2,624,468			386,542
Total liabilities and shareholders ’ equity	3,229,954			3,240,172			477,227

SO-YOUNG INTERNATIONAL INC.

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME/(LOSS)

(Amounts in thousands, except for share and per share data)

	For the Three Months Ended										For the Nine Months Ended
	September 30, 2019			September 30 , 2020			September 30 , 2020				September 30, 2019				September 30 , 2020			September 30 , 2020
	RMB			RMB			US$				RMB				RMB			US$
Revenues
Information services	214,349			265,654			39,127				568,905				626,178			92,226
Reservation services	88,076			93,925			13,833				224,558				244,175			35,963
Total revenues	302,425			359,579			52,960				793,463				870,353			128,189
Cost of revenues	(53,899	)		(54,743	)		(8,063		)		(140,119		)		(148,586	)		(21,884	)
Gross profit	248,526			304,836			44,897				653,344				721,767			106,305
Operating expenses:
Sales and marketing expenses	(156,583	)		(221,620	)		(32,641		)		(337,881		)		(515,919	)		(75,987	)
General and administrative expenses	(32,359	)		(50,295	)		(7,408		)		(124,492		)		(134,099	)		(19,751	)
Research and development expenses	(39,545	)		(63,150	)		(9,301		)		(122,559		)		(158,272	)		(23,311	)
Total operating expenses	(228,487	)		(335,065	)		(49,350		)		(584,932		)		(808,290	)		(119,049	)
Income/(loss) from operations	20,039			(30,229	)		(4,453		)		68,412				(86,523	)		(12,744	)
Other income/(expenses):
Investment income	1,082			4,680			689				4,554				10,469			1,542
Interest income	15,685			7,539			1,110				31,528				32,916			4,848
Exchange losses	(5,694	)		(551	)		(81		)		(3,676		)		(515	)		(76	)
Share of losses of equity method investee	–			(1,330	)		(196		)		–				(4,477	)		(659	)
Others, net	3,425			4,535			668				26,687				(2,491	)		(367	)
Income /(loss) before tax	34,537			(15,356	)		(2,263		)		127,505				(50,621	)		(7,456	)
Income tax (expenses)/benefit	(2,937	)		16,259			2,395				(20,726		)		17,781			2,619
Net income /(loss)	31,600			903			132				106,779				(32,840	)		(4,837	)
Accretions of convertible redeemable preferred shares to redemption value	–			–			–				(50,219		)		–			–
Net income/(loss) attributable to ordinary shareholders of the Company	31,600			903			132				56,560				(32,840	)		(4,837	)

SO-YOUNG INTERNATIONAL INC.

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME/(LOSS) (Continued)

(Amounts in thousands, except for share and per share data)

	For the Three Months Ended											For the Nine Months Ended
	September 30, 2019			September 30 , 2020			September 30 , 2020					September 30, 2019			September 30 , 2020			September 30 , 2020
	RMB			RMB			US$					RMB			RMB			US$
Net income/(loss) per ordinary share
Net earnings/(loss) per ordinary share attributable to ordinary shareholder – basic	0.40			0.01			0.00					1.07			(0.13	)		(0.02	)
Net earnings/(loss) per ordinary share attributable to ordinary shareholder – diluted	0.38			0.01			0.00					1.00			(0.13	)		(0.02	)
Net earnings/(loss) per ADS attributable to ordinary shareholders – basic (13 ADS represents 10 Class A ordinary shares)	0.31			0.01			0.00					0.82			(0.10	)		(0.01	)
Net earnings/(loss) per ADS attributable to ordinary shareholders – diluted (13 ADS represents 10 Class A ordinary shares)	0.29			0.01			0.00					0.77			(0.10	)		(0.01	)
Weighted average number of ordinary shares used in computing earnings/(loss)  per share, basic*	78,613,419			81,629,610			81,629,610					52,800,398			81,411,972			81,411,972
Weighted average number of ordinary shares used in computing earnings/(loss)  per share, diluted*	82,888,045			84,069,327			84,069,327					56,764,774			82,954,264			82,954,264
Share-based compensation expenses included in:
Cost of revenues	(1,591	)		(5,091	)		(750	)				(8,700	)		(13,287	)		(1,957	)
Sales and marketing expenses	(1,097	)		(2,225	)		(328	)				(6,110	)		(4,528	)		(667	)
General and administrative expenses	(6,415	)		(12,155	)		(1,790	)				(56,505	)		(34,690	)		(5,109	)
Research and development expenses	208			(6,021	)		(887	)				(16,467	)		(15,188	)		(2,237	)
*  Both Class A and Class B ordinary shares are included in the calculation of the weighted average number of ordinary shares outstanding, basic and diluted.

SO-YOUNG INTERNATIONAL INC.

Reconciliation of GAAP and Non-GAAP Results

(Amounts in thousands, except for share and per share data)

	For the Three Months Ended								For the Nine Months Ended
	September 30, 2019		September 30 , 2020			September 30 , 2020			September 30, 2019			September 30 , 2020			September 30 , 2020
	RMB		RMB			US$			RMB			RMB			US$
GAAP income/(loss) from operations	20,039		(30,229	)		(4,453	)		68,412			(86,523	)		(12,744	)
Add back: Shared-based compensation expenses	8,895		25,492			3,755			87,782			67,693			9,970
Non-GAAP income/(loss) from operations	28,934		(4,737	)		(698	)		156,194			(18,830	)		(2,774	)
GAAP Net income/(loss)	31,600		903			132			106,779			(32,840	)		(4,837	)
Add back: Shared-based compensation expenses	8,895		25,492			3,755			87,782			67,693			9,970
Non-GAAP net income	40,495		26,395			3,887			194,561			34,853			5,133

 

 

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BKD CPAs & Advisors
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[email protected]

GUANGZHOU, China, Nov. 25, 2020 (GLOBE NEWSWIRE) — Viomi Technology Co., Ltd (“Viomi” or the “Company”) (NASDAQ: VIOT), a leading IoT @ Home technology company in China, today announced its unaudited financial results for the third quarter ended September 30, 2020.

Third
Quarter 2020 Financial and Operating Highlights

• Net revenues reached RMB1,486.7 million (US$219.0 million), an increase of 39.0% from the third quarter of 2019.
• Gross margin was 17.1%.
• Net income attributable to ordinary shareholders of the Company was RMB34.9 million (US$5.1 million).
• Non-GAAP net income attributable to ordinary shareholders of the Company
  
  ¹
  was RMB57.4 million (US$8.4 million).
• Number of
  cumulative
  household users reached more than 4.6 million, compared to approximately 4.2 million as of the end of the second quarter of 2020 and approximately 2.6 million as of the end of the third quarter of 2019.
• Percentage of household users with at least two connected products reached 19.5%, compared to 19.0% as of the end of the second quarter of 2020 and 17.1% as of the end of the third quarter of 2019.

¹ “Non-GAAP net income attributable to ordinary shareholders of the Company” is defined as net income attributable to ordinary shareholders of the Company excluding share-based compensation expenses. See “Reconciliation of GAAP and Non-GAAP Results” at the end of this press release.

“Under the backdrop of a meaningful industry recovery and rebound in consumer demand in the post-pandemic landscape, we continued our strong growth momentum in the third quarter, once again exceeding our previous guidance,” said Mr. Xiaoping Chen, Founder, Chairman of the Board of Directors and Chief Executive Officer of Viomi.

“Over the past two years, as part of our 5G IoT strategy, we have been developing a 5G IoT technology, protocol and algorithm framework for the home environment, including sensor technology, AI algorithms and smart hardware. Our dynamic, next-generation 5G IoT-enabled products are expected to enable ever-increasing scenario-based content, consumption, entertainment and lifestyle applications in the home environment, which will create numerous monetization opportunities for us over time. We believe such transformational trends will form the foundation of the next phase of industry evolution and we look forward to being at the forefront of these developments.

“To this end, we continued to expand our value-added businesses and content applications. At our recent 5G IoT product launch event in October, we announced additional enhancements to our line of 21Face 5G IoT large-screen refrigerators, and further expanded related content partnerships. Following our previous cooperation with various entertainment and media platforms, including Kugou Music, online video platform iQIYI, audio sharing platform Ximalaya FM and recipe sharing app Douguo, we also recently reached a cooperation agreement with Douyin, China’s popular short video social media platform, to further enrich our large-screen content offerings and increase user stickiness. Going forward, we will continue to explore even more IoT content offerings and partnerships in relation to our large-screen products, such as community group purchasing and grocery delivery services, in order to cater to dynamic and ever-changing consumption and user behavioral trends.

“In addition, in light of greater consumer emphasis on cleanness in the post-pandemic era, we have ramped up efforts to capture opportunities in our Viomi-branded water purifier and sweeper robots product categories. We recently launched a number of trend-setting products, including our first series of double reverse osmosis water purifiers, Super, and automatic dust disposal sweeper robot, Alpha. These two product categories have enjoyed extremely robust sales in recent months, most notably during the ‘Double-Eleven’ sales season. We expect such new and innovative products, together with our 21Face large-screen refrigerators, to form important additional pillars of growth in the years ahead. Leveraging upon our extensive existing experience, know-how and supply-chain resources, we have also been making the appropriate internal resource allocations as well as new personnel hires to ensure the success of these projects,” added Mr. Chen.

“In the past two years since our IPO, we have more than doubled our revenues, successfully expanded into numerous diverse product lines, significantly deepened our sales channel penetration, enriched our patent portfolio and established Viomi as a highly differentiated 5G IoT consumer-technology brand, all while maintaining healthy levels of profitability. Looking ahead, we will continue to execute our core 5G IoT strategy, focus our resources on core categories and streamline our product lines. We are fully devoted and committed to delivering strong, high-quality growth, and cementing ourselves as an industry leader in the next-generation of products, technologies and applications. Our goal is to make the 5G IoT home a reality for the benefit of all of our consumers and stakeholders,” concluded Mr. Chen.

“Our year-over-year net revenues growth of 39.0% again demonstrated the strength of our diversified business mix, as the overall industry began to recover from the impact of COVID-19. Gross margin also improved meaningfully on a quarter-over-quarter basis to 17.1%. Our core focus will remain on delivering robust top-line growth through new product launches, sales channel expansion and market share gains. In addition, we also expect to see meaningful gross margin uplift going forward as a result of more positive shifts in product mix, in line with our overall brand premiumization and SKU optimization strategy,” Mr. Shun Jiang, Chief Financial Officer of Viomi, commented.

Third
Quarter 2020
Financial Results

REVENUE

Net revenues increased by 39.0% to RMB1,486.7 million (US$219.0 million) from RMB1,069.5 million for the third quarter of 2019, primarily due to the continued successful rollout and significant increase in sales of new products. Revenues from our Viomi business increased by 46.5% to RMB861.9 million (US$126.9 million) from RMB588.2 million for the third quarter of 2019, representing 58.0% of the total revenues.

• IoT @ Home portfolio. Revenues from IoT @ Home portfolio increased by 72.5% to RMB1,060.2 million (US$156.1 million) from RMB614.8 million for the third quarter of 2019. The growth was primarily driven by the continued successful rollout of certain new product categories, in particular sweeper robots and air conditioning systems.

• Home water solutions. Revenues from home water solutions decreased by 32.2% to RMB145.4 million (US$21.4 million) from RMB214.5 million for the third quarter of 2019. The decline was primarily due to the decreases in average selling prices, particularly of Xiaomi-branded water purifier products. These effects were partially mitigated by the successful introduction of new series of Viomi-branded water purifier products.

• Consumable
  s
  . Revenues from consumables increased by 32.6% to RMB71.3 million (US$10.5 million) from RMB53.7 million for the third quarter of 2019, primarily due to increased demand for the Company’s water purifier filter products.

• Small appliances and others. Revenues from small appliances and others increased by 12.6% to RMB209.9 million (US$30.9 million) from RMB186.5 million for the third quarter of 2019.

GROSS PROFIT

Gross profit increased by 6.8% to RMB254.3 million (US$37.4 million) from RMB238.1 million for the third quarter of 2019. Gross margin was 17.1%, compared to 22.3% for the third quarter of 2019 and 14.3% for the second quarter of 2020. The year-over-year decrease in gross margin was primarily due to shifts in the Company’s business and product mix, together with structural industry-wide year-over-year decreases in average selling prices of water purifiers. The quarter-over-quarter increase in gross margin was primarily due to a stabilization of margins across product lines, including water purifiers, together with more positive shifts in business and product mix towards higher gross margin products.

OPERATING EXPENSES

Total operating expenses increased by 33.8% to RMB226.4 million (US$33.3million) from RMB169.2 million for the third quarter of 2019, primarily due to the growth of the Company’s business, together with an increase in share-based compensation expenses of RMB11.9 million (US$1.8 million).

Research and development expenses increased by 22.0% to RMB52.7 million (US$7.8 million) from RMB43.2 million for the third quarter of 2019.

Selling and marketing expenses increased by 34.2% to RMB152.2 million (US$22.4 million) from RMB113.4 million for the third quarter of 2019.

General and administrative expenses increased by 70.3% to RMB21.4 million (US$3.2 million) from RMB12.6 million for the third quarter of 2019.

As a percentage of total net revenues, total operating expenses for the third quarter of 2020 decreased to 15.2% from 15.8% for the third quarter of 2019.

INCOME FROM OPERATIONS

Income from operations was RMB36.4 million (US$5.4 million), compared to RMB82.5 million for the third quarter of 2019.

Non-GAAP operating income², which excludes the impact of share-based compensation expenses, was RMB58.9 million (US$8.7 million), compared to RMB93.1 million for the third quarter of 2019.

NET INCOME

Net income attributable to ordinary shareholders of the Company was RMB34.9 million (US$5.1 million), compared to RMB72.9 million for the third quarter of 2019.

Non-GAAP net income attributable to ordinary shareholders of the Company was RMB57.4 million (US$8.4 million), compared to RMB83.4 million for the third quarter of 2019.

² “Non-GAAP operating income” is defined as income from operation excluding share-based compensation expenses. See “Reconciliation of GAAP and Non-GAAP Results” at the end of this press release.

BALANCE SHEET

As of September 30, 2020, the Company had cash and cash equivalents of RMB715.6 million (US$105.4 million), restricted cash of RMB39.7 million (US$5.8 million), short-term deposits of nil and short-term investments of RMB179.6 million (US$26.5 million).

OUTLOOK

For the fourth quarter of 2020, the Company currently expects:

• Net revenues to be between RMB1.90 billion and RMB2.00 billion, representing a year-over-year growth of approximately 9.1% to 14.8%.

For the full year of 2020, the Company currently expects:

• Net revenues to be between RMB5.84 billion and RMB5.94 billion, representing a year-over-year growth of approximately 25.6% to 27.7%.

The above outlook is based on the current market conditions and reflects the Company’s current and preliminary estimates of market and operating conditions and customer demand, which are all subject to change.

Conference Call

The Company’s management will host a conference call at 7:30 a.m. Eastern Time on Wednesday, November 25, 2020 (8:30 p.m. Beijing Time on November 25, 2020) to discuss financial results and answer questions from investors and analysts. Listeners may access the call by dialing:

United States (Toll Free):	+1-888-346-8982
International:	+1-412-902-4272
Mainland China (Toll Free):	400-120-1203
Hong Kong (Toll Free):	800-905-945
Hong Kong:	+852-3018-4992
Conference ID:	10149971

A telephone replay will be available one hour after the call until December 2, 2020 by dialing:

United States:	+1-877-344-7529
International:	+1-412-317-0088
Replay Passcode:	10149971

Additionally, a live and archived webcast of the conference call will be available at http://ir.viomi.com.

About Viomi Technology

Viomi’s mission is to redefine the future home via the concept of IoT @ Home.

Viomi has developed a unique IoT @ Home platform consisting an ecosystem of innovative IoT-enabled smart home products, together with a suite of complementary consumable products and value-added businesses. This platform provides an attractive entry point into the consumer home, enabling consumers to intelligently interact with a broad portfolio of IoT products in an intuitive and human-like manner to make daily life more convenient, efficient and enjoyable, while allowing Viomi to grow its household user base and capture various additional scenario-driven consumption events in the home environment.

For more information, please visit: http://ir.viomi.com.

Use of Non-GAAP Measures

The Company uses non-GAAP operating income and non-GAAP net income attributable to ordinary shareholders, which are non-GAAP financial measures, in evaluating its operating results and for financial and operational decision-making purposes. Non-GAAP operating income is income from operations excluding share-based compensation expenses. Non-GAAP net income attributable to ordinary shareholders is net income attributable to ordinary shareholders excluding share-based compensation expenses. The non-GAAP adjustments do not have any tax impact as share-based compensation expenses are non-deductible for income tax purpose.

The Company believes that non-GAAP financial measures help identify underlying trends in its business by excluding the impact of share-based compensation expenses, which are non-cash charges, and these measures provide useful information about the Company’s operating results, enhance the overall understanding of the Company’s past performance and future prospects and allow for greater visibility with respect to key metrics used by the Company’s management in its financial and operational decision-making.

Non-GAAP financial measures should not be considered in isolation or construed as alternative to income from operations, net income, or any other measure of performance or as an indicator of the Company’s operating performance. Investors are encouraged to review the historical non-GAAP financial measures to the most directly comparable GAAP measures. Non-GAAP financial measures presented here may not be comparable to similarly titled measures presented by other companies. Other companies may calculate similarly titled measures differently, limiting their usefulness as comparative measures to the Company’s data. We encourage investors and others to review its financial information in its entirety and not rely on a single financial measure.

Exchange Rate

The Company’s business is primarily conducted in China and the significant majority of revenues generated are denominated in Renminbi (“RMB”). This announcement contains currency conversions of RMB amounts into U.S. dollars (“US$”) solely for the convenience of the reader. Unless otherwise noted, all translations from RMB to US$ are made at a rate of RMB6.7896 to US$1.00, the effective noon buying rate for September 30, 2020 as set forth in the H.10 statistical release of the Federal Reserve Board. No representation is made that the RMB amounts could have been, or could be, converted, realized or settled into US$ at that rate on for September 30, 2020, or at any other rate.

Safe Harbor Statement

This announcement contains forward-looking statements. These statements are made under the “safe harbor” provisions of the U.S. Private Securities Litigation Reform Act of 1995. These forward-looking statements can be identified by terminology such as “will,” “expects,” “anticipates,” “future,” “intends,” “plans,” “believes,” “estimates,” “confident” and similar statements. Among other things, the business outlook and quotations from management in this announcement, as well as Viomi’s strategic and operational plans, contain forward-looking statements. Viomi may also make written or oral forward-looking statements in its periodic reports to the United States Securities and Exchange Commission (the “SEC”), in its annual report to shareholders, in press releases and other written materials and in oral statements made by its officers, directors or employees to third parties. Statements that are not historical facts, including statements about the Company’s beliefs and expectations, are forward-looking statements. Forward-looking statements involve inherent risks and uncertainties. A number of factors could cause actual results to differ materially from those contained in any forward-looking statement, including but not limited to the following: the Company’s growth strategies; the cooperation with Xiaomi, the recognition of the Company’s brand; trends and competition in global IoT-enabled smart home market; development and commercialization of new products, services and technologies; governmental policies relating to the Company’s industry and general economic conditions in China and around the globe, and assumptions underlying or related to any of the foregoing. Further information regarding these and other risks is included in the Company’s filings with the SEC. All information provided in this press release and in the attachments is as of the date of this press release, and the Company undertakes no obligation to update any forward-looking statement, except as required under applicable law.

For investor and media inquiries, please contact:

In China:

Viomi Technology Co., Ltd
Cecilia Li
E-mail: [email protected]

The Piacente Group, Inc.
Emilie Wu
Tel: +86-21-6039-8363
E-mail: [email protected]

In the United States:

The Piacente Group, Inc.
Brandi Piacente
Tel: +1-212-481-2050
E-mail: [email protected]

VIOMI TECHNOLOGY CO., LTD

UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS

(All amounts in thousands, except shares, ADS, per share and per ADS data)

		As of December 31,		As of September 30,
		2019		2020		2020
		RMB		RMB		US$
Assets
Current assets
Cash and cash equivalents		972,438		715,565		105,391
Restricted cash		30,567		39,691		5,846
Short-term deposits		60,000		–		–
Short-term investments		316,201		179,643		26,459
Accounts and notes receivable from third parties (net of allowance of RMB2,006 and RMB6,717 as of December 31, 2019 and September 30, 2020, respectively)		316,189		583,090		85,880
Accounts receivable from a related party (net of allowance of nil and RMB49 as of December 31, 2019 and September 30, 2020, respectively)		707,947		489,145		72,043
Other receivables from related parties (net of allowance of nil and RMB5 as of December 31, 2019 and September 30, 2020, respectively)		23,944		51,997		7,658
Inventories		418,015		492,698		72,567
Prepaid expenses and other current assets		62,314		142,548		20,995
Total current assets		2,907,615		2,694,377		396,839
Non-current assets
Prepaid expenses and other non-current assets		11,170		21,383		3,149
Property, plant and equipment, net		67,293		61,341		9,035
Deferred tax assets		12,276		13,849		2,040
Intangible assets, net		4,357		7,487		1,103
Right-of-use assets, net		19,762		23,518		3,464
Land use rights, net		–		60,834		8,960
Long-term deposits		–		60,000		8,837
Total non-current assets		114,858		248,412		36,588
Total assets		3,022,473		2,942,789		433,427
Liabilities and shareholders’ equity
Current liabilities
Accounts and notes payable		1,043,159		1,010,786		148,873
Advances from customers		103,150		73,661		10,849
Amount due to related parties		25,106		69,060		10,171
Accrued expenses and other liabilities		325,042		269,782		39,735
Short-term borrowing		95,868		–		–
Income tax payables		33,522		29,291		4,314
Lease liabilities due within one year		6,993		9,879		1,455
Total current liabilities		1,632,840		1,462,459		215,397
Non-current liabilities
Accrued expenses and other liabilities		1,795		3,021		445
Lease liabilities		13,391		14,557		2,144
Total non-current liabilities		15,186		17,578		2,589
Total liabilities		1,648,026		1,480,037		217,986

VIOMI TECHNOLOGY CO., LTD

UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS (CONTINUED)

(All amounts in thousands, except shares, ADS, per share and per ADS data)

		As of December 31,			As of September 30,
		2019			2020			2020
		RMB			RMB			US$
Shareholders’ equity
Class A Ordinary Shares (US$0.00001 par value; 4,800,000,000 shares authorized; 98,444,732 and 100,512,725 shares issued and outstanding as of December 31, 2019 and September 30, 2020, respectively)		6			6			1
Class B Ordinary Shares (US$0.00001 par value; 150,000,000 shares authorized; 110,850,000 and 107,937,273 shares issued and outstanding as of December 31, 2019 and September 30, 2020, respectively)		6			6			1
Treasury stock		–			(32,687	)		(4,814	)
Additional paid-in capital		1,192,332			1,271,350			187,250
Retained earnings		195,596			255,099			37,572
Accumulated other comprehensive loss		(19,145	)		(33,626	)		(4,953	)
Total equity attributable to shareholders of the Company		1,368,795			1,460,148			215,057
Non-controlling interests		5,652			2,604			384
Total shareholders’ equity		1,374,447			1,462,752			215,441
Total liabilities and shareholders’ equity		3,022,473			2,942,789			433,427

Note: On January 1, 2020, the Company adopted ASC326, “Financial Instruments-Credit Losses” using modified-retrospective transition approach. Following the adoption of this guidance, a cumulative-effect adjustment to retained earnings, amounting to RMB2.4 million, was recognized as of January 1, 2020.

VIOMI TECHNOLOGY CO., LTD

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF

COMPREHENSIVE INCOME

(All amounts in thousands, except shares, ADS, per share and per ADS data)

		Three Months Ended
		September 30 , 2019		September 30 , 2020		September 30 , 2020
		RMB		RMB		US$
Net revenues:
A related party		481,283		624,822		92,026
Third parties		588,218		861,922		126,947
Total net revenues		1,069,501		1,486,744		218,973
Cost of revenues (including RMB10,203 and RMB143,072 with related parties for the three months ended September 30, 2019 and 2020, respectively)		(831,366	)	(1,232,481	)	(181,524	)
Gross profit		238,135		254,263		37,449
Operating expenses (1)
Research and development expenses (including nil, and RMB156, with related parties for the three months ended September 30, 2019 and 2020, respectively)		(43,164	)	(52,674	)	(7,758	)
Selling and marketing expenses (including RMB14,348, RMB23,210 with related parties for the three months ended September 30, 2019 and 2020, respectively)		(113,446	)	(152,247	)	(22,424	)
General and administrative expenses		(12,590	)	(21,447	)	(3,159	)
Total operating expenses		(169,200	)	(226,368	)	(33,341	)
Other income		13,584		8,537		1,257
Income from operations		82,519		36,432		5,365
Interest income and investment income		2,818		9,985		1,471
Other non-operating income		446		580		85
Income before income tax expenses		85,783		46,997		6,921
Income tax expenses		(12,456	)	(11,890	)	(1,751	)
Net income		73,327		35,107		5,170
Less: Net income attributable to the non-controlling interest shareholders		426		187		28
Net income attributable to ordinary shareholders of the Company		72,901		34,920		5,142

VIOMI TECHNOLOGY CO., LTD

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF

COMPREHENSIVE INCOME (CONTINUED)

(All amounts in thousands, except shares, ADS, per share and per ADS data)

		Three Months Ended
		September 30 , 2019		September 30 , 2020		September 30 , 2020
		RMB		RMB		US$
Net income attributable to the Company		72,901		34,920		5,142
Other comprehensive (loss)/income, net of tax
Foreign currency translation adjustment		20,255		(24,956	)	(3,676	)
Total comprehensive income attributable to the Company		93,156		9,964		1,466
Net income per ADS*
-Basic		1.05		0.50		0.07
-Diluted		1.01		0.48		0.07
Weighted average number of ADS used in calculating net income per ADS
-Basic		69,351,625		69,719,922		69,719,922
-Diluted		71,932,384		72,589,361		72,589,361
Net income per share attributable to ordinary shareholders of the Company
-Basic		0.35		0.17		0.03
-Diluted		0.34		0.16		0.02
Weighted average number of ordinary shares used in calculating net income per share
-Basic		208,054,876		209,159,767		209,159,767
-Diluted		215,797,153		217,768,082		217,768,082

*Each ADS represents 3 ordinary shares.

(1)  Share-based compensation was allocated in operating expenses as follows:

		Three Months Ended
		September 30 , 2019		September 30 , 2020		September 30 , 2020
		RMB		RMB		US$
General and administrative expenses		1,818		6,270		923
Research and development expenses		5,609		12,963		1,909
Selling and marketing expenses		3,106		3,211		473

VIOMI TECHNOLOGY CO., LTD

Reconciliations of GAAP And Non-GAAP Results

(All amounts in thousands, except shares, ADS, per share and per ADS data)

		Three Months Ended
		September 30, 2019		September 30, 2020		September 30, 2020
		RMB		RMB		US$
Income from operations		82,519		36,432		5,365
Share-based compensation expenses		10,533		22,444		3,305
Non-GAAP operating income		93,052		58,876		8,670
Net income		73,327		35,107		5,170
Share-based compensation expenses		10,533		22,444		3,305
Non-GAAP net income		83,860		57,551		8,475
Net income attributable to the Company		72,901		34,920		5,142
Share-based compensation expenses		10,533		22,444		3,305
Non-GAAP net income attributable to the Company		83,434		57,364		8,447
Net income attributable to ordinary shareholders		72,901		34,920		5,142
Share-based compensation expenses		10,533		22,444		3,305

Non-GAAP net income attributable to ordinary shareholders		83,434		57,364		8,447
Non-GAAP net income per ADS
-Basic		1.20		0.82		0.12
-Diluted		1.16		0.79		0.12
Weighted average number of ADS used in calculating Non-GAAP net income per ADS
-Basic		69,351,625		69,719,922		69,719,922
-Diluted		71,932,384		72,589,361		72,589,361
Non-GAAP net income per ordinary share
-Basic		0.40		0.27		0.04
-Diluted		0.39		0.26		0.04
Weighted average number of ordinary shares used in calculating Non-GAAP net income per share
-Basic		208,054,876		209,159,767		209,159,767
-Diluted		215,797,153		217,768,082		217,768,082

Note: The non-GAAP adjustments do not have any tax impact as share-based compensation expenses are non-deductible for income tax purpose.