Low-Cost Business Model and Disciplined Capital Allocation Drive Solid Operating Performance and Strong EPS Growth
Third Quarter Revenue of $2 Billion with GAAP EPS of $1.79; Adjusted EPS of $1.88
GAAP Operating Income of $91 Million; GAAP Net Income of $70 Million; Adjusted EBITDA of $125 Million
Repurchased $32 Million of Shares in the Third Quarter of 2023
Updates Full-Year 2023 Guidance
BOCA RATON, Fla.–(BUSINESS WIRE)–Nov. 8, 2023– The ODP Corporation (“ODP,” or the “Company”) (NASDAQ:ODP), a leading provider of products, services, and technology solutions to businesses and consumers, today announced results for the third quarter ended September 30, 2023.
Consolidated (in millions, except per share amounts)
3Q23
3Q22
YTD23
YTD22
Selected GAAP and Non-GAAP measures:
Sales
$2,009
$2,172
$6,025
$6,385
Sales change from prior year period
(8)%
(6)%
Operating income
$91
$84
$232
$188
Adjusted operating income (1)
$95
$95
$247
$238
Net income from continuing operations
$70
$67
$176
$142
Diluted earnings per share from continuing operations
$1.79
$1.36
$4.38
$2.84
Adjusted net income from continuing operations (1)
$73
$73
$187
$177
Adjusted earnings per share from continuing operations (fully diluted) (1)
$1.88
$1.48
$4.66
$3.54
Adjusted EBITDA (1)
$125
$131
$342
$347
Operating Cash Flow from continuing operations
$112
$163
$261
$79
Free Cash Flow (2)
$86
$138
$183
$11
Adjusted Free Cash Flow (3)
$89
$160
$192
$54
Third Quarter 2023 Summary(1)(2)(3)
Total reported sales of $2.0 billion, down 8% versus the prior year, primarily due to lower sales in its Office Depot consumer division, largely driven by 71 fewer retail locations in service compared to the prior year, as well as lower retail and online consumer traffic and transactions
GAAP operating income of $91 million and net income from continuing operations of $70 million, or $1.79 per diluted share, versus $84 million and $67 million, respectively, or $1.36 per diluted share, in the prior year
Adjusted operating income of $95 million, flat compared to the third quarter of 2022; adjusted EBITDA of $125 million, compared to $131 million in the third quarter of 2022
Adjusted net income from continuing operations of $73 million, or adjusted diluted earnings per share from continuing operations of $1.88, versus $73 million or $1.48, respectively, in the prior year
Operating cash flow from continuing operations of $112 million and adjusted free cash flow of $89 million, versus $163 million and $160 million, respectively, in the prior year
Repurchased 659 thousand shares at a cost of $32 million in the third quarter of 2023
$1.2 billion of total available liquidity including $384 million in cash and cash equivalents at quarter end
“I am extremely impressed seeing the day-to-day commitment and exceptional execution from our team as I fulfill Chief Executive Officer Gerry Smith’s responsibilities while he is on medical leave,” said Joseph Vassalluzzo, ODP’s chairman of the board. “In the quarter, our team delivered strong operating income and earnings per share results against a challenging economic backdrop, reflecting our unwavering commitment to operational excellence and to our low-cost business model approach.
“We continue to make progress across our four business units as we execute our three horizons strategy. This included expanding margins at ODP Business Solutions, new product testing and category expansion at Office Depot, securing new third-party customers at Veyer while remaining on track to more than double third-party EBITDA this year, and enhancing our platform and customer engagement at Varis.
“Our shareholder value creation formula, which integrates operational excellence with a shareholder-focused capital allocation plan, including the repurchase of approximately $32 million of shares during the quarter, contributed to a meaningful year-over-year increase in adjusted earnings per share for the third quarter and revised upward EPS guidance for the full year,” Vassalluzzo added.
“As we look ahead, we anticipate the macroeconomic environment to remain challenging throughout the remainder of the year. However, we are confident in our position of strength and will continue to focus on driving value for shareholders through our low-cost business model, leveraging our multiple routes to market, and continuing with our disciplined capital allocation,” Vassalluzzo concluded.
Consolidated Results
Reported (GAAP) Results
Total reported sales for the third quarter of 2023 were $2 billion, a decrease of 8% compared with the same period last year. This was driven primarily by lower sales in its consumer division, Office Depot, primarily due to 71 fewer stores in service compared to last year related to planned store closures, as well as lower retail and online consumer traffic. Sales at ODP Business Solutions Division were down slightly compared to last year, largely driven by slower return to office trends and lower sales of technology products. Meanwhile, Veyer provided strong logistics support for the ODP Business Solutions and Office Depot Divisions, and continued to capture additional demand for its supply chain and procurement solutions among other third-party customers.
The Company reported operating income of $91 million in the third quarter of 2023, up 8% compared to operating income of $84 million in the prior year period. Operating results in the third quarter of 2023 included $4 million of charges. These charges consisted primarily of $3 million associated with non-cash asset impairments largely related to the operating lease right-of-use (ROU) assets associated with the Company’s retail store locations. Net income from continuing operations was $70 million, or $1.79 per diluted share in the third quarter of 2023, up from $67 million, or $1.36 per diluted share in the third quarter of 2022.
Adjusted (non-GAAP) Results(1)
Adjusted results for the third quarter of 2023 exclude charges and credits totaling $4 million as described above and the associated tax impacts.
Third quarter of 2023 adjusted EBITDA was $125 million compared to $131 million in the prior year period. This included depreciation and amortization of $28 million and $32 million in the third quarters of 2023 and 2022, respectively
Third quarter of 2023 adjusted operating income was $95 million, flat compared to the third quarter of 2022
Third quarter of 2023 adjusted net income from continuing operations was $73 million, or $1.88 per diluted share, compared to $73 million, or $1.48 per diluted share, in the third quarter of 2022, an increase of 27% on a per share basis
Division Results
ODP Business Solutions Division
Leading B2B distribution solutions provider serving small, medium and enterprise level companies with an annual trailing-twelve-month revenue in excess of $4 billion
Reported sales were $1.0 billion in the third quarter of 2023, down approximately 3% compared to the same period last year primarily related to lower sales of technology products and weaker macroeconomic conditions
Stronger sales in cleaning and breakroom supplies were more than offset by lower sales of technology and core supplies
Total adjacency category sales, including cleaning and breakroom, furniture, technology, and copy and print, were 44% of total ODP Business Solutions’ sales
Continued strong pipeline and net new business customer additions
Operating income was $56 million in the third quarter of 2023, up 17% over the same period last year, related primarily to higher gross margins. As a percentage of sales, operating income margin was 6%, up 90 basis points compared to the same period last year
Office Depot Division
Leading provider of retail consumer and small business products and services distributed via Office Depot and OfficeMax retail locations and an award-winning eCommerce presence
Reported sales were $1.0 billion in the third quarter of 2023, down 12% compared to the prior year period partially due to 71 fewer retail outlets in service associated with planned store closures, as well as lower demand relative to last year in certain product categories, softer back-to-school seasonal demand, and lower online sales. The Company closed 14 retail stores in the quarter and had 938 stores at quarter end. Sales were down approximately 6% on a comparable store basis
Stronger sales of copy and print services were more than offset by lower sales in supplies, technology, and other categories
Store and online traffic were lower year over year due to a greater percentage of customers having returned to the office post pandemic, as well as weaker macroeconomic activity
Operating income was $66 million in the third quarter of 2023, compared to operating income of $83 million during the same period last year, driven primarily by the flow through impact from lower sales. As a percentage of sales, operating income was 7%, flat compared to the same period last year.
Veyer Division
Veyer is a supply chain, distribution, procurement and global sourcing operation with over 35 years of experience and proven leadership, supporting Office Depot and ODP Business Solutions, as well as third-party customers. Veyer’s assets and capabilities include 8 million square feet of infrastructure through a nationwide network of distribution centers, cross-docks, and other facilities throughout the United States; a global sourcing presence in Asia; a large private fleet of vehicles; and next-day delivery to 98.5% of US population
In the third quarter of 2023, Veyer provided strong support for its internal customers, ODP Business Solutions and Office Depot, as well as for its third-party customers, generating sales of $1.3 billion
Operating income was $10 million in the third quarter of 2023, up from $9 million in the prior year period related to the favorable impacts of higher sales to external third parties and lower product costing
In the quarter relative to last year, sales and EBITDA generated from third party customers was up 57% and 119% respectively, resulting in sales of approximately $11 million and EBITDA of $3 million in the quarter
Varis Division
Varis is a tech-enabled B2B indirect procurement marketplace launched in the fourth quarter of 2022, which provides buyers and suppliers a seamless way to transact through the platform’s consumer-like buying experience and advanced spend management tools
Successfully launched the platform in the fourth quarter of 2022; adding and on-boarding new customers, incorporating feedback, and adding new features and capabilities to the platform
Varis generated revenues in the third quarter of 2023 of $2 million, flat compared to the third quarter of 2022
Operating loss was $17 million, flat compared to the third quarter of 2022, as the division continued to enhance its platform and onboard new customers
Share Repurchases
The Company continued to execute under its previously announced $1 billion share repurchase authorization, available through year-end 2025. During the third quarter of 2023, the Company repurchased 659 thousand shares at a cost of $32 million. Since the inception of the authorization beginning in November 2022, the Company has repurchased 9 million shares for approximately $420 million.
The number of shares to be repurchased in the future and the timing of such transactions will depend on a variety of factors, including market conditions, regulatory requirements, and other corporate considerations. The current authorization could be suspended or discontinued at any time as determined by the Board of Directors.
Balance Sheet and Cash Flow
As of September 30, 2023, ODP had total available liquidity of approximately $1.2 billion, consisting of $384 million in cash and cash equivalents and $771 million of available credit under the Third Amended Credit Agreement. Total debt was $173 million.
For the third quarter of 2023, cash generated by operating activities of continuing operations was $112 million, which included $3 million in restructuring and other spend, compared to cash provided by operating activities of continuing operations of $163 million in the third quarter of the prior year, which included $22 million in restructuring and other spend. The year-over-year change in operating cash flow is largely related to the timing of certain working capital items.
Capital expenditures in the third quarter of 2023 and 2022 were $25 million, reflecting continued growth investments in the Company’s digital transformation, distribution network, and eCommerce capabilities. Adjusted Free Cash Flow(3) was $89 million in the third quarter of 2023, compared to $160 million in the prior year period.
“I would like to recognize our entire team for their commitment and dedication in managing inventory and working capital, which has resulted in another quarter of strong cash flow generation,” said Anthony Scaglione, executive vice president and chief financial officer of The ODP Corporation. “As we work to close out the year, we maintain our disciplined approach, focusing on managing costs, maximizing cash flow, and executing our capital allocation plan,” Scaglione added.
Updated 2023 Expectations
“Our team’s unwavering commitment to delivering value is evident in our compelling customer proposition, strong free cash flow generation, and strategic capital allocation for the benefit of our shareholders,” highlighted Vassalluzzo. “While we acknowledge the influence of the challenging macroeconomic environment on consumer and business activity, we remain steadfast in our dedication to driving long-term value within our business through effective execution of our three horizons strategy.”
The Company’s full year guidance for 2023 included in this release includes non-GAAP measures, such as Adjusted EBITDA, Adjusted Operating Income, Adjusted Earnings per Share and Adjusted Free Cash Flow. These measures exclude charges or credits not indicative of core operations, which may include but not be limited to merger integration expenses, restructuring charges, acquisition-related costs, executive transition costs, asset impairments and other significant items that currently cannot be predicted without unreasonable efforts. The exact amount of these charges or credits are not currently determinable but may be significant. Accordingly, the Company is unable to provide equivalent GAAP measures or reconciliations from GAAP to non-GAAP for these financial measures without unreasonable effort.
The Company is updating its full year guidance for 2023 as follows:
Previous 2023 Guidance
Updated 2023 Guidance
Sales
Approximately $8 billion
Revised to $7.8 – $7.9 billion
Adjusted EBITDA
$400 – $430 million
Affirmed
Adjusted Operating Income
$270 – $300 million
Revised to $280 – $310 million
Adjusted Earnings per Share(*)
$5.00 – $5.30 per share
Revised to $5.30 – $5.60 per share
Adjusted Free Cash Flow(**)
$200 – $230 million
Affirmed
Capital Expenditures
$100 – $120 million
Affirmed
*Adjusted Earnings per Share (EPS) guidance for 2023 includes tax benefits related to R&D and employee-related tax credits and includes expected impact from share repurchases
**Adjusted Free Cash Flow is defined as cash flows from operating activities less capital expenditures excluding cash charges associated with the Company’s Maximize B2B Restructuring and expenses incurred in connection with our previously planned separation of the consumer business and re-alignment
“Our year-to-date performance speaks to the resilience of our team and the strength of our low-cost business model and capital allocation approach,” said Scaglione. “While the weaker macroeconomic conditions have impacted the level of consumer and business activity creating top-line headwinds, our continued focus on operational excellence has us well positioned to continue driving strong operating results as we close out the year. Our updated guidance assumes a consistent overall macroeconomic environment and reflects our year-to-date revenue trends, while increasing our outlook for adjusted operating income and adjusted EPS.
Our increased adjusted EPS outlook also assumes a lower full-year effective tax rate driven by the execution of certain tax credits, lower than anticipated interest expense associated with projected intra-quarter ABL borrowings, and the impact from our continued share buyback activity,” Scaglione added.
The ODP Corporation will webcast a call with financial analysts and investors on November 8, 2023, at 9:00 am Eastern Time, which will be accessible to the media and the general public. To listen to the conference call via webcast, please visit The ODP Corporation’s Investor Relations website at investor.theodpcorp.com. A replay of the webcast will be available approximately two hours following the event.
(1)
As presented throughout this release, adjusted results represent non-GAAP financial measures and exclude charges or credits not indicative of core operations and the tax effect of these items, which may include but not be limited to merger integration, restructuring, acquisition costs, and asset impairments. Reconciliations from GAAP to non-GAAP financial measures can be found in this release as well as on the Company’s Investor Relations website at investor.theodpcorp.com.
(2)
As used in this release, Free Cash Flow is defined as cash flows from operating activities less capital expenditures. Free Cash Flow is a non-GAAP financial measure and reconciliations from GAAP financial measures can be found in this release as well as on the Company’s Investor Relations website at investor.theodpcorp.com.
(3)
As used in this release, Adjusted Free Cash Flow is defined as Free Cash Flow excluding cash charges associated with the Company’s Maximize B2B Restructuring, and expenses incurred in connection with our previously planned separation of the consumer business and re-alignment. Adjusted Free Cash Flow is a non-GAAP financial measure and reconciliations from GAAP financial measures can be found in this release as well as on the Company’s Investor Relations website at investor.theodpcorp.com.
About The ODP Corporation
The ODP Corporation (NASDAQ:ODP) is a leading provider of products, services, and technology solutions through an integrated business-to-business (B2B) distribution platform and omni-channel presence, which includes supply chain and distribution operations, dedicated sales professionals, a B2B digital procurement solution, online presence, and a network of Office Depot and OfficeMax retail stores. Through its operating companies ODP Business Solutions, LLC; Office Depot, LLC; Veyer, LLC; and Varis, Inc, The ODP Corporation empowers every business, professional, and consumer to achieve more every day. For more information, visit theodpcorp.com.
This communication may contain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These statements or disclosures may discuss goals, intentions and expectations as to future trends, plans, events, results of operations, cash flow or financial condition, the potential impacts on our business due to the unknown severity and duration of the COVID-19 pandemic, or state other information relating to, among other things, the Company, based on current beliefs and assumptions made by, and information currently available to, management. Forward-looking statements generally will be accompanied by words such as “anticipate,” “believe,” “plan,” “could,” “estimate,” “expect,” “forecast,” “guidance,” “expectations”, “outlook,” “intend,” “may,” “possible,” “potential,” “predict,” “project,” “propose” or other similar words, phrases or expressions, or other variations of such words. These forward-looking statements are subject to various risks and uncertainties, many of which are outside of the Company’s control. There can be no assurances that the Company will realize these expectations or that these beliefs will prove correct, and therefore investors and stakeholders should not place undue reliance on such statements.
Factors that could cause actual results to differ materially from those in the forward-looking statements include, among other things, highly competitive office products market and failure to differentiate the Company from other office supply resellers or respond to decline in general office supplies sales or to shifting consumer demands; competitive pressures on the Company’s sales and pricing; the risk that the Company is unable to transform the business into a service-driven, B2B platform that such a strategy will not result in the benefits anticipated; the risk that the Company will not be able to achieve the expected benefits of its strategic plans, including its strategic shift to maintain all of its businesses under common ownership; the risk that the Company may not be able to realize the anticipated benefits of acquisitions due to unforeseen liabilities, future capital expenditures, expenses, indebtedness and the unanticipated loss of key customers or the inability to achieve expected revenues, synergies, cost savings or financial performance; the risk that the Company is unable to successfully maintain a relevant omni-channel experience for its customers; the risk that the Company is unable to execute the Maximize B2B Restructuring Plan successfully or that such plan will not result in the benefits anticipated; failure to effectively manage the Company’s real estate portfolio; loss of business with government entities, purchasing consortiums, and sole- or limited-source distribution arrangements; failure to attract and retain qualified personnel, including employees in stores, service centers, distribution centers, field and corporate offices and executive management, and the inability to keep supply of skills and resources in balance with customer demand; failure to execute effective advertising efforts and maintain the Company’s reputation and brand at a high level; disruptions in computer systems, including delivery of technology services; breach of information technology systems affecting reputation, business partner and customer relationships and operations and resulting in high costs and lost revenue; unanticipated downturns in business relationships with customers or terms with the suppliers, third-party vendors and business partners; disruption of global sourcing activities, evolving foreign trade policy (including tariffs imposed on certain foreign made goods); exclusive Office Depot branded products are subject to additional product, supply chain and legal risks; product safety and quality concerns of manufacturers’ branded products and services and Office Depot private branded products; covenants in the credit facility; general disruption in the credit markets; incurrence of significant impairment charges; retained responsibility for liabilities of acquired companies; fluctuation in quarterly operating results due to seasonality of the Company’s business; changes in tax laws in jurisdictions where the Company operates; increases in wage and benefit costs and changes in labor regulations; changes in the regulatory environment, legal compliance risks and violations of the U.S. Foreign Corrupt Practices Act and other worldwide anti-bribery laws; volatility in the Company’s common stock price; changes in or the elimination of the payment of cash dividends on Company common stock; macroeconomic conditions such as higher interest rates and future declines in business or consumer spending; increases in fuel and other commodity prices and the cost of material, energy and other production costs, or unexpected costs that cannot be recouped in product pricing; unexpected claims, charges, litigation, dispute resolutions or settlement expenses; catastrophic events, including the impact of weather events on the Company’s business; the discouragement of lawsuits by shareholders against the Company and its directors and officers as a result of the exclusive forum selection of the Court of Chancery, the federal district court for the District of Delaware or other Delaware state courts by the Company as the sole and exclusive forum for such lawsuits; and the impact of the COVID-19 pandemic on the Company’s business. The foregoing list of factors is not exhaustive. Investors and shareholders should carefully consider the foregoing factors and the other risks and uncertainties described in the Company’s Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q, and Current Reports on Form 8-K filed with the U.S. Securities and Exchange Commission. The Company does not assume any obligation to update or revise any forward-looking statements.
ATLANTA, November 8, 2023 — Gray Television, Inc. (“Gray”) (NYSE: GTN) announced today that its Board of Directors has authorized a quarterly cash dividend of $0.08 per share of its common stock and Class A common stock. The dividend is payable on December 29, 2023, to shareholders of record at the close of business on December 15, 2023.
About Gray Television:
We are a multimedia company headquartered in Atlanta, Georgia. We are the nation’s largest owner of top-rated local television stations and digital assets. Our television stations serve 113 television markets that collectively reach approximately 36 percent of US television households. This portfolio includes 80 markets with the top-rated television station and 102 markets with the first and/or second highest rated television station in 2022. We also own video program companies Raycom Sports, Tupelo Media Group, and PowerNation Studios, as well as the studio production facilities Assembly Atlanta and Third Rail Studios. We own a majority interest in Swirl Films. For more information, please visit www.gray.tv.
Forward-Looking Statements:
This press release contains certain forward-looking statements that are based largely on Gray’s current expectations and reflect various estimates and assumptions by Gray. These statements are statements other than those of historical fact and may be identified by words such as “estimates”, “expect,” “anticipate,” “will,” “implied,” “assume” and similar expressions. Forward-looking statements are subject to certain risks, trends and uncertainties that could cause actual results and achievements to differ materially from those expressed in such forward-looking statements. Such risks, trends and uncertainties, which in some instances are beyond Gray’s control include Gray’s inability to provide expected future payment of dividends, and other future events. Gray is subject to additional risks and uncertainties described in Gray’s quarterly and annual reports filed with the Securities and Exchange Commission from time to time, including in the “Risk Factors,” and management’s discussion and analysis of financial condition and results of operations sections contained therein, which reports are made publicly available via its website, www.gray.tv. Any forward-looking statements in this communication should be evaluated in light of these important risk factors. This press release reflects management’s views as of the date hereof. Except to the extent required by applicable law, Gray undertakes no obligation to update or revise any information contained in this communication beyond the date hereof, whether as a result of new information, future events or otherwise.
# # #
Gray Contacts:
www.gray.tv.
Jim Ryan, Executive Vice President and Chief Financial Officer, (404) 504-9828
Kevin P. Latek, Executive Vice President, Chief Legal and Development Officer, (404) 266-8333
BY THE COMTECH EDITORIAL TEAM – NOV 7, 2023 | 3 MIN READ
TORRANCE, Calif. & MELVILLE, N.Y. — Nov. 7, 2023 — Stellant Systems, Inc. (Stellant) and Comtech (NASDAQ: CMTL), both global technology leaders, announced today that the companies have closed, effective November 7, 2023, on the previously announced sale of Comtech’s Power Systems Technology (PST) product line. Stellant is a portfolio company of Arlington Capital Partners, a Washington D.C.-area private equity firm with extensive experience investing in regulated industries.
Net cash proceeds received at closing by Comtech approximated $32.5 million and were used in part by Comtech to pay down outstanding debt on its existing Credit Facility. In connection with the consummation of the closing of the transaction, Comtech entered into a Third Amended and Restated Credit Agreement with its existing lenders and a Second Amended and Restated Certificate of Designations with its existing Series A convertible preferred shareholders, who both consented to the transaction. Comtech will provide financial and other information concerning the impact of the PST transaction during its next regularly scheduled quarterly earnings conference call to review the results of its fiscal quarter ended October 31, 2023, the exact date and time of which will be announced in advance.
About Stellant Systems, Inc.
Stellant Systems is a premier manufacturer of critical spectrum and RF power amplification systems to the space, defense, medical, science and industrial markets for both domestic and international customers. Stellant has three domestic manufacturing facilities and nearly 1,000 employees. For more information, visit www.Stellantsystems.com.
About Comtech
Comtech Telecommunications Corp. is a leading global technology company providing terrestrial and wireless network solutions, next-generation 9-1-1 emergency services, satellite and space communications technologies, and cloud native capabilities to commercial and government customers around the world. Our unique culture of innovation and employee empowerment unleashes a relentless passion for customer success. With multiple facilities located in technology corridors throughout the United States and around the world, Comtech leverages our global presence, technology leadership, and decades of experience to create the world’s most innovative communications solutions.For more information, please visit www.comtech.com.
About Arlington Capital Partners
Arlington Capital Partners is a Washington, DC-based private equity firm that has managed approximately $7 billion in capital commitments. Arlington is focused on middle market investment opportunities in growth industries including government services and technology, aerospace & defense, healthcare, and business services and software. The firm’s professionals and network have a unique combination of operating and private equity experience that enable Arlington to be a value-added investor. Arlington invests in companies in partnership with high quality management teams that are motivated to establish and/or advance their company’s position as leading competitors in their field. For more information, visit Arlington Capital’s website at arlingtoncap.com and follow Arlington on LinkedIn.
Forward-Looking Statements
Certain information in this press release contains forward-looking statements. Forward-looking statements can be identified by words such as: “will,” “intend,” “expect,” and similar references to future periods. Forward-looking statements by their nature address matters that are, to different degrees, uncertain, such as statements about the consummation of the transaction and the anticipated benefits thereof. All such forward-looking statements are based upon current plans, estimates, expectations and ambitions that are subject to risks, uncertainties and assumptions, many of which are beyond the control of Stellant and Comtech, that could cause actual results to differ materially from those expressed in such forward-looking statements. Important risk factors that may cause such a difference include, but are not limited to: anticipated tax treatment, unforeseen liabilities, the possibility that any of the anticipated benefits of the transaction will not be realized or will not be realized within the expected time period, and other factors as described in Comtech’s filings with the Securities and Exchange Commission, including those under the heading “Risk Factors” in Comtech’s most recent Annual Report on Form 10-K. Stellant and Comtech do not intend to update or revise publicly any forward-looking statements, whether because of new information, future events, or otherwise, except as required by law.
PRINCETON, N.J., Nov. 07, 2023 (GLOBE NEWSWIRE) — PDS Biotechnology Corporation (Nasdaq: PDSB) (PDS Biotech or the Company), a clinical-stage immunotherapy company developing a growing pipeline of targeted cancer immunotherapies and infectious disease vaccines based on the Company’s proprietary T cell activating platforms, today announced that the Company will release financial results for the third quarter of 2023 on Tuesday, November 14, 2023, before the market opens. Following the release, management will host a conference call to review the financial results and provide a business update.
Tuesday, November 14, 2023, 8:00 AM ET Domestic: 877-407-3088 International: 201-389-0927 Conference ID: 13741454
After the live webcast, the event will be archived on PDS Biotech’s website for six months.
About PDS Biotechnology
PDS Biotech is a clinical-stage immunotherapy company developing a growing pipeline of targeted cancer and infectious disease immunotherapies based on our proprietary Versamune®, Versamune® plus PDS0301, and Infectimune® T cell-activating platforms. We believe our targeted immunotherapies have the potential to overcome the limitations of current immunotherapy approaches through the activation of the right type, quantity and potency of T cells. To date, our lead Versamune® clinical candidate, PDS0101, has demonstrated the ability to reduce and shrink tumors and stabilize disease in combination with approved and investigational therapeutics in patients with a broad range of HPV16-associated cancers in multiple Phase 2 clinical trials and will be advancing into a Phase 3 clinical trial in combination with KEYTRUDA® for the treatment of recurrent/metastatic HPV16-positive head and neck cancer in 2023. Our Infectimune® based vaccines have also demonstrated the potential to induce not only robust and durable neutralizing antibody responses, but also powerful T cell responses, including long-lasting memory T cell responses in pre-clinical studies to date. To learn more, please visit www.pdsbiotech.com or follow us on Twitter at @PDSBiotech.
Forward Looking Statements
This communication contains forward-looking statements (including within the meaning of Section 21E of the United States Securities Exchange Act of 1934, as amended, and Section 27A of the United States Securities Act of 1933, as amended) concerning PDS Biotechnology Corporation (the “Company”) and other matters. These statements may discuss goals, intentions and expectations as to future plans, trends, events, results of operations or financial condition, or otherwise, based on current beliefs of the Company’s management, as well as assumptions made by, and information currently available to, management. Forward-looking statements generally include statements that are predictive in nature and depend upon or refer to future events or conditions, and include words such as “may,” “will,” “should,” “would,” “expect,” “anticipate,” “plan,” “likely,” “believe,” “estimate,” “project,” “intend,” “forecast,” “guidance”, “outlook” and other similar expressions among others. Forward-looking statements are based on current beliefs and assumptions that are subject to risks and uncertainties and are not guarantees of future performance. Actual results could differ materially from those contained in any forward-looking statement as a result of various factors, including, without limitation: the Company’s ability to protect its intellectual property rights; the Company’s anticipated capital requirements, including the Company’s anticipated cash runway and the Company’s current expectations regarding its plans for future equity financings; the Company’s dependence on additional financing to fund its operations and complete the development and commercialization of its product candidates, and the risks that raising such additional capital may restrict the Company’s operations or require the Company to relinquish rights to the Company’s technologies or product candidates; the Company’s limited operating history in the Company’s current line of business, which makes it difficult to evaluate the Company’s prospects, the Company’s business plan or the likelihood of the Company’s successful implementation of such business plan; the timing for the Company or its partners to initiate the planned clinical trials for PDS0101, PDS0203 and other Versamune® and Infectimune® based product candidates; the future success of such trials; the successful implementation of the Company’s research and development programs and collaborations, including any collaboration studies concerning PDS0101, PDS0203 and other Versamune® and Infectimune® based product candidates and the Company’s interpretation of the results and findings of such programs and collaborations and whether such results are sufficient to support the future success of the Company’s product candidates; the success, timing and cost of the Company’s ongoing clinical trials and anticipated clinical trials for the Company’s current product candidates, including statements regarding the timing of initiation, pace of enrollment and completion of the trials (including the Company’s ability to fully fund its disclosed clinical trials, which assumes no material changes to the Company’s currently projected expenses), futility analyses, presentations at conferences and data reported in an abstract, and receipt of interim or preliminary results (including, without limitation, any preclinical results or data), which are not necessarily indicative of the final results of the Company’s ongoing clinical trials; any Company statements about its understanding of product candidates mechanisms of action and interpretation of preclinical and early clinical results from its clinical development programs and any collaboration studies; and other factors, including legislative, regulatory, political and economic developments not within the Company’s control. The foregoing review of important factors that could cause actual events to differ from expectations should not be construed as exhaustive and should be read in conjunction with statements that are included herein and elsewhere, including the other risks, uncertainties, and other factors described under “Risk Factors,” “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and elsewhere in the documents we file with the U.S. Securities and Exchange Commission. The forward-looking statements are made only as of the date of this press release and, except as required by applicable law, the Company undertakes no obligation to revise or update any forward-looking statement, or to make any other forward-looking statements, whether as a result of new information, future events or otherwise.
Versamune® and Infectimune® are registered trademarks of PDS Biotechnology Corporation. KEYTRUDA® is a registered trademark of Merck Sharp and Dohme LLC, a subsidiary of Merck & Co., Inc., Rahway, N.J., USA.
Substantial THIO program progress including unprecedented disease control rate (DCR) of 100% in second-line non-small cell lung cancer (NSCLC)
Key THIO findings in gliomas, pediatric brain cancer, and second generation THIO-derived cancer therapies
Strong pace of enrollment in THIO-101 Phase 2 trial exceeds average enrollment pace in similar NSCLC trials
CHICAGO–(BUSINESS WIRE)– MAIA Biotechnology, Inc., (NYSE American: MAIA) (“MAIA” or the “Company”), a clinical-stage biopharmaceutical company developing telomere-targeting immunotherapies for cancer, today reported financial results for the third quarter ended September 30, 2023 and key operational updates.
“Our successful and productive third quarter was punctuated by the outstanding data on our lead asset THIO that we recently revealed, and an accelerating pace of enrollment in our THIO-101 Phase 2 trial,” said Vlad Vitoc, M.D., MAIA’s Chairman and Chief Executive Officer. “We are expanding our trial in Europe, and with the FDA’s recent clearance for THIO studies in the U.S. as part of THIO-101, we have reached an essential milestone in the clinical development of THIO. Preliminary efficacy data from the trial is excellent and includes an unprecedented disease control rate (DCR) of 100% in second-line NSCLC treatment, far surpassing the standard of care DCR of 53-64%. We achieved the pre-determined statistical requirements to proceed to the next stage of the trial earlier than expected, and we look forward to sharing our continuing progress in the coming months and into 2024.”
Third Quarter Business Highlights and Recent Developments
THIO Program
Announced 100% Disease Control in Second-Line Non-Small Cell Lung Cancer Demonstrating Impressive Positive Preliminary Efficacy Data: 100% preliminary DCR was observed in second-line and 88% in third-line, in highly difficult-to-treat patients who already progressed through previous lines of treatment. DCRs across all dose levels met the pre-determined statistical requirements earlier than expected to proceed to next stage of the THIO-101 Phase 2 trial.
Highly Potent Anticancer Activity in Gliomas: MAIA’slead asset THIO showed highly potent anticancer activity in models of glioma, an aggressive type of brain tumor that originates from glial cells and is among the most difficult-to-treat cancers. As a monotherapy, THIO demonstrated efficacy in multiple glioma cell lines that had acquired resistance to the current state-of-the-art care temozolomide (TMZ).
THIO as Potential Therapy for Pediatric Brain Cancer: Study data showed THIO’s potent anticancer activity in diffuse intrinsic pontine glioma (DIPG), one of the most aggressive tumors affecting the central nervous system in children. The treatment resulted in noticeably increased tumor sensitivity to immune or ionizing radiation therapies.
Higher Anticancer Potency of Next Generation THIO Conjugates: Positive Investigational New Drug-enabling study data on telomere-targeting agents derived from lipid-modified THIO molecules warrant further in vivo in-depth investigation of THIO-like agents as second generation cancer therapies.
THIO-101 Phase 2 Clinical Trial
U.S. FDA Clearance of THIO IND Application: TheU.S. Food and Drug Administration (FDA) cleared an Investigational New Drug (IND) application enabling THIO to be evaluated in the U.S. as part of THIO-101, the Company’s ongoing global phase 2 clinical study in patients with advanced non-small cell lung cancer (NSCLC). THIO is being tested in sequential combination with a checkpoint inhibitor (CPI) to evaluate anti-tumor activity and immune response in NSCLC patients.
Strong Pace of Enrollment in THIO-101: 49 patients have been dosed to date at a pace of enrollment that is currently exceeding the average enrollment pace in similar NSCLC trials. Out of the 49 patients dosed, 37 have already completed at least one post baseline assessment.
Continuing Positive Preliminary Survival Data: The first 2 subjects dosed on trial (both receiving 3rd line of treatment) reported long term survival of 14.6 and 12.5 months, respectively, at the latest post baseline assessment with no new anti-cancer treatment initiated. Follow up was ongoing for the first subject at the time of data cut-off.
Third Quarter 2023 Financial Results
Cash Position: Cash totaled approximately $6.1 million as of September 30, 2023, compared to $10.9 million in cash as of December 31, 2022.
Research and Development (R&D) Expenses: R&D expenses were approximately $2.6 million for the quarter ended September 30, 2023, compared to approximately $2.3 million for quarter ended September 30, 2022. The increase was primarily related to an increase in scientific research expenses.
General and Administrative (G&A) Expenses: G&A expenses were approximately $2.4 million for the quarter ended September 30, 2023, compared to approximately $1.7 million for the quarter ended September 30, 2022. The increase for the quarter was primarily related to an increase in professional fees related to the write-off of deferred offering costs and an increase in investor relations costs.
Other Income, Net: Other income was approximately $0.08 million for the quarter ended September 30, 2023, compared to other income, net of $0.19 million for the quarter ended September 30, 2022, primarily related to a change in the fair value of warrant liability.
Net Loss: Net loss was approximately $4.9 million, or $0.36 per share, for the quarter ended September 30, 2023, as compared to net loss of approximately $4.9 million, or $0.48 per share, for the quarter ended September 30, 2022. Weighted average shares outstanding were 13,675,802 in the third quarter of 2023, compared to 10,165,622 in the third quarter of 2022.
For additional information on the Company’s financial results for the quarter ended September 30, 2023, please refer to the Form 10-Q filed with the SEC.
About THIO
THIO (6-thio-dG or 6-thio-2’-deoxyguanosine) is a first-in-class investigational telomere-targeting agent currently in clinical development to evaluate its activity in Non-Small Cell Lung Cancer (NSCLC). Telomeres, along with the enzyme telomerase, play a fundamental role in the survival of cancer cells and their resistance to current therapies. The modified nucleotide 6-thio-2’-deoxyguanosine (THIO) induces telomerase-dependent telomeric DNA modification, DNA damage responses, and selective cancer cell death. THIO-damaged telomeric fragments accumulate in cytosolic micronuclei and activates both innate (cGAS/STING) and adaptive (T-cell) immune responses. The sequential treatment with THIO followed by PD-(L)1 inhibitors resulted in profound and persistent tumor regression in advanced, in vivo cancer models by induction of cancer type–specific immune memory. THIO is presently developed as a second or later line of treatment for NSCLC for patients that have progressed beyond the standard-of-care regimen of existing checkpoint inhibitors.
About THIO-101, Phase 2 Clinical Trial
THIO-101 is a multicenter, open-label, dose finding Phase 2 clinical trial. It is the first trial designed to evaluate THIO’s anti-tumor activity when followed by PD-(L)1 inhibition. The trial is testing the hypothesis that low doses of THIO administered prior to an anti-PD-1 agent will enhance and prolong immune response in patients with advanced NSCLC who previously did not respond or developed resistance and progressed after first-line treatment regimen containing another checkpoint inhibitor. The trial design has two primary objectives: (1) to evaluate the safety and tolerability of THIO administered as an anticancer compound and a priming immune activator (2) to assess the clinical efficacy of THIO using Overall Response Rate (ORR) as the primary clinical endpoint. For more information on this Phase II trial, please visit ClinicalTrials.gov using the identifier NCT05208944.
About MAIA Biotechnology, Inc.
MAIA is a targeted therapy, immuno-oncology company focused on the development and commercialization of potential first-in-class drugs with novel mechanisms of action that are intended to meaningfully improve and extend the lives of people with cancer. Our lead program is THIO, a potential first-in-class cancer telomere targeting agent in clinical development for the treatment of NSCLC patients with telomerase-positive cancer cells. For more information, please visit www.maiabiotech.com.
Forward Looking Statements
MAIA cautions that all statements, other than statements of historical facts contained in this press release, are forward-looking statements. Forward-looking statements are subject to known and unknown risks, uncertainties, and other factors that may cause our or our industry’s actual results, levels or activity, performance or achievements to be materially different from those anticipated by such statements. The use of words such as “may,” “might,” “will,” “should,” “could,” “expect,” “plan,” “anticipate,” “believe,” “estimate,” “project,” “intend,” “future,” “potential,” or “continue,” and other similar expressions are intended to identify forward looking statements. However, the absence of these words does not mean that statements are not forward-looking. All forward-looking statements are based on current estimates, assumptions and expectations by our management that, although we believe to be reasonable, are inherently uncertain. Any forward-looking statement expressing an expectation or belief as to future events is expressed in good faith and believed to be reasonable at the time such forward-looking statement is made. These forward-looking statements are only predictions and may differ materially from actual results due to a variety of factors including: (i) lower than anticipated rate of patient enrollment, (ii) the initiation, timing, cost, progress and results of our preclinical and clinical studies and our research and development programs, (iii) our ability to advance product candidates into, and successfully complete, clinical studies, (iv) the timing or likelihood of regulatory filings and approvals, (v) our ability to develop, manufacture and commercialize our product candidates and to improve the manufacturing process, (vi) the rate and degree of market acceptance of our product candidates, (vii) the size and growth potential of the markets for our product candidates and our ability to serve those markets, (viii) our ability to obtain and maintain intellectual property protection for our product candidates and (ix) other risks and uncertainties detailed from time to time in our filings with the Securities and Exchange Commission, including without limitation our periodic reports on Form 10-K and 10-Q, each as amended and supplemented from time to time. Any forward-looking statement speaks only as of the date on which it was made. We undertake no obligation to publicly update or revise any forward-looking statement, whether as a result of new information, future events or otherwise, except as required by law. In this release, unless the context requires otherwise, “MAIA,” “Company,” “we,” “our,” and “us” refers to MAIA Biotechnology, Inc. and its subsidiaries.
MustGrow Receives PMRA Approval to Commence Large Scale Field Trials via NexusBioAg BAT Program
Approval from Health Canada’s Pest Management Regulatory Agency (PMRA) to commence large-scale farmer trials.
Program to focus on MustGrow’s TerraMG™ mustard-derived soil biopesticide technology for use in Canadian canola and pulse crop markets.
NexusBioAg’s 2024 BioAdvantage Trials (BAT) Program to evaluate large-scale efficacy and commercial value potential.
MustGrow and NexusBioAg are committed to launching innovative, sustainable, and regenerative agriculture products.
SASKATOON, Saskatchewan, Canada, November 7, 2023 – MustGrow Biologics Corp. (TSXV:MGRO) (OTC:MGROF) (FRA:0C0) (the “Company” or “MustGrow”) is pleased to announce the approval of Health Canada’s Pest Management Regulatory Agency (“PMRA”) to commence large-scale field trials via NexusBioAg’s 2024 BioAdvantage Trials Program (“BAT Program”). NexusBioAg, is a division of Univar Solutions, providing an expanded portfolio of crop nutrition solutions, including industry-leading inoculants, micronutrients, nitrogen stabilizers, and foliar products. NexusBioAg is partnered with MustGrow to provide TerraMGTM to Canadian farmers, upon PMRA registraion, as a preplant soil treatment for diseases affecting canola and pulse crops.
NexusBioAg’s BAT Program is recognized as an industry leading field trialing program with an established process to gather data from large field scale trials across Canada. Since it’s inception, NexusBioAg continues to expand the BAT Program footprint and engage with collaborators to evaluate products in the NexusBioAg pipeline. Through the BAT Program, NexusBioAg validates product efficacy and establishes the product value and opportunity. To learn more about the BAT Program visit www.nexusbioag.com/bioadvantage-trials.
The BAT Program will focus on MustGrow’s TerraMGTM mustard-derived soil biopesticide technology for use in Canadian canola and pulse crop markets. The addition of this plant-based technology to the BAT Program further diversifies and expands NexusBioAg’s extensive portfolio of inoculants, micronutrients, nitrogen stabilizers and foliars for the Canadian agricultural market.
“There has been a significant amount of grower interest in MustGrow’s TerraMGTM and there is excitement to evaluate TerraMGTM in real farming conditions during the 2024 BAT Program. We will collaborate with MustGrow to conduct large scale field trials throughout Western Canada and give agriculture innovators an opportunity to work with true agriculture innovation,” remarked Daniel Samphir, NexusBioAg Senior Marketing Manager.
In 2021, NexusBioAg and MustGrow initiated a field research program to develop MustGrow’s sustainable farming technology in Canadian canola and pulse crops. This technology has the potential to address the agronomic challenges of clubroot and aphanomyces diseases which are rapidly devastating these crops. Building on existing collaborative data, NexusBioAg and MustGrow are now moving forward to the next stage of the registration process. Through the BAT Program, NexusBioAg farm customers will have access to MustGrow’s mustard plant-based agronomic innovation.
NexusBioAg is committed to launching innovative, cutting-edge products, with a focus on sustainability and regenerative agriculture, which benefit the Canadian agricultural industry and growers. MustGrow specializes in the research and development of organic biocontrol, soil amendment and biofertility technologies from mustard, harnessing the plant’s natural defense mechanism with technologies that have the potential to control diseases, pests and weeds, and in addition, provide nutrients to boost the soil microbiome. Combining the proficiencies of both companies in the agriculture market will help Canadian farmers benefit from innovative and sustainable farming solutions.
Clubroot Disease: Canola
Clubroot is a rapidly spreading disease pathogen destroying canola, one of Canada’s more profitable crops with over 20 million acres grown each year and contributing C$30 billion in economic activity in Canada.(1) Industry experts conservatively estimate C$500 million in annual canola crop losses in Canada caused by Clubroot.(2) Current treatments cannot eradicate clubroot completely – they are only intended to slow the spread and reduce the incidence and severity of the disease. Some field infections may lead to 100% crop loss.
Aphanomyces Disease: Pulse Crops
Aphanomyces is a water mould pathogen responsible for root-rot disease, infecting a variety of peas, lentils and other legumes collectively referred to as pulse crops. The disease causes severe root damage and wilting, with yield losses ranging from 10% to 100% in infected fields.(2) Canada is one of the world’s largest producers of pulse crops, with approximately 7 to 10 million arces grown annually with an estimated farm gate value of over C$3.5 billion, and the world’s largest exporter.(3) Industry experts conservatively estimate C$125 million in annual pulse crop losses due to aphanomyces.(2) Current treatment measures cannot control aphanomyces – they are only able to slow down the spread and reduce the incidence and severity of the disease.
The global plant-based protein market size is projected to grow from US$14.1 billion in 2021 to US$17.4 billion by 2027 (CAGR of 3.7%).(4) This is attributed to several drivers, predominantly rising consumer health-consciousness, growing prevalence of protein-rich pulse crop food products, and technological innovations in plant-based protein extraction.
For more information about NexusBioAg’s crop nutrition solutions, please visit www.nexusbioag.com. To learn more about TerraMG™, visit www.mustgrow.ca.
About MustGrow
MustGrow is an agriculture biotech company developing organic biocontrol, soil amendment and biofertility products by harnessing the natural defense mechanism and organic materials of the mustard plant to sustainably protect the global food supply and help farmers feed the world. MustGrow and its leading global partners — Janssen PMP (pharmaceutical division of Johnson & Johnson), Bayer, Sumitomo Corporation, and Univar Solutions’ NexusBioAg — are developing mustard-based organic solutions to potentially replace harmful synthetic chemicals. Concurrently, with new formulations derived from food-grade mustard, the Company is pursuing the adoption and use of its technology in the soil amendment and biofertily markets. Over 150 independent tests have been completed, validating MustGrow’s safe and effective approach to crop and food protection and yield enhancements. Pending regulatory approval, MustGrow’s patented liquid technologies could be applied through injection, standard drip or spray equipment, improving functionality and performance features. Now a platform technology, MustGrow and its global partners are pursuing applications in several different industries from preplant soil treatment and weed control, to postharvest disease control and food preservation, to soil amendment and biofertility. MustGrow has approximately 50.1 million basic common shares issued and outstanding and 55.0 million shares fully diluted. For further details, please visit www.mustgrow.ca.
Contact Information
Corey Giasson Director & CEO Phone: +1-306-668-2652 info@mustgrow.ca
MustGrow Forward-Looking Statements
Certain statements included in this news release constitute “forward-looking statements” which involve known and unknown risks, uncertainties and other factors that may affect the results, performance or achievements of MustGrow.
Generally, forward-looking information can be identified by the use of forward-looking terminology such as “plans”, “expects”, “is expected”, “budget”, “estimates”, “intends”, “anticipates” or “does not anticipate”, or “believes”, or variations of such words and phrases or statements that certain actions, events or results “may”, “could”, “would”, “might”, “occur” or “be achieved”. Examples of forward-looking statements in this news release include, among others, statements MustGrow makes regarding: the potential outcomes of the BAT Program trials of MustGrow’s TerraMGTM; the focus of the BAT Program on MustGrow’s TerraMGTM mustard-derived soil biopesticide technology for use in Canadian canola and pulse crop markets; the potential of MustGrow’s TerraMGTM technology to address the agronomic challenges of clubroot and aphanomyces diseases on canola and pulse crops; and the potential outcome of any registration process for MustGrow’s TerraMGTM.
Forward-looking statements are subject to a number of risks and uncertainties that may cause the actual results of MustGrow to differ materially from those discussed in such forward-looking statements, and even if such actual results are realized or substantially realized, there can be no assurance that they will have the expected consequences to, or effects on, MustGrow. Important factors that could cause MustGrow’s actual results and financial condition to differ materially from those indicated in the forward-looking statements include market receptivity to investor relations activities as well as those risks described in more detail in MustGrow’s Annual Information Form for the year ended December 31, 2022 and other continuous disclosure documents filed by MustGrow with the applicable securities regulatory authorities which are available at www.sedar.com. Readers are referred to such documents for more detailed information about MustGrow, which is subject to the qualifications, assumptions and notes set forth therein.
This release does not constitute an offer for sale of, nor a solicitation for offers to buy, any securities in the United States.
Neither the TSXV, nor their Regulation Services Provider (as that term is defined in the policies of the TSXV), nor the OTC Markets has approved the contents of this release or accepts responsibility for the adequacy or accuracy of this release.
BOCA RATON, Fla.–(BUSINESS WIRE)–Nov. 7, 2023– The GEO Group, Inc. (NYSE: GEO) (“GEO”), a leading provider of support services for secure facilities, processing centers, and reentry centers, as well as enhanced in-custody rehabilitation, post-release support, and electronic monitoring programs, reported today its financial results for the third quarter and first nine months of 2023.
Third Quarter 2023 Highlights
Total revenues of $602.8 million
Net Income of $24.5 million
Net Income Attributable to GEO of $0.16 per diluted share
Adjusted Net Income of $0.19 per diluted share
Adjusted EBITDA of $118.7 million
Reduced Total Net Debt by $109 million to approximately $1.8 billion
For the third quarter 2023, we reported net income of $24.5 million, compared to net income of $38.3 million for the third quarter 2022. We reported total revenues for the third quarter 2023 of $602.8 million compared to $616.7 million for the third quarter 2022. Third quarter 2023 results reflect a year-over-year increase of $13.0 million in net interest expense as a result of the completed transactions to address the substantial majority of our outstanding debt, which closed on August 19, 2022, as well as the impact of higher interest rates. We reported third quarter 2023 Adjusted EBITDA of $118.7 million, compared to $136.2 million for the third quarter 2022.
George C. Zoley, Executive Chairman of GEO, said, “Our diversified business units continued to deliver steady operational and financial performance. We have also made further progress towards our objective of reducing our net debt, which remains a strategic priority for our company. During the third quarter of 2023, we reduced our total net debt by $109 million, ending the period with approximately $1.8 billion in total net debt. We believe that our ongoing efforts to reduce debt and deleverage our balance sheet will enhance value for our shareholders over time.”
First Nine Months 2023 Highlights
Total revenues of $1.80 billion
Net Income of $82.0 million
Net Income Attributable to GEO of $0.55 per diluted share
Adjusted Net Income of $0.66 per diluted share
Adjusted EBITDA of $378.6 million
For the first nine months of 2023, we reported net income of $82.0 million, compared to net income of $130.2 million for the first nine months of 2022. We reported total revenues for the first nine months of 2023 of $1.80 billion compared to $1.76 billion for the first nine months of 2022.
Results for the first nine months of 2023 reflect a year-over-year increase of $66.2 million in net interest expense as a result of the completed transactions to address the substantial majority of our outstanding debt, which closed on August 19, 2022, as well as the impact of higher interest rates. For the first nine months of 2023, we reported Adjusted EBITDA of $378.6 million, compared to $393.7 million for the first nine months of 2022.
2023 Financial Guidance
Today, we updated our guidance for the full-year and fourth quarter of 2023 to reflect our updated expectations regarding the U.S. Department of Homeland Security’s Intensive Supervision and Appearance Program (“ISAP”).
Our previous guidance for the fourth quarter of 2023 assumed a moderate increase in ISAP participants during the quarter. While the ISAP participant count has remained relatively stable over the last three months, we have not experienced the moderate increase that was contemplated in our previous guidance. We believe that U.S. Immigration and Customs Enforcement (“ICE”) continues to face budgetary pressures, and the timing of the passage of federal appropriations bills for the fiscal year 2024 remains uncertain. As a result of these factors, we have updated our guidance assumptions and now assume for budget purposes that the ISAP participant count will be flat to slightly down for the balance of the year.
For the fourth quarter 2023, we expect GAAP Net Income to be in a range of $19 million to $24 million and quarterly revenues to be in a range of $590 million to $600 million. We expect fourth quarter 2023 Adjusted EBITDA to be in a range of $117 million to $122 million.
For the full-year 2023, we expect GAAP Net Income to be in a range of $100 million to $105 million on annual revenues of approximately $2.4 billion. We expect our full-year 2023 Adjusted EBITDA to be between $495 million and $500 million dollars. We expect our effective tax rate for the full-year 2023 to be approximately 29 percent, exclusive of any discrete items.
Our guidance does not include the potential reactivation of any of our remaining idle Secure Services facilities, which total approximately 9,000 beds.
Conference Call Information
We have scheduled a conference call and webcast for today at 11:00 AM (Eastern Time) to discuss our third quarter 2023 financial results as well as our outlook. The call-in number for the U.S. is 1-877-250-1553 and the international call-in number is 1-412-542-4145. In addition, a live audio webcast of the conference call may be accessed on the Webcasts section under the News, Events and Reports tab of GEO’s investor relations webpage at investors.geogroup.com. A replay of the webcast will be available on the website for one year. A telephonic replay of the conference call will be available through November 14, 2023, at 1-877-344-7529 (U.S.) and 1-412-317-0088 (International). The participant passcode for the telephonic replay is 4528594.
About The GEO Group
The GEO Group, Inc. (NYSE: GEO) is a leading diversified government service provider, specializing in design, financing, development, and support services for secure facilities, processing centers, and community reentry centers in the United States, Australia, South Africa, and the United Kingdom. GEO’s diversified services include enhanced in-custody rehabilitation and post-release support through the award-winning GEO Continuum of Care®, secure transportation, electronic monitoring, community-based programs, and correctional health and mental health care. GEO’s worldwide operations include the ownership and/or delivery of support services for 100 facilities totaling approximately 81,000 beds, including idle facilities and projects under development, with a workforce of up to approximately 18,000 employees.
Reconciliation Tables and Supplemental Information
GEO has made available Supplemental Information which contains reconciliation tables of Net Income Attributable to GEO to Adjusted Net Income, and Net Income to EBITDA and Adjusted EBITDA, along with supplemental financial and operational information on GEO’s business and other important operating metrics. The reconciliation tables are also presented herein. Please see the section below titled “Note to Reconciliation Tables and Supplemental Disclosure – Important Information on GEO’s Non-GAAP Financial Measures” for information on how GEO defines these supplemental Non-GAAP financial measures and reconciles them to the most directly comparable GAAP measures. GEO’s Reconciliation Tables can be found herein and in GEO’s Supplemental Information available on GEO’s investor webpage at investors.geogroup.com.
Note to Reconciliation Tables and Supplemental Disclosure – Important Information on GEO’s Non-GAAP Financial Measures
Adjusted Net Income, EBITDA, and Adjusted EBITDA are non-GAAP financial measures that are presented as supplemental disclosures. GEO has presented herein certain forward-looking statements about GEO’s future financial performance that include non-GAAP financial measures, including Net Debt, Net Leverage, and Adjusted EBITDA. The determination of the amounts that are included or excluded from these non-GAAP financial measures is a matter of management judgment and depends upon, among other factors, the nature of the underlying expense or income amounts recognized in a given period.
While we have provided a high level reconciliation for the guidance ranges for full year 2023, we are unable to present a more detailed quantitative reconciliation of the forward-looking non-GAAP financial measures to their most directly comparable forward-looking GAAP financial measures because management cannot reliably predict all of the necessary components of such GAAP measures. The quantitative reconciliation of the forward-looking non-GAAP financial measures will be provided for completed annual and quarterly periods, as applicable, calculated in a consistent manner with the quantitative reconciliation of non-GAAP financial measures previously reported for completed annual and quarterly periods.
Net Debt is defined as gross principal debt less cash from restricted subsidiaries. Net Leverage is defined as Net Debt divided by Adjusted EBITDA.
EBITDA is defined as net income adjusted by adding provisions for income tax, interest expense, net of interest income, and depreciation and amortization. Adjusted EBITDA is defined as EBITDA adjusted for (gain)/loss on asset divestitures, pre-tax, net loss attributable to non-controlling interests, stock-based compensation expenses, pre-tax, transaction related expenses, pre-tax, other non-cash revenue and expenses, pre-tax, and certain other adjustments as defined from time to time.
Given the nature of our business as a real estate owner and operator, we believe that EBITDA and Adjusted EBITDA are helpful to investors as measures of our operational performance because they provide an indication of our ability to incur and service debt, to satisfy general operating expenses, to make capital expenditures, and to fund other cash needs or reinvest cash into our business.
We believe that by removing the impact of our asset base (primarily depreciation and amortization) and excluding certain non-cash charges, amounts spent on interest and taxes, and certain other charges that are highly variable from year to year, EBITDA and Adjusted EBITDA provide our investors with performance measures that reflect the impact to operations from trends in occupancy rates, per diem rates and operating costs, providing a perspective not immediately apparent from net income.
The adjustments we make to derive the non-GAAP measures of EBITDA and Adjusted EBITDA exclude items which may cause short-term fluctuations in income from continuing operations and which we do not consider to be the fundamental attributes or primary drivers of our business plan and they do not affect our overall long-term operating performance.
EBITDA and Adjusted EBITDA provide disclosure on the same basis as that used by our management and provide consistency in our financial reporting, facilitate internal and external comparisons of our historical operating performance and our business units and provide continuity to investors for comparability purposes.
Adjusted Net Income is defined as net income attributable to GEO adjusted for certain items which by their nature are not comparable from period to period or that tend to obscure GEO’s actual operating performance, including for the periods presented (gain)/loss on asset divestitures, pre-tax, (gain)/loss on the extinguishment of debt, pre-tax, transaction related expenses, pre-tax, and tax effect of adjustments to net income attributable to GEO.
Safe-Harbor Statement
This press release contains forward-looking statements regarding future events and future performance of GEO that involve risks and uncertainties that could materially and adversely affect actual results, including statements regarding GEO’s financial guidance for the full-year and fourth quarter of 2023, statements regarding GEO’s efforts to market its current idle facilities, GEO’s focus on reducing net debt, and GEO’s assumptions regarding the number of ISAP participants during the fourth quarter of 2023. Forward-looking statements generally can be identified by the use of forward-looking terminology such as “may,” “will,” “expect,” “anticipate,” “intend,” “plan,” “believe,” “seek,” “estimate,” or “continue” or the negative of such words and similar expressions. Risks and uncertainties that could cause actual results to vary from current expectations and forward-looking statements contained in this press release include, but are not limited to: (1) GEO’s ability to meet its financial guidance for 2023 given the various risks to which its business is exposed; (2) GEO’s ability to deleverage and repay, refinance or otherwise address its debt maturities in an amount and on terms commercially acceptable to GEO, and on the timeline it expects or at all; (3) GEO’s ability to identify and successfully complete any potential sales of company-owned assets and businesses on commercially advantageous terms on a timely basis, or at all; (4) changes in federal and state government policy, orders, directives, legislation and regulations that affect public-private partnerships with respect to secure, correctional and detention facilities, processing centers and reentry centers, including the timing and scope of implementation of President Biden’s Executive Order directing the U.S. Attorney General not to renew the U.S. Department of Justice contracts with privately operated criminal detention facilities; (5) changes in federal immigration policy; (6) public and political opposition to the use of public-private partnerships with respect to secure correctional and detention facilities, processing centers and reentry centers; (7) the magnitude, severity, and duration of the COVID-19 global pandemic, its impact on GEO, GEO’s ability to mitigate the risks associated with COVID-19, and the efficacy and distribution of COVID-19 vaccines; (8) GEO’s ability to sustain or improve company-wide occupancy rates at its facilities in light of the COVID-19 global pandemic and policy and contract announcements impacting GEO’s federal facilities in the United States; (9) fluctuations in GEO’s operating results, including as a result of contract terminations, contract renegotiations, changes in occupancy levels and increases in GEO’s operating costs; (10) general economic and market conditions, including changes to governmental budgets and its impact on new contract terms, contract renewals, renegotiations, per diem rates, fixed payment provisions, and occupancy levels; (11) GEO’s ability to address inflationary pressures related to labor related expenses and other operating costs; (12) GEO’s ability to timely open facilities as planned, profitably manage such facilities and successfully integrate such facilities into GEO’s operations without substantial costs; (13) GEO’s ability to win management contracts for which it has submitted proposals and to retain existing management contracts; (14) risks associated with GEO’s ability to control operating costs associated with contract start-ups; (15) GEO’s ability to successfully pursue growth and continue to create shareholder value; (16) GEO’s ability to obtain financing or access the capital markets in the future on acceptable terms or at all; and (17) other factors contained in GEO’s Securities and Exchange Commission periodic filings, including its Form 10-K, 10-Q and 8-K reports, many of which are difficult to predict and outside of GEO’s control.
Third quarter and first nine months of 2023 financial tables to follow:
Condensed Consolidated Balance Sheets*(Unaudited)
As of
As of
September 30, 2023
December 31, 2022
(unaudited)
(unaudited)
ASSETS
Cash and cash equivalents
$
141,020
$
95,073
Accounts receivable, less allowance for doubtful accounts
356,501
416,399
Prepaid expenses and other current assets
41,138
43,536
Total current assets
$
538,659
$
555,008
Restricted Cash and Investments
130,729
111,691
Property and Equipment, Net
1,951,524
2,002,021
Operating Lease Right-of-Use Assets, Net
106,552
90,950
Assets Held for Sale
5,130
480
Deferred Income Tax Assets
8,005
8,005
Intangible Assets, Net (including goodwill)
893,449
902,887
Other Non-Current Assets
90,335
89,341
Total Assets
$
3,724,383
$
3,760,383
LIABILITIES AND SHAREHOLDERS’ EQUITY
Accounts payable
$
66,758
$
79,312
Accrued payroll and related taxes
78,568
53,225
Accrued expenses and other current liabilities
200,187
237,369
Operating lease liabilities, current portion
24,506
22,584
Current portion of finance lease obligations, and long-term debt
63,307
44,722
Total current liabilities
$
433,326
$
437,212
Deferred Income Tax Liabilities
75,849
75,849
Other Non-Current Liabilities
79,797
74,008
Operating Lease Liabilities
86,849
73,801
Finance Lease Liabilities
740
1,280
Long-Term Debt
1,789,273
1,933,145
Total Shareholders’ Equity
1,258,549
1,165,088
Total Liabilities and Shareholders’ Equity
$
3,724,383
$
3,760,383
* all figures in ‘000s
Condensed Consolidated Statements of Operations*(Unaudited)
Q3 2023
Q3 2022
YTD 2023
YTD 2022
(unaudited)
(unaudited)
(unaudited)
(unaudited)
Revenues
$
602,785
$
616,683
$
1,804,885
$
1,756,045
Operating expenses
440,667
436,210
1,302,287
1,233,162
Depreciation and amortization
31,173
32,330
94,787
100,284
General and administrative expenses
47,356
50,022
139,182
147,878
Operating income
83,589
98,121
268,629
274,721
Interest income
1,320
5,111
3,785
16,301
Interest expense
(55,777
)
(46,537
)
(165,081
)
(111,383
)
Loss on extinguishment of debt
(91
)
(37,487
)
(1,845
)
(37,487
)
Gain on asset divestitures
1,274
29,279
3,449
32,332
Income before income taxes and equity in earnings of affiliates
30,315
48,487
108,937
174,484
Provision for income taxes
6,521
11,246
30,036
48,106
Equity in earnings of affiliates, net of income tax provision
709
1,071
3,121
3,786
Net income
24,503
38,312
82,022
130,164
Less: Net loss attributable to noncontrolling interests
16
25
71
119
Net income attributable to The GEO Group, Inc.
$
24,519
$
38,337
$
82,093
$
130,283
Weighted Average Common Shares Outstanding:
Basic
122,066
121,154
121,850
120,998
Diluted
123,433
122,426
123,479
121,907
Net income per Common Share Attributable to The GEO Group, Inc.** :
Basic:
Net income per share — basic
$
0.17
$
0.26
$
0.56
$
0.89
Diluted:
Net income per share — diluted
$
0.16
$
0.26
$
0.55
$
0.89
* All figures in ‘000s, except per share data
** In accordance with U.S. GAAP, diluted earnings per share attributable to GEO available to common stockholders is calculated under the if-converted method or the two-class method, whichever calculation results in the lowest diluted earnings per share amount, which may be lower than Adjusted Net Income Per Diluted Share.
Reconciliation of Net Income to EBITDA and Adjusted EBITDA,and Net Income Attributable to GEO to Adjusted Net Income*(Unaudited)
Q3 2023
Q3 2022
YTD 2023
YTD 2022
(unaudited)
(unaudited)
(unaudited)
(unaudited)
Net Income
$
24,503
$
38,312
$
82,022
$
130,164
Add:
Income tax provision **
6,588
11,435
30,617
48,570
Interest expense, net of interest income ***
54,548
78,913
163,141
132,569
Depreciation and amortization
31,173
32,330
94,787
100,284
EBITDA
$
116,812
$
160,990
$
370,567
$
411,587
Add (Subtract):
Gain on asset divestitures, pre-tax
(1,274
)
(29,279
)
(3,449
)
(32,332
)
Net loss attributable to noncontrolling interests
16
25
71
119
Stock based compensation expenses, pre-tax
3,116
3,141
12,052
13,010
Transaction related expenses, pre-tax
–
1,322
–
1,322
Other non-cash revenue & expenses, pre-tax
–
–
(687
)
–
Adjusted EBITDA
$
118,670
$
136,199
$
378,554
$
393,706
Net Income attributable to GEO
$
24,519
$
38,337
$
82,093
$
130,283
Add (Subtract):
Gain on asset divestitures, pre-tax
(1,274
)
(29,279
)
(3,449
)
(32,958
)
Loss on extinguishment of debt, pre-tax
91
37,487
1,845
37,487
Transaction related expenses, pre-tax
–
1,322
–
1,322
Tax effect of adjustment to net income attributable to GEO (1)
297
(7,697
)
403
(6,772
)
Adjusted Net Income
$
23,633
$
40,170
$
80,892
$
129,362
Weighted average common shares outstanding – Diluted
123,433
122,426
123,479
121,907
Adjusted Net Income per Diluted share
0.19
0.33
0.66
1.06
* all figures in ‘000s, except per share data
** including income tax provision on equity in earnings of affiliates
*** includes loss on extinguishment of debt
(1) Tax adjustment related to gain on asset divestitures and loss on extinguishment of debt.
2023 Outlook/Reconciliation (1)(In thousands, except per share data)(Unaudited)
FY 2023
Net Income
$
100,000
to
$
105,000
Net Interest Expense
217,000
217,000
Income Taxes (including income tax provision on equity in earnings of affiliates)
40,000
40,000
Depreciation and Amortization
127,000
127,000
Non-Cash Stock Based Compensation
15,700
15,700
Other Non-Cash
(4,700
)
(4,700
)
Adjusted EBITDA
$
495,000
to
$
500,000
Net Income Attributable to GEO Per Diluted Share
$
0.80
to
$
0.85
Weighted Average Common Shares Outstanding-Diluted
123,500
to
123,500
CAPEX
Growth
9,000
to
10,000
Technology
16,000
to
20,000
Facility Maintenance
45,000
to
50,000
Capital Expenditures
70,000
to
80,000
Total Debt, Net
$
1,820,000
$
1,780,000
Total Leverage, Net
3.66
3.58
(1) Total Net Leverage is calculated using the midpoint of Adjusted EBITDA guidance range.
BOCA RATON, Fla.–(BUSINESS WIRE)–Nov. 7, 2023– The GEO Group, Inc. (NYSE: GEO) (“GEO”), a leading provider of support services for secure facilities, processing centers, and reentry centers, as well as enhanced in-custody rehabilitation, post-release support, and electronic monitoring programs, reported today its financial results for the third quarter and first nine months of 2023.
Third Quarter 2023 Highlights
Total revenues of $602.8 million
Net Income of $24.5 million
Net Income Attributable to GEO of $0.16 per diluted share
Adjusted Net Income of $0.19 per diluted share
Adjusted EBITDA of $118.7 million
Reduced Total Net Debt by $109 million to approximately $1.8 billion
For the third quarter 2023, we reported net income of $24.5 million, compared to net income of $38.3 million for the third quarter 2022. We reported total revenues for the third quarter 2023 of $602.8 million compared to $616.7 million for the third quarter 2022. Third quarter 2023 results reflect a year-over-year increase of $13.0 million in net interest expense as a result of the completed transactions to address the substantial majority of our outstanding debt, which closed on August 19, 2022, as well as the impact of higher interest rates. We reported third quarter 2023 Adjusted EBITDA of $118.7 million, compared to $136.2 million for the third quarter 2022.
George C. Zoley, Executive Chairman of GEO, said, “Our diversified business units continued to deliver steady operational and financial performance. We have also made further progress towards our objective of reducing our net debt, which remains a strategic priority for our company. During the third quarter of 2023, we reduced our total net debt by $109 million, ending the period with approximately $1.8 billion in total net debt. We believe that our ongoing efforts to reduce debt and deleverage our balance sheet will enhance value for our shareholders over time.”
First Nine Months 2023 Highlights
Total revenues of $1.80 billion
Net Income of $82.0 million
Net Income Attributable to GEO of $0.55 per diluted share
Adjusted Net Income of $0.66 per diluted share
Adjusted EBITDA of $378.6 million
For the first nine months of 2023, we reported net income of $82.0 million, compared to net income of $130.2 million for the first nine months of 2022. We reported total revenues for the first nine months of 2023 of $1.80 billion compared to $1.76 billion for the first nine months of 2022.
Results for the first nine months of 2023 reflect a year-over-year increase of $66.2 million in net interest expense as a result of the completed transactions to address the substantial majority of our outstanding debt, which closed on August 19, 2022, as well as the impact of higher interest rates. For the first nine months of 2023, we reported Adjusted EBITDA of $378.6 million, compared to $393.7 million for the first nine months of 2022.
2023 Financial Guidance
Today, we updated our guidance for the full-year and fourth quarter of 2023 to reflect our updated expectations regarding the U.S. Department of Homeland Security’s Intensive Supervision and Appearance Program (“ISAP”).
Our previous guidance for the fourth quarter of 2023 assumed a moderate increase in ISAP participants during the quarter. While the ISAP participant count has remained relatively stable over the last three months, we have not experienced the moderate increase that was contemplated in our previous guidance. We believe that U.S. Immigration and Customs Enforcement (“ICE”) continues to face budgetary pressures, and the timing of the passage of federal appropriations bills for the fiscal year 2024 remains uncertain. As a result of these factors, we have updated our guidance assumptions and now assume for budget purposes that the ISAP participant count will be flat to slightly down for the balance of the year.
For the fourth quarter 2023, we expect GAAP Net Income to be in a range of $19 million to $24 million and quarterly revenues to be in a range of $590 million to $600 million. We expect fourth quarter 2023 Adjusted EBITDA to be in a range of $117 million to $122 million.
For the full-year 2023, we expect GAAP Net Income to be in a range of $100 million to $105 million on annual revenues of approximately $2.4 billion. We expect our full-year 2023 Adjusted EBITDA to be between $495 million and $500 million dollars. We expect our effective tax rate for the full-year 2023 to be approximately 29 percent, exclusive of any discrete items.
Our guidance does not include the potential reactivation of any of our remaining idle Secure Services facilities, which total approximately 9,000 beds.
Conference Call Information
We have scheduled a conference call and webcast for today at 11:00 AM (Eastern Time) to discuss our third quarter 2023 financial results as well as our outlook. The call-in number for the U.S. is 1-877-250-1553 and the international call-in number is 1-412-542-4145. In addition, a live audio webcast of the conference call may be accessed on the Webcasts section under the News, Events and Reports tab of GEO’s investor relations webpage at investors.geogroup.com. A replay of the webcast will be available on the website for one year. A telephonic replay of the conference call will be available through November 14, 2023, at 1-877-344-7529 (U.S.) and 1-412-317-0088 (International). The participant passcode for the telephonic replay is 4528594.
About The GEO Group
The GEO Group, Inc. (NYSE: GEO) is a leading diversified government service provider, specializing in design, financing, development, and support services for secure facilities, processing centers, and community reentry centers in the United States, Australia, South Africa, and the United Kingdom. GEO’s diversified services include enhanced in-custody rehabilitation and post-release support through the award-winning GEO Continuum of Care®, secure transportation, electronic monitoring, community-based programs, and correctional health and mental health care. GEO’s worldwide operations include the ownership and/or delivery of support services for 100 facilities totaling approximately 81,000 beds, including idle facilities and projects under development, with a workforce of up to approximately 18,000 employees.
Reconciliation Tables and Supplemental Information
GEO has made available Supplemental Information which contains reconciliation tables of Net Income Attributable to GEO to Adjusted Net Income, and Net Income to EBITDA and Adjusted EBITDA, along with supplemental financial and operational information on GEO’s business and other important operating metrics. The reconciliation tables are also presented herein. Please see the section below titled “Note to Reconciliation Tables and Supplemental Disclosure – Important Information on GEO’s Non-GAAP Financial Measures” for information on how GEO defines these supplemental Non-GAAP financial measures and reconciles them to the most directly comparable GAAP measures. GEO’s Reconciliation Tables can be found herein and in GEO’s Supplemental Information available on GEO’s investor webpage at investors.geogroup.com.
Note to Reconciliation Tables and Supplemental Disclosure – Important Information on GEO’s Non-GAAP Financial Measures
Adjusted Net Income, EBITDA, and Adjusted EBITDA are non-GAAP financial measures that are presented as supplemental disclosures. GEO has presented herein certain forward-looking statements about GEO’s future financial performance that include non-GAAP financial measures, including Net Debt, Net Leverage, and Adjusted EBITDA. The determination of the amounts that are included or excluded from these non-GAAP financial measures is a matter of management judgment and depends upon, among other factors, the nature of the underlying expense or income amounts recognized in a given period.
While we have provided a high level reconciliation for the guidance ranges for full year 2023, we are unable to present a more detailed quantitative reconciliation of the forward-looking non-GAAP financial measures to their most directly comparable forward-looking GAAP financial measures because management cannot reliably predict all of the necessary components of such GAAP measures. The quantitative reconciliation of the forward-looking non-GAAP financial measures will be provided for completed annual and quarterly periods, as applicable, calculated in a consistent manner with the quantitative reconciliation of non-GAAP financial measures previously reported for completed annual and quarterly periods.
Net Debt is defined as gross principal debt less cash from restricted subsidiaries. Net Leverage is defined as Net Debt divided by Adjusted EBITDA.
EBITDA is defined as net income adjusted by adding provisions for income tax, interest expense, net of interest income, and depreciation and amortization. Adjusted EBITDA is defined as EBITDA adjusted for (gain)/loss on asset divestitures, pre-tax, net loss attributable to non-controlling interests, stock-based compensation expenses, pre-tax, transaction related expenses, pre-tax, other non-cash revenue and expenses, pre-tax, and certain other adjustments as defined from time to time.
Given the nature of our business as a real estate owner and operator, we believe that EBITDA and Adjusted EBITDA are helpful to investors as measures of our operational performance because they provide an indication of our ability to incur and service debt, to satisfy general operating expenses, to make capital expenditures, and to fund other cash needs or reinvest cash into our business.
We believe that by removing the impact of our asset base (primarily depreciation and amortization) and excluding certain non-cash charges, amounts spent on interest and taxes, and certain other charges that are highly variable from year to year, EBITDA and Adjusted EBITDA provide our investors with performance measures that reflect the impact to operations from trends in occupancy rates, per diem rates and operating costs, providing a perspective not immediately apparent from net income.
The adjustments we make to derive the non-GAAP measures of EBITDA and Adjusted EBITDA exclude items which may cause short-term fluctuations in income from continuing operations and which we do not consider to be the fundamental attributes or primary drivers of our business plan and they do not affect our overall long-term operating performance.
EBITDA and Adjusted EBITDA provide disclosure on the same basis as that used by our management and provide consistency in our financial reporting, facilitate internal and external comparisons of our historical operating performance and our business units and provide continuity to investors for comparability purposes.
Adjusted Net Income is defined as net income attributable to GEO adjusted for certain items which by their nature are not comparable from period to period or that tend to obscure GEO’s actual operating performance, including for the periods presented (gain)/loss on asset divestitures, pre-tax, (gain)/loss on the extinguishment of debt, pre-tax, transaction related expenses, pre-tax, and tax effect of adjustments to net income attributable to GEO.
Safe-Harbor Statement
This press release contains forward-looking statements regarding future events and future performance of GEO that involve risks and uncertainties that could materially and adversely affect actual results, including statements regarding GEO’s financial guidance for the full-year and fourth quarter of 2023, statements regarding GEO’s efforts to market its current idle facilities, GEO’s focus on reducing net debt, and GEO’s assumptions regarding the number of ISAP participants during the fourth quarter of 2023. Forward-looking statements generally can be identified by the use of forward-looking terminology such as “may,” “will,” “expect,” “anticipate,” “intend,” “plan,” “believe,” “seek,” “estimate,” or “continue” or the negative of such words and similar expressions. Risks and uncertainties that could cause actual results to vary from current expectations and forward-looking statements contained in this press release include, but are not limited to: (1) GEO’s ability to meet its financial guidance for 2023 given the various risks to which its business is exposed; (2) GEO’s ability to deleverage and repay, refinance or otherwise address its debt maturities in an amount and on terms commercially acceptable to GEO, and on the timeline it expects or at all; (3) GEO’s ability to identify and successfully complete any potential sales of company-owned assets and businesses on commercially advantageous terms on a timely basis, or at all; (4) changes in federal and state government policy, orders, directives, legislation and regulations that affect public-private partnerships with respect to secure, correctional and detention facilities, processing centers and reentry centers, including the timing and scope of implementation of President Biden’s Executive Order directing the U.S. Attorney General not to renew the U.S. Department of Justice contracts with privately operated criminal detention facilities; (5) changes in federal immigration policy; (6) public and political opposition to the use of public-private partnerships with respect to secure correctional and detention facilities, processing centers and reentry centers; (7) the magnitude, severity, and duration of the COVID-19 global pandemic, its impact on GEO, GEO’s ability to mitigate the risks associated with COVID-19, and the efficacy and distribution of COVID-19 vaccines; (8) GEO’s ability to sustain or improve company-wide occupancy rates at its facilities in light of the COVID-19 global pandemic and policy and contract announcements impacting GEO’s federal facilities in the United States; (9) fluctuations in GEO’s operating results, including as a result of contract terminations, contract renegotiations, changes in occupancy levels and increases in GEO’s operating costs; (10) general economic and market conditions, including changes to governmental budgets and its impact on new contract terms, contract renewals, renegotiations, per diem rates, fixed payment provisions, and occupancy levels; (11) GEO’s ability to address inflationary pressures related to labor related expenses and other operating costs; (12) GEO’s ability to timely open facilities as planned, profitably manage such facilities and successfully integrate such facilities into GEO’s operations without substantial costs; (13) GEO’s ability to win management contracts for which it has submitted proposals and to retain existing management contracts; (14) risks associated with GEO’s ability to control operating costs associated with contract start-ups; (15) GEO’s ability to successfully pursue growth and continue to create shareholder value; (16) GEO’s ability to obtain financing or access the capital markets in the future on acceptable terms or at all; and (17) other factors contained in GEO’s Securities and Exchange Commission periodic filings, including its Form 10-K, 10-Q and 8-K reports, many of which are difficult to predict and outside of GEO’s control.
Third quarter and first nine months of 2023 financial tables to follow:
Condensed Consolidated Balance Sheets*(Unaudited)
As of
As of
September 30, 2023
December 31, 2022
(unaudited)
(unaudited)
ASSETS
Cash and cash equivalents
$
141,020
$
95,073
Accounts receivable, less allowance for doubtful accounts
356,501
416,399
Prepaid expenses and other current assets
41,138
43,536
Total current assets
$
538,659
$
555,008
Restricted Cash and Investments
130,729
111,691
Property and Equipment, Net
1,951,524
2,002,021
Operating Lease Right-of-Use Assets, Net
106,552
90,950
Assets Held for Sale
5,130
480
Deferred Income Tax Assets
8,005
8,005
Intangible Assets, Net (including goodwill)
893,449
902,887
Other Non-Current Assets
90,335
89,341
Total Assets
$
3,724,383
$
3,760,383
LIABILITIES AND SHAREHOLDERS’ EQUITY
Accounts payable
$
66,758
$
79,312
Accrued payroll and related taxes
78,568
53,225
Accrued expenses and other current liabilities
200,187
237,369
Operating lease liabilities, current portion
24,506
22,584
Current portion of finance lease obligations, and long-term debt
63,307
44,722
Total current liabilities
$
433,326
$
437,212
Deferred Income Tax Liabilities
75,849
75,849
Other Non-Current Liabilities
79,797
74,008
Operating Lease Liabilities
86,849
73,801
Finance Lease Liabilities
740
1,280
Long-Term Debt
1,789,273
1,933,145
Total Shareholders’ Equity
1,258,549
1,165,088
Total Liabilities and Shareholders’ Equity
$
3,724,383
$
3,760,383
* all figures in ‘000s
Condensed Consolidated Statements of Operations*(Unaudited)
Q3 2023
Q3 2022
YTD 2023
YTD 2022
(unaudited)
(unaudited)
(unaudited)
(unaudited)
Revenues
$
602,785
$
616,683
$
1,804,885
$
1,756,045
Operating expenses
440,667
436,210
1,302,287
1,233,162
Depreciation and amortization
31,173
32,330
94,787
100,284
General and administrative expenses
47,356
50,022
139,182
147,878
Operating income
83,589
98,121
268,629
274,721
Interest income
1,320
5,111
3,785
16,301
Interest expense
(55,777
)
(46,537
)
(165,081
)
(111,383
)
Loss on extinguishment of debt
(91
)
(37,487
)
(1,845
)
(37,487
)
Gain on asset divestitures
1,274
29,279
3,449
32,332
Income before income taxes and equity in earnings of affiliates
30,315
48,487
108,937
174,484
Provision for income taxes
6,521
11,246
30,036
48,106
Equity in earnings of affiliates, net of income tax provision
709
1,071
3,121
3,786
Net income
24,503
38,312
82,022
130,164
Less: Net loss attributable to noncontrolling interests
16
25
71
119
Net income attributable to The GEO Group, Inc.
$
24,519
$
38,337
$
82,093
$
130,283
Weighted Average Common Shares Outstanding:
Basic
122,066
121,154
121,850
120,998
Diluted
123,433
122,426
123,479
121,907
Net income per Common Share Attributable to The GEO Group, Inc.** :
Basic:
Net income per share — basic
$
0.17
$
0.26
$
0.56
$
0.89
Diluted:
Net income per share — diluted
$
0.16
$
0.26
$
0.55
$
0.89
* All figures in ‘000s, except per share data
** In accordance with U.S. GAAP, diluted earnings per share attributable to GEO available to common stockholders is calculated under the if-converted method or the two-class method, whichever calculation results in the lowest diluted earnings per share amount, which may be lower than Adjusted Net Income Per Diluted Share.
Reconciliation of Net Income to EBITDA and Adjusted EBITDA,and Net Income Attributable to GEO to Adjusted Net Income*(Unaudited)
Q3 2023
Q3 2022
YTD 2023
YTD 2022
(unaudited)
(unaudited)
(unaudited)
(unaudited)
Net Income
$
24,503
$
38,312
$
82,022
$
130,164
Add:
Income tax provision **
6,588
11,435
30,617
48,570
Interest expense, net of interest income ***
54,548
78,913
163,141
132,569
Depreciation and amortization
31,173
32,330
94,787
100,284
EBITDA
$
116,812
$
160,990
$
370,567
$
411,587
Add (Subtract):
Gain on asset divestitures, pre-tax
(1,274
)
(29,279
)
(3,449
)
(32,332
)
Net loss attributable to noncontrolling interests
16
25
71
119
Stock based compensation expenses, pre-tax
3,116
3,141
12,052
13,010
Transaction related expenses, pre-tax
–
1,322
–
1,322
Other non-cash revenue & expenses, pre-tax
–
–
(687
)
–
Adjusted EBITDA
$
118,670
$
136,199
$
378,554
$
393,706
Net Income attributable to GEO
$
24,519
$
38,337
$
82,093
$
130,283
Add (Subtract):
Gain on asset divestitures, pre-tax
(1,274
)
(29,279
)
(3,449
)
(32,958
)
Loss on extinguishment of debt, pre-tax
91
37,487
1,845
37,487
Transaction related expenses, pre-tax
–
1,322
–
1,322
Tax effect of adjustment to net income attributable to GEO (1)
297
(7,697
)
403
(6,772
)
Adjusted Net Income
$
23,633
$
40,170
$
80,892
$
129,362
Weighted average common shares outstanding – Diluted
123,433
122,426
123,479
121,907
Adjusted Net Income per Diluted share
0.19
0.33
0.66
1.06
* all figures in ‘000s, except per share data
** including income tax provision on equity in earnings of affiliates
*** includes loss on extinguishment of debt
(1) Tax adjustment related to gain on asset divestitures and loss on extinguishment of debt.
2023 Outlook/Reconciliation (1)(In thousands, except per share data)(Unaudited)
FY 2023
Net Income
$
100,000
to
$
105,000
Net Interest Expense
217,000
217,000
Income Taxes (including income tax provision on equity in earnings of affiliates)
40,000
40,000
Depreciation and Amortization
127,000
127,000
Non-Cash Stock Based Compensation
15,700
15,700
Other Non-Cash
(4,700
)
(4,700
)
Adjusted EBITDA
$
495,000
to
$
500,000
Net Income Attributable to GEO Per Diluted Share
$
0.80
to
$
0.85
Weighted Average Common Shares Outstanding-Diluted
123,500
to
123,500
CAPEX
Growth
9,000
to
10,000
Technology
16,000
to
20,000
Facility Maintenance
45,000
to
50,000
Capital Expenditures
70,000
to
80,000
Total Debt, Net
$
1,820,000
$
1,780,000
Total Leverage, Net
3.66
3.58
(1) Total Net Leverage is calculated using the midpoint of Adjusted EBITDA guidance range.
BRENTWOOD, Tenn., Nov. 06, 2023 (GLOBE NEWSWIRE) — CoreCivic, Inc. (NYSE: CXW) (the Company) announced today its financial results for the third quarter of 2023.
Damon T. Hininger, CoreCivic’s President and Chief Executive Officer, said, “We are pleased with our third quarter results, and are optimistic that the post-pandemic environment will continue to result in increasing opportunities to serve our government partners. Federal, state, and local government agencies are experiencing an increase in the need for the solutions that we provide.”
Hininger continued, “We also continue to execute on our capital allocation strategy, repaying nearly $140 million of debt net of the change in cash so far this year, and reducing leverage, measured by net debt to EBITDA, to 2.8x using the trailing twelve months. Our debt reduction strategy has contributed to a meaningful reduction to interest expense from the prior year, despite an increasing interest rate environment. The amendment and extension of our bank credit facility obtained subsequent to quarter-end, which included an increase in size and an extension of the maturity to 2028, provides us with additional flexibility to execute on our long-term capital allocation strategy, including share repurchases.”
Financial Highlights – Third Quarter 2023
Total revenue of $483.7 million
CoreCivic Safety revenue of $443.3 million
CoreCivic Community revenue of $29.8 million
CoreCivic Properties revenue of $10.5 million
Net Income of $13.9 million
Diluted earnings per share of $0.12
Adjusted Diluted EPS of $0.14
Normalized Funds From Operations per diluted share of $0.35
Adjusted EBITDA of $75.2 million
Third Quarter 2023 Financial Results Compared With Third Quarter 2022
Net income in the third quarter of 2023 totaled $13.9 million, or $0.12 per diluted share, compared with net income in the third quarter of 2022 of $68.3 million, or $0.58 per diluted share. Among other special items, net income in the prior year quarter included gains on sales of real estate assets of $83.8 million, or $0.53 per share, including a $77.5 million gain on the sale of our McRae Correctional Facility. Adjusted for special items, adjusted net income in the third quarter of 2023 was $15.6 million, or $0.14 per diluted share (Adjusted Diluted EPS), compared with adjusted net income in the third quarter of 2022 of $9.7 million, or $0.08 per diluted share, representing a per share increase of 75%. Special items for each period are presented in detail in the calculation of Adjusted Net Income and Adjusted Diluted EPS in the Supplemental Financial Information following the financial statements presented herein.
The $0.06 per share increase in Adjusted Diluted EPS primarily resulted from higher federal and state populations, combined with lower interest expense resulting from our debt reduction strategy. These earnings increases were partially offset by the expiration of our contract with the Federal Bureau of Prisons (BOP) at the McRae Correctional Facility on November 30, 2022, and the lease with the Oklahoma Department of Corrections (ODC) at our North Fork Correctional Facility on June 30, 2023. We sold the McRae facility to the state of Georgia in August 2022, but continued to lease the facility so that we could fulfill our obligations to the BOP through the expiration date of the contract.
While we continue to experience ongoing labor market pressures and continue to incur temporary incentives and related incremental operating expenses at certain facilities, we have achieved notable improvements in our attraction and retention rates as a result of our staffing strategies and due to an overall improvement in the hiring environment. We believe the investments in our staffing have positioned us to manage the increased number of residents we have begun to experience now that the remaining occupancy restrictions caused by the COVID-19 pandemic have been removed, most notably Title 42, which ended May 11, 2023. Under Title 42, asylum-seekers and anyone crossing the border without proper documentation or authority were denied entry at the United States border in an effort to contain the spread of COVID-19. Since May 11, 2023 through September 25, 2023, the number of individuals in the custody of U.S. Immigration and Customs Enforcement (ICE) has increased 66%. Since May 11, 2023 through September 30, 2023, ICE detention populations within our facilities have increased by 4,729, or 84%, which we believe was possible, in part, because of our investments in staffing.
Earnings before interest, taxes, depreciation and amortization (EBITDA) was $72.8 million in the third quarter of 2023, compared with $147.9 million in the third quarter of 2022. Adjusted EBITDA, which excludes special items, was $75.2 million in the third quarter of 2023, compared with $68.4 million in the third quarter of 2022, an increase of 10.0%. The increase in Adjusted EBITDA was attributable to an increase in occupancy, combined with a general reduction in temporary staffing incentives, partially offset by the expiration of the contract with the BOP at the McRae facility and the lease with the ODC at the North Fork facility. The contract expirations at the McRae and North Fork facilities resulted in an aggregate reduction to EBITDA of $4.8 million from the third quarter of 2022.
Funds From Operations (FFO) was $38.5 million, or $0.34 per diluted share, in the third quarter of 2023, compared to $33.3 million, or $0.28 per diluted share, in the third quarter of 2022. Normalized FFO, which excludes special items, was $40.5 million, or $0.35 per diluted share, in the third quarter of 2023, compared with $33.9 million, or $0.29 per diluted share, in the third quarter of 2022, representing an increase in Normalized FFO per share of 21%. Normalized FFO was impacted by the same factors that affected Adjusted EBITDA, further improved by a reduction in interest expense as a result of our debt reduction strategy that isn’t reflected in Adjusted EBITDA.
Adjusted Net Income, EBITDA, Adjusted EBITDA, FFO, and Normalized FFO, and, where appropriate, their corresponding per share amounts, are measures calculated and presented on the basis of methodologies other than in accordance with generally accepted accounting principles (GAAP). Please refer to the Supplemental Financial Information and the note following the financial statements herein for further discussion and reconciliations of these measures to net income, the most directly comparable GAAP measure.
Business Updates
Capital Strategy
Debt Repayments. We continued to make progress on our debt reduction strategy, increasing our total debt repaid for the nine months ended September 30, 2023, to $137.7 million, net of the change in cash, including $65.0 million during the third quarter of 2023. We have no debt maturities until April 2026 when our 8.25% Senior Notes, which have an outstanding principal balance of $593.1 million, are scheduled to mature.
Amendment and Extension of Bank Credit Facility. On October 11, 2023, we entered into a Fourth Amended and Restated Credit Agreement (New Bank Credit Facility) in an aggregate amount of $400.0 million, effectively replacing our Third Amended and Restated Credit Agreement dated May 12, 2022, which was an aggregate amount of $350.0 million. The New Bank Credit Facility, among other things, increases the available borrowings under the revolving credit facility from $250.0 million to $275.0 million and increases the size of the term loan from an initial balance of $100.0 million to $125.0 million, extends the maturity date to October 11, 2028 from May 12, 2026, and makes conforming changes to replace the Bloomberg Short-Term Bank Yield Index to the Secured Overnight Financing Rate. Further, financial covenants were modified to remove the $100.0 million limit of netting unrestricted cash and cash equivalents when calculating the consolidated total leverage ratio and the consolidated secured leverage ratio. At the closing of the New Bank Credit Facility, we received $33.8 million of net borrowings before transaction costs as a result of the increased size of the term loan, and the revolving credit facility remains undrawn, except for $17.4 million in outstanding letters of credit.
Share Repurchases. On May 12, 2022, our Board of Directors approved a share repurchase program authorizing the Company to repurchase up to $150.0 million of our common stock. On August 2, 2022, our Board of Directors authorized an increase in our share repurchase program of up to an additional $75.0 million in shares of our common stock, or a total of up to $225.0 million. During the nine months ended September 30, 2023, we repurchased 2.6 million shares of our common stock, at an aggregate purchase price of $25.6 million, excluding fees, commissions and other costs related to the repurchases. Since the share repurchase program was authorized, through September 30, 2023, we have repurchased a total of 9.2 million shares at an aggregate price of $100.1 million, excluding fees, commissions and other costs related to the repurchases. We did not repurchase any shares of our common stock during the third quarter of 2023.
As of September 30, 2023, we had $124.9 million remaining under the share repurchase program authorized by the Board of Directors. Additional repurchases of common stock will be made in accordance with applicable securities laws and may be made at management’s discretion within parameters set by the Board of Directors from time to time in the open market, through privately negotiated transactions, or otherwise. The share repurchase program has no time limit and does not obligate us to purchase any particular amount of our common stock. The authorization for the share repurchase program may be terminated, suspended, increased or decreased by our Board of Directors in its discretion at any time.
New Management Contracts
New Management Contract With Hinds County, Mississippi. On September 25, 2023, we announced that we signed a new management contract with Hinds County, Mississippi for up to 250 adult male pre-trial detainees at our 2,672-bed Tallahatchie County Correctional Facility in Tutwiler, Mississippi. The initial contract term is for two years, which may be extended for an additional year upon mutual agreement. We currently care for approximately 200 residents from Hinds County at the Tallahatchie facility, in addition to over 400 residents from the U.S. Marshals Service, Vermont, South Carolina, the U.S. Virgin Islands, and Tallahatchie County.
Intent to Award New Management Contract From State of Montana. On October 11, 2023, we were notified by the state of Montana of its intent to award us a new management contract for up to 120 inmates at our 1,896-bed Saguaro Correctional Facility in Eloy, Arizona. We expect to execute the contract in the short-term and begin accepting residents from Montana later in the fourth quarter of 2023. We currently care for approximately 875 residents from Hawaii and nearly 600 residents from the state of Idaho at the Saguaro Correctional Facility. We also manage the fully occupied company-owned Crossroads Correctional Center in Shelby, Montana for the State pursuant to a separate management contract.
2023 Financial Guidance
Based on current business conditions, we are providing the following update to our financial guidance for the full year 2023:
Guidance Full Year 2023
Prior Guidance Full Year 2023
• Net income
$58.7 million to $64.9 million
$58.4 million to $66.4 million
• Adjusted net income
$62.3 million to $68.5 million
$59.5 million to $67.5 million
• Diluted EPS
$0.51 to $0.57
$0.51 to $0.58
• Adjusted Diluted EPS
$0.54 to $0.60
$0.52 to $0.59
• FFO per diluted share
$1.37 to $1.43
$1.36 to $1.44
• Normalized FFO per diluted share
$1.40 to $1.46
$1.37 to $1.45
• EBITDA
$298.8 million to $303.0 million
$297.0 million to $303.0 million
• Adjusted EBITDA
$302.5 million to $306.8 million
$297.3 million to $303.3 million
During 2023, we expect to invest $66.0 million to $69.0 million in capital expenditures, consisting of $36.0 million to $37.0 million in maintenance capital expenditures on real estate assets, $25.0 million to $26.0 million for maintenance capital expenditures on other assets and information technology, and $5.0 million to $6.0 million for other capital investments.
Supplemental Financial Information and Investor Presentations
We have made available on our website supplemental financial information and other data for the third quarter of 2023. Interested parties may access this information through our website at http://ir.corecivic.com/ under “Financial Information” of the Investors section. We do not undertake any obligation and disclaim any duties to update any of the information disclosed in this report.
Management may meet with investors from time to time during the fourth quarter of 2023. Written materials used in the investor presentations will also be available on our website beginning on or about November 29, 2023. Interested parties may access this information through our website at http://ir.corecivic.com/ under “Events & Presentations” of the Investors section.
Conference Call, Webcast and Replay Information
We will host a webcast conference call at 11:00 a.m. central time (12:00 p.m. eastern time) on Tuesday, November 7, 2023, which will be accessible through the Company’s website at www.corecivic.com under the “Events & Presentations” section of the “Investors” page. To participate via telephone and join the call live, please register in advance here https://register.vevent.com/register/BI3e522c1e25f444ec98977db80437da4f. Upon registration, telephone participants will receive a confirmation email detailing how to join the conference call, including the dial-in number and a unique passcode.
About CoreCivic
CoreCivic is a diversified, government-solutions company with the scale and experience needed to solve tough government challenges in flexible, cost-effective ways. We provide a broad range of solutions to government partners that serve the public good through high-quality corrections and detention management, a network of residential and non-residential alternatives to incarceration to help address America’s recidivism crisis, and government real estate solutions. We are the nation’s largest owner of partnership correctional, detention and residential reentry facilities, and one of the largest prison operators in the United States. We have been a flexible and dependable partner for government for 40 years. Our employees are driven by a deep sense of service, high standards of professionalism and a responsibility to help government better the public good. Learn more at www.corecivic.com.
Forward-Looking Statements
This press release contains statements as to our beliefs and expectations of the outcome of future events that are “forward-looking” statements within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended, and the Private Securities Litigation Reform Act of 1995, as amended. These forward-looking statements are subject to risks and uncertainties that could cause actual results to differ materially from the statements made. These include, but are not limited to, the risks and uncertainties associated with: (i) changes in government policy, legislation and regulations that affect utilization of the private sector for corrections, detention, and residential reentry services, in general, or our business, in particular, including, but not limited to, the continued utilization of our correctional and detention facilities by the federal government, including as a consequence of the United States Department of Justice not renewing contracts as a result of President Biden’s Executive Order on Reforming Our Incarceration System to Eliminate the Use of Privately Operated Criminal Detention Facilities, impacting utilization primarily by the BOP and the United States Marshals Service, and the impact of any changes to immigration reform and sentencing laws (we do not, under longstanding policy, lobby for or against policies or legislation that would determine the basis for, or duration of, an individual’s incarceration or detention); (ii) our ability to obtain and maintain correctional, detention, and residential reentry facility management contracts because of reasons including, but not limited to, sufficient governmental appropriations, contract compliance, negative publicity and effects of inmate disturbances; (iii) changes in the privatization of the corrections and detention industry, the acceptance of our services, the timing of the opening of new facilities and the commencement of new management contracts (including the extent and pace at which new contracts are utilized), as well as our ability to utilize available beds; (iv) general economic and market conditions, including, but not limited to, the impact governmental budgets can have on our contract renewals and renegotiations, per diem rates, and occupancy; (v) fluctuations in our operating results because of, among other things, changes in occupancy levels; competition; contract renegotiations or terminations; inflation and other increases in costs of operations, including a continuing rise in labor costs; fluctuations in interest rates and risks of operations; (vi) the impact resulting from the termination of Title 42, the federal government’s policy to deny entry at the United States southern border to asylum-seekers and anyone crossing the southern border without proper documentation or authority in an effort to contain the spread of the coronavirus and related variants, or COVID-19; (vii) government budget uncertainty, the impact of the debt ceiling and the potential for government shutdowns and changing funding priorities; (viii) our ability to successfully identify and consummate future development and acquisition opportunities and realize projected returns resulting therefrom; (ix) our ability to have met and maintained qualification for taxation as a real estate investment trust, or REIT, for the years we elected REIT status; and (x) the availability of debt and equity financing on terms that are favorable to us, or at all. Other factors that could cause operating and financial results to differ are described in the filings we make from time to time with the Securities and Exchange Commission.
We take no responsibility for updating the information contained in this press release following the date hereof to reflect events or circumstances occurring after the date hereof or the occurrence of unanticipated events or for any changes or modifications made to this press release or the information contained herein by any third-parties, including, but not limited to, any wire or internet services, except as may be required by law.
CORECIVIC, INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS (UNAUDITED AND AMOUNTS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
ASSETS
September 30, 2023
December 31, 2022
Cash and cash equivalents
$
103,697
$
149,401
Restricted cash
14,214
12,764
Accounts receivable, net of credit loss reserve of $7,358 and $8,008, respectively
269,416
312,435
Prepaid expenses and other current assets
32,638
32,134
Assets held for sale
–
6,936
Total current assets
419,965
513,670
Real estate and related assets:
Property and equipment, net of accumulated depreciation of $1,798,675 and $1,716,283, respectively
2,127,800
2,176,098
Other real estate assets
204,096
208,181
Goodwill
4,844
4,844
Other assets
311,903
341,976
Total assets
$
3,068,608
$
3,244,769
LIABILITIES AND STOCKHOLDERS’ EQUITY
Accounts payable and accrued expenses
$
290,385
$
285,226
Current portion of long-term debt
13,982
165,525
Total current liabilities
304,367
450,751
Long-term debt, net
1,055,588
1,084,858
Deferred revenue
18,869
22,590
Non-current deferred tax liabilities
98,124
99,618
Other liabilities
133,358
154,544
Total liabilities
1,610,306
1,812,361
Commitments and contingencies
Preferred stock ― $0.01 par value; 50,000 shares authorized; none issued and outstanding at September 30, 2023 and December 31, 2022, respectively
–
–
Common stock ― $0.01 par value; 300,000 shares authorized; 113,605 and 114,988 shares issued and outstanding at September 30, 2023 and December 31, 2022, respectively
1,136
1,150
Additional paid-in capital
1,792,481
1,807,689
Accumulated deficit
(335,315
)
(376,431
)
Total stockholders’ equity
1,458,302
1,432,408
Total liabilities and stockholders’ equity
$
3,068,608
$
3,244,769
CORECIVIC, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED AND AMOUNTS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
For the Three Months Ended September 30,
For the Nine Months Ended September 30,
2023
2022
2023
2022
REVENUE:
Safety
$
443,324
$
423,186
$
1,282,717
$
1,253,788
Community
29,791
26,379
84,569
76,269
Properties
10,477
14,587
37,888
43,704
Other
113
59
215
135
483,705
464,211
1,405,389
1,373,896
EXPENSES:
Operating
Safety
350,946
342,190
1,015,070
987,472
Community
23,268
22,022
68,888
63,531
Properties
3,067
3,902
9,752
10,561
Other
42
80
158
259
Total operating expenses
377,323
368,194
1,093,868
1,061,823
General and administrative
33,927
30,194
99,218
92,808
Depreciation and amortization
32,526
31,931
95,183
96,218
Shareholder litigation expense
–
–
–
1,900
Asset impairments
2,710
3,513
2,710
3,513
446,486
433,832
1,290,979
1,256,262
OTHER INCOME (EXPENSE):
Interest expense, net
(17,886
)
(20,793
)
(55,305
)
(65,381
)
Expenses associated with debt repayments and refinancing transactions
(100
)
(783
)
(326
)
(7,588
)
Gain on sale of real estate assets, net
368
83,828
343
87,149
Other income (expense)
(74
)
(71
)
(43
)
934
INCOME BEFORE INCOME TAXES
19,527
92,560
59,079
132,748
Income tax expense
(5,635
)
(24,242
)
(17,957
)
(34,865
)
NET INCOME
$
13,892
$
68,318
$
41,122
$
97,883
BASIC EARNINGS PER SHARE
$
0.12
$
0.59
$
0.36
$
0.82
DILUTED EARNINGS PERSHARE
$
0.12
$
0.58
$
0.36
$
0.82
CORECIVIC, INC. AND SUBSIDIARIES SUPPLEMENTAL FINANCIAL INFORMATION (UNAUDITED AND AMOUNTS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
CALCULATION OF ADJUSTED NET INCOME AND ADJUSTED DILUTED EPS
For the Three Months Ended September 30,
For the Nine Months Ended September 30,
2023
2022
2023
2022
Net income
$
13,892
$
68,318
$
41,122
$
97,883
Special items:
Expenses associated with debt repayments and refinancing transactions
100
783
326
7,588
Income tax expense associated with change in corporate tax structure
–
–
930
–
Gain on sale of real estate assets, net
(368
)
(83,828
)
(343
)
(87,149
)
Shareholder litigation expense
–
–
–
1,900
Asset impairments
2,710
3,513
2,710
3,513
Income tax expense (benefit) for special items
(709
)
20,959
(784
)
19,543
Adjusted net income
$
15,625
$
9,745
$
43,961
$
43,278
Weighted average common shares outstanding – basic
113,605
116,569
113,919
119,282
Effect of dilutive securities:
Restricted stock-based awards
802
881
686
774
Weighted average shares and assumed conversions – diluted
114,407
117,450
114,605
120,056
Adjusted Diluted EPS
$
0.14
$
0.08
$
0.38
$
0.36
CORECIVIC, INC. AND SUBSIDIARIES SUPPLEMENTAL FINANCIAL INFORMATION (UNAUDITED AND AMOUNTS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
CALCULATION OF FUNDS FROM OPERATIONS AND NORMALIZED FUNDS FROM OPERATIONS
For the Three Months Ended September 30,
For the Nine Months Ended September 30,
2023
2022
2023
2022
Net income
$
13,892
$
68,318
$
41,122
$
97,883
Depreciation and amortization of real estate assets
24,837
24,158
73,206
72,825
Impairment of real estate assets
–
3,513
–
3,513
Gain on sale of real estate assets, net
(368
)
(83,828
)
(343
)
(87,149
)
Income tax expense for special items
107
21,165
100
22,073
Funds From Operations
$
38,468
$
33,326
$
114,085
$
109,145
Expenses associated with debt repayments and refinancing transactions
100
783
326
7,588
Income tax expense associated with change in corporate tax structure
–
–
930
–
Shareholder litigation expense
–
–
–
1,900
Other asset impairments
2,710
–
2,710
–
Income tax benefit for special items
(816
)
(206
)
(884
)
(2,530
)
Normalized Funds From Operations
$
40,462
$
33,903
$
117,167
$
116,103
Funds From Operations Per Diluted Share
$
0.34
$
0.28
$
1.00
$
0.91
Normalized Funds From Operations Per Diluted Share
$
0.35
$
0.29
$
1.02
$
0.97
CALCULATION OF EBITDA AND ADJUSTED EBITDA
For the Three Months Ended September 30,
For the Nine Months Ended September 30,
2023
2022
2023
2022
Net income
$
13,892
$
68,318
$
41,122
$
97,883
Interest expense
20,734
23,455
64,037
73,139
Depreciation and amortization
32,526
31,931
95,183
96,218
Income tax expense
5,635
24,242
17,957
34,865
EBITDA
$
72,787
$
147,946
$
218,299
$
302,105
Expenses associated with debt repayments and refinancing transactions
100
783
326
7,588
Gain on sale of real estate assets, net
(368
)
(83,828
)
(343
)
(87,149
)
Shareholder litigation expense
–
–
–
1,900
Asset impairments
2,710
3,513
2,710
3,513
Adjusted EBITDA
$
75,229
$
68,414
$
220,992
$
227,957
CORECIVIC, INC. AND SUBSIDIARIES SUPPLEMENTAL FINANCIAL INFORMATION (UNAUDITED AND AMOUNTS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
GUIDANCE — CALCULATION OF ADJUSTED NET INCOME, FUNDS FROM OPERATIONS, EBITDA & ADJUSTED EBITDA
For the Year Ending December 31, 2023
Low End of Guidance
High End of Guidance
Net income
$
58,672
$
64,922
Expenses associated with debt repayments and refinancing transactions
1,363
1,363
Income tax expense associated with change in corporate tax structure
930
930
Gain on sale of real estate assets, net
(343
)
(343
)
Asset impairments
2,710
2,710
Income tax benefit for special items
(1,082
)
(1,082
)
Adjusted net income
$
62,250
$
68,500
Net income
$
58,672
$
64,922
Depreciation and amortization of real estate assets
98,000
98,500
Gain on sale of real estate assets, net
(343
)
(343
)
Income tax expense for special items
100
100
Funds From Operations
$
156,429
$
163,179
Expenses associated with debt repayments and refinancing transactions
1,363
1,363
Income tax expense associated with change in corporate tax structure
930
930
Other asset impairments
2,710
2,710
Income tax benefit for special items
(1,182
)
(1,182
)
Normalized Funds From Operations
$
160,250
$
167,000
Diluted EPS
$
0.51
$
0.57
Adjusted Diluted EPS
$
0.54
$
0.60
FFO per diluted share
$
1.37
$
1.43
Normalized FFO per diluted share
$
1.40
$
1.46
Net income
$
58,672
$
64,922
Interest expense
85,500
84,500
Depreciation and amortization
128,000
128,000
Income tax expense
26,598
25,598
EBITDA
$
298,770
$
303,020
Expenses associated with debt repayments and refinancing transactions
1,363
1,363
Gain on sale of real estate assets, net
(343
)
(343
)
Asset impairments
2,710
2,710
Adjusted EBITDA
$
302,500
$
306,750
NOTE TO SUPPLEMENTAL FINANCIAL INFORMATION
Adjusted Net Income, EBITDA, Adjusted EBITDA, FFO, and Normalized FFO, and, where appropriate, their corresponding per share metrics are non-GAAP financial measures. The Company believes that these measures are important operating measures that supplement discussion and analysis of the Company’s results of operations and are used to review and assess operating performance of the Company and its properties and their management teams. The Company believes that it is useful to provide investors, lenders and securities analysts disclosures of its results of operations on the same basis that is used by management.
FFO, in particular, is a widely accepted non-GAAP supplemental measure of performance of real estate companies, grounded in the standards for FFO established by the National Association of Real Estate Investment Trusts (NAREIT). NAREIT defines FFO as net income computed in accordance with GAAP, excluding gains (or losses) from sales of property and extraordinary items, plus depreciation and amortization of real estate and impairment of depreciable real estate and after adjustments for unconsolidated partnerships and joint ventures calculated to reflect funds from operations on the same basis. As a company with extensive real estate holdings, we believe FFO and FFO per share are important supplemental measures of our operating performance and believe they are frequently used by securities analysts, investors and other interested parties in the evaluation of REITs and other real estate operating companies, many of which present FFO and FFO per share when reporting results. EBITDA, Adjusted EBITDA, and FFO are useful as supplemental measures of performance of the Company’s properties because such measures do not take into account depreciation and amortization, or with respect to EBITDA, the impact of the Company’s tax provision and financing strategies. Because the historical cost accounting convention used for real estate assets requires depreciation (except on land), this accounting presentation assumes that the value of real estate assets diminishes at a level rate over time. Because of the unique structure, design and use of the Company’s properties, management believes that assessing performance of the Company’s properties without the impact of depreciation or amortization is useful. The Company may make adjustments to FFO from time to time for certain other income and expenses that it considers non-recurring, infrequent or unusual, even though such items may require cash settlement, because such items do not reflect a necessary or ordinary component of the ongoing operations of the Company. Normalized FFO excludes the effects of such items. The Company calculates Adjusted Net Income by adding to GAAP Net Income expenses associated with the Company’s debt repayments and refinancing transactions, and certain impairments and other charges that the Company believes are unusual or non-recurring to provide an alternative measure of comparing operating performance for the periods presented.
Other companies may calculate Adjusted Net Income, EBITDA, Adjusted EBITDA, FFO, and Normalized FFO differently than the Company does, or adjust for other items, and therefore comparability may be limited. Adjusted Net Income, EBITDA, Adjusted EBITDA, FFO, and Normalized FFO and, where appropriate, their corresponding per share measures are not measures of performance under GAAP, and should not be considered as an alternative to cash flows from operating activities, a measure of liquidity or an alternative to net income as indicators of the Company’s operating performance or any other measure of performance derived in accordance with GAAP. This data should be read in conjunction with the Company’s consolidated financial statements and related notes included in its filings with the Securities and Exchange Commission.
Contact:
Investors: David Garfinkle – Chief Financial Officer – (615) 263-3008 Financial Media: David Gutierrez, Dresner Corporate Services – (312) 780-7204
IRVING, Texas–(BUSINESS WIRE)– Salem Media Group, Inc. (NASDAQ: SALM) announced today that it plans to report its third quarter 2023 financial results after the market closes on November 13, 2023.
The company also plans to host a teleconference to discuss its results on November 13, 2023, at 4:00 PM Central Time. To access the teleconference, please dial (888) 770-7291, and then ask to be joined to the Salem Media Group Third Quarter 2023 call or listen to the webcast.
A replay of the teleconference will be available through November 27, 2023, and can be heard by dialing (800) 770-2030 – replay pin number 2413416, or on the investor relations portion of the company’s website, located at investor.salemmedia.com.
ABOUT SALEM MEDIA GROUP:
Salem Media Group is America’s leading multimedia company specializing in Christian and conservative content, with media properties comprising radio, digital media and book and newsletter publishing. Each day Salem serves a loyal and dedicated audience of listeners and readers numbering in the millions nationally. With its unique programming focus, Salem provides compelling content, fresh commentary and relevant information from some of the most respected figures across the Christian and conservative media landscape. Learn more about Salem Media Group, Inc. at www.salemmedia.com.
Despite decades of effective environmental policy and improved air quality in the US, air pollution remains the greatest environmental health risk factor, contributing to 100,000 to 200,000 incremental deaths annually, primarily from fine particulate matter (PM2.5) derived from pollutants including vehicle and industrial emissions from fuel and biomasscombustion, cigarette smoke, volcanos, fires, and desert dust.
PM2.5 is inhaled into the lungs, spreading through the bloodstream to other organs, especially the kidney, which accumulates it during glomerular filtration, where it triggers NLRP3 inflammasome activation resulting in damaging inflammation and cell death (pyroptosis) leading to chronic kidney disease and its progression.
ZyVersa is developing Inflammasome ASC Inhibitor IC 100 which can inhibit up to 12 different inflammasomes (including NLRP3 inflammasomes) and their associated ASC specks which perpetuate damaging inflammation.
WESTON, Fla., Nov. 06, 2023 (GLOBE NEWSWIRE) — ZyVersa Therapeutics, Inc. (Nasdaq: ZVSA, or “ZyVersa”), a clinical stage specialty biopharmaceutical company developing first-in-class drugs for treatment of inflammatory and renal diseases, announces publication of an article in the peer-reviewed journal, Ecotoxicology and Environmental Safety, demonstrating that inhibiting NLRP3 inflammasomes can attenuate kidney damage and dysfunction associated with the environmental pollutant, PM2.5.
In the paper titled, “PM2.5 induces renal tubular injury by activating NLRP3-mediated pyroptosis,” the authors conducted studies in a mouse model exposed to high concentrations of ambient PM2.5 for 12 weeks, and in a mouse kidney cell line. Following are key findings reported in the paper:
PM2.5 exposure leads to kidney structural changes and functional impairment.
Inflammasome NLRP3-induced Inflammation and pyroptosis were increased in PM2.5-exposed kidney tissues.
Inhibiting the inflammasome NLRP3 pathway, including downstream caspase-1, rescued the kidneys from PM2.5-induced cell death.
The authors stated, “We further provided evidence that NLRP3-mediated pyroptosis plays critical roles in the progression of kidney injury induced by PM2.5 exposure. Inhibiting the activation of NLRP3 inflammasome can remarkably protect the renal tubular epithelial cells from PM2.5-induced proptosis.” To read the article, Click Here.
“The research published in the Journal,Ecotoxicology and Environmental Safety, reinforces other published data demonstrating that inhibiting NLRP3 inflammasomes can attenuate kidney damage and dysfunction of multiple causes, now including kidney damage associated with the environmental pollutant, PM2.5,” commented Stephen C. Glover, ZyVersa’s Co-founder, Chairman, CEO and President. “This research provides increasing support for inflammasome inhibition as a promising treatment option for kidney disease, a major health problem affecting over 35 million adults in the United States. ZyVersa is developing Inflammasome ASC inhibitor IC 100. Unlike NLRP3 inhibitors, designed to inhibit formation of one inflammasome to block initiation of the inflammatory cascade, IC 100 was designed to inhibit multiple types of inflammasomes and their associated ASC specks to uniquely block both initiation and perpetuation of damaging inflammation.” To review a white paper summarizing the mechanism of action and preclinical data for IC 100, Click Here.
About Inflammasome ASC Inhibitor IC 100
IC 100 is a novel humanized IgG4 monoclonal antibody that inhibits the inflammasome adaptor protein ASC. IC 100 was designed to attenuate both initiation and perpetuation of the inflammatory response. It does so by binding to a specific region of the ASC component of multiple types of inflammasomes, including NLRP1, NLRP2, NLRP3, NLRC4, AIM2, Pyrin. Intracellularly, IC 100 binds to ASC monomers, inhibiting inflammasome formation, thereby blocking activation of IL-1β early in the inflammatory cascade. IC 100 also binds to ASC in ASC Specks, both intracellularly and extracellularly, further blocking activation of IL-1β and the perpetuation of the inflammatory response that is pathogenic in inflammatory diseases. Because active cytokines amplify adaptive immunity through various mechanisms, IC 100, by attenuating cytokine activation, also attenuates the adaptive immune response.
About ZyVersa Therapeutics, Inc.
ZyVersa (Nasdaq: ZVSA) is a clinical stage specialty biopharmaceutical company leveraging advanced, proprietary technologies to develop first-in-class drugs for patients with renal and inflammatory diseases who have significant unmet medical needs. The Company is currently advancing a therapeutic development pipeline with multiple programs built around its two proprietary technologies – Cholesterol Efflux Mediator™ VAR 200 for treatment of kidney diseases, and Inflammasome ASC Inhibitor IC 100, targeting damaging inflammation associated with numerous CNS and other inflammatory diseases. For more information, please visit www.zyversa.com.
Certain statements contained in this press release regarding matters that are not historical facts, are forward-looking statements within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended, and the Private Securities Litigation Reform Act of 1995. These include statements regarding management’s intentions, plans, beliefs, expectations, or forecasts for the future, and, therefore, you are cautioned not to place undue reliance on them. No forward-looking statement can be guaranteed, and actual results may differ materially from those projected. ZyVersa Therapeutics, Inc (“ZyVersa”) uses words such as “anticipates,” “believes,” “plans,” “expects,” “projects,” “future,” “intends,” “may,” “will,” “should,” “could,” “estimates,” “predicts,” “potential,” “continue,” “guidance,” and similar expressions to identify these forward-looking statements that are intended to be covered by the safe-harbor provisions. Such forward-looking statements are based on ZyVersa’s expectations and involve risks and uncertainties; consequently, actual results may differ materially from those expressed or implied in the statements due to a number of factors, including ZyVersa’s plans to develop and commercialize its product candidates, the timing of initiation of ZyVersa’s planned preclinical and clinical trials; the timing of the availability of data from ZyVersa’s preclinical and clinical trials; the timing of any planned investigational new drug application or new drug application; ZyVersa’s plans to research, develop, and commercialize its current and future product candidates; the clinical utility, potential benefits and market acceptance of ZyVersa’s product candidates; ZyVersa’s commercialization, marketing and manufacturing capabilities and strategy; ZyVersa’s ability to protect its intellectual property position; and ZyVersa’s estimates regarding future revenue, expenses, capital requirements and need for additional financing.
New factors emerge from time-to-time, and it is not possible for ZyVersa to predict all such factors, nor can ZyVersa assess the impact of each such factor on the business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in any forward-looking statements. Forward-looking statements included in this press release are based on information available to ZyVersa as of the date of this press release. ZyVersa disclaims any obligation to update such forward-looking statements to reflect events or circumstances after the date of this press release, except as required by applicable law.
This press release does not constitute an offer to sell, or the solicitation of an offer to buy, any securities.
Corporate and IR Contact: Karen Cashmere Chief Commercial Officer kcashmere@zyversa.com 786-251-9641
Reported record revenues of $1.0 billion, up 5% y/y
Awarded bookings of $1.3 billion, increasing backlog to a record high of $13.3 billion
Reported operating income of $21.0 million; adjusted operating income1 of $59.5 million
Adjusted EBITDA1 of $64.7 million with a margin1 of 6.5%
Diluted EPS1 of ($0.21); Adjusted diluted EPS1 of $0.73
Reported year-to-date cash flow from operations of $135.2 million, and reduced net debt $88.9 million
MCLEAN, Va., Nov. 6, 2023 /PRNewswire/ — V2X, Inc. (NYSE:VVX) announced third quarter 2023 financial results.
“We achieved record revenue in the third quarter of approximately $1 billion, which demonstrates our unwavering commitment to our clients and the missions we support,” said Chuck Prow, President and Chief Executive Officer of V2X. “Bookings activity in the quarter was strong at $1.3 billion in awards. This yielded total backlog of $13.3 billion, an all-time high for the company and provides solid revenue visibility moving into 2024. Importantly, we are executing the “Expand the Base” component of our strategic framework and were successful in achieving extended scope through client engagement initiatives on existing business, which has yielded $332 million of awards in the quarter and $1.2 billion year-to-date. We are also leveraging our converged capabilities to pursue new business and currently have a robust pipeline of opportunities, which includes ~$19 billion of bids we plan to submit over the next twelve months and over $6 billion submitted and in evaluation.”
Mr. Prow continued, “During the quarter, we had notable success capturing several key pursuits that are representative of V2X’s differentiated ability to deliver technology and operational solutions across the mission lifecycle. For example, we secured a $190 million five-year, fixed price contract to continue providing training and range operations services to the U.S. Army in the Middle East. Our team will provide training support services as well as instruction, operation, and maintenance of training aids, devices, simulators, and simulations; fixed ranges; deployable ranges; and numerous training facilities. This successful capture leverages our decades of experience providing high consequence training as well as our global scale and will allow V2X to bring our Army client unparalleled service delivery in support of enhancing the warfighting skills via the use of live and virtual training. We continue to invest in the future and are developing the next generation of training capabilities, techniques, and enablers.”
“We have also made remarkable progress organically growing V2X’s environmental capabilities and were recently awarded an $85 million two-year contract to support the recovery and remediation of drinking water. This win builds on V2X’s original work to support the Department of Defense with the establishment of a water supply system for military housing at Red Hill, Hawaii. Our ability to deliver solutions that generate tangible results and public health benefits have led to incremental work and are now helping to deliver safe drinking water to the local communities. We have also successfully leveraged this capability to win similar work in Japan. We are proud to be supporting such an important environmental mission and believe there is significant opportunity to expand our efforts to other geographic areas both within and outside of the Pacific region.”
“Finally, subsequent to the end of the quarter, we were awarded a $458 million five-year, fixed price program to provide depot site standup as well as organizational, selected intermediate and limited depot level maintenance, and logistics support for the F-5 Adversary aircraft with the Navy and Marine Corps. The F-5 contract, combined with our Naval Test Wing Pacific and Atlantic awards, equates to over $1.7 billion in new work V2X has won with the U.S. Navy over the past ~18 months. I’d like to thank our teams for their commitment to delivering unique and value-added solutions that provide differentiation and enhanced client outcomes.”
Mr. Prow concluded, “We are pleased with our continued revenue growth and record backlog which is supported by the momentum generated through our efforts to converge solutions across our clients’ mission lifecycle. V2X is differentiating its capability offerings through the intersection of technology and operations, which we believe will continue to create value for our shareholders.”
Third Quarter 2023 Results
Revenue of $1.0 billion, up 4.5% y/y
Operating income of $21.0 million, including merger and integration related costs of $15.8 million, and amortization of acquired intangible assets of $22.6 million
Adjusted operating income1 of $59.5 million
Adjusted EBITDA1 of $64.7 million with a 6.5% adjusted EBITDA margin1
Diluted EPS1 of ($0.21); Adjusted Diluted EPS1 of $0.73
Net debt as of September 29, 2023 of $1.1 billion
Total backlog as of September 29, 2023 of $13.3 billion
“V2X reported revenue of $1.0 billion in the quarter, which represents 4.5% year-over-year growth,” said Shawn Mural, Senior Vice President and Chief Financial Officer. “Revenue growth in the quarter was achieved through continued program execution on existing programs, plus the phase-in of recent awards, including our first task order win with the Department of State, which reached full operational capability approximately two weeks ahead of schedule and has since expanded in size. We were also successful in continuing to defend our core and have won over $1 billion in recompete programs year to date.”
“For the quarter, the Company reported operating income of $21.0 million and adjusted operating income1 of $59.5 million. Adjusted EBITDA1 was $64.7 million with a margin of 6.5%, which was influenced by contract mix and performance on certain integrated electronic security programs. Third quarter diluted EPS was ($0.21), due primarily to merger and integration related costs, amortization of acquired intangible assets, and interest expense. Adjusted diluted EPS1 for the quarter was $0.73.”
“Cash generation was strong and net cash provided by operating activities was $135.2 million year to date. Adjusted net cash provided by operating activities1 year to date was $83.6 million, adding back $20.9 million of M&A and integration costs with $13.4 million of CARES act payments, and removing the contribution of the master accounts receivable purchase or MARPA facility of $85.8 million.”
“At the end of the quarter, net debt for V2X was $1,131.8 million. Our solid cash generation has enabled V2X to reduce its total debt by $88.9 million year to date. Net consolidated indebtedness to EBITDA1 (net leverage ratio) was 3.46x. Additionally, our strong fundamentals and cash flow profile allowed us to reprice our Term Loan B shortly after the quarter close. We expect the new pricing to reduce annual interest expense by $2 million,” said Mr. Mural.
Total backlog as of September 29, 2023, was $13.3 billion. Funded backlog was $3.2 billion. Bookings in the quarter were $1.3 billion, resulting in a book-to-bill of 1.3x. The trailing twelve-month book-to-bill was 1.1x.
2023 Guidance Mr. Mural concluded, “Based on what we are seeing in the business we are raising the low end and mid-point of our full year revenue projections. Given third-quarter results and our outlook, we are lowering the ranges for adjusted EBITDA and adjusted diluted EPS. This change incorporates year-to-date results, including the program performance mentioned earlier and timing of activities associated with national security support. We are reaffirming guidance for adjusted net cash provided by operating activities.” The Company is adjusting its 2023 guidance and is as follows:
$ millions, except for per share amounts
2023 Guidance (Updated)
2023 Mid-Point (Updated)
Revenue
$3,900
$3,950
$3,925
Adjusted EBITDA1
$285
$295
$290
Adjusted Diluted Earnings Per Share1
$3.50
$3.75
$3.62
Adjusted Net Cash Provided by Operating Activities 1
$115
$135
$125
Forward-looking statements are based upon current expectations and are subject to factors that could cause actual results to differ materially from those suggested here, including those factors set forth in the Safe Harbor Statement below.
Third Quarter 2023 Conference Call
Management will conduct a conference call with analysts and investors at 8:00 a.m. ET on Monday, November 6, 2023. U.S.-based participants may dial in to the conference call at 877-407-3982, while international participants may dial 201-493-6780. A live webcast of the conference call as well as an accompanying slide presentation will be available here: https://app.webinar.net/gAed3AVKra2
A replay of the conference call will be posted on the V2X website shortly after completion of the call and will be available for one year. A telephonic replay will also be available through November 20, 2023, at 844-512-2921 (domestic) or 412-317-6671 (international) with passcode 13742132.
Presentation slides that will be used in conjunction with the conference call will also be made available online in advance on the “investors” section of the company’s website at https://gov2x.com/. V2X recognizes its website as a key channel of distribution to reach public investors and as a means of disclosing material non-public information to comply with its obligations under the U.S. Securities and Exchange Commission (“SEC”) Regulation FD.
Footnotes: 1 See “Key Performance Indicators and Non-GAAP Financial Measures” for descriptions and reconciliations.
About V2X V2X builds smart solutions designed to integrate physical and digital infrastructure – from base to battlefield – by aligning people, actions, and outputs. Formed by the merger of Vectrus and Vertex, we bring a combined 120 years of successful mission support. Our lifecycle solutions improve security, streamline logistics, and enhance readiness.
The Company delivers a comprehensive suite of integrated solutions across the operations and logistics, aerospace, training, and technology markets to national security, defense, civilian and international clients. Our global team of approximately 15,000 employees brings innovation to every point in the mission lifecycle, from preparation to operations, to sustainment, as it tackles the most complex challenges with agility, grit, and dedication.
Safe Harbor Statement
Safe Harbor Statement under the Private Securities Litigation Reform Act of 1995 (the “Act”): Certain material presented herein includes forward-looking statements intended to qualify for the safe harbor from liability established by the Act. These forward-looking statements include, but are not limited to, all the statements and items listed under “2023 Guidance” above and other assumptions contained therein for purposes of such guidance, other statements about our 2023 performance outlook, revenue, contract opportunities, and any discussion of future operating or financial performance.
Forward-looking statements generally can be identified by the use of forward-looking terminology such as “may,” “will,” “expect,” “intend,” “estimate,” “anticipate,” “believe,” “could,” “potential,” “continue” or similar terminology. These statements are based on the beliefs and assumptions of the management of the Company based on information currently available to management.
These forward-looking statements are not guarantees of future performance, conditions, or results, and involve a number of known and unknown risks, uncertainties, assumptions, and other important factors, many of which are outside our management’s control, which could cause actual results to differ materially from the results discussed in the forward-looking statements. In addition, forward-looking statements are subject to certain risks and uncertainties that could cause actual results to differ materially from the Company’s historical experience and our present expectations or projections. For a discussion of some of the risks and uncertainties that could cause actual results to differ from such forward-looking statements, see the risks and other factors detailed from time to time our Annual Report on Form 10-K, Quarterly Reports on Form 10-Q, and other filings with the SEC.
We undertake no obligation to update any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by law.
Key Performance Indicators and Non-GAAP Measures
The primary financial performance measures we use to manage our business and monitor results of operations are revenue trends and operating income trends. Management believes that these financial performance measures are the primary drivers for our earnings and net cash from operating activities. Management evaluates its contracts and business performance by focusing on revenue, operating income, and operating margin. Operating income represents revenue less both cost of revenue and selling, general and administrative (SG&A) expenses. Cost of revenue consists of labor, subcontracting costs, materials, and an allocation of indirect costs, which includes service center transaction costs. SG&A expenses consist of indirect labor costs (including wages and salaries for executives and administrative personnel), bid and proposal expenses and other general and administrative expenses not allocated to cost of revenue. We define operating margin as operating income divided by revenue.
We manage the nature and amount of costs at the program level, which forms the basis for estimating our total costs and profitability. This is consistent with our approach for managing our business, which begins with management’s assessing the bidding opportunity for each contract and then managing contract profitability throughout the performance period.
In addition to the key performance measures discussed above, we consider adjusted net income, adjusted diluted earnings per share, adjusted operating income, adjusted EBITDA, adjusted EBITDA margin, adjusted operating cash flow, and pro forma revenue to be useful to management and investors in evaluating our operating performance, and to provide a tool for evaluating our ongoing operations. This information can assist investors in assessing our financial performance and measures our ability to generate capital for deployment among competing strategic alternatives and initiatives. We provide this information to our investors in our earnings releases, presentations, and other disclosures.
Adjusted net income, adjusted diluted earnings per share, adjusted operating income, adjusted EBITDA, adjusted EBITDA margin, adjusted net cash provided by (used in) operating activities, and pro forma revenue, however, are not measures of financial performance under GAAP and should not be considered a substitute for financial measures determined in accordance with GAAP. Definitions and reconciliations of these items are provided below.
Pro forma revenue is defined as the combined results of our operations as if the Merger had occurred on January 1, 2021.
Adjusted operating income is defined as operating income, adjusted to exclude items that may include, but are not limited to, significant charges or credits, and unusual and infrequent non-operating items that impact current results but are not related to our ongoing operations, such as M&A, integration, and related costs.
Adjusted EBITDA is defined as operating income, adjusted to exclude depreciation and amortization of intangible assets, and items that may include, but are not limited to, significant charges or credits, and unusual and infrequent non-operating items that impact current results but are not related to our ongoing operations, such as M&A, integration, and related costs.
Adjusted EBITDA margin is defined as adjusted EBITDA divided by revenue.
Adjusted net income is defined as net income, adjusted to exclude items that may include, but are not limited to, significant charges or credits, and unusual and infrequent non-operating items that impact current results but are not related to our ongoing operations, such as M&A, integration and related costs, amortization of acquired intangible assets, amortization of debt issuance costs, and loss on extinguishment of debt.
Adjusted diluted earnings per share is defined as adjusted net income divided by the weighted average diluted common shares outstanding.
Cash interest, net is defined as interest expense, net adjusted to exclude amortization of debt issuance costs.
Adjusted net cash provided by (used in) operating activities is defined as net cash provided by (or used in) operating activities adjusted to exclude infrequent non-operating items, such as M&A payments and related costs.
Net leverage ratio is defined as net debt (or total debt less unrestricted cash) divided by trailing twelve-month (TTM) bank EBITDA.
In this document, the Company presents certain forward-looking non-GAAP metrics. The Company does not provide outlook on a GAAP basis because the items that the Company excludes from GAAP to calculate the comparable non-GAAP measure can be dependent on future events that are less capable of being controlled or reliably predicted by management and are not part of the Company’s routine operating activities. Additionally, management does not forecast many of the excluded items for internal use and therefore cannot create or rely on outlook done on a GAAP basis. The occurrence, timing, and amount of any of the items excluded from GAAP to calculate non-GAAP could significantly impact the Company’s fiscal 2023 GAAP results.
CONTACT:
V2X, Inc. Mike Smith, CFA 719-637-5773 ir@gov2x.com
CHELMSFORD, MA / ACCESSWIRE / November 6, 2023 / Harte Hanks, Inc. (NASDAQ:HHS), a leading global customer experience company focused on bringing companies closer to customers for 100 years, today announced that Ron Lee, an experienced executive with a proven track record of driving revenue growth and operational improvement by developing talent, leveraging analytics and innovating through technology modernization, has joined Harte Hanks as Senior Vice President of Sales Services. Mr. Lee will lead Harte Hanks’ sales offering, which includes inside sales outsourcing, sales transformation and optimization, and sales play development.
Lee joins Harte Hanks from Procore Technologies, a leading SaaS provider specializing in the construction industry, where he served as the Head of Revenue Planning and Productivity. Previously, he spent 10 years at ADP developing and executing the global inside sales strategy, transforming the sales & marketing tech stack and implementing predictive analytics within GTM processes. Mr. Lee started his career at PwC and has also served in sales operations and finance leadership roles at Lucent Technologies, D&B and Merck. He holds a Bachelor’s degree in Accounting from Villanova University and a MBA in Marketing, Finance and International Business from New York University.
Kirk Davis, Chief Executive Officer, commented: “We continue to recruit top sales talent to revitalize our growth engine. Ron, along with Kelly Waller, our new Corporate SVP for Sales and Marketing, are both accomplished leaders with a deep understanding of how to create solutions for enterprise clients. Ron takes the helm of Harte Hanks’ Sales Services division, which originated through our acquisition of InsideOut last December. Ron is a critical hire at a pivotal time. Inside sales is a valuable offering for our clients, and an area in which we expect to achieve a strong rebound, accelerating growth and higher profitability in 2024.”
“Inside sales is essential for the growth and transformation of sales through digital technology, cost savings, and the ability to meet the changing preferences of buyers,” commented Mr. Lee. “Harte Hanks has built powerful tools to streamline this process for clients, and this offering provides a quantifiable return on investment. I look forward to bringing this value proposition to new logos and expanding our relationships with existing customers.”
About Harte Hanks:
Harte Hanks (NASDAQ: HHS) is a leading global customer experience company whose mission is to partner with clients to provide them with CX strategy, data-driven analytics and actionable insights combined with seamless program execution to better understand, attract and engage their customers.
Using its unparalleled resources and award-winning talent in the areas of Customer Care, Fulfillment and Logistics, and Marketing Services, Harte Hanks has a proven track record of driving results for some of the world’s premier brands, including Bank of America, GlaxoSmithKline, Unilever, Pfizer, HBOMax, Volvo, Ford, FedEx, Midea, Sony and IBM among others. Headquartered in Chelmsford, Massachusetts, Harte Hanks has over 2,500 employees in offices across the Americas, Europe, and Asia Pacific.
As used herein, “Harte Hanks” or “the Company” refers to Harte Hanks, Inc. and/or its applicable operating subsidiaries, as the context may require. Harte Hanks’ logo and name are trademarks of Harte Hanks.
Our press release and related earnings conference call contain “forward-looking statements” within the meaning of U.S. federal securities laws. All such statements are qualified by this cautionary note, provided pursuant to the safe harbor provisions of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. Statements other than historical facts are forward-looking and may be identified by words such as “may,” “will,” “expects,” “believes,” “anticipates,” “plans,” “estimates,” “seeks,” “could,” “intends,” or words of similar meaning. These forward-looking statements are based on current information, expectations and estimates and involve risks, uncertainties, assumptions and other factors that are difficult to predict and that could cause actual results to vary materially from what is expressed in or indicated by the forward-looking statements. In that event, our business, financial condition, results of operations or liquidity could be materially adversely affected and investors in our securities could lose part or all of their investments. These risks, uncertainties, assumptions and other factors include: (a) local, national and international economic and business conditions, including (i) the outbreak of diseases, such as the COVID-19 coronavirus, which has curtailed travel to and from certain countries and geographic regions, created supply chain disruption and shortages, disrupted business operations and reduced consumer spending, (ii) market conditions that may adversely impact marketing expenditures, (iii) the impact of the Russia/Ukraine conflict on the global economy and our business, including impacts from related sanctions and export controls and (iv) the impact of economic environments and competitive pressures on the financial condition, marketing expenditures and activities of our clients and prospects; (b) the demand for our products and services by clients and prospective clients, including (i) the willingness of existing clients to maintain or increase their spending on products and services that are or remain profitable for us, and (ii) our ability to predict changes in client needs and preferences; (c) economic and other business factors that impact the industry verticals we serve, including competition and consolidation of current and prospective clients, vendors and partners in these verticals; (d) our ability to manage and timely adjust our facilities, capacity, workforce and cost structure to effectively serve our clients; (e) our ability to improve our processes and to provide new products and services in a timely and cost-effective manner though development, license, partnership or acquisition; (f) our ability to protect our facilities against security breaches and other interruptions and to protect sensitive personal information of our clients and their customers; (g) our ability to respond to increasing concern, regulation and legal action over consumer privacy issues, including changing requirements for collection, processing and use of information; (h) the impact of privacy and other regulations, including restrictions on unsolicited marketing communications and other consumer protection laws; (i) fluctuations in fuel prices, paper prices, postal rates and postal delivery schedules; (j) the number of shares, if any, that we may repurchase in connection with our repurchase program; (k) unanticipated developments regarding litigation or other contingent liabilities; (l) our ability to complete anticipated divestitures and reorganizations, including cost-saving initiatives; (m) our ability to realize the expected tax refunds; and (n) other factors discussed from time to time in our filings with the Securities and Exchange Commission, including under “Item 1A. Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2022 which was filed on March 31, 2023. The forward-looking statements in this press release and our related earnings conference call are made only as of the date hereof, and we undertake no obligation to update publicly any forward-looking statement, even if new information becomes available or other events occur in the future.
Investor Relations Contact:
Rob Fink or Tom Baumann 646.809.4048 / 646.349.6641 FNK IR HHS@fnkir.com
STAMFORD, Conn., Nov. 02, 2023 (GLOBE NEWSWIRE) — Eagle Bulk Shipping Inc. (NYSE: EGLE) (“Eagle” or the “Company”), one of the world’s largest owner-operators within the midsize drybulk vessel segment, today reported financial results for the quarter ended September 30, 2023.
Quarter Highlights:
Generated Revenues, net of $82.6 million
Achieved TCE(1) of $11,482 based on TCE Revenue(1) of $54.1 million
Incurred a net loss of $5.2 million, or $0.55 per basic share
Adjusted net loss(1) of $2.9 million, or $0.31 per basic share(1)
Generated Adjusted EBITDA(1) of $15.6 million
Completed the sale of the Sankaty Eagle, a non-core, non-scrubber-fitted Supramax bulkcarrier
Declared a quarterly dividend of $0.10 per share for the third quarter of 2023
Dividend is payable on November 22, 2023 to shareholders of record at the close of business on November 14, 2023
1These are non-GAAP financial measures. A reconciliation of GAAP to non-GAAP financial measures has been provided in the financial tables included in this press release. An explanation of these measures and how they are calculated are also included below under the heading “Supplemental Information – Non-GAAP Financial Measures.”
Recent Developments:
Coverage position for the fourth quarter of 2023 is as follows:
68% of owned available days fixed at an average TCE of $15,655
Eagle’s CEO Gary Vogel commented, “Although our financial results for the third quarter are reflective of the headwinds faced by the broader industry, we were able to once again outperform the BSI (Baltic Supramax Index) by 14%, achieving a net TCE of $11,482. Specifically, market fundamentals remained challenging during the quarter, with the BSI averaging just over $10,000 for the period.
Freight rates bottomed as we moved through the quarter, with September benefiting from a strong rally as the index reached almost $15,000. The Atlantic market was the main driver for this recovery in rates, catalyzed by robust exports of soybeans and corn out of Brazil following this season’s record crop. Looking ahead to the fourth quarter, spot rates have come off from their recent highs, but remain supported with the BSI averaging approximately $13,700 quarter-to-date. Further, as of today, we have fixed approximately 68% of our owned available days, at a net TCE of $15,655.
During the quarter, we continued to focus on operational efficiencies and improvements. Our OPEX costs were down sequentially for the third quarter in a row and Eagle’s entire fleet is now leveraging SoFar Ocean’s advanced voyage optimization system achieving meaningful fuel and emissions reductions.
We remain positive about the medium-term prospects for the drybulk industry, particularly given strong supply side fundamentals, macroeconomic risks notwithstanding. With a fully modern fleet of 52, predominately scrubber-fitted vessels, and approximately $170 million in total liquidity, Eagle is well-positioned to continue to take advantage of opportunities for the benefit of our stakeholders.”
Fleet Operating Data
Three Months Ended
Nine Months Ended
September 30, 2023
September 30, 2022
September 30, 2023
September 30, 2022
Ownership Days
4,808
4,831
14,425
14,424
Owned Available Days
4,708
4,588
13,791
13,599
Fleet Development
Sankaty Eagle, a 2011-built Supramax (58k DWT)
Sold in second quarter of 2023 for $16.4 million and delivered to new owners in third quarter of 2023
Owned fleet totals 52 vessels (96% scrubber-fitted) with an average age of 10.0 years
Results of Operations for the three and nine months ended September 30, 2023 and 2022
For the three months ended September 30, 2023, the Company reported a net loss of $5.2 million, or basic and diluted net loss per share of $0.55. In the comparable quarter of 2022, the Company reported net income of $77.2 million, or basic and diluted net income per share of $5.94 and $4.77, respectively.
For the three months ended September 30, 2023, the Company reported an adjusted net loss of $2.9 million, which excludes net unrealized losses on FFAs and bunker swaps of $2.2 million, or basic and diluted adjusted net loss per share of $0.31. In the comparable quarter of 2022, the Company reported adjusted net income of $74.3 million, which excludes net unrealized gains on FFAs and bunker swaps of $7.1 million and a loss on debt extinguishment of $4.2 million, or basic and diluted adjusted net income per share of $5.72 and $4.58, respectively.
For the nine months ended September 30, 2023, the Company reported net income of $16.1 million, or basic and diluted net income per share of $1.38 and $1.36, respectively. For the nine months ended September 30, 2022, the Company reported net income of $224.7 million, or basic and diluted net income per share of $17.31 and $13.86, respectively.
For the nine months ended September 30, 2023, the Company reported adjusted net income of $17.2 million, which excludes net unrealized losses on FFAs and bunker swaps of $0.4 million and impairment of operating lease right-of-use assets of $0.7 million, or basic and diluted adjusted net income per share of $1.47 and $1.44, respectively. For the nine months ended September 30, 2022, the Company reported adjusted net income of $220.4 million, which excludes net unrealized gains on FFAs and bunker swaps of $8.5 million and a loss on debt extinguishment of $4.2 million, or basic and diluted adjusted net income per share of $16.97 and $13.59, respectively.
Revenues, net
Revenues, net for the three months ended September 30, 2023 were $82.6 million compared to $185.3 million for the comparable quarter of 2022. Revenues, net decreased $102.7 million primarily due to lower rates on both time and voyage charters, driven by a decline in the drybulk market.
Revenues, net for the nine months ended September 30, 2023 were $289.2 million compared to $568.4 million for the nine months ended September 30, 2022. Revenues, net decreased $279.2 million primarily due to lower rates on both time and voyage charters, driven by a decline in the drybulk market.
Voyage expenses
Voyage expenses for the three months ended September 30, 2023 were $23.8 million compared to $40.8 million for the comparable quarter of 2022. Voyage expenses decreased $17.0 million primarily due to a $15.0 million reduction in bunker consumption expenses primarily due to decreases in voyage charters and bunker prices and a $1.2 million decrease in broker commissions due to lower freight rates driven by a decline in the drybulk market.
Voyage expenses for the nine months ended September 30, 2023 were $82.7 million compared to $120.7 million for the nine months ended September 30, 2022. Voyage expenses decreased $38.0 million primarily due to a $25.4 million reduction in bunker consumption expenses due to decreases in voyage charters and bunker prices, a $9.1 million reduction in port expenses due to a decrease in voyage charters and a $3.5 million decrease in broker commissions due to lower freight rates driven by a decline in the drybulk market.
Vessel operating expenses
Vessel operating expenses for the three months ended September 30, 2023 were $28.8 million compared to $33.1 million for the comparable quarter of 2022. Vessel operating expenses decreased $4.3 million primarily due to a $2.6 million decrease in repair costs, a $0.8 million decrease in lube costs driven by lower purchase volume and a $0.5 million decrease in the cost of stores and spares driven by lower purchases.
Vessel operating expenses for the nine months ended September 30, 2023 were $91.1 million compared to $88.2 million for the nine months ended September 30, 2022. Vessel operating expenses increased $2.9 million primarily due to a $3.2 million increase in crewing costs driven by higher compensation and increased crew changes as a result of crewing manager transitions and a $1.4 million increase in costs driven by certain repairs and discretionary spending on upgrades to six vessels, including newly acquired ships, partially offset by a $1.3 million decrease in lube costs driven by lower purchase volume and a $0.4 million decrease in the cost of stores and spares driven by lower purchases.
Adjusted vessel operating expenses(2), which excludes one-time, non-recurring expenses related to vessel acquisitions, charges relating to a change in the crewing manager on some of the Company’s vessels and discretionary hull and hold upgrades for the three months ended September 30, 2023 were $28.5 million compared to $31.7 million for the comparable quarter in 2022. Adjusted vessel operating expenses decreased $3.2 million primarily due to a $1.5 million decrease in repair costs, a $0.8 million decrease in lube costs driven by lower purchase volume and a $0.5 million decrease in the cost of stores and spares driven by lower purchases. Average daily adjusted vessel operating expenses(1) (“Adjusted DVOE”) for the three months ended September 30, 2023 were $5,922 compared to $6,566 for the comparable quarter in 2022.
Adjusted vessel operating expenses(2), which excludes one-time, non-recurring expenses related to vessel acquisitions, charges relating to a change in the crewing manager on some of the Company’s vessels and discretionary hull and hold upgrades for the nine months ended September 30, 2023 were $87.5 million compared to $86.4 million for the nine months ended September 30, 2022. Adjusted vessel operating expenses increased $1.1 million primarily due to a $2.6 million increase in crewing costs driven by higher compensation, a $1.3 million increase in repair costs, partially offset by a $1.6 million decrease in lube costs driven by lower purchase volume and a $0.4 million decrease in the cost of stores and spares driven by lower purchases. Adjusted DVOE for the nine months ended September 30, 2023 were $6,068 compared to $5,991 for the nine months ended September 30, 2022.
2This is a non-GAAP financial measure. A reconciliation of GAAP to non-GAAP financial measures has been provided in the financial tables included in this press release. An explanation of this measure and how it is calculated is also included below under the heading “Supplemental Information – Non-GAAP Financial Measures.”
Charter hire expenses
Charter hire expenses for the three months ended September 30, 2023 were $6.9 million compared to $19.8 million for the comparable quarter of 2022. Charter hire expenses decreased $12.9 million primarily due to decreases in both charter hire rates as a result of a decline in the drybulk market and chartered-in days.
Charter hire expenses for the nine months ended September 30, 2023 were $31.0 million compared to $63.8 million for the nine months ended September 30, 2022. Charter hire expenses decreased $32.8 million primarily due to decreases in both charter hire rates as a result of a decline in the drybulk market and chartered-in days.
Chartered-in days, which is the aggregate number of days in a period during which the Company chartered-in vessels, for the three months ended September 30, 2023 and 2022 were 589 and 1,000, respectively. Chartered-in days for the nine months ended September 30, 2023 and 2022 were 2,315 and 3,102, respectively.
Depreciation and amortization
Depreciation and amortization for the three months ended September 30, 2023 was $15.5 million compared to $15.4 million for the comparable quarter of 2022. Depreciation and amortization increased $0.1 million primarily due to a $0.8 million increase in depreciation from the net impact of vessels acquired and sold during the respective periods and a $0.1 million increase in deferred drydocking cost amortization due to higher drydocking expenditures, partially offset by $0.9 million decrease in depreciation due to a change in our estimated vessel scrap value from $300 per lwt to $400 per lwt, effective January 1, 2023.
Depreciation and amortization for the nine months ended September 30, 2023 was $45.0 million compared to $45.2 million for the nine months ended September 30, 2022. Depreciation and amortization decreased $0.2 million primarily due to a $2.9 million decrease in depreciation due to a change in our estimated vessel scrap value from $300 per lwt to $400 per lwt, effective January 1, 2023, partially offset by a $1.6 million increase in depreciation from the net impact of vessels acquired and sold during the respective periods, a $0.7 million increase in deferred drydocking cost amortization due to higher drydocking expenditures and a $0.3 million increase in depreciation from an increase in installed vessel improvements.
General and administrative expenses
General and administrative expenses for the three months ended September 30, 2023 were $10.7 million compared to $9.7 million for the comparable quarter of 2022. Excluding stock-based compensation expense of $1.7 million and $1.4 million for the three months ended September 30, 2023 and 2022, respectively, general and administrative expenses for the three months ended September 30, 2023 were $9.0 million compared to $8.2 million for the comparable quarter of 2022. General and administrative expenses increased $1.0 million primarily due to a $0.6 million increase in professional fees and a $0.2 million increase in stock-based compensation expense.
General and administrative expenses for the nine months ended September 30, 2023 were $32.9 million compared to $29.6 million for the nine months ended September 30, 2022. Excluding stock-based compensation expense of $5.7 million and $4.5 million for the nine months ended September 30, 2023 and 2022, respectively, general and administrative expenses for the nine months ended September 30, 2023 were $27.2 million compared to $25.1 million for the nine months ended September 30, 2022. General and administrative expenses increased $3.3 million primarily due to a $1.1 million increase in stock-based compensation expense, a $1.1 million increase in employee-related costs and other small increases across professional fees, corporate travel and office expenses.
Other operating expense
Other operating expense for the three months ended September 30, 2023 and 2022 was $0.7 million and $2.5 million, respectively. Other operating expense for the three months ended September 30, 2023 was primarily comprised of costs related to a 2021 U.S. government investigation into an allegation that one of our vessels may have improperly disposed of ballast water that entered the engine room bilges during a repair. Other operating expense for the three months ended September 30, 2022 was primarily comprised of costs associated with a corporate transaction that did not materialize.
Other operating expense for each of the nine months ended September 30, 2023 and 2022 was $0.9 million and $2.6 million, respectively. Other operating expense for the nine months ended September 30, 2023 was primarily comprised of costs related to a 2021 U.S. government investigation into an allegation that one of our vessels may have improperly disposed of ballast water that entered the engine room bilges during a repair. Other operating expense for the nine months ended September 30, 2022 was primarily comprised of costs associated with a corporate transaction that did not materialize.
Gain on sale of vessels
For the three months ended September 30, 2023, the Company recorded a gain on the sale of the vessel Sankaty Eagle of $4.9 million. For the three months ended September 30, 2022, the Company recorded a gain on the sale of the vessel Cardinal of $9.3 million.
For the nine months ended September 30, 2023, the Company recorded a gain on the sale of the vessels Jaeger, Montauk Eagle, Newport Eagle and Sankaty Eagle of $19.7 million. For the nine months ended September 30, 2022, the Company recorded a gain on the sale of the vessel Cardinal of $9.3 million.
Interest expense
Interest expense for the three months ended September 30, 2023 and 2022 was $7.7 million and $4.2 million, respectively. Interest expense increased $3.5 million due to the impact of increased amounts outstanding under the Global Ultraco Debt Facility and higher interest rates.
Interest expense for the nine months ended September 30, 2023 and 2022 was $16.0 million and $13.0 million, respectively. Interest expense increased $3.0 million primarily due to the impact of increased amounts outstanding under the Global Ultraco Debt Facility and higher interest rates.
Interest income
Interest income for the three months ended September 30, 2023 and 2022 was $1.5 million and $0.9 million, respectively. Interest income increased primarily due to higher interest rates on the Company’s cash balances.
Interest income for the nine months ended September 30, 2023 and 2022 was $5.1 million and $1.1 million, respectively. Interest income increased primarily due to higher interest rates on the Company’s cash balances.
Realized and unrealized loss/(gain) on derivative instruments, net
Realized and unrealized loss/(gain) on derivative instruments, net for the three months ended September 30, 2023 was a loss of $0.1 million compared to a gain of $11.3 million for the comparable quarter of 2022. The $11.4 million decrease was due to market movements as well as lower FFA and bunker swap activity.
Realized and unrealized loss/(gain) on derivative instruments, net for the nine months ended September 30, 2023 was a gain of $2.3 million compared to a gain of $13.3 million for the nine months ended September 30, 2022. The $11.0 million decrease was due to market movements as well as lower FFA and bunker swap activity.
A summary of outstanding FFAs as of September 30, 2023 is as follows:
FFA Period
Average FFA Contract Price
Number of Days Hedged
Quarter ending December 31, 2023 – Buy Positions
$
14,196
(345
)
Quarter ending December 31, 2023 – Sell Positions
$
12,922
1,380
Liquidity and Capital Resources
Nine Months Ended
($ in thousands)
September 30, 2023
September 30, 2022
Net cash provided by operating activities
$
35,965
$
242,491
Net cash (used in)/provided by investing activities
(27,831
)
4,090
Net cash used in financing activities
(81,434
)
(135,198
)
Net (decrease)/increase in cash, cash equivalents and restricted cash
(73,300
)
111,383
Cash, cash equivalents and restricted cash at beginning of period
189,754
86,222
Cash, cash equivalents and restricted cash at end of period
$
116,454
$
197,605
Net cash provided by operating activities for the nine months ended September 30, 2023 was $36.0 million, compared to $242.5 million for the nine months ended September 30, 2022. The decrease is primarily due to a decrease in net income driven by lower freight rates.
Net cash used in investing activities for the nine months ended September 30, 2023 was $27.8 million, compared to net cash provided by investing activities of $4.1 million for the nine months ended September 30, 2022. During the nine months ended September 30, 2023, the Company paid (i) $81.8 million to purchase three vessels and other vessel improvements, (ii) $2.1 million to purchase BWTS and (iii) $0.7 million to purchase other fixed assets. These uses of cash were partially offset by $56.6 million in net proceeds from the sale of four vessels. During the nine months ended September 30, 2022, the Company received net proceeds of $14.9 million from the sale of one vessel and paid (i) $5.7 million to purchase BWTS, (ii) $4.1 million as an advance for the purchase of a vessel, (iii) $0.8 million to purchase vessel improvements and (iv) $0.3 million to purchase other fixed assets.
Net cash used in financing activities for the nine months ended September 30, 2023 was $81.4 million, compared to $135.2 million for the nine months ended September 30, 2022. During the nine months ended September 30, 2023, the Company (i) paid $222.7 million to repurchase Common Stock, inclusive of fees, (ii) repaid $37.4 million of term loan under the Global Ultraco Debt Facility, (iii) paid $15.8 million in dividends and (iv) paid $2.0 million for taxes related to net share settlement of equity awards. These uses of cash were partially offset by (i) $123.4 million of proceeds, net of debt issuance costs, from the Revolving Facility under the Global Ultraco Debt Facility and (ii) $73.1 million of proceeds, net of debt issuance costs, from the Term Facility under the Global Ultraco Debt Facility. During the nine months ended September 30, 2022, the Company (i) paid $81.6 million in dividends, (ii) repaid $37.4 million of term loan under the Global Ultraco Debt Facility, (iii) paid $14.2 million to repurchase $10.0 million in aggregate principal amount of Convertible Bond Debt, and (iv) paid $2.4 million for taxes related to net share settlement of equity awards.
As of September 30, 2023, cash and cash equivalents including noncurrent restricted cash was $116.5 million compared to $189.8 million as of December 31, 2022.
A summary of the Company’s debt as of September 30, 2023 and December 31, 2022 is as follows:
September 30, 2023
December 31, 2022
($ in thousands)
Principal Amount Outstanding
Debt Discounts and Debt Issuance Costs
Carrying Value
Principal Amount Outstanding
Debt Discounts and Debt Issuance Costs
Carrying Value
Convertible Bond Debt
$
104,119
$
(328
)
$
103,791
$
104,119
$
(620
)
$
103,499
Global Ultraco Debt Facility – Term Facility
275,400
(5,778
)
269,622
237,750
(6,767
)
230,983
Global Ultraco Debt Facility – Revolving Facility
125,000
(2,941
)
122,059
—
—
—
Total debt
504,519
(9,047
)
495,472
341,869
(7,387
)
334,482
Less: Current portion – Convertible Bond Debt
(104,119
)
328
(103,791
)
—
—
—
Less: Current portion – Global Ultraco Debt Facility
(49,800
)
—
(49,800
)
(49,800
)
—
(49,800
)
Total long-term debt
$
350,600
$
(8,719
)
$
341,881
$
292,069
$
(7,387
)
$
284,682
(1
)
As of September 30, 2023 and December 31, 2022, the undrawn revolving facility under the Global Ultraco Debt Facility was $55 million and $100 million, respectively.
As of September 30, 2023, the effective conversion price of the Convertible Bond Debt equals $31.70 per share of Common Stock. If the market value of the Company’s Common Stock remains above this price, we would expect the holders of the Convertible Bond Debt to elect conversion prior to maturity. Upon conversion of the remaining Convertible Bond Debt, the Company will pay or deliver, as the case may be, either cash, shares of Common Stock or a combination of cash and shares of Common Stock, at the Company’s election, to the holder (subject to shareholder approval requirements in accordance with the indenture that governs the Convertible Bond Debt).
The Company continuously evaluates potential transactions that it expects to be accretive to earnings, enhance shareholder value or are in the best interests of the Company, including without limitation, business combinations, the acquisition of vessels or related businesses, repayment or refinancing of existing debt, the issuance of new securities, share and debt repurchases or other transactions.
Capital Expenditures and Drydocking
Our capital expenditures primarily relate to the purchase of vessels as well as regularly scheduled drydocking and other vessel improvements, which are expected to enhance their revenue earning capabilities, efficiency and/or safety and to comply with international shipping standards and environmental laws and regulations. Certain vessel improvement costs and costs incurred in connection with drydocking are necessary to comply with international shipping standards and environmental laws and regulations, while others are discretionary in nature and evaluated on a business case-by-case basis.
During the fourth quarter of 2022, the Company entered into a memorandum of agreement to acquire a high-specification 2015-built Ultramax bulkcarrier for total consideration of $24.3 million. The vessel was delivered to the Company during the first quarter of 2023.
On January 30, 2023, the Company entered into a memorandum of agreement to acquire a high-specification 2020-built scrubber-fitted Ultramax bulkcarrier for total consideration of $30.1 million. The vessel was delivered to the Company during the second quarter of 2023.
On February 28, 2023, the Company entered into a memorandum of agreement to acquire a high-specification 2020-built scrubber-fitted Ultramax bulkcarrier for total consideration of $30.1 million. The vessel was delivered to the Company during the second quarter of 2023.
Although the Company has some flexibility regarding the timing of vessel drydockings, the timing of costs are relatively predictable. In accordance with statutory requirements, we expect vessels less than 15 years old to be drydocked every 60 months and vessels older than 15 years to be drydocked every 30 months. We intend to fund drydocking costs with cash from operations, cash on hand or with amounts available under the Global Ultraco Debt Facility. In addition, drydocking typically requires us to reposition vessels from a discharge port to shipyard facilities, which will reduce our owned available days and revenues during that period.
Drydocking costs incurred are deferred and amortized through depreciation and amortization on the condensed consolidated statements of operations on a straight-line basis over the period through the date the next drydocking is required to become due. During the nine months ended September 30, 2023, five of our vessels completed drydock and we incurred $10.6 million for drydocking costs. During the nine months ended September 30, 2022, eight of our vessels completed drydock and we incurred $18.5 million for drydocking costs.
Vessel improvements generally include systems and equipment intended to enhance a vessel’s efficiency and revenue earning capability. We intend to fund these costs through cash from operations, cash on hand or amounts available under the Global Ultraco Debt Facility.
The following table provides certain information about the estimated costs for anticipated vessel drydockings and improvements in the next four quarters, along with the anticipated off-hire days:
Projected Costs (1) ($ in millions)
Quarters Ending
Off-hire Days(2)
Drydocks
Vessel Improvements(3)
December 31, 2023
224
$
4.1
$
1.8
March 31, 2024
232
$
4.7
$
0.8
June 30, 2024
143
$
2.0
$
0.4
September 30, 2024
165
$
2.4
$
—
(1
)
We intend to fund these costs with cash from operations, cash on hand or with amounts available under the Global Ultraco Debt Facility.
(2
)
Actual duration of off-hire days will vary based on the age and condition of the vessel, yard schedules and other factors. Projected off-hire days includes an allowance for unforeseen events.
(3
)
Projected costs for vessel improvements are primarily comprised of costs for ballast water treatment systems (“BWTS”).
SUMMARY CONSOLIDATED FINANCIAL AND OTHER DATA
The following table summarizes the Company’s selected condensed consolidated financial statements and other data for the periods indicated below.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited) (in thousands, except share and per share data)
Three Months Ended
Nine Months Ended
September 30, 2023
September 30, 2022
September 30, 2023
September 30, 2022
Revenues, net
$
82,606
$
185,313
$
289,210
$
568,406
Voyage expenses
23,791
40,792
82,737
120,710
Vessel operating expenses
28,822
33,091
91,077
88,213
Charter hire expenses
6,868
19,772
31,014
63,768
Depreciation and amortization
15,472
15,407
45,035
45,241
General and administrative expenses
10,652
9,666
32,871
29,611
Impairment of operating lease right-of-use assets
—
—
722
—
Other operating expense
677
2,469
860
2,643
Gain on sale of vessels
(4,855
)
(9,336
)
(19,731
)
(9,336
)
Total operating expenses, net
81,427
111,861
264,585
340,850
Operating income
1,179
73,452
24,625
227,556
Interest expense
7,714
4,236
16,005
13,021
Interest income
(1,488
)
(881
)
(5,139
)
(1,100
)
Realized and unrealized loss/(gain) on derivative instruments, net
104
(11,293
)
(2,318
)
(13,281
)
Loss on debt extinguishment
—
4,173
—
4,173
Total other expense/(income), net
6,330
(3,765
)
8,548
2,813
Net (loss)/income
$
(5,151
)
$
77,217
$
16,077
$
224,743
Weighted average shares outstanding:
Basic
9,313,051
12,993,450
11,686,433
12,985,329
Diluted
9,313,051
16,201,852
15,057,652
16,219,264
Per share amounts:
Basic net (loss)/income
$
(0.55
)
$
5.94
$
1.38
$
17.31
Diluted net (loss)/income
$
(0.55
)
$
4.77
$
1.36
$
13.86
CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited) (in thousands, except share data and par values)
September 30, 2023
December 31, 2022
ASSETS:
Current assets:
Cash and cash equivalents
$
113,879
$
187,155
Accounts receivable, net of a reserve of $2,933 and $3,169, respectively
24,594
32,311
Prepaid expenses
5,832
4,531
Inventories
26,881
28,081
Collateral on derivatives
4,380
909
Fair value of derivative assets – current
8,653
8,479
Other current assets
652
558
Total current assets
184,871
262,024
Noncurrent assets:
Vessels and vessel improvements, at cost, net of accumulated depreciation of $289,819 and $261,725, respectively
914,108
891,877
Advances for vessel purchases
—
3,638
Advances for BWTS and other assets
1,984
2,722
Deferred drydock costs, net
37,756
42,849
Other fixed assets, net of accumulated depreciation of $1,324 and $1,623, respectively
952
310
Operating lease right-of-use assets
10,892
23,006
Restricted cash – noncurrent
2,575
2,599
Fair value of derivative assets – noncurrent
5,435
8,184
Total noncurrent assets
973,702
975,185
Total assets
$
1,158,573
$
1,237,209
LIABILITIES & STOCKHOLDERS’ EQUITY:
Current liabilities:
Accounts payable
$
20,938
$
20,129
Accrued interest
2,092
3,061
Other accrued liabilities
19,198
24,097
Fair value of derivative liabilities – current
585
163
Current portion of operating lease liabilities
10,109
22,045
Unearned charter hire revenue
8,201
9,670
Current portion of long-term debt – Global Ultraco Debt Facility
49,800
49,800
Current portion of long-term debt – Convertible Bond Debt, net of debt discount and debt issuance costs
103,791
—
Total current liabilities
214,714
128,965
Noncurrent liabilities:
Long-term debt – Global Ultraco Debt Facility, net of debt discount and debt issuance costs
341,881
181,183
Convertible Bond Debt, net of debt discount and debt issuance costs
—
103,499
Fair value of derivative liabilities – noncurrent
444
—
Noncurrent portion of operating lease liabilities
2,766
3,173
Other noncurrent accrued liabilities
696
1,208
Total noncurrent liabilities
345,787
289,063
Total liabilities
560,501
418,028
Commitments and contingencies
Stockholders’ equity:
Preferred stock, $0.01 par value, 25,000,000 shares authorized, none issued as of September 30, 2023 and December 31, 2022
—
—
Common stock, $0.01 par value, 700,000,000 shares authorized, 9,319,177 and 13,003,702 shares issued and outstanding as of September 30, 2023 and December 31, 2022, respectively
93
130
Additional paid-in capital
746,898
966,058
Accumulated deficit
(162,418
)
(163,556
)
Accumulated other comprehensive income
13,499
16,549
Total stockholders’ equity
598,072
819,181
Total liabilities and stockholders’ equity
$
1,158,573
$
1,237,209
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) (in thousands)
Nine Months Ended
September 30, 2023
September 30, 2022
Cash flows from operating activities:
Net income
$
16,077
$
224,743
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation
34,577
35,513
Noncash operating lease expense
17,890
21,083
Amortization of deferred drydocking costs
10,458
9,728
Amortization of debt discount and debt issuance costs
1,958
1,627
Loss on debt extinguishment
—
4,173
Impairment of operating lease right-of-use assets
722
—
Gain on sale of vessels
(19,731
)
(9,336
)
Unrealized loss/(gain) on derivative instruments, net
437
(8,517
)
Stock-based compensation expense
5,680
4,542
Drydocking expenditures
(10,562
)
(18,527
)
Changes in operating assets and liabilities:
Accounts payable
1,381
650
Accounts receivable
7,707
(5,098
)
Accrued interest
(969
)
(1,241
)
Inventories
1,199
(8,622
)
Operating lease liabilities current and noncurrent
(19,570
)
(21,076
)
Collateral on derivatives
(3,471
)
13,881
Fair value of derivatives, other current and noncurrent assets
(141
)
(183
)
Other accrued liabilities
(4,907
)
(2,332
)
Prepaid expenses
(1,301
)
(1,223
)
Unearned charter hire revenue
(1,469
)
2,706
Net cash provided by operating activities
35,965
242,491
Cash flows from investing activities:
Purchase of vessels and vessel improvements
(81,802
)
(781
)
Advances for vessel purchases
—
(4,125
)
Purchase of BWTS
(2,142
)
(5,695
)
Proceeds from hull and machinery insurance claims
174
—
Net proceeds from sale of vessels
56,609
14,944
Purchase of other fixed assets
(670
)
(253
)
Net cash (used in)/provided by investing activities
(27,831
)
4,090
Cash flows from financing activities:
Proceeds from Revolving Facility, net of debt issuance costs – Global Ultraco Debt Facility
123,361
—
Proceeds from Term Facility, net of debt issuance costs – Global Ultraco Debt Facility
73,125
—
Repayment of Term Facility – Global Ultraco Debt Facility
(37,350
)
(37,350
)
Repurchase of Common Stock and associated fees – related party
(222,688
)
—
Repurchase of Convertible Bond Debt
—
(14,188
)
Dividends paid
(15,790
)
(81,577
)
Debt issuance costs paid to lenders – Original Global Ultraco Debt Facility
—
(18
)
Cash paid for taxes related to net share settlement of equity awards
(1,989
)
(2,351
)
Other financing costs paid
(103
)
—
Cash received from exercise of stock options
—
85
Proceeds from equity offerings, net of issuance costs
—
201
Net cash used in financing activities
(81,434
)
(135,198
)
Net (decrease)/increase in cash, cash equivalents and restricted cash
(73,300
)
111,383
Cash, cash equivalents and restricted cash at beginning of period
189,754
86,222
Cash, cash equivalents and restricted cash at end of period
$
116,454
$
197,605
Cash paid for interest
$
22,064
$
12,861
Supplemental Information – Non-GAAP Financial Measures
This release includes various financial measures that are non-GAAP financial measures as defined under the rules of the Securities and Exchange Commission (“SEC”). We believe these measures provide important supplemental information to investors to use in evaluating ongoing operating results. We use these measures, together with accounting principles generally accepted in the United States (“GAAP” or “U.S. GAAP”) measures, for internal managerial purposes and as a means to evaluate period-to-period comparisons. However, we do not, and you should not, rely on non-GAAP financial measures alone as measures of our performance. We believe that non-GAAP financial measures reflect an additional way of viewing aspects of our operations, that when taken together with GAAP results and the reconciliations to corresponding GAAP financial measures that we also provide and provide a more complete understanding of factors and trends affecting our business. We strongly encourage you to review all of our financial statements and publicly-filed reports in their entirety and to not solely rely on any single non-GAAP financial measure.
Because non-GAAP financial measures are not standardized, it may not be possible to compare these financial measures with other companies’ non-GAAP financial measures, even if they have similar names.
Non-GAAP Financial Measures
Adjusted net (loss)/income and Basic and Diluted adjusted net (loss)/income per share
Adjusted net (loss)/income and Basic and Diluted adjusted net (loss)/income per share represent Net (loss)/income and Basic and Diluted net (loss)/income per share, respectively, as adjusted to exclude unrealized gains and losses on FFAs and bunker swaps, gains and losses on debt extinguishment, and impairment of operating lease right-of-use assets. The Company utilizes derivative instruments such as FFAs and bunker swaps to partially hedge against its underlying long physical position in ships (as represented by owned and third-party chartered-in vessels). As the Company does not apply hedge accounting to these derivative instruments, unrealized mark-to-market gains and losses on forward hedge positions impact current quarter results, causing timing mismatches in the Condensed Consolidated Statements of Operations. Additionally, we believe that gains and losses on debt extinguishment and impairment of operating lease right-of-use assets are not representative of our normal business operations. We believe that Adjusted net (loss)/income and Adjusted net (loss)/income per share are more useful to analysts and investors in comparing the results of operations and operational trends between periods and relative to other peer companies in our industry. Our Adjusted net (loss)/income should not be considered an alternative to net income/(loss), operating income/(loss), cash flows provided by/(used in) operating activities or any other measure of financial performance or liquidity presented in accordance with U.S. GAAP. As noted above, our Adjusted net (loss)/income and Adjusted net (loss)/income per share may not be comparable to similarly titled measures of another company because all companies may not calculate Adjusted net (loss)/income or Adjusted net (loss)/income per share in the same manner.
The following table presents the reconciliation of our Net (loss)/income to Adjusted net (loss)/income:
Reconciliation of GAAP Net (loss)/income to Adjusted net (loss)/income (in thousands, except share and per share data)
Three Months Ended
Nine Months Ended
September 30, 2023
September 30, 2022
September 30, 2023
September 30, 2022
Net (loss)/income
$
(5,151
)
$
77,217
$
16,077
$
224,743
Adjustments to reconcile net (loss)/income to adjusted net (loss)/income:
Unrealized loss/(gain) on FFAs and bunker swaps, net
2,222
(7,124
)
437
(8,517
)
Impairment of operating lease right-of-use assets
—
—
722
—
Loss on debt extinguishment
—
4,173
—
4,173
Adjusted net (loss)/income
$
(2,929
)
$
74,266
$
17,236
$
220,399
Weighted average shares outstanding:
Basic
9,313,051
12,993,450
11,686,433
12,985,329
Diluted (1)
9,313,051
16,201,852
15,057,652
16,219,264
Per share amounts:
Basic adjusted net (loss)/income
$
(0.31
)
$
5.72
$
1.47
$
16.97
Diluted adjusted net (loss)/income
$
(0.31
)
$
4.58
$
1.44
$
13.59
(1
)
Diluted weighted average shares outstanding for the three and nine months ended September 30, 2023 and 2022 includes dilutive potential common shares related to the Convertible Bond Debt based on the if-converted method and potential common shares related to stock awards and options based on the treasury stock method, unless to do so would have been anti-dilutive to Diluted adjusted net (loss)/income per share.
EBITDA and Adjusted EBITDA
We define EBITDA as Net (loss)/income under GAAP adjusted for interest, income taxes and depreciation and amortization.
Adjusted EBITDA is a non-GAAP financial measure that is used as a supplemental financial measure by our management and by external users of our financial statements, such as investors, commercial banks and others, to assess our operating performance as compared to that of other peer companies in our industry, without regard to financing methods, capital structure or historical costs basis. Our Adjusted EBITDA should not be considered an alternative to net income/(loss), operating income/(loss), cash flows provided by/(used in) operating activities or any other measure of financial performance or liquidity presented in accordance with U.S. GAAP. Our Adjusted EBITDA may not be comparable to similarly titled measures of another company because all companies may not calculate Adjusted EBITDA in the same manner. Adjusted EBITDA represents EBITDA adjusted to exclude certain non-cash, one-time and other items that the Company believes are not indicative of the ongoing performance of its core operations such as vessel impairment, gains and losses on sale of vessels, impairment of operating lease right-of-use assets, unrealized gains and losses on FFAs and bunker swaps, gains and losses on debt extinguishment and stock-based compensation expense.
The following table presents a reconciliation of our Net (loss)/income to EBITDA and Adjusted EBITDA:
Reconciliation of GAAP Net (loss)/income to EBITDA and Adjusted EBITDA (in thousands)
Three Months Ended
Nine Months Ended
September 30, 2023
September 30, 2022
September 30, 2023
September 30, 2022
Net (loss)/income
$
(5,151
)
$
77,217
$
16,077
$
224,743
Adjustments to reconcile net (loss)/income to EBITDA:
Interest expense
7,714
4,236
16,005
13,021
Interest income
(1,488
)
(881
)
(5,139
)
(1,100
)
Income taxes
—
—
—
—
EBIT
1,075
80,572
26,943
236,664
Depreciation and amortization
15,472
15,407
45,035
45,241
EBITDA
16,547
95,979
71,978
281,905
Non-cash, one-time and other adjustments to EBITDA(1)
(963
)
(10,838
)
(12,892
)
(9,138
)
Adjusted EBITDA
$
15,584
$
85,141
$
59,086
$
272,767
(1
)
One-time and other adjustments to EBITDA for the three and nine months ended September 30, 2023 and 2022 includes gains on sale of vessels, net unrealized losses/(gains) on FFAs and bunker swaps, impairment of operating lease right-of-use assets, loss on debt extinguishment and stock-based compensation expense.
TCE revenue and TCE
Time charter equivalent revenue (“TCE revenue”) and time charter equivalent (“TCE”) are non-GAAP financial measures that are commonly used in the shipping industry primarily to compare daily earnings generated by vessels on time charters with daily earnings generated by vessels on voyage charters, because charter hire rates for vessels on voyage charters are generally not expressed in per-day amounts while charter hire rates for vessels on time charters generally are expressed in such amounts. The Company defines TCE revenue as revenues, net less voyage expenses and charter hire expenses, adjusted for realized gains and losses on FFAs and bunker swaps and defines TCE as TCE revenue divided by the number of owned available days. Owned available days is the number of our ownership days less the aggregate number of days that our vessels are off-hire due to vessel familiarization upon acquisition, repairs, vessel upgrades or special surveys. The shipping industry uses available days to measure the number of days in a period during which vessels should be capable of generating revenues. TCE provides additional meaningful information in conjunction with Revenues, net, the most directly comparable GAAP measure, because it assists Company management in making decisions regarding the deployment and use of its vessels and in evaluating their performance. Our TCE revenue and TCE should not be considered alternatives to net income/(loss), operating income/(loss), cash flows provided by/(used in) operating activities or any other measure of financial performance or liquidity presented in accordance with U.S. GAAP. Our TCE revenue and TCE may not be comparable to similarly titled measures of another company because all companies may not calculate TCE revenue and TCE in the same manner.
The following table presents the reconciliation of our Revenues, net to TCE:
Reconciliation of Revenues, net to TCE (in thousands, except for Owned available days and TCE)
Three Months Ended
Nine Months Ended
September 30, 2023
September 30, 2022
September 30, 2023
September 30, 2022
Revenues, net
$
82,606
$
185,313
$
289,210
$
568,406
Less:
Voyage expenses
(23,791
)
(40,792
)
(82,737
)
(120,710
)
Charter hire expenses
(6,868
)
(19,772
)
(31,014
)
(63,768
)
Realized gain on FFAs and bunker swaps, net
2,118
4,169
2,755
4,764
TCE revenue
$
54,065
$
128,918
$
178,214
$
388,692
Owned available days
4,708
4,588
13,791
13,599
TCE
$
11,482
$
28,099
$
12,922
$
28,582
Adjusted vessel operating expenses and Adjusted DVOE
Adjusted vessel operating expenses and Adjusted DVOE are non-GAAP financial measures that are used as supplemental financial measures by our management and by external users of our financial statements to assess our operating performance as compared to that of other peer companies in our industry. The Company defines Adjusted vessel operating expenses as vessel operating expenses presented in accordance with U.S. GAAP, adjusted to exclude one-time, non-recurring expenses related to vessel acquisitions, charges relating to a change in the crewing manager on some of our vessels and discretionary spending associated with hull and hold upgrades and defines Adjusted DVOE as Adjusted vessel operating expenses divided by the number of ownership days. Ownership days is the aggregate number of days in a period during which each vessel in our fleet has been owned by us. Adjusted vessel operating expenses and Adjusted DVOE provide additional meaningful information in conjunction with Vessel operating expenses, the most directly comparable GAAP measure. Our Adjusted vessel operating expenses and Adjusted DVOE should not be considered alternatives to net income/(loss), operating income/(loss), cash flows provided by/(used in) operating activities or any other measure of financial performance or liquidity presented in accordance with U.S. GAAP. Our Adjusted vessel operating expenses and Adjusted DVOE may not be comparable to similarly titled measures of another company because all companies may not calculate Adjusted vessel operating expenses and Adjusted DVOE in the same manner.
The following table presents the reconciliation of our Vessel operating expenses to Adjusted vessel operating expenses and Adjusted DVOE:
Reconciliation of GAAP Vessel operating expenses to Adjusted vessel operating expenses and Adjusted DVOE (in thousands, except for Ownership days and Adjusted DVOE data)
Three Months Ended
Nine Months Ended
September 30, 2023
September 30, 2022
September 30, 2023
September 30, 2022
Vessel operating expenses
$
28,822
$
33,091
$
91,077
$
88,213
Less:
Adjustments to vessel operating expenses(1):
(347
)
(1,371
)
(3,548
)
(1,796
)
Adjusted vessel operating expenses
$
28,475
$
31,720
$
87,529
$
86,417
Ownership days
4,808
4,831
14,425
14,424
Adjusted DVOE
$
5,922
$
6,566
$
6,068
$
5,991
(1
)
Adjustments to vessel operating expenses includes one-time, non-recurring expenses related to vessel acquisitions, charges relating to a change in the crewing manager on some of our vessels and discretionary spending associated with hull and hold upgrades.
Glossary of Terms
Chartered-in days: We define chartered-in days as the aggregate number of days in a period during which we charter-in vessels under operating leases. The Company charters-in vessels on a long-term and short-term basis.
Owned available days: We define owned available days as the number of ownership days less the aggregate number of days that our owned vessels are off-hire due to vessel familiarization upon acquisition, repairs, vessel upgrades or special surveys and other reasons which prevent the vessel from performing under a charter party in a period. The shipping industry uses owned available days to measure the number of days in a period during which owned vessels should be capable of generating revenues.
Ownership days: We define ownership days as the aggregate number of days in a period during which each vessel in our fleet has been owned by us. Ownership days are an indicator of the size of our fleet over a period and affect both the amount of revenues and the amount of expenses that we record during a period.
Definitions of Capitalized Terms
Convertible Bond Debt: Convertible Bond Debt refers to 5.0% Convertible Senior Notes due 2024 issued by the Company on July 29, 2019 that will mature on August 1, 2024.
Global Ultraco Debt Facility: Global Ultraco Debt Facility refers to the senior secured credit facility entered into by Eagle Bulk Ultraco LLC (“Eagle Ultraco”), a wholly-owned subsidiary of the Company, along with certain of its vessel-owning subsidiaries as guarantors, with the lenders party thereto (the “Lenders”), Credit Agricole Corporate and Investment Bank (“Credit Agricole”) as security trustee, structurer, sustainability coordinator and facility agent. The Global Ultraco Debt Facility provides for an aggregate principal amount of $485.3 million, which consists of (i) a term loan facility in an aggregate principal amount of $300.3 million (the “Term Facility”) and (ii) a revolving credit facility in an aggregate principal amount of $185.0 million (the “Revolving Facility”). The Global Ultraco Debt Facility is secured by 52 of the Company’s vessels. As of September 30, 2023, $54.6 million remains undrawn under the Revolving Facility.
Conference Call Information
As previously announced, members of Eagle’s senior management team will host a teleconference and webcast at 8:00 a.m. ET on Friday, November 3, 2023, to discuss the third quarter results.
A live webcast of the call will be available on the Investor Relations page of the Company’s website at ir.eagleships.com. To access the call by phone, please register at https://register.vevent.com/register/BIee839edd63884046b37812fb660d9ebb and you will be provided with dial-in details. A replay of the webcast will be available on the Investor Relations page of the Company’s website.
About Eagle Bulk Shipping Inc.
The Company is a U.S.-based, fully integrated shipowner-operator, providing global transportation solutions to a diverse group of customers including miners, producers, traders and end users. Headquartered in Stamford, Connecticut, with offices in Singapore and Copenhagen, Eagle focuses exclusively on the versatile midsize drybulk vessel segment and owns one of the largest fleets of Supramax/Ultramax vessels in the world. The Company performs all management services in-house (strategic, commercial, operational, technical, and administrative) and employs an active management approach to fleet trading with the objective of optimizing revenue performance and maximizing earnings on a risk-managed basis. For further information, please visit our website: www.eagleships.com.
Website Information
We intend to use our website, www.eagleships.com, as a means of disclosing material non-public information and for complying with our disclosure obligations under Regulation FD. Such disclosures will be included in our website’s Investor Relations section. Accordingly, investors should monitor the Investor Relations portion of our website, in addition to following our press releases, filings with the SEC, public conference calls, and webcasts. To subscribe to our e-mail alert service, please click the “Investor Alerts” link in the Investor Relations section of our website and submit your email address. The information contained in, or that may be accessed through, our website is not incorporated by reference into or a part of this document or any other report or document we file with or furnish to the SEC, and any references to our website are intended to be inactive textual references only.
Disclaimer: Forward-Looking Statements
Matters discussed in this release may constitute forward-looking statements that may be deemed to be “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended, Section 21E of the Securities Exchange Act of 1934, as amended, and the Private Securities Litigation Reform Act of 1995, and are intended to be covered by the safe harbor provided for under these sections. These statements may include words such as “believe,” “estimate,” “project,” “intend,” “expect,” “plan,” “anticipate,” and similar expressions in connection with any discussion of the timing or nature of future operating or financial performance or other events. Forward-looking statements in this release reflect management’s current expectations and observations with respect to future events and financial performance. Where we express an expectation or belief as to future events or results, including future plans with respect to financial performance, the payment of dividends and/or repurchase of shares, or future actions of holders of the Convertible Bond Debt, including whether or not to elect to convert any portion of the Convertible Bond Debt prior to its maturity date, such expectation or belief is expressed in good faith and believed to have a reasonable basis. However, our forward-looking statements are subject to risks, uncertainties, and other factors, which could cause actual results to differ materially from future results expressed, projected, or implied by those forward-looking statements.
Where we express an expectation or belief as to future events or results, such expectation or belief is expressed in good faith and believed to have a reasonable basis. However, our forward-looking statements are subject to risks, uncertainties, and other factors, which could cause actual results to differ materially from future results expressed, projected or implied by those forward-looking statements. The principal factors that affect our financial position, results of operations and cash flows include market freight rates, which fluctuate based on various economic and market conditions, periods of charter hire, vessel operating expenses and voyage costs, which are incurred primarily in U.S. dollars, depreciation expenses, which are a function of the purchase price of our vessels and our vessels’ estimated useful lives and scrap value, general and administrative expenses, and financing costs related to our indebtedness. The accuracy of the Company’s assumptions, expectations, beliefs and projections depends on events or conditions that change over time and are thus susceptible to change based on actual experience, new developments and known and unknown risks. The Company gives no assurance that the forward-looking statements will prove to be correct, does not undertake any duty to update them and disclaims any intent or obligation to update publicly any forward-looking statements, whether as a result of new information, future events or otherwise, except as may be required under applicable securities laws. Our actual results may differ materially from those anticipated in these forward-looking statements as a result of certain factors which could include the following: (i) volatility of freight rates driven by changes in demand for seaborne transportation of drybulk commodities and in supply of drybulk shipping capacity; (ii) changes in drybulk carrier capacity driven by levels of newbuilding orders, scrapping rates or fleet utilization; (iii) changes in rules and regulations applicable to the drybulk industry, including, without limitation, regulations of the International Maritime Organization and the European Union (the “EU”), requirements of the Environmental Protection Agency and other governmental and quasi-governmental agencies; (iv) changes in U.S., United Kingdom, United Nations and EU economic sanctions and trade embargo laws and regulations as well as equivalent economic sanctions laws of other relevant jurisdictions; (v) actions taken by regulatory authorities including, without limitation, the U.S. Treasury Department’s Office of Foreign Assets Control (“OFAC”); (vi) changes in the typical seasonal variations in drybulk freight rates; (vii) changes in national and international economic and political conditions including, without limitation, the current conflicts between Russia and Ukraine and Israel and Hamas, the current economic and political environment in China and the environment in historically high-risk geographic areas such as the South China Sea, the Indian Ocean, the Gulf of Guinea and the Gulf of Aden; (viii) changes in the condition of the Company’s vessels or applicable maintenance or regulatory standards (which may affect, among other things, our anticipated drydocking costs); (ix) the duration and impact of the novel coronavirus (“COVID-19”) pandemic and measures implemented by governments of various countries in response to the COVID-19 pandemic; (x) volatility of the cost of fuel; (xi) volatility of costs of labor and materials needed to operate our business due to inflation; (xii) any legal proceedings which we may be involved from time to time; and (xiii) other factors listed from time to time in our filings with the Securities and Exchange Commission (the “SEC”).
We have based these statements on assumptions and analyses formed by applying our experience and perception of historical trends, current conditions, expected future developments and other factors we believe are appropriate in the circumstances. The Company’s future results may be impacted by adverse economic conditions, such as inflation, deflation, or lack of liquidity in the capital markets, that may negatively affect it or parties with whom it does business. Should one or more of the foregoing risks or uncertainties materialize in a way that negatively impacts the Company, or should the Company’s underlying assumptions prove incorrect, the Company’s actual results may vary materially from those anticipated in its forward-looking statements, and its business, financial condition and results of operations could be materially and adversely affected. Risks and uncertainties are further described in our Annual Report on Form 10-K for the year ended December 31, 2022, as filed with the SEC on March 10, 2023, as updated by those risks described in Part II, Item 1A of our Quarterly Report on Form 10-Q for the three months ended June 30, 2023, filed with the SEC on August 4, 2023.
CONTACT
Company Contact: Constantine Tsoutsoplides Chief Financial Officer Eagle Bulk Shipping Inc. Tel. +1 203-276-8100 Email: investor@eagleships.com
