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 [email protected]
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 [email protected] 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.
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 [email protected]
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: [email protected]
Acquisition expands ISG Research coverage of the $800 billion software sector
STAMFORD, Conn. — Information Services Group (ISG) (Nasdaq: III), a leading global technology research and advisory firm, today announced it has acquired Ventana Research, a leading technology research firm specializing in coverage of the $800 billion software industry.
The move expands the capabilities of ISG Research, an important and fast-growing recurring-revenue-stream business for ISG, at a time when enterprises increasingly are leveraging software and services in combination to improve operating performance, deliver better customer and employee experiences, and drive growth.
“With the addition of Ventana Research, ISG becomes a stronger global powerhouse in technology research,” said Michael P. Connors, chairman and CEO of ISG. “We are famously known for our industry-leading coverage of the managed services sector, and now we are expanding and deepening our coverage of the all-important software industry. No other firm can compete with us when it comes to our comprehensive sourcing data, market coverage, analyst insights and market-making advisor perspectives – a combination that delivers unmatched value to both buyers and sellers of technology services and software.”
Ventana Research, founded in 2002 and based in Bend, Ore., tracks more than 2,000 software vendors – including covering more than 250 in-depth – to provide the industry’s most comprehensive analyst and research coverage of the global software sector. Its team of experienced professionals provides insights and expert guidance on mainstream and disruptive technologies through a unique set of research-based products, including an online community for business and IT professionals.
“Enterprises are relying more and more on independent market research and analyst insights to guide their technology buying decisions and manage their technology ecosystems, while providers seek the same advice to improve their products and hone their go-to-market strategies,” said Mark Smith, founder and CEO of Ventana Research. “We are delighted to be joining ISG and adding our industry-leading capabilities, people, credibility, client relationships and software industry coverage to the ISG Research portfolio.”
Smith will continue to lead Ventana Research in his new role as ISG partner, Software Research.
“Ventana Research will maintain its well-known and trusted portfolio of research products and services, which are a perfect complement to the existing ISG Research portfolio,” said Paul Gottsegen, president of ISG Research and Client Experience. “As we move past the initial integration period, there will be many opportunities to create synergy as we naturally and smoothly integrate Ventana offerings fully into ISG Research and create new offerings that will deliver even more value to our clients.”
Ventana Research becomes one of five service lines of ISG Research. The others are ISG Provider Lens™ (service provider evaluation research), ISG Provider Services (go-to-market research and support for service providers), ISG ProBenchmark® (SaaS-based pricing intelligence platform) and ISG Events (producer of industry conferences and webinars).
ISG (Information Services Group) (Nasdaq: III) is a leading global technology research and advisory firm. A trusted business partner to more than 900 clients, including more than 75 of the world’s top 100 enterprises, ISG is committed to helping corporations, public sector organizations, and service and technology providers achieve operational excellence and faster growth. The firm specializes in digital transformation services, including automation, cloud and data analytics; sourcing advisory; managed governance and risk services; network carrier services; strategy and operations design; change management; market intelligence and technology research and analysis. Founded in 2006, and based in Stamford, Conn., ISG employs more than 1,600 digital-ready professionals operating in more than 20 countries—a global team known for its innovative thinking, market influence, deep industry and technology expertise, and world-class research and analytical capabilities based on the industry’s most comprehensive marketplace data. For more information, visit www.isg-one.com.
Reports GAAP revenues of $72 million, a third-quarter record
Reports net income of $3.2 million, GAAP EPS of $0.06 and adjusted EPS of $0.11
Reports third-quarter adjusted EBITDA of $11 million
Declares fourth-quarter dividend of $0.045 per share, payable December 20 to record holders as of December 5
Acquires Ventana Research; expands ISG Research coverage into $800 billion software sector
Sets fourth-quarter guidance: revenues between $68 million and $71 million and adjusted EBITDA between $9.0 million and $10.5 million
STAMFORD, Conn.–(BUSINESS WIRE)– Information Services Group (ISG) (Nasdaq: III), a leading global technology research and advisory firm, today announced financial results, including record third-quarter revenues, for the quarter ended September 30, 2023.
“ISG delivered strong results in the third quarter, with record revenues of $72 million, our best topline performance ever in a third quarter,” said Michael P. Connors, chairman and CEO. “Our recurring revenues were up 19 percent, revenues in Europe were up 14 percent and firm-wide adjusted EBITDA margin improved 120 basis points from last quarter despite a more difficult macro environment. These results were powered by a relentless focus on execution and our proactive management of the current demand environment.”
Commenting on the macro environment, Connors said: “Our enterprise clients continue to leverage our capabilities with a dual focus on all things digital and cost optimization, a traditional sweet spot for ISG. Overall, clients are slower in their decision-making and spending is being stretched over longer periods of time, amid concerns about continued economic uncertainty and rising geopolitical tensions. With that said, our pipeline remains strong, and the pace of execution will be driven by clients’ need for speed as they position themselves for 2024 when conditions are expected to improve.”
Ventana Research Acquisition
ISG said today it has acquired the business of Ventana Research, a leading technology research firm specializing in coverage of the $800 billion software industry.
The move expands the capabilities of ISG Research, an important and fast-growing recurring-revenue-stream business for ISG, at a time when enterprises increasingly are leveraging software and services in combination to improve operating performance, deliver better customer and employee experiences, and drive growth.
“With the addition of Ventana Research, ISG becomes a stronger global powerhouse in technology research,” said Connors. “We are famously known for our industry-leading coverage of the managed services sector, and now we are expanding and deepening our coverage of the all-important software industry. In addition to increasing our market research coverage, we see synergies to accelerate the growth of our Software Advisory business with enterprises.”
Citing ISG Index™ research, Connors noted that software-based XaaS solutions – both infrastructure-as-a service and software-as-a-service – account for more than 60 percent of global spending on IT and business services, up from 48 percent five years ago. “We expect spending on cloud-based, software-driven services to continue expanding in the coming years,” he said, “and with it, client demand for in-depth research and advice to guide software investment decisions.”
Ventana Research, founded in 2002 and based in Bend, Ore., tracks more than 2,000 software vendors and covers more than 250 of them in-depth to provide the industry’s most comprehensive analyst and research coverage of the global software sector. Its team of experienced professionals provides insights and expert guidance on mainstream and disruptive technologies through a unique set of research-based products, including an online community for business and IT professionals.
Third-Quarter 2023 Results
Reported revenues for the third quarter were a record $71.8 million, up 4.3 percent from $68.8 million in the prior year. Currency translation positively impacted reported revenues by $1.4 million versus the prior year. Reported revenues were $42.5 million in the Americas, up 1 percent; $22.1 million in Europe, up 14 percent; and $7.2 million in Asia Pacific, down 2 percent versus the prior year.
ISG reported third-quarter operating income of $6.2 million, down 16 percent from $7.4 million in the third quarter of 2022. Reported third-quarter net income was $3.2 million, down 42 percent from net income of $5.6 million in the prior year. Fully diluted earnings per share was $0.06, compared with $0.11 per fully diluted share in the prior year.
Adjusted net income (a non-GAAP measure defined below under “Non-GAAP Financial Measures”) for the third quarter was $5.7 million, or $0.11 per share on a fully diluted basis, compared with adjusted net income of $7.2 million, or $0.14 per share on a fully diluted basis, in the prior year’s third quarter.
Third-quarter adjusted EBITDA (a non-GAAP measure defined below under “Non-GAAP Financial Measures”) was $10.6 million, essentially flat with the prior year.
Other Financial and Operating Highlights
ISG generated $3.2 million of cash from operations in the third quarter, compared with $0.3 million used from operations in the third quarter last year. The firm’s cash balance totaled $18.7 million at September 30, 2023, down from $19.6 million at June 30, 2023.
During the third quarter, ISG paid dividends of $2.3 million and repurchased $0.9 million of shares. As of September 30, 2023, ISG had $79.2 million in debt outstanding, unchanged from December 31, 2022. The firm’s gross-debt-to-adjusted-EBITDA ratio (a non-GAAP measure calculated by dividing outstanding debt by adjusted EBITDA) was 1.8 times.
2023 Fourth-Quarter Revenue and Adjusted EBITDA Guidance
“For the fourth quarter, ISG is targeting revenues of between $68 million and $71 million and adjusted EBITDA of between $9.0 million and $10.5 million,” Connors said. “We will continue to monitor the macroeconomic and geopolitical environment, and other factors, and adjust our business plans accordingly.”
Quarterly Dividend
The ISG Board of Directors declared a fourth-quarter dividend of $0.045 per share payable on December 20, 2023, to shareholders of record on December 5, 2023.
Conference Call
ISG has scheduled a call for 9 a.m., U.S. Eastern Time, Friday, November 3, 2023, to discuss the company’s third-quarter results. The call can be accessed by dialing +1 (888) 330-2057; or, for international callers, by dialing +1 (646) 960-0203. The access code is 1482106. A recording of the conference call will be accessible on ISG’s website (www.isg-one.com) for approximately four weeks following the call.
Forward-Looking Statements
This communication contains “forward-looking statements” which represent the current expectations and beliefs of management of ISG concerning future events and their potential effects. Statements contained herein including words such as “anticipate,” “believe,” “contemplate,” “plan,” “estimate,” “target,” “expect,” “intend,” “will,” “continue,” “should,” “may,” and other similar expressions, are “forward-looking statements” under the Private Securities Litigation Reform Act of 1995. These forward-looking statements are not guarantees of future results and are subject to certain risks and uncertainties that could cause actual results to differ materially from those anticipated. Those risks relate to inherent business, economic and competitive uncertainties and contingencies relating to the businesses of ISG and its subsidiaries including without limitation: (1) failure to secure new engagements or loss of important clients; (2) ability to hire and retain enough qualified employees to support operations; (3) ability to maintain or increase billing and utilization rates; (4) management of growth; (5) success of expansion internationally; (6) competition; (7) ability to move the product mix into higher margin businesses; (8) general political and social conditions such as war, political unrest and terrorism; (9) healthcare and benefit cost management; (10) ability to protect ISG and its subsidiaries’ intellectual property or data and the intellectual property or data of others; (11) currency fluctuations and exchange rate adjustments; (12) ability to successfully consummate or integrate strategic acquisitions; (13) outbreaks of diseases, including coronavirus, or similar public health threats or fear of such an event; and (14) engagements may be terminated, delayed or reduced in scope by clients. Certain of these and other applicable risks, cautionary statements and factors that could cause actual results to differ from ISG’s forward-looking statements are included in ISG’s filings with the U.S. Securities and Exchange Commission. ISG undertakes no obligation to update or revise any forward-looking statements to reflect subsequent events or circumstances.
Non-GAAP Financial Measures
ISG reports all financial information required in accordance with U.S. generally accepted accounting principles (GAAP). In this release, ISG has presented both GAAP financial results as well as non-GAAP information for the three and nine months ended September 30, 2023 and September 30, 2022. ISG believes that evaluating its ongoing operating results will be enhanced if it discloses certain non-GAAP information. These non-GAAP financial measures exclude non-cash and certain other special charges that many investors believe may obscure the user’s overall understanding of ISG’s current financial performance and the Company’s prospects for the future. ISG believes that these non-GAAP measures provide useful information to investors because they improve the comparability of the financial results between periods and provide for greater transparency of key measures used to evaluate the Company’s performance.
ISG provides adjusted EBITDA (defined as net income plus interest, taxes, depreciation and amortization, foreign currency transaction gains/losses, non-cash stock compensation, interest accretion associated with contingent consideration, acquisition-related costs, and severance, integration and other expense), adjusted net income (defined as net income plus amortization of intangible assets, non-cash stock compensation, foreign currency transaction gains/losses, interest accretion associated with contingent consideration, acquisition-related costs, write-off of deferred financing costs, and severance, integration and other expense, on a tax-adjusted basis), adjusted net income per diluted share, adjusted EBITDA margin, gross-debt-to-adjusted-EBITDA ratio and selected financial data on a constant currency basis which are non-GAAP measures that the Company believes provide useful information to both management and investors by excluding certain expenses and financial implications of foreign currency translations, which management believes are not indicative of ISG’s core operations. These non-GAAP measures are used by ISG to evaluate the Company’s business strategies and management’s performance.
We evaluate our results of operations on both an as reported and a constant currency basis. The constant currency presentation, which is a non-GAAP financial measure, excludes the impact of year-over-year fluctuations in foreign currency exchange rates. We believe providing constant currency information provides valuable supplemental information regarding our results of operations, thereby facilitating period-to-period comparisons of our business performance and is consistent with how management evaluates the Company’s performance. We calculate constant currency percentages by converting our current and prior-periods local currency financial results using the same point in time exchange rates and then compare the adjusted current and prior period results. This calculation may differ from similarly titled measures used by others and, accordingly, the constant currency presentation is not meant to be a substitution for recorded amounts presented in conformity with GAAP, nor should such amounts be considered in isolation.
Management believes this information facilitates comparison of underlying results over time. Non-GAAP financial measures, when presented, are reconciled to the most closely applicable GAAP measure. Non-GAAP measures are provided as additional information and should not be considered in isolation or as a substitute for results prepared in accordance with GAAP. A reconciliation of the forward-looking non-GAAP estimates contained herein to the corresponding GAAP measures is not being provided, due to the unreasonable efforts required to prepare it.
About ISG
ISG (Information Services Group) (Nasdaq: III) is a leading global technology research and advisory firm. A trusted business partner to more than 900 clients, including more than 75 of the world’s top 100 enterprises, ISG is committed to helping corporations, public sector organizations, and service and technology providers achieve operational excellence and faster growth. The firm specializes in digital transformation services, including automation, cloud and data analytics; sourcing advisory; managed governance and risk services; network carrier services; strategy and operations design; change management; market intelligence and technology research and analysis. Founded in 2006, and based in Stamford, Conn., ISG employs 1,600 digital-ready professionals operating in more than 20 countries—a global team known for its innovative thinking, market influence, deep industry and technology expertise, and world-class research and analytical capabilities based on the industry’s most comprehensive marketplace data. For more information, visit www.isg-one.com.
Information Services Group, Inc.
Condensed Consolidated Statement of Income and Comprehensive Income
(unaudited)
(in thousands, except per share amounts)
Three Months Ended September 30,
Nine Months Ended September 30,
2023
2022
2023
2022
Revenues
$
71,773
$
68,836
$
224,868
$
212,100
Operating expenses
Direct costs and expenses for advisors
43,032
39,786
138,048
125,111
Selling, general and administrative
20,992
20,334
63,992
60,806
Depreciation and amortization
1,526
1,286
4,692
3,872
Operating income
6,223
7,430
18,136
22,311
Interest income
104
37
285
126
Interest expense
(1,533
)
(824
)
(4,676
)
(1,997
)
Foreign currency transaction (loss) gain
(2
)
131
(40
)
248
Income before taxes
4,792
6,774
13,705
20,688
Income tax provision
1,591
1,218
4,680
5,245
Net income
$
3,201
$
5,556
$
9,025
$
15,443
Weighted average shares outstanding:
Basic
48,711
47,888
48,542
48,191
Diluted
50,257
49,844
50,287
50,637
Earnings per share:
Basic
$
0.07
$
0.12
$
0.19
$
0.32
Diluted
$
0.06
$
0.11
$
0.18
$
0.30
Information Services Group, Inc.
Reconciliation from GAAP to Non-GAAP
(unaudited)
(in thousands, except per share amounts)
Three Months Ended September 30,
Nine Months Ended September 30,
2023
2022
2023
2022
Net income
$
3,201
$
5,556
$
9,025
$
15,443
Plus:
Interest expense (net of interest income)
1,429
787
4,391
1,871
Income taxes
1,591
1,218
4,680
5,245
Depreciation and amortization
1,526
1,286
4,692
3,872
Interest accretion associated with contingent consideration
26
–
77
8
Acquisition-related costs (1)
99
25
99
41
Severance, integration and other expense
674
8
2,016
458
Foreign currency transaction loss (gain)
2
(131
)
40
(248
)
Non-cash stock compensation
2,098
1,987
6,752
5,432
Adjusted EBITDA
$
10,646
$
10,736
$
31,772
$
32,122
Net income
$
3,201
$
5,556
$
9,025
$
15,443
Plus:
Non-cash stock compensation
2,098
1,987
6,752
5,432
Intangible amortization
769
525
2,352
1,580
Interest accretion associated with contingent consideration
26
–
77
8
Acquisition-related costs (1)
99
25
99
41
Severance, integration and other expense
674
8
2,016
458
Write-off of deferred financing costs
–
–
379
–
Foreign currency transaction loss (gain)
2
(131
)
40
(248
)
Tax effect (2)
(1,174
)
(772
)
(3,749
)
(2,327
)
Adjusted net income
$
5,695
$
7,198
$
16,991
$
20,387
Weighted average shares outstanding:
Basic
48,711
47,888
48,542
48,191
Diluted
50,257
49,844
50,287
50,637
Adjusted earnings per share:
Basic
$
0.12
$
0.15
$
0.35
$
0.42
Diluted
$
0.11
$
0.14
$
0.34
$
0.40
(1)
Consists of expenses from acquisition-related costs and non-cash fair value adjustments on pre-acquisition contract liabilities.
(2)
Marginal tax rate of 32%, reflecting U.S. federal income tax rate of 21% plus 11% attributable to U.S. states and foreign jurisdictions.
SANTA MONICA, Calif.–(BUSINESS WIRE)– Entravision Communications Corporation (NYSE: EVC), a leading global advertising solutions, media and technology company, today announced financial results for the three- and nine-month periods ended September 30, 2023.
Third Quarter 2023 Highlights
Record quarterly advertising revenue
Net revenue up 14% over the prior-year quarter
Net income attributable to common stockholders down 71% compared to the prior-year quarter
Consolidated EBITDA down 45% compared to the prior-year quarter
Operating cash flow up 45% over the prior-year quarter
Free cash flow down 74% compared to the prior-year quarter
Quarterly cash dividend of $0.05 per share
“We achieved a record quarterly advertising revenue of $274.4 million, up 14% year-over-year, led by strength in our Digital segment, which now comprises 84% of total revenue,” said Chris Young, Chief Financial Officer. “We continued to execute on our Digital transformation strategy during the quarter with the signing of two new partnerships with Match and Pinterest to further diversify our portfolio of digital solutions. While non-returning political revenue and sales mix contributed to the year-over-year decline in our Consolidated EBITDA, we anticipate increased political spending ahead of the 2024 elections will benefit our Television and Audio segments and Consolidated EBITDA in the quarters to come.”
Quarterly Cash Dividend
The Company announced today that its Board of Directors approved a quarterly cash dividend to shareholders of $0.05 per share on the Company’s Class A and Class U common stock, in an aggregate amount of $4.4 million. The quarterly dividend will be payable on December 29, 2023 to shareholders of record as of the close of business on December 15, 2023, and the common stock will trade ex-dividend on December 14, 2023. The Company currently anticipates that future cash dividends will be paid on a quarterly basis; however, any decision to pay future cash dividends will be subject to approval by the Board.
Non-GAAP Financial Measures
This press release contains certain non-GAAP financial measures as defined by SEC Regulation G. The GAAP financial measure most directly comparable to each of these non-GAAP financial measures, and a table reconciling each of these non-GAAP financial measures to its most directly comparable GAAP financial measure is included beginning on page 10.
Unaudited Financial Highlights (In thousands, except share and per share data)
Three-Month Period
Nine-Month Period
Ended September 30,
Ended September 30,
2023
2022
% Change
2023
2022
% Change
Net revenue
$
274,417
$
241,014
14
%
$
786,804
$
659,881
19
%
Cost of revenue – digital (1)
199,289
157,095
27
%
562,881
431,951
30
%
Operating expenses (2)
53,809
49,294
9
%
163,069
140,527
16
%
Corporate expenses (3)
13,292
9,525
40
%
35,836
26,769
34
%
Foreign currency (gain) loss
548
1,966
(72
)%
289
2,112
(86
)%
Consolidated EBITDA (4)
14,185
25,972
(45
)%
41,420
66,566
(38
)%
Free cash flow (5)
$
4,004
$
15,443
(74
)%
$
9,470
$
44,026
(78
)%
Net income (loss)
$
2,732
$
9,090
(70
)%
$
2,430
$
19,444
(88
)%
Net (income) loss attributable to redeemable noncontrolling interest
$
(13
)
$
–
*
$
(1
)
$
–
*
Net (income) loss attributable to noncontrolling interest
$
–
$
303
(100
)%
$
342
$
303
13
%
Net income (loss) attributable to common stockholders
$
2,719
$
9,393
(71
)%
$
2,771
$
19,747
(86
)%
Net income (loss) per share attributable to common stockholders, basic and diluted
$
0.03
$
0.11
(73
)%
$
0.03
$
0.23
(87
)%
Weighted average common shares outstanding, basic
87,995,567
84,945,873
87,803,770
85,469,675
Weighted average common shares outstanding, diluted
89,888,721
87,417,501
89,835,363
87,671,726
(1)
Consists primarily of the costs of online media acquired from third-party publishers. Media cost is classified as cost of revenue in the period in which the corresponding revenue is recognized.
(2)
Operating expenses include direct operating and selling, general and administrative expenses. Included in operating expenses are $2.6 million and $1.0 million of non-cash stock-based compensation for the three-month periods ended September 30, 2023 and 2022, respectively, and $7.2 million and $2.9 million of non-cash stock-based compensation for the nine-month periods ended September 30, 2023 and 2022, respectively.
(3)
Corporate expenses include $4.4 million and $1.8 million of non-cash stock-based compensation for the three-month periods ended September 30, 2023 and 2022, respectively, and $9.8 million and $5.1 million of non-cash stock-based compensation for the nine-month periods ended September 30, 2023 and 2022, respectively.
(4)
Consolidated EBITDA means net income (loss) plus gain (loss) on sale of assets, depreciation and amortization, non-cash impairment charge, non-cash stock-based compensation included in operating and corporate expenses, net interest expense, other operating gain (loss), gain (loss) on debt extinguishment, income tax (expense) benefit, equity in net income (loss) of nonconsolidated affiliate, non-cash losses, syndication programming amortization less syndication programming payments, revenue from the Federal Communications Commission, or FCC, spectrum incentive auction less related expenses, expenses associated with investments, EBITDA attributable to redeemable noncontrolling interest, acquisitions and dispositions and certain pro-forma cost savings. We use the term consolidated EBITDA because that measure is defined in our 2017 Credit Agreement and 2023 Credit Agreement, and does not include gain (loss) on sale of assets, depreciation and amortization, non-cash impairment charge, non-cash stock-based compensation, net interest expense, other income (loss), gain (loss) on debt extinguishment, income tax (expense) benefit, equity in net income (loss) of nonconsolidated affiliate, non-cash losses, syndication programming amortization less syndication programming payments, revenue from FCC spectrum incentive auction less related expenses, expenses associated with investments, EBITDA attributable to redeemable noncontrolling interest, acquisitions and dispositions and certain pro-forma cost savings.
(5)
Free cash flow is defined as consolidated EBITDA less cash paid for income taxes, net interest expense, capital expenditures (less amounts reimbursed by landlord) and non-recurring cash expenses plus dividend income, and other operating gain (loss). Net interest expense is defined as interest expense, less non-cash interest expense relating to amortization of debt finance costs, and less interest income.
Unaudited Financial Results (In thousands)
Three-Month Period
Ended September 30,
2023
2022
% Change
Net revenue
$
274,417
$
241,014
14
%
Cost of revenue – digital (1)
199,289
157,095
27
%
Operating expenses (1)
53,809
49,294
9
%
Corporate expenses (1)
13,292
9,525
40
%
Depreciation and amortization
7,356
6,554
12
%
Change in fair value of contingent consideration
(5,997
)
734
*
Impairment charge
989
—
*
Foreign currency (gain) loss
548
1,966
(72
)%
Other operating (gain) loss
—
(58
)
(100
)%
Operating income (loss)
5,131
15,904
(68
)%
Interest expense, net
(2,896
)
(2,267
)
28
%
Dividend income
—
6
(100
)%
Realized gain (loss) on marketable securities
(33
)
(473
)
(93
)%
Income (loss) before income taxes
2,202
13,170
(83
)%
Income tax benefit (expense)
530
(4,080
)
*
Net income (loss)
2,732
9,090
(70
)%
Net (income) loss attributable to redeemable noncontrolling interest
(13
)
—
*
Net (income) loss attributable to noncontrolling interest
—
303
(100
)%
Net income (loss) attributable to common stockholders
$
2,719
$
9,393
(71
)%
(1) Cost of revenue, operating expenses and corporate expenses are defined on page 2.
Net revenue in the third quarter of 2023 totaled $274.4 million, up 14% from $241.0 million in the prior-year period. Of the overall increase, $42.6 million was attributable to our digital segment and was primarily due to advertising revenue growth from our digital commercial partnerships business, and due to various acquisitions, which did not fully contribute to our financial results in our digital segment in the comparable period. The overall increase was partially offset by a decrease of $6.1 million attributable to our television segment, primarily due to decreases in political advertising revenue and national advertising revenue, partially offset by increases in local advertising revenue and spectrum usage rights revenue. In addition, the overall increase was partially offset by a decrease of $3.1 million attributable to our audio segment, primarily due to a decrease in political advertising revenue, and decreases in local and national advertising revenue.
Cost of revenue in the third quarter of 2023 totaled $199.3 million, up 27% from $157.1 million in the prior-year period. The increase was primarily due to increased cost of revenue related to advertising revenue growth from our digital commercial partnerships business, and due to various acquisitions, which did not fully contribute to our financial results in our digital segment in the comparable period.
Operating expenses in the third quarter of 2023 totaled $53.8 million, up 9% from $49.3 million in the prior-year period. Of the overall increase, $4.1 million was attributable to our digital segment and was primarily due to an increase in non-cash stock-based compensation, which is mainly a result of the timing of the 2023 annual restricted stock unit (“RSU”) grant to certain employees, which was made in February 2023 compared to the 2022 annual grant, which was made in December 2022, and due to an increase in expenses associated with the increase in digital advertising revenue, an increase in salary expense, and due to various acquisitions, which did not fully contribute to our financial results in our digital segment in the comparable period. In addition, of the overall increase in operating expenses, $0.5 million was attributable to our audio segment primarily due to an increase in non-cash stock-based compensation, which is mainly a result of the 2023 annual RSU grant timing mentioned above, and due to an increase in salaries. The overall increase was partially offset by a decrease of $0.1 million attributable to our television segment.
Corporate expenses in the third quarter of 2023 totaled $13.3 million, up 40% from $9.5 million in the prior-year period. The increase was primarily due to an increase in non-cash stock-based compensation, which is mainly a result of the 2023 annual RSU grant timing mentioned above and RSU grant to our new CEO, and increases in professional service fees.
Nine-Month Period
Ended September 30,
2023
2022
% Change
Net revenue
$
786,804
$
659,881
19
%
Cost of revenue – digital (1)
562,881
431,951
30
%
Operating expenses (1)
163,069
140,527
16
%
Corporate expenses (1)
35,836
26,769
34
%
Depreciation and amortization
20,336
19,212
6
%
Change in fair value of contingent consideration
(8,939
)
6,810
*
Impairment charge
989
—
*
Foreign currency (gain) loss
289
2,112
(86
)%
Other operating (gain) loss
—
(1,011
)
(100
)%
Operating income (loss)
12,343
33,511
(63
)%
Interest expense, net
(9,333
)
(5,309
)
76
%
Dividend income
32
20
60
%
Realized gain (loss) on marketable securities
(94
)
(473
)
(80
)%
Gain (loss) on debt extinguishment
(1,556
)
—
*
Income (loss) before income taxes
1,392
27,749
(95
)%
Income tax benefit (expense)
1,038
(8,305
)
*
Net income (loss)
2,430
19,444
(88
)%
Net (income) loss attributable to redeemable noncontrolling interest
(1
)
—
*
Net (income) loss attributable to noncontrolling interest
342
303
13
%
Net income (loss) attributable to common stockholders
$
2,771
$
19,747
(86
)%
Net revenue for the nine-month period of 2023 totaled $786.8 million, up 19% from $659.9 million in the prior-year period. Of the overall increase, $140.9 million was attributable to our digital segment and was primarily due to advertising revenue growth from our digital commercial partnerships business, and due to various acquisitions, which did not fully contribute to our financial results in our digital segment in the comparable period. The overall increase was partially offset by a decrease of $9.1 million attributable to our television segment, primarily due to decreases in political advertising revenue and national advertising revenue, partially offset by increases in local advertising revenue, spectrum usage rights revenue and retransmission consent revenue. In addition, the overall increase was partially offset by a decrease of $4.9 million attributable to our audio segment, primarily due to a decrease in political advertising revenue, and decreases in local and national advertising revenue.
Cost of revenue for the nine-month period of 2023 totaled $562.9 million, up 30% from $432.0 million in the prior-year period. The increase was due to increased cost of revenue related to advertising revenue growth from our digital commercial partnerships business, and due to various acquisitions, which did not fully contribute to our financial results in our digital segment in the comparable period.
Operating expenses for the nine-month period of 2023 totaled $163.1 million, up 16% from $140.5 million in the prior-year period. Of the overall increase, $18.2 million was attributable to our digital segment and was primarily due to an increase in non-cash stock-based compensation, which is mainly a result of the 2023 annual RSU grant timing mentioned above, and due to an increase in expenses associated with the increase in digital advertising revenue, an increase in salary expense, and due to various acquisitions, which did not fully contribute to our financial results in our digital segment in the comparable period. Additionally, of the overall increase in operating expenses, $0.9 million was attributable to our television segment primarily due to an increase in non-cash stock-based compensation, which is mainly a result of the 2023 annual RSU grant timing mentioned above, partially offset by a decrease in bad debt expense. In addition, of the overall increase in operating expenses, $3.5 million was attributable to our audio segment primarily due to an increase in non-cash stock-based compensation, which is mainly a result of the 2023 annual RSU grant timing mentioned above, and due to an increase in salaries and increased rent expense in the temporary office space until the move to our new permanent offices, which was completed in June 2023.
Corporate expenses for the nine-month period of 2023 totaled $35.8 million, up 34% from $26.8 million in the prior-year period. The increase was primarily due to an increase in non-cash stock-based compensation, which is mainly a result of the 2023 annual RSU grant timing mentioned above and RSU grant to our new CEO, and increases in professional service fees, audit fees and rent expense.
Balance Sheet and Related Metrics
Cash and marketable securities as of September 30, 2023 totaled $128.7 million. Total debt as defined in the Company’s credit agreement was $211.1 million. Net of $50 million of cash and marketable securities, total leverage as defined in the Company’s credit agreement was 2.1 times as of September 30, 2023. Net of total cash and marketable securities, total leverage was 1.1 times.
Unaudited Segment Results (In thousands)
Three-Month Period
Nine-Month Period
Ended September 30,
Ended September 30,
2023
2022
% Change
2023
2022
% Change
Net Revenue
Digital
$
231,487
$
188,877
23
%
$
657,865
$
516,966
27
%
Television
29,552
35,678
(17
)%
89,807
98,918
(9
)%
Audio
13,378
16,459
(19
)%
39,132
43,997
(11
)%
Total
$
274,417
$
241,014
14
%
$
786,804
$
659,881
19
%
Cost of Revenue – digital (1)
Digital
$
199,289
$
157,095
27
%
$
562,881
$
431,951
30
%
Operating Expenses (1)
Digital
23,173
19,080
21
%
69,755
51,577
35
%
Television
19,892
20,003
(1
)%
59,859
58,969
2
%
Audio
10,744
10,211
5
%
33,455
29,981
12
%
Total
$
53,809
$
49,294
9
%
$
163,069
$
140,527
16
%
Corporate Expenses (1)
$
13,292
$
9,525
40
%
$
35,836
$
26,769
34
%
Consolidated EBITDA (1)
$
14,185
$
25,972
(45
)%
$
41,420
$
66,566
(38
)%
(1) Cost of revenue, operating expenses, corporate expenses, and consolidated EBITDA are defined on page 2.
Notice of Conference Call
Entravision Communications Corporation will hold a conference call to discuss its third quarter 2023 results on Thursday, November 2, 2023 at 5:00 p.m. Eastern Time. To access the conference call, please dial (844) 836-8739 (U.S.) or (412) 317-5440 (Int’l) ten minutes prior to the start time and reference Conference ID number 10182461. The call will also be available via live webcast on the investor relations portion of the Company’s website located at www.entravision.com.
About Entravision Communications Corporation
Entravision is a global advertising solutions, media and technology company. Over the past three decades, we have strategically evolved into a digital powerhouse, expertly connecting brands to consumers in the U.S., Latin America, Europe, Asia and Africa. Our digital segment, the company’s largest by revenue, offers a full suite of end-to-end advertising services in 40 countries. We have commercial partnerships with Meta, X Corp. (formerly known as Twitter), TikTok, and Spotify, and marketers can use our Smadex and other platforms to deliver targeted advertising to audiences around the globe. In the U.S., we maintain a diversified portfolio of television and radio stations that target Hispanic audiences and complement our global digital services. Entravision remains the largest affiliate group of the Univision and UniMás television networks. Shares of Entravision Class A Common Stock trade on the NYSE under ticker: EVC. Learn more about our offerings at entravision.com or connect with us on LinkedIn and Facebook.
Forward-Looking Statements
This press release contains certain forward-looking statements. These forward-looking statements, which are included in accordance with the safe harbor provisions of the Private Securities Litigation Reform Act of 1995, may involve known and unknown risks, uncertainties and other factors that may cause the Company’s actual results and performance in future periods to be materially different from any future results or performance suggested by the forward-looking statements in this press release. Although the Company believes the expectations reflected in such forward-looking statements are based upon reasonable assumptions, it can give no assurance that actual results will not differ materially from these expectations, and the Company disclaims any duty to update any forward-looking statements made by the Company. From time to time, these risks, uncertainties and other factors are discussed in the Company’s filings with the Securities and Exchange Commission.
(Financial Table Follows)
Entravision Communications Corporation
Consolidated Statements of Operations
(In thousands, except share and per share data)
(Unaudited)
Three-Month Period
Nine-Month Period
Ended September 30,
Ended September 30,
2023
2022
2023
2022
Net revenue
$
274,417
$
241,014
$
786,804
$
659,881
Expenses:
Cost of revenue – digital
199,289
157,095
562,881
431,951
Direct operating expenses
31,855
30,086
94,782
87,505
Selling, general and administrative expenses
21,954
19,208
68,287
53,022
Corporate expenses
13,292
9,525
35,836
26,769
Depreciation and amortization
7,356
6,554
20,336
19,212
Change in fair value of contingent consideration
(5,997
)
734
(8,939
)
6,810
Impairment charge
989
—
989
—
Foreign currency (gain) loss
548
1,966
289
2,112
Other operating (gain) loss
—
(58
)
—
(1,011
)
269,286
225,110
774,461
626,370
Operating income (loss)
5,131
15,904
12,343
33,511
Interest expense
(4,454
)
(3,055
)
(12,788
)
(7,225
)
Interest income
1,558
788
3,455
1,916
Dividend income
—
6
32
20
Realized gain (loss) on marketable securities
(33
)
(473
)
(94
)
(473
)
Gain (loss) on debt extinguishment
—
—
(1,556
)
—
Income (loss) before income taxes
2,202
13,170
1,392
27,749
Income tax benefit (expense)
530
(4,080
)
1,038
(8,305
)
Net income (loss)
2,732
9,090
2,430
19,444
Net (income) loss attributable to redeemable noncontrolling interest
(13
)
—
(1
)
—
Net (income) loss attributable to noncontrolling interest
—
303
342
303
Net income (loss) attributable to common stockholders
$
2,719
$
9,393
$
2,771
$
19,747
Basic and diluted earnings per share:
Net income (loss) per share attributable to common stockholders, basic and diluted
$
0.03
$
0.11
$
0.03
$
0.23
Cash dividends declared per common share, basic and diluted
$
0.05
$
0.03
$
0.15
$
0.08
Weighted average common shares outstanding, basic
87,995,567
84,945,873
87,803,770
85,469,675
Weighted average common shares outstanding, diluted
89,888,721
87,417,501
89,835,363
87,671,726
Entravision Communications Corporation
Consolidated Balance Sheets
(In thousands; unaudited)
September 30,
December 31,
2023
2022
ASSETS
Current assets
Cash and cash equivalents
$
110,624
$
110,691
Marketable securities
18,063
44,528
Restricted cash
765
753
Trade receivables, net of allowance for doubtful accounts
211,175
224,713
Assets held for sale
1,223
—
Prepaid expenses and other current assets
43,404
27,238
Total current assets
385,254
407,923
Property and equipment, net
67,750
61,362
Intangible assets subject to amortization, net
55,706
61,811
Intangible assets not subject to amortization
207,453
207,453
Goodwill
90,672
86,991
Deferred income taxes
2,591
2,591
Operating leases right of use asset
45,159
44,413
Other assets
21,550
8,297
Total assets
$
876,135
$
880,841
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities
Current maturities of long-term debt
$
8,643
$
5,256
Accounts payable and accrued expenses
240,417
237,415
Operating lease liabilities
7,150
5,570
Total current liabilities
256,210
248,241
Long-term debt, less current maturities, net of unamortized debt issuance costs
201,301
207,292
Long-term operating lease liabilities
46,849
42,151
Other long-term liabilities
17,294
30,198
Deferred income taxes
68,464
67,590
Total liabilities
590,118
595,472
Redeemable noncontrolling interest
47,301
—
Stockholders’ equity
Class A common stock
8
8
Class U common stock
1
1
Additional paid-in capital
742,040
776,298
Accumulated deficit
(501,604
)
(504,375
)
Accumulated other comprehensive income (loss)
(1,729
)
(1,510
)
Total stockholders’ equity
238,716
270,422
Noncontrolling interest
–
14,947
Total equity
238,716
285,369
Total liabilities and equity
$
876,135
$
880,841
Entravision Communications Corporation
Consolidated Statements of Cash Flows
(In thousands; unaudited)
Three-Month Period
Nine-Month Period
Ended September 30,
Ended September 30,
2023
2022
2023
2022
Cash flows from operating activities:
Net income (loss)
$
2,732
$
9,090
$
2,430
$
19,444
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
Depreciation and amortization
7,356
6,554
20,336
19,212
Impairment charge
989
—
989
—
Deferred income taxes
(40
)
62
(169
)
(3,151
)
Non-cash interest
85
365
264
1,076
Amortization of syndication contracts
118
117
358
348
Payments on syndication contracts
(125
)
(70
)
(366
)
(304
)
Non-cash stock-based compensation
7,032
2,786
17,053
7,995
(Gain) loss on marketable securities
33
473
94
473
(Gain) loss on disposal of property and equipment
(29
)
39
(11
)
(599
)
(Gain) loss on debt extinguishment
—
—
1,556
—
Change in fair value of contingent consideration
(5,997
)
734
(8,939
)
6,810
Changes in assets and liabilities:
(Increase) decrease in accounts receivable
(1,219
)
4,708
16,261
22,296
(Increase) decrease in prepaid expenses and other current assets, operating leases right of use asset and other assets
(3,902
)
1,069
(7,199
)
(183
)
Increase (decrease) in accounts payable, accrued expenses and other liabilities
14,993
(10,691
)
26,460
4,725
Net cash provided by operating activities
22,026
15,236
69,117
78,142
Cash flows from investing activities:
Proceeds from sale of property and equipment and intangibles
33
—
83
2,671
Purchases of property and equipment
(5,023
)
(4,673
)
(19,881
)
(7,882
)
Purchase of a business, net of cash acquired
—
—
(6,930
)
—
Investment in variable interest entities, net of cash consolidated
—
(5,164
)
—
(5,164
)
Purchases of marketable securities
(1,183
)
(5,241
)
(11,355
)
(92,480
)
Proceeds from sale of marketable securities
10,000
36,369
38,093
46,868
Purchases of investments
(100
)
—
(300
)
—
Issuance of loan receivable
(5,550
)
—
(13,636
)
—
Net cash provided by (used in) investing activities
(1,823
)
21,291
(13,926
)
(55,987
)
Cash flows from financing activities:
Proceeds from stock option exercises
—
—
554
218
Tax payments related to shares withheld for share-based compensation plans
(63
)
—
(158
)
(267
)
Payments on debt
(1,250
)
(1,001
)
(214,495
)
(2,501
)
Dividends paid
(4,400
)
(2,124
)
(13,182
)
(6,415
)
Distributions to noncontrolling interest
—
—
(3,380
)
—
Repurchase of Class A common stock
—
—
—
(11,280
)
Payment of contingent consideration
(3,403
)
(21,734
)
(35,113
)
(65,340
)
Principal payments under finance lease obligation
(37
)
(33
)
(113
)
(72
)
Proceeds from borrowings on debt
1
—
212,420
—
Payments for debt issuance costs
—
—
(1,777
)
—
Net cash used in financing activities
(9,152
)
(24,892
)
(55,244
)
(85,657
)
Effect of exchange rates on cash, cash equivalents and restricted cash
(3
)
5
(2
)
(1
)
Net increase (decrease) in cash, cash equivalents and restricted cash
11,048
11,640
(55
)
(63,503
)
Cash, cash equivalents and restricted cash:
Beginning
100,341
110,700
111,444
185,843
Ending
$
111,389
$
122,340
$
111,389
$
122,340
Entravision Communications Corporation
Reconciliation of Consolidated EBITDA to Cash Flows From Operating Activities
(In thousands; unaudited)
The most directly comparable GAAP financial measure is operating cash flow. A reconciliation of this non-GAAP measure to cash flows from operating activities for each of the periods presented is as follows:
Three-Month Period
Nine-Month Period
Ended September 30,
Ended September 30,
2023
2022
2023
2022
Consolidated EBITDA (1)
$
14,185
$
25,972
$
41,420
$
66,566
EBITDA attributable to redeemable noncontrolling interest
319
—
736
—
EBITDA attributable to noncontrolling interest
—
(5
)
230
(5
)
Interest expense
(4,454
)
(3,055
)
(12,788
)
(7,225
)
Interest income
1,558
788
3,455
1,916
Dividend income
–
6
32
20
Realized gain (loss) on marketable securities
(33
)
(473
)
(94
)
(473
)
Income tax expense
530
(4,080
)
1,038
(8,305
)
Amortization of syndication contracts
(118
)
(117
)
(358
)
(348
)
Payments on syndication contracts
125
70
366
304
Non-cash stock-based compensation included in direct operating expenses
(2,637
)
(981
)
(7,218
)
(2,878
)
Non-cash stock-based compensation included in corporate expenses
(4,395
)
(1,805
)
(9,835
)
(5,117
)
Depreciation and amortization
(7,356
)
(6,554
)
(20,336
)
(19,212
)
Change in fair value of contingent consideration
5,997
(734
)
8,939
(6,810
)
Impairment charge
(989
)
—
(989
)
—
Non-recurring cash severance charge
—
—
(612
)
—
Other operating gain (loss)
—
58
—
1,011
Gain (loss) on debt extinguishment
—
—
(1,556
)
—
Net (income) loss attributable to redeemable noncontrolling interest
(13
)
—
(1
)
—
Net (income) loss attributable to noncontrolling interest
—
303
342
303
Net income (loss) attributable to common stockholders
2,719
9,393
2,771
19,747
Depreciation and amortization
7,356
6,554
20,336
19,212
Impairment charge
989
—
989
—
Deferred income taxes
(40
)
62
(169
)
(3,151
)
Non-cash interest
85
365
264
1,076
Amortization of syndication contracts
118
117
358
348
Payments on syndication contracts
(125
)
(70
)
(366
)
(304
)
Non-cash stock-based compensation
7,032
2,786
17,053
7,995
Realized (gain) loss on marketable securities
33
473
94
473
(Gain) loss on debt extinguishment
—
—
1,556
—
(Gain) loss on disposal of property and equipment
(29
)
39
(11
)
(599
)
Change in fair value of contingent consideration
(5,997
)
734
(8,939
)
6,810
Net income (loss) attributable to redeemable noncontrolling interest
13
—
1
—
Net income (loss) attributable to noncontrolling interest
—
(303
)
(342
)
(303
)
Changes in assets and liabilities:
(Increase) decrease in accounts receivable
(1,219
)
4,708
16,261
22,296
(Increase) decrease in prepaid expenses and other current assets, operating leases right of use asset and other assets
(3,902
)
1,069
(7,199
)
(183
)
Increase (decrease) in accounts payable, accrued expenses and other liabilities
14,993
(10,691
)
26,460
4,725
Cash flows from operating activities
22,026
15,236
69,117
78,142
(1)
Consolidated EBITDA is defined on page 2.
Entravision Communications Corporation
Reconciliation of Free Cash Flow to Cash Flows From Operating Activities
(In thousands; unaudited)
The most directly comparable GAAP financial measure is operating cash flow. A reconciliation of this non-GAAP measure to cash flows from operating activities for each of the periods presented is as follows:
Three-Month Period
Nine-Month Period
Ended September 30,
Ended September 30,
2023
2022
2023
2022
Consolidated EBITDA (1)
$
14,185
$
25,972
$
41,420
$
66,566
Net interest expense (1)
(2,811
)
(1,902
)
(9,069
)
(4,233
)
Dividend income
—
6
32
20
Cash paid for income taxes
(2,347
)
(4,018
)
(5,929
)
(11,456
)
Capital expenditures (2)
(5,023
)
(4,673
)
(19,881
)
(7,882
)
Landlord incentive reimbursement
—
—
3,509
—
Non-recurring cash severance charge
—
—
(612
)
—
Other operating gain (loss)
—
58
—
1,011
Free cash flow (1)
4,004
15,443
9,470
44,026
Capital expenditures (2)
5,023
4,673
19,881
7,882
Landlord incentive reimbursement
—
—
(3,509
)
—
EBITDA attributable to redeemable noncontrolling interest
319
—
736
—
EBITDA attributable to noncontrolling interest
—
(5
)
230
(5
)
(Gain) loss on disposal of property and equipment
(29
)
39
(11
)
(599
)
Cash paid for income taxes
2,347
4,018
5,929
11,456
Deferred income taxes
(40
)
62
(169
)
(3,151
)
Income tax (expense) benefit
530
(4,080
)
1,038
(8,305
)
Changes in assets and liabilities:
(Increase) decrease in accounts receivable
(1,219
)
4,708
16,261
22,296
(Increase) decrease in prepaid expenses and other current assets, operating leases right of use asset and other assets
(3,902
)
1,069
(7,199
)
(183
)
Increase (decrease) in accounts payable, accrued expenses and other liabilities
14,993
(10,691
)
26,460
4,725
Cash Flows From Operating Activities
$
22,026
$
15,236
$
69,117
$
78,142
(1)
Consolidated EBITDA, net interest expense, and free cash flow are defined on page 2.
(2)
Capital expenditures are not part of the consolidated statement of operations.
Christopher T. Young Chief Financial Officer and Treasurer Entravision Communications Corporation 310-447-3870
