Data demonstrate that extracellular ASC specks, independent of IL-1β, govern the pathogenesis and extent of amyloid A (AA) amyloidosis, which is characterized by deposition of insoluble amyloid fibrils in tissues and organs disrupting their structure and function.
Extracellular ASC interacts with serum amyloid A (SAA) released by the liver during inflammation, forming a scaffold that accelerates SAA aggregation into amyloid fibrils, which are deposited in tissues and organs.
Amyloid A amyloidosis occurs in a heterogeneous spectrum of chronic inflammatory conditions such as rheumatoid arthritis, Crohn’s disease, and inflammatory bowel disease.
ZyVersa is developing Inflammasome ASC Inhibitor IC 100, which inhibits intra- and extracellular ASC and specks associated with multiple types of inflammasomes to attenuate damaging inflammation and its perpetuation and spread to surrounding tissues.
WESTON, Fla., Aug. 07, 2024 (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 data published in the peer-reviewed journal, EMBO Molecular Medicine, demonstrating that extracellular ASC has a crucial role in aggregation and deposition of amyloid A fibrils leading to associated chronic inflammatory conditions.
“This research highlighting the role of extracellular ASC specks, independent of IL-1β, in the pathogenesis of chronic conditions associated with amyloid A amyloidosis reinforces our selection of ASC as a target for our inflammasome inhibitor IC 100,” stated Stephen C. Glover, ZyVersa’s Co-founder, Chairman, CEO, and President. “This paper provides one more piece of evidence that inhibiting extracellular ASC specks associated with multiple types of inflammasomes has potential to control damaging inflammation associated with a broad range of inflammatory diseases.”
ASC colocalized tightly with SAA in human AA amyloidosis.
ASC specks accelerated SAA fibril formation.
Splenic amyloid load was decreased in a Pycard knock-out mouse model of AA Amyloidosis which lacks ASC.
Treatment with anti-ASCPYD antibodies decreased amyloid loads in wild-type mice suffering from AA amyloidosis.
“Our findings might have therapeutic implications that advance the fields of protein misfolding disorders (PMDs) and chronic inflammatory diseases in general as ASC could be a target of disease-modifying therapies that aim to reduce amyloid deposition and pathology in various proteinopathies,” concluded the authors.
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, and 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. The lead indication for IC 100 is obesity and its associated metabolic complications. To review a white paper summarizing the mechanism of action and preclinical data for IC 100, Click Here.
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 inflammatory or kidney diseases with high unmet medical needs. We are well positioned in the rapidly emerging inflammasome space with a highly differentiated monoclonal antibody, Inflammasome ASC Inhibitor IC 100, and in kidney disease with phase 2 Cholesterol Efflux MediatorTM VAR 200. The lead indication for IC 100 is obesity and its associated metabolic complications, and for VAR 200, focal segmental glomerulosclerosis (FSGS). Each therapeutic area offers a “pipeline within a product,” with potential for numerous indications. The total accessible market is over $100 billion. 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, Media, and IR Contact: Karen Cashmere Chief Commercial Officer kcashmere@zyversa.com 786-251-9641
Second Quarter Revenue of $1.7 Billion with GAAP EPS of $(0.12); Adjusted EPS of $0.56
Progress on Project Core to Drive Future Cost Savings and Implementing Growth Initiatives
Company Repurchased $191 Million of Shares Year to Date
Company Provides Update on Varis Sale Process
BOCA RATON, Fla.–(BUSINESS WIRE)–Aug. 7, 2024– The ODP Corporation (“ODP,” or the “Company”) (NASDAQ:ODP), a leading provider of products, services, and technology solutions to businesses and consumers, today announced results for the second quarter ended June 29, 2024.
Second Quarter 2024 Summary(1)(2)(3)
Total reported sales of $1.7 billion, down 10% versus the prior year on a reported basis. The decrease in reported sales is largely related to lower sales in its Office Depot Division, primarily due to 58 fewer retail locations in service compared to the previous year and reduced transactions, as well as lower sales in its ODP Business Solutions Division
GAAP operating income of approximately $400 thousand and net income (loss) from continuing operations of $(4) million, or $(0.12) per diluted share, versus $60 million and $43 million, respectively, or $1.09 per diluted share, in the prior year period
Adjusted operating income of $33 million, compared to $67 million in the second quarter of 2023; adjusted EBITDA of $57 million, compared to $95 million in the second quarter of 2023
Adjusted net income from continuing operations of $20 million, or adjusted diluted earnings per share from continuing operations of $0.56, versus $48 million or $1.22, respectively, in the prior year period
Operating cash flow from continuing operations of $(1) million and adjusted free cash flow of $5 million, versus $(8) million and $(24) million, respectively, in the prior year period
Repurchased nearly 2.4 million shares at a cost of $104 million in the second quarter of 2024; Repurchased a total of approximately $141 million of shares when including purchases made in the second quarter and post quarter through the current date
$831 million of total available liquidity including $190 million in cash and cash equivalents, of which $10 million is presented in Current assets held for sale related to the Varis Division, at quarter end
“We are executing Project Core while taking actions to improve top-line trends in both our B2B and B2C businesses,” said Gerry Smith, chief executive officer of The ODP Corporation. “Our performance in the quarter was below our expectations, impacted by more cautious business spending and weaker consumer activity, along with new customer onboarding challenges impacting revenue traction at ODP Business Solutions. Additionally, retail store traffic trends, while improving sequentially, remained sluggish. Although market challenges impacted Office Depot and ODP Business Solutions, we continued to see progress in Veyer, as they executed across their growth strategies, attracting new third-party customers and improving their external EBITDA. Furthermore, we continued to buy back our shares, returning over $100 million of our stock in the quarter and over $190 million year to date,” he added.
“While we are pacing below our prior expectations for the year, we are not standing still. We’re taking actions to improve our top-line trajectory and we remain focused on capturing the long-term opportunities derived by our strong value proposition, solid balance sheet, and flexible foundation. In addition to our efforts under Project Core, which we expect will create over $100 million in annual cost savings when fully implemented, we are executing on initiatives to accelerate sales pipeline conversion, drive additional avenues for growth with existing customers, and leverage our deep customer relationships to solve more of their procurement challenges. This is what we call the Power of 1 – the ability to add value to our customers through offering one more product or suite of products to help them succeed. For example, we recently were awarded a sizeable order for standalone air conditioning units for a government entity — something not top of mind when you think of ODP Business Solutions, but it showcases the trust customers have in our capabilities to source, deliver, and solution during a time of need – all through the Power of 1. Additionally, we are set early for the upcoming back-to-school season and well positioned with our Education 365 approach, connecting customers within the education sector.”
“Although we are disappointed by our first half performance and outlook for the remainder of the year, we are committed to driving growth back into the business, remaining focused on converting the numerous opportunities in our pipeline, strengthening our position in the second half of the year and having impact in 2025 and beyond. We have several prospects at both ODP Business Solutions and Veyer that we expect to close in the second half that will boost revenue growth velocity as we exit this year. With these opportunities, coupled with our full realization of Project Core, we expect to exit 2024 with a stronger profile,” he continued.
“Despite the near term top-line challenges, we remain committed and encouraged about the future and confident in our operational excellence approach. Our team remains focused on executing the necessary steps to position us for long term growth and profitability,” Smith concluded.
Consolidated Results
Reported (GAAP) Results Total reported sales for the second quarter of 2024 were $1.7 billion, a decrease of 10% compared with the same period last year, driven by lower sales in both its consumer and business-to-business (B2B) divisions. Lower sales in its consumer division, Office Depot, was primarily due to 58 fewer stores in service compared to last year related to planned store closures, as well as lower retail and online consumer traffic and transactions. Sales at ODP Business Solutions Division were lower compared to last year, largely driven by macroeconomic factors causing more cautious spending among business customers, as well as continued challenges related to the onboarding of new customers and fewer transactions. Meanwhile, Veyer provided strong logistics support for the ODP Business Solutions and Office Depot Divisions and continued to execute across its growth strategy, delivering supply chain and procurement solutions to new third-party customers and driving external EBITDA.
The Company reported GAAP operating income of approximately $400 thousand in the second quarter of 2024, down compared to GAAP operating income of $60 million in the prior year period. Operating results in the second quarter of 2024 included $33 million of charges, primarily related to $25 million in net merger and restructuring expenses and $8 million non-cash asset impairment primarily related to the operating lease right-of-use (ROU) assets associated with the Company’s retail store locations. Net loss from continuing operations was $4 million, or $(0.12) per diluted share in the second quarter of 2024, down compared to net income from continuing operations of $43 million, or $1.09 per diluted share in the second quarter of 2023.
Adjusted (non-GAAP) Results(1) Adjusted results for the second quarter of 2024 exclude charges and credits totaling $33 million as described above and the associated tax impacts.
Second quarter 2024 adjusted EBITDA was $57 million compared to $95 million in the prior year period. This included depreciation and amortization of $24 million and $25 million in the second quarter of 2024 and 2023, respectively
Second quarter 2024 adjusted operating income was $33 million, down compared to $67 million in the second quarter of 2023
Second quarter 2024 adjusted net income from continuing operations was $20 million, or $0.56 per diluted share, compared to $48 million, or $1.22 per diluted share, in the second quarter of 2023, a decrease of 54% on a per share basis
Division Results
ODP Business Solutions Division Leading B2B distribution solutions provider serving small, medium and enterprise level companies with an annual trailing-twelve-month revenue of nearly $4 billion.
Reported sales were $917 million in the second quarter of 2024, down 8% compared to the same period last year. The decrease in sales was related primarily to weaker macroeconomic conditions, more cautious business spending, new customer onboarding challenges, and lower sales conversion
Total adjacency category sales, including cleaning and breakroom, furniture, technology, and copy and print, were 43% of total ODP Business Solutions’ sales
Continued strong pipeline of potential new business and implementing several initiatives to regain top-line traction
Operating income was $29 million in the second quarter of 2024, down 36% compared to the same period last year on a reported basis. As a percentage of sales, operating income margin was 3%, down 140 basis points compared to the same period last year
Office Depot Division Leading provider of retail consumer and small business products and services distributed via Office Depot and OfficeMax retail locations and an eCommerce presence.
Reported sales were $799 million in the second quarter of 2024, down 12% compared to the prior year on a reported basis. Lower sales were partially driven by 58 fewer retail outlets in service associated with planned store closures, as well as lower demand relative to last year in major product categories and lower online sales. The Company closed 9 retail stores in the quarter and had 894 stores at quarter end. Sales were down 7% on a comparable store basis
Store and online traffic were lower year over year due to macroeconomic factors causing sluggish consumer activity
Operating income was $17 million in the second quarter of 2024, compared to operating income of $35 million during the same period last year, driven primarily by the flow through impact from lower sales. As a percentage of sales, operating income was 2%, down 170 basis points compared to the same period last year
Veyer Division Nationwide supply chain, distribution, procurement and global sourcing operation supporting Office Depot and ODP Business Solutions, as well as third-party customers. Veyer’s assets and capabilities include 8 million square feet of infrastructure through a network of distribution centers, cross-docks, and other facilities throughout the United States; a global sourcing presence in Asia; a large private fleet of vehicles; and next-day delivery to 98.5% of US population.
In the second quarter of 2024, Veyer provided support for its internal customers, ODP Business Solutions and Office Depot, as well as its third-party customers, generating sales of $1.2 billion
Operating income was $5 million in the second quarter of 2024, compared to $6 million in the prior year period driven by the flow through impact of lower sales to internal customers partially offset by the contribution related to services to external third-party customers
In the second quarter of 2024, sales generated from third-party customers were in-line with the same period last year and EBITDA generated from third-party customers increased by 17% year over year, resulting in sales of $10 million and EBITDA of $4 million
Share Repurchases
The Company continued to execute under its previously announced $1 billion share repurchase authorization valid through March 31, 2027. During the second quarter of 2024, the Company repurchased nearly 2.4 million shares at a cost of $104 million. Since the end of the second quarter of 2024, the Company repurchased additional shares for $37 million.
“Our capital allocation strategy balances investing in the future of our business while continuing to enhance value for shareholders through share repurchases under our buyback authorization,” stated Anthony Scaglione, executive vice president and chief financial officer of The ODP Corporation. “We have executed under this approach, investing in our business and repurchasing over $190 million of our stock thus far in 2024. Moving forward, we will continue to balance our capital allocation strategy remaining mindful of market conditions and business performance as we continue to drive our low-cost business model through Project Core.”
The number of shares to be repurchased under the authorization in the future and the timing of such transactions will depend on a variety of factors, including market conditions, regulatory requirements, and other corporate considerations. The new share repurchase authorization could be suspended or discontinued at any time as determined by the Board of Directors.
Balance Sheet and Cash Flow
As of June 29, 2024, ODP had total available liquidity of approximately $831 million, consisting of $190 million in cash and cash equivalents, including $10 million that is presented in Current assets held for sale related to the Varis Division, and $641 million of available credit under the Fourth Amended Credit Agreement. Total debt was $183 million.
For the second quarter of 2024, cash used in operating activities of continuing operations was $1 million, which included $25 million in restructuring spend, compared to cash used in operating activities of continuing operations of $8 million in the second quarter of the prior year, which included $1 million in restructuring spend. The year-over-year change in operating cash flow is largely related to the timing of certain working capital items.
Capital expenditures in the second quarter of 2024 were $19 million versus $17 million in the prior year period, reflecting continued growth investments in the Company’s digital transformation, distribution network, and eCommerce capabilities. Adjusted Free Cash Flow(3) was $5 million in the second quarter of 2024, compared to $(24) million in the prior year period.
Progress on Project Core
As the Company previously announced, Project Core is a plan designed to create further efficiencies throughout its business, focused on driving enhanced operating results and shareholder value. This broad-based plan includes cost improvement actions across the entire enterprise, optimizing its organizational structure to support future growth of the business. The Company continues to make significant progress under Project Core and is in position to realize in-year savings of approximately $50 million and annualized savings of over $100 million when fully implemented. Restructuring and related charges associated with these actions are now estimated to be in the range of $40 million to $50 million, excluding those related to the Varis Division, and are expected to be substantially incurred throughout 2024.
Varis Division Update
The Company has entered into a non-binding term sheet agreement with a third-party for the sale of Varis. Under the proposed terms, the Company would retain an approximately 20% current stake in the entity. However, there can be no assurances regarding the ultimate timing of this proposed transaction or that such transaction will be completed.
“After a thorough process, we have arrived at a path forward for Varis that aligns with our stated objectives of finalizing our capital commitment to the business, while providing ODP with a continued invested interest in the opportunities ahead. We expect to announce further details of the proposed transaction upon close, which we expect to be completed in the third quarter,” added Smith.
2024 Guidance
“Our performance in the first half of the year was clearly below expectations, placing us behind our goals for the year,” said Smith. “The initiatives we are taking to improve our top-line trajectory, along with our low-cost model, high touch service approach, and strong value proposition, give us confidence in our ability to improve our performance and position us for greater stability and growth in the future. Considering our slow start to the first half of the year, as well as the uncertain macroeconomic environment and the potential variability of the timing of our initiatives, we are updating our 2024 guidance as follows”:
Updated full-year guidance for 2024
*Adjusted Earnings per Share (fully diluted) (EPS) guidance for 2024 excludes potential discrete (tax) items that may affect quarter to quarter fluctuations and includes expected impact from share repurchases
The Company’s full year guidance for 2024 includes non-GAAP measures, such as Adjusted EBITDA, Adjusted Operating Income, Adjusted Earnings per Share (fully diluted) and Adjusted Free Cash Flow. These measures exclude charges or credits not indicative of core operations, which may include but not be limited to restructuring charges, capital expenditures, acquisition-related costs, executive transition costs, asset impairments and other significant items that currently cannot be predicted without unreasonable efforts. The exact amount of these charges or credits are not currently determinable but may be significant. Accordingly, the Company is unable to provide equivalent GAAP measures or reconciliations from GAAP to non-GAAP for these financial measures.
“As a result of our first half performance, along with a continuing challenging macro environment and lower than anticipated sales pipeline conversion in ODP Business Solutions, we are lowering our full year outlook. While first half results were below our expectations, our team remains focused on executing upon opportunities in our business to grow our top line, leveraging our low-cost business model, strong balance sheet, and diverse routes to market,” said Scaglione.
The ODP Corporation will webcast a call with financial analysts and investors on August 7, 2024, at 9:00 am Eastern Time, which will be accessible to the media and the general public. To listen to the conference call via webcast, please visit The ODP Corporation’s Investor Relations website at investor.theodpcorp.com. A replay of the webcast will be available approximately two hours following the event.
(1)
As presented throughout this release, adjusted results represent non-GAAP financial measures and exclude charges or credits not indicative of core operations and the tax effect of these items, which may include but not be limited to merger integration, restructuring, acquisition costs, and asset impairments. Reconciliations from GAAP to non-GAAP financial measures can be found in this release as well as on the Company’s Investor Relations website at investor.theodpcorp.com.
(2)
As used in this release, Free Cash Flow is defined as cash flows from operating activities less capital expenditures. Free Cash Flow is a non-GAAP financial measure and reconciliations from GAAP financial measures can be found in this release as well as on the Company’s Investor Relations website at investor.theodpcorp.com.
(3)
As used in this release, Adjusted Free Cash Flow is defined as Free Cash Flow excluding cash charges associated with the Company’s Project Core Restructuring, and related expenses. Adjusted Free Cash Flow is a non-GAAP financial measure and reconciliations from GAAP financial measures can be found in this release as well as on the Company’s Investor Relations website at investor.theodpcorp.com.
About The ODP Corporation
The ODP Corporation (NASDAQ:ODP) is a leading provider of products, services, and technology solutions through an integrated business-to-business (B2B) distribution platform and omni-channel presence, which includes supply chain and distribution operations, dedicated sales professionals, online presence, and a network of Office Depot and OfficeMax retail stores. Through its operating companies ODP Business Solutions, LLC; Office Depot, LLC; and Veyer, LLC, The ODP Corporation empowers every business, professional, and consumer to achieve more every day. For more information, visit theodpcorp.com.
FORWARD LOOKING STATEMENTS This communication may contain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These statements or disclosures may discuss goals, intentions and expectations as to future trends, plans, events, results of operations, cash flow or financial condition, or state other information relating to, among other things, the Company, based on current beliefs and assumptions made by, and information currently available to, management. Forward-looking statements generally will be accompanied by words such as “anticipate,” “believe,” “plan,” “could,” “estimate,” “expect,” “forecast,” “guidance,” “expectations”, “outlook,” “intend,” “may,” “possible,” “potential,” “predict,” “project,” “propose” or other similar words, phrases or expressions, or other variations of such words. These forward-looking statements are subject to various risks and uncertainties, many of which are outside of the Company’s control. There can be no assurances that the Company will realize these expectations or that these beliefs will prove correct, and therefore investors and stakeholders should not place undue reliance on such statements. Factors that could cause actual results to differ materially from those in the forward-looking statements include, among other things, highly competitive office products market and failure to differentiate the Company from other office supply resellers or respond to decline in general office supplies sales or to shifting consumer demands; competitive pressures on the Company’s sales and pricing; the risk that the Company is unable to transform the business into a service-driven, B2B platform or that such a strategy will not result in the benefits anticipated; the risk that the Company will not be able to achieve the expected benefits of its strategic plans, including a potential sale of Varis on the terms proposed or at all and benefits related to Project Core; the risk that the Company may not be able to realize the anticipated benefits of acquisitions due to unforeseen liabilities, future capital expenditures, expenses, indebtedness and the unanticipated loss of key customers or the inability to achieve expected revenues, synergies, cost savings or financial performance; the risk that the Company is unable to successfully maintain a relevant omni-channel experience for its customers; the risk that the Company is unable to execute the Maximize B2B Restructuring Plan successfully or that such plan will not result in the benefits anticipated; failure to effectively manage the Company’s real estate portfolio; loss of business with government entities, purchasing consortiums, and sole- or limited- source distribution arrangements; failure to attract and retain qualified personnel, including employees in stores, service centers, distribution centers, field and corporate offices and executive management, and the inability to keep supply of skills and resources in balance with customer demand; failure to execute effective advertising efforts and maintain the Company’s reputation and brand at a high level; disruptions in computer systems, including delivery of technology services; breach of information technology systems affecting reputation, business partner and customer relationships and operations and resulting in high costs and lost revenue; unanticipated downturns in business relationships with customers or terms with the suppliers, third-party vendors and business partners; disruption of global sourcing activities, evolving foreign trade policy (including tariffs imposed on certain foreign made goods); exclusive Office Depot branded products are subject to additional product, supply chain and legal risks; product safety and quality concerns of manufacturers’ branded products and services and Office Depot private branded products; covenants in the credit facility; general disruption in the credit markets; incurrence of significant impairment charges; retained responsibility for liabilities of acquired companies; fluctuation in quarterly operating results due to seasonality of the Company’s business; changes in tax laws in jurisdictions where the Company operates; increases in wage and benefit costs and changes in labor regulations; changes in the regulatory environment, legal compliance risks and violations of the U.S. Foreign Corrupt Practices Act and other worldwide anti-bribery laws; volatility in the Company’s common stock price; changes in or the elimination of the payment of cash dividends on Company common stock; macroeconomic conditions such as higher interest rates and future declines in business or consumer spending; increases in fuel and other commodity prices and the cost of material, energy and other production costs, or unexpected costs that cannot be recouped in product pricing; unexpected claims, charges, litigation, dispute resolutions or settlement expenses; catastrophic events, including the impact of weather events on the Company’s business; the discouragement of lawsuits by shareholders against the Company and its directors and officers as a result of the exclusive forum selection of the Court of Chancery, the federal district court for the District of Delaware or other Delaware state courts by the Company as the sole and exclusive forum for such lawsuits; and the impact of the COVID-19 pandemic on the Company’s business. The foregoing list of factors is not exhaustive. Investors and shareholders should carefully consider the foregoing factors and the other risks and uncertainties described in the Company’s Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q, and Current Reports on Form 8-K filed with the U.S. Securities and Exchange Commission. The Company does not assume any obligation to update or revise any forward-looking statements.
Strong financial results further validates solid execution of strategic initiatives to grow and drive stronger earnings power
Revenue up 5% to a record $50.0 million reflecting strength in defense and refining; gross margin expanded 170 basis points to 24.8%
Net income increased 12% to $3.0 million for net margin of 5.9%, adjusted net income1 was up 20% to $3.6 million and adjusted EBITDA1 was $5.1 million, or 10.3% of sales
Orders of $55.8 million driven by defense market and international demand, resulted in a book-to-bill ratio of 1.1x and nearly $400 million in backlog2
Strong balance sheet with no debt and $21.6 million of cash at June 30, 2024, provides financial flexibility to support future growth
BATAVIA, N.Y.–(BUSINESS WIRE)– First paragraph, first sentence of release should read: Graham Corporation (NYSE: GHM) (“GHM” or the “Company”), a global leader in the design and manufacture of mission critical fluid, power, heat transfer and vacuum technologies for the defense, space, energy, and process industries, today reported financial results for its first quarter for the fiscal year ending March 31, 2025 (“fiscal 2025”). (instead of Graham Corporation (NYSE: GHM) (“GHM” or the “Company”), a global leader in the design and manufacture of mission critical fluid, power, heat transfer and vacuum technologies for the defense, space, energy, and process industries, today reported financial results for its first quarter for the fiscal year ended June 30, 2024 (“fiscal 2025”).
The updated release reads:
GRAHAM CORPORATION NET INCOME INCREASED 12% TO $3.0 MILLION ON EXPANDED GROSS MARGIN OF 24.8% IN FIRST QUARTER OF FISCAL 2025
Graham Corporation (NYSE: GHM) (“GHM” or the “Company”), a global leader in the design and manufacture of mission critical fluid, power, heat transfer and vacuum technologies for the defense, space, energy, and process industries, today reported financial results for its first quarter for the fiscal year ending March 31, 2025 (“fiscal 2025”). Results for the quarter include the P3 Technologies, LLC (“P3”) acquisition, which closed on November 9, 2023.
“We are delivering consistent improvement, solid growth and strengthening profitability,” commented Daniel J. Thoren, President and Chief Executive Officer. “We believe our solid results reflect the commitment and discipline of the GHM team, the confidence our customers have bestowed on us and the effectiveness of our strategy to build better companies. In addition to the visibility our nearly $400 million in backlog provides, it is worth noting that the growth of our defense business has also reduced our economic sensitivity as we receive a steady flow of program renewals and new opportunities with the U.S. Navy. In fact, we will be breaking ground this month on a new 29,000 square foot facility in Batavia, NY to provide production efficiencies, and increased capabilities and capacity to support our defense customer’s needs.”
He concluded, “These are exciting times at Graham Corp. We are steadily advancing our plan, delivering on our targets and are strategically positioning for continued growth.”
First Quarter Fiscal 2025 Performance Review (All comparisons are with the same prior-year period unless noted otherwise.)
*Graham believes that, when used in conjunction with measures prepared in accordance with U.S. generally accepted accounting principles, adjusted net income, adjusted diluted net income per share, Adjusted EBITDA and adjusted EBITDA margin, which are non-GAAP measures, help in the understanding of its operating performance. See attached tables and other information on pages 10 and 11 for important disclosures regarding Graham’s use of these non-GAAP measures.
Record quarterly net sales of $50.0 million increased 5%, or $2.4 million, and included $1.6 million of incremental sales from P3. Sales to the defense market increased $6.3 million, or 28%, and were driven by better execution, improved pricing, and increased direct labor. These increases more than offset lower “Other” revenue that reflected variability in project timing across multiple markets and customers. Aftermarket sales to the refining, chemical/petrochemical, and defense markets of $7.8 million remained strong but were $3.0 million lower than the prior year record levels. See supplemental data for a further breakdown of sales by market and region.
Gross margin expanded 170 basis points to 24.8%, which reflected higher margin defense sales, higher margin P3 sales, and improved execution. Additionally, gross profit for the quarter benefited $480 thousand due to a $2.1 million grant received from BlueForge Alliance to reimburse the Company for the cost of its defense welder training programs in Batavia and related equipment. BlueForge Alliance is a nonprofit, neutral integrator that supports the U.S. Navy’s submarine industrial base initiatives.
Selling, general and administrative expense (“SG&A”), inclusive of amortization, was $9.3 million, or 18.6% of sales, up $2.0 million over the prior year. This increase reflects the continued investments the Company is making in its operations, employees, and technology. This included $0.3 million of incremental costs related to P3, $0.3 million for enterprise resource planning (“ERP”) conversion costs at the Batavia facility, $0.4 million of incremental research and development costs, and a $0.3 million increase in the supplemental performance bonus for Barber-Nichols employees3. When compared with the fourth quarter of fiscal 2024, SG&A expenses decreased $1.8 million, or 16%, primarily due to lower professional services fees and performance-based compensation.
Cash Management and Balance Sheet Cash provided by operating activities was $8.7 million for the first quarter of fiscal 2025. Cash and cash equivalents on June 30, 2024, were $21.6 million up from $16.9 million on March 31, 2024. Capital expenditures for the first quarter of fiscal 2025 were $3.0 million.
The Company had no debt outstanding at June 30, 2024 with $29 million available on its senior secured revolving credit facility.
Orders for the three-month period ended June 30, 2024, were $55.8 million, which equated to a book-to-bill ratio of 1.1x. Defense orders represented 51% of total orders and included the second option year award to support the MK48 Mod 7 Heavyweight Torpedo program with mission critical alternators and regulators. Additionally, orders for the quarter included three surface condenser systems for the world’s first net-zero carbon emissions integrated ethylene cracker and derivatives site located in North America. Aftermarket orders for the refining and petrochemical markets for the first quarter of fiscal 2025 increased 4% to $8.2 million compared with the prior-year period.
Backlog at quarter end was $396.8 million, up 23% compared with the prior-year period and up 2% compared with the end of the trailing fourth quarter of fiscal 2024. Approximately 35% to 45% of orders currently in backlog are expected to be converted to sales in the next twelve months and another 25% to 30% is expected to convert to sales over the following year. The majority of orders expected to convert beyond twelve months are for the defense industry, specifically the U.S. Navy.
Fiscal 2025 Outlook The Company’s outlook for 2025 is reaffirmed as follows:
(1) Includes approximately $6.5 million to $7.5 million of BN supplemental performance bonus, equity-based compensation, and ERP conversion costs included in SG&A expense. (2) Excludes net interest expense, income taxes, depreciation and amortization from net income, as well as approximately $2.0 million to $3.0 million of equity-based compensation and ERP conversion costs included in SG&A expense.
Webcast and Conference Call GHM’s management will host a conference call and live webcast on August 7, 2024 at 11:00 a.m. Eastern Time (“ET”) to review its financial results as well as its strategy and outlook. The review will be accompanied by a slide presentation, which will be made available immediately prior to the conference call on GHM’s investor relations website.
A question-and-answer session will follow the formal presentation. GHM’s conference call can be accessed by calling (201) 689-8560. Alternatively, the webcast can be monitored from the events section of GHM’s investor relations website.
A telephonic replay will be available from 3:00 p.m. ET today through Wednesday, August 14, 2024. To listen to the archived call, dial (412) 317-6671 and enter conference ID number 13746993 or access the webcast replay via the Company’s website at ir.grahamcorp.com, where a transcript will also be posted once available.
About Graham Corporation Graham is a global leader in the design and manufacture of mission critical fluid, power, heat transfer and vacuum technologies for the defense, space, energy, and process industries. Graham Corporation and its family of global brands are built upon world-renowned engineering expertise in vacuum and heat transfer, cryogenic pumps, and turbomachinery technologies, as well as its responsive and flexible service and the unsurpassed quality customers have come to expect from the Company’s products and systems. Graham Corporation routinely posts news and other important information on its website, grahamcorp.com, where additional information on Graham Corporation and its businesses can be found.
Safe Harbor Regarding Forward Looking Statements This news release contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended.
Forward-looking statements are subject to risks, uncertainties and assumptions and are identified by words such as “expects,” “future,” “outlook,” “anticipates,” “believes,” “could,” “guidance,” “should,” ”may”, “will,” “plan” and other similar words. All statements addressing operating performance, events, or developments that Graham Corporation expects or anticipates will occur in the future, including but not limited to, profitability of future projects and the business, its ability to deliver to plan, its ability to continue to strengthen relationships with customers in the defense industry, its ability to secure future projects and applications, expected expansion and growth opportunities, anticipated sales, revenues, adjusted EBITDA, adjusted EBITDA margins, capital expenditures and SG&A expenses, the timing of conversion of backlog to sales, orders, market presence, profit margins, tax rates, foreign sales operations, customer preferences, changes in market conditions in the industries in which it operates, changes in general economic conditions and customer behavior, forecasts regarding the timing and scope of the economic recovery in its markets, and its acquisition and growth strategy, are forward-looking statements. Because they are forward-looking, they should be evaluated in light of important risk factors and uncertainties. These risk factors and uncertainties are more fully described in Graham Corporation’s most recent Annual Report filed with the Securities and Exchange Commission (the “SEC”), included under the heading entitled “Risk Factors”, and in other reports filed with the SEC.
Should one or more of these risks or uncertainties materialize or should any of Graham Corporation’s underlying assumptions prove incorrect, actual results may vary materially from those currently anticipated. In addition, undue reliance should not be placed on Graham Corporation’s forward-looking statements. Except as required by law, Graham Corporation disclaims any obligation to update or publicly announce any revisions to any of the forward-looking statements contained in this news release.
Non-GAAP Financial Measures Adjusted EBITDA is defined as consolidated net income (loss) before net interest expense, income taxes, depreciation, amortization, other acquisition related expenses, and other unusual/nonrecurring expenses. Adjusted EBITDA margin is defined as Adjusted EBITDA as a percentage of sales. Adjusted EBITDA and Adjusted EBITDA margin are not measures determined in accordance with generally accepted accounting principles in the United States, commonly known as GAAP. Nevertheless, Graham believes that providing non-GAAP information, such as Adjusted EBITDA and Adjusted EBITDA margin, is important for investors and other readers of Graham’s financial statements, as it is used as an analytical indicator by Graham’s management to better understand operating performance. Moreover, Graham’s credit facility also contains ratios based on Adjusted EBITDA. Because Adjusted EBITDA and Adjusted EBITDA margin are non-GAAP measures and are thus susceptible to varying calculations, Adjusted EBITDA, and Adjusted EBITDA margin, as presented, may not be directly comparable to other similarly titled measures used by other companies.
Adjusted net income and adjusted net income per diluted share are defined as net income and net income per diluted share as reported, adjusted for certain items and at a normalized tax rate. Adjusted net income and adjusted net income per diluted share are not measures determined in accordance with GAAP, and may not be comparable to the measures as used by other companies. Nevertheless, Graham believes that providing non-GAAP information, such as adjusted net income and adjusted net income per diluted share, is important for investors and other readers of the Company’s financial statements and assists in understanding the comparison of the current quarter’s and current fiscal year’s net income and net income per diluted share to the historical periods’ net income and net income per diluted share. Graham also believes that adjusted net income per share, which adds back intangible amortization expense related to acquisitions, provides a better representation of the cash earnings of the Company.
Forward-Looking Non-GAAP Measures Forward-looking adjusted EBITDA and adjusted EBITDA margin are non-GAAP measures. The Company is unable to present a quantitative reconciliation of these forward-looking non-GAAP financial measures to their most directly comparable forward-looking GAAP financial measures because such information is not available, and management cannot reliably predict the necessary components of such GAAP measures without unreasonable effort largely because forecasting or predicting our future operating results is subject to many factors out of our control or not readily predictable. In addition, the Company believes that such reconciliations would imply a degree of precision that would be confusing or misleading to investors. The unavailable information could have a significant impact on the Company’s fiscal 2024 financial results. These non-GAAP financial measures are preliminary estimates and are subject to risks and uncertainties, including, among others, changes in connection with purchase accounting, quarter-end, and year-end adjustments. Any variation between the Company’s actual results and preliminary financial estimates set forth above may be material.
Key Performance Indicators In addition to the foregoing non-GAAP measures, management uses the following key performance metrics to analyze and measure the Company’s financial performance and results of operations: orders, backlog, and book-to-bill ratio. Management uses orders and backlog as measures of current and future business and financial performance, and these may not be comparable with measures provided by other companies. Orders represent written communications received from customers requesting the Company to provide products and/or services. Backlog is defined as the total dollar value of net orders received for which revenue has not yet been recognized. Management believes tracking orders and backlog are useful as they often times are leading indicators of future performance. In accordance with industry practice, contracts may include provisions for cancellation, termination, or suspension at the discretion of the customer.
The book-to-bill ratio is an operational measure that management uses to track the growth prospects of the Company. The Company calculates the book-to-bill ratio for a given period as net orders divided by net sales.
Given that each of orders, backlog, and book-to-bill ratio are operational measures and that the Company’s methodology for calculating orders, backlog and book-to-bill ratio does not meet the definition of a non-GAAP measure, as that term is defined by the U.S. Securities and Exchange Commission, a quantitative reconciliation for each is not required or provided.
BOCA RATON, Fla.–(BUSINESS WIRE)–Aug. 7, 2024– 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 second quarter and first six months of 2024.
Second Quarter 2024 Highlights
Total revenues of $607.2 million
Net Loss Attributable to GEO of $0.25 per diluted share, reflects costs associated with the extinguishment of debt of $82.3 million, pre-tax, in connection with the April 2024 debt refinancing
Adjusted Net Income of $0.23 per diluted share
Adjusted EBITDA of $119.3 million
For the second quarter 2024, we reported a net loss attributable to GEO of $32.5 million, or $0.25 per diluted share, compared to net income attributable to GEO of $29.6 million, or $0.20 per diluted share, for the second quarter 2023. Second quarter 2024 results reflect costs associated with the extinguishment of debt of $82.3 million, pre-tax, in connection with the April 2024 refinancing of our debt. Excluding the costs associated with the extinguishment of debt and other unusual and/or nonrecurring items, we reported adjusted net income for the second quarter 2024 of $30.1 million, or $0.23 per diluted share, compared to $29.2 million, or $0.24 per diluted share, for the second quarter 2023.
We reported total revenues for the second quarter 2024 of $607.2 million compared to $593.9 million for the second quarter 2023. We reported second quarter 2024 Adjusted EBITDA of $119.3 million, compared to $129.0 million for the second quarter 2023.
George C. Zoley, Executive Chairman of GEO, said, “Our diversified business units have continued to deliver steady financial and operational performance. We are pleased to have completed the comprehensive refinancing of our debt, including the exchange and retirement of substantially all of our convertible notes, during the second quarter of 2024. We believe that these important transactions significantly enhanced our balance sheet, lowered our average cost of debt, and have given us greater flexibility to evaluate options for capital returns in the future. We remain focused on the disciplined allocation of capital to enhance long-term value for shareholders as we execute our company’s strategic priorities and pursue quality growth opportunities.”
First Six Months 2024 Highlights
Total revenues of $1.21 billion
Net Loss Attributable to GEO of $0.08 per diluted share, reflects costs associated with the extinguishment of debt of $82.4 million, pre-tax
Adjusted Net Income of $0.43 per diluted share
Adjusted EBITDA of $236.9 million
For the first six months of 2024, we reported a net loss attributable to GEO of $9.9 million, or $0.08 per diluted share, compared to net income attributable to GEO of $57.6 million, or $0.39 per diluted share, for the first six months of 2023. Results for the first six months of 2024 reflect costs associated with the extinguishment of debt of $82.4 million, pre-tax. Excluding the costs associated with the extinguishment of debt and other unusual and/or nonrecurring items, we reported adjusted net income for the first six months of 2024 of $53.8 million, or $0.43 per diluted share, compared to $57.3 million, or $0.46 per diluted share, for the first six months of 2023.
We reported total revenues for the first six months of 2024 of $1.21 billion compared to $1.20 billion for the first six months of 2023. We reported Adjusted EBITDA for the first six months of 2024 of $236.9 million, compared to $259.9 million for the first six months of 2023.
Financial Guidance
Today, we updated our financial guidance for 2024. For the full year 2024, we expect net income Attributable to GEO to be in a range of $0.40 to $0.51 per diluted share, on annual revenues of approximately $2.44 billion and reflecting an effective tax rate of approximately 24 percent, inclusive of known discrete items. Our full-year 2024 guidance reflects the costs associated with the extinguishment of debt of $82.4 million, pre-tax, in connection with the refinancing of our debt.
Excluding the costs associated with the extinguishment of debt and other unusual and/or nonrecurring items, we expect full year 2024 Adjusted Net Income to be in a range of $0.82 to $0.93 per diluted share. We expect full year 2024 Adjusted EBITDA to be between $485 million and $505 million.
For the third quarter 2024, we expect net income attributable to GEO to be in a range of $0.21 to $0.25 per diluted share. We expect third quarter 2024 revenues to be in a range of $606 million to $616 million. We expect third quarter 2024 Adjusted EBITDA to be in a range of $123 million to $130 million.
For the fourth quarter 2024, we expect net income attributable to GEO to be in a range of $0.22 to $0.29 per diluted share. We expect fourth quarter 2024 revenues to be in a range of $611 million to $621 million. We expect fourth quarter 2024 Adjusted EBITDA to be in a range of $125 million to $138 million.
Recent Developments
During the second quarter 2024, U.S. Immigration and Customs Enforcement (“ICE”) issued a task order for the GEO-owned 1,940-bed Adelanto ICE Processing Center in California (the “Adelanto Center”), which provides for continued funding through October 19, 2024, allowing additional time for ICE to obtain relief from previously disclosed COVID-related litigation that currently prevents full use of the Adelanto Center. ICE and GEO entered into a 15-year contract on December 19, 2019, for the provision of secure residential housing and care at the Adelanto Center, consisting of a 5-year base period, ending on December 19, 2024, followed by two 5-year option periods.
On June 20, 2024, we announced that GEO had given the Oklahoma Department of Corrections (“ODOC”) notice of our intent to discontinue our management contract for the company-owned, 2,388-bed Lawton Correctional and Rehabilitation Facility (the “Lawton Facility”), which was set to expire on June 30, 2024. Subsequently, on June 26, 2024, GEO and the ODOC agreed to enter into a new one-year contract, continuing GEO’s operation of the Lawton Facility through June 30, 2025, under revised terms.
Balance Sheet
During the second quarter 2024, we completed the comprehensive refinancing of our debt, including the exchange and retirement of $229.4 million of the $230 million in aggregate principal amount of our senior unsecured exchangeable notes due 2026 using a combination of $229.4 million in cash and approximately 12.4 million shares of GEO common stock.
As of June 30, 2024, our senior debt was comprised of $650.0 million aggregate principal amount of 8.625% senior secured notes due 2029; $625.0 million aggregate principal amount of 10.25% senior unsecured notes due 2031; $444.4 million in borrowings under a Term Loan B due 2029, bearing interest at SOFR plus 5.25%; $40.0 million in borrowings outstanding under a $310 million Revolving Credit Facility bearing interest at SOFR plus 3.00%; and $40.7 million in other secured and unsecured debt. Net of cash-on-hand of $46.3 million, our total net debt was approximately $1.754 billion at the end of the second quarter 2024.
Conference Call Information
We have scheduled a conference call and webcast for today at 11:00 AM (Eastern Time) to discuss our second quarter 2024 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 August 14, 2024, at 1-877-344-7529 (U.S.) and 1-412-317-0088 (International). The participant passcode for the telephonic replay is 4116450.
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 2024, 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/impairment, pre-tax, net loss attributable to non-controlling interests, stock-based compensation expenses, pre-tax, start-up expenses, pre-tax, ATM equity program expenses, pre-tax, transaction fees, pre-tax, close-out expenses, pre-tax, other non-cash items, 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/(loss) 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 loss on the extinguishment of debt, pre-tax, start-up expenses, pre-tax, transaction fees, pre-tax, ATM equity program expenses, pre-tax, close-out expenses, pre-tax, discrete tax benefit, 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, third quarter, and fourth quarter of 2024, statements regarding GEO’s focus on reducing net debt, deleveraging its balance sheet, positioning itself to explore options to return capital to shareholders in the future, and pursuing a disciplined allocation of capital to enhance long-term value for shareholders, executing on GEO’s strategic priorities, and pursuing quality growth opportunities. 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 2024 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 or potential acquisitions of assets or 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) any continuing impact of the COVID-19 global pandemic on GEO and GEO’s ability to mitigate the risks associated with COVID-19; (8) GEO’s ability to sustain or improve company-wide occupancy rates at its facilities; (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 opportunities 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.
NEW YORK, August 6, 2024 /PRNewswire/ — Bit Digital, Inc. (Nasdaq: BTBT) (“Bit Digital” or the “Company”), a sustainable platform for digital assets and artificial intelligence (“AI”) infrastructure headquartered in New York, announced its unaudited digital asset production and corporate updates for the month of July 2024.
Corporate Highlights for July 2024
The Company had 256 servers actively generating revenue from its initial Bit Digital AI contract, as of July 31, 2024. The Company earned an estimated $4.3 million of unaudited revenue from this contract during the month of July 2024.
In July 2024, the Company produced 60.5 BTC, a 1.9% decrease compared to the prior month.
The Company’s active hash rate was approximately 2.46 EH/s as of July 31, 2024.
Treasury holdings of BTC and ETH were 641.8 and 27,274.4 with a fair market value of approximately $41.5 million and $88.1 million, respectively, on July 31, 2024.
The BTC equivalent1 of our digital asset holdings as of July 31, 2024, was approximately 2,009.0 or approximately $129.8 million.
The Company had cash and cash equivalents of $82.1 million and total liquidity (defined as cash and cash equivalents, USDC, and the fair market value of digital assets) of approximately $211.9 million, as of July 31, 2024.
Proof-of-Stake Highlights
The Company had approximately 17,184 ETH actively staked in native staking protocols as of July 31, 2024.
Bit Digital earned a blended APY of approximately 3.3% on its staked ETH position for the month of July 2024.
The Company earned aggregate staking rewards of approximately 47.5 ETH during July 2024.
Upcoming Events
2024 Annual Gateway Conference, San Francisco, CA on September 4-5
About Bit Digital
Bit Digital, Inc. is a sustainable platform for digital assets and artificial intelligence (“AI”) infrastructure headquartered in New York City. Our bitcoin mining operations are located in the US, Canada, and Iceland. The Company has established a business line, Bit Digital AI, that offers specialized cloud-infrastructure services for artificial intelligence applications. For additional information, please contact ir@bit-digital.com or visit our website at www.bit-digital.com.
Investor Notice
Investing in our securities involves a high degree of risk. Before making an investment decision, you should carefully consider the risks, uncertainties and forward-looking statements described under “Risk Factors” in Item 3.D of our most recent Annual Report on Form 20-F for the fiscal year ended December 31, 2023. If any material risk was to occur, our business, financial condition or results of operations would likely suffer. In that event, the value of our securities could decline and you could lose part or all of your investment. The risks and uncertainties we describe are not the only ones facing us. Additional risks not presently known to us or that we currently deem immaterial may also impair our business operations. In addition, our past financial performance may not be a reliable indicator of future performance, and historical trends should not be used to anticipate results in the future. Future changes in the network-wide mining difficulty rate or bitcoin hash rate may also materially affect the future performance of Bit Digital’s production of bitcoin. Actual operating results will vary depending on many factors including network difficulty rate, total hash rate of the network, the operations of our facilities, the status of our miners, and other factors.
Safe Harbor Statement
This press release may contain certain “forward-looking statements” relating to the business of Bit Digital, Inc., and its subsidiary companies. All statements, other than statements of historical fact included herein are “forward-looking statements.” These forward-looking statements are often identified by the use of forward-looking terminology such as “believes,” “expects,” or similar expressions, involving known and unknown risks and uncertainties. Although the Company believes that the expectations reflected in these forward-looking statements are reasonable, they do involve assumptions, risks and uncertainties, and these expectations may prove to be incorrect. Investors should not place undue reliance on these forward-looking statements, which speak only as of the date of this press release. The Company’s actual results could differ materially from those anticipated in these forward-looking statements as a result of a variety of factors, including those discussed in the Company’s periodic reports that are filed with the Securities and Exchange Commission and available on its website at http://www.sec.gov. All forward-looking statements attributable to the Company or persons acting on its behalf are expressly qualified in their entirety by these factors. Other than as required under the securities laws, the Company does not assume a duty to update these forward-looking statements.
MORTON GROVE, Ill., Aug. 6, 2024 /PRNewswire/ — Lifeway Foods, Inc. (Nasdaq: LWAY) (“Lifeway” or “the Company”), a leading U.S. supplier of kefir and fermented probiotic products to support the microbiome, today announced it will report financial results for the second quarter ended June 30, 2024 on August 13, 2024 before market hours.
A pre-recorded conference call and webcast with Julie Smolyanksy, Lifeway’s President and Chief Executive Officer, discussing these results with additional comments and details will be made available through the “Investor Relations” section of the Company’s website at https://lifewaykefir.com/webinars-reports/ upon dissemination of the second quarter results on August 13, 2024 before market hours.
About Lifeway Foods, Inc. Lifeway Foods, Inc., which has been recognized as one of Forbes’ Best Small Companies, is America’s leading supplier of the probiotic, fermented beverage known as kefir. In addition to its line of drinkable kefir, the company also produces a variety of cheeses and a ProBugs line for kids. Lifeway’s tart and tangy fermented dairy products are now sold across the United States, Mexico, Ireland and France. Learn how Lifeway is good for more than just you at lifewayfoods.com.
Media: Derek Miller Vice President of Communications, Lifeway Foods Email: derekm@lifeway.net
General inquiries: Lifeway Foods, Inc. Phone: 847-967-1010 Email: info@lifeway.net
For more than 70 years, Vectrus has provided critical mission support for our customers’ toughest operational challenges. As a high-performing organization with exceptional talent, deep domain knowledge, a history of long-term customer relationships, and groundbreaking technical expertise, we deliver innovative, mission-matched solutions for our military and government customers worldwide. Whether it’s base operations support, supply chain and logistics, IT mission support, engineering and digital integration, security, or maintenance, repair and overhaul, our customers count on us for on-target solutions that increase efficiency, reduce costs, improve readiness, and strengthen national security. Vectrus is headquartered in Colorado Springs, Colo., and includes about 8,100 employees spanning 205 locations in 28 countries. In 2021, Vectrus generated sales of $1.8 billion. For more information, visit the company’s website at www.vectrus.com or connect with Vectrus on Facebook, Twitter, and LinkedIn.
Joe Gomes, CFA, Managing Director, Equity Research Analyst, Generalist , Noble Capital Markets, Inc.
Joshua Zoepfel, Research Associate, Noble Capital Markets, Inc.
Refer to the full report for the price target, fundamental analysis, and rating.
2Q24 Results. Record revenue of $1.07 billion, up 9.7% from $977.9 million in 2Q23. We had estimated $1.02 billion. Adjusted EBITDA totaled $72.3 million, or a 6.7% margin, compared to $77.8 million and 8.0% last year, driven by contract mix. V2X reported a GAAP net loss of $6.5 million, or a loss of $0.21/sh, versus net income of $1.8 million, or $0.06/sh, in 2Q23. Adjusted EPS was $0.83 versus $1.10. We had estimated adjusted EPS at $0.87.
Revenue Drivers. Revenue growth in the quarter was achieved through continued expansion of existing business in the Pacific and Middle East regions, as well as new programs. Revenue growth in both areas grew by 29% year-over-year. Notably, in the quarter V2X had over $500 million of on contract growth.
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*Analyst certification and important disclosures included in the full report. NOTE: investment decisions should not be based upon the content of this research summary. Proper due diligence is required before making any investment decision.
ISG (Information Services Group) (Nasdaq: III) is a leading global technology research and advisory firm. A trusted business partner to more than 700 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 1,300 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 additional information, visit www.ISG-One.com
Joe Gomes, CFA, Managing Director, Equity Research Analyst, Generalist , Noble Capital Markets, Inc.
Joshua Zoepfel, Research Associate, Noble Capital Markets, Inc.
Refer to the full report for the price target, fundamental analysis, and rating.
Improved Metrics. Although performance decreased from the prior year, the Company improved sequentially. Stable revenue and lower costs led to higher a gross margin of 39.5% compared to 36.1% in the first quarter. The increased margin led to profitability in the quarter compared to a net loss last quarter. These improvements show ISG’s efficiency in the continued down environment while the Company prepares for clients to resuming spending, in our view.
Geographies. Although the regions are down from the prior year, most of ISG’s geographies are showing stability. Both the Americas and Europe are experiencing stability in their pipelines even as the uncertain macro environment continues. We would note management believes spending will resume more quickly in the Americas segment, primarily the U.S., with a return to spending as soon as the fourth quarter.
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GeoVax Labs, Inc. is a clinical-stage biotechnology company developing novel therapies and vaccines for solid tumor cancers and many of the world’s most threatening infectious diseases. The company’s lead program in oncology is a novel oncolytic solid tumor gene-directed therapy, Gedeptin®, presently in a multicenter Phase 1/2 clinical trial for advanced head and neck cancers. GeoVax’s lead infectious disease candidate is GEO-CM04S1, a next-generation COVID-19 vaccine targeting high-risk immunocompromised patient populations. Currently in three Phase 2 clinical trials, GEO-CM04S1 is being evaluated as a primary vaccine for immunocompromised patients such as those suffering from hematologic cancers and other patient populations for whom the current authorized COVID-19 vaccines are insufficient, and as a booster vaccine in patients with chronic lymphocytic leukemia (CLL). In addition, GEO-CM04S1 is in a Phase 2 clinical trial evaluating the vaccine as a more robust, durable COVID-19 booster among healthy patients who previously received the mRNA vaccines. GeoVax has a leadership team who have driven significant value creation across multiple life science companies over the past several decades.
Robert LeBoyer, Senior Vice President, Equity Research Analyst, Biotechnology, Noble Capital Markets, Inc.
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GeoVax Made Significant Advances In 2Q24. GeoVax reported a 2Q24 loss of $5.1 million or $(1.99) per share. The company reviewed the progress made during the quarter, including the DARPA grant for the Phase 2 CM04S1 trial, two CM04S1 trials in immunocompromised cancer patients, and announcement of the Phase 2 Gedeptin trial design.
Financial Results Reflect First Grant Revenues. During 2Q, GeoVax recognized $0.3 million in revenues from work related to the Phase 2 CM04S1 trial. Revenue is recognized as the work is completed on a cost-reimbursement basis, with billings recorded as receivables. The company had $1.6 million in cash on June 30 and plans to raise capital in the near future.
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Joe Gomes, CFA, Managing Director, Equity Research Analyst, Generalist , Noble Capital Markets, Inc.
Jacob Mutchler, Research Associate, Noble Capital Markets, Inc.
Refer to the full report for the price target, fundamental analysis, and rating.
Electrical Systems. To our surprise, the segment had a difficult quarter, revenue decreased $13.5 million, or 21.2%. The decrease was largely attributed to a slow down in the construction and agriculture industries, and new contract wins taking longer to ramp up and at lower than expected volumes. In our view, the company is well positioned to capitalize on the industry rebound, anticipated to take place in 2025 & 2026.
Vehicle Solutions. The segment experienced a decrease of $11.8 million, or 7.7%, from the prior year period, which was primarily driven by softer demand and reorganization. Notably, the company anticipated a more drastic decline in the business and closed a plant, shifting manufacturing to three other existing facilities, which should improve cost structure over the long-term.
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Mark Reichman, Managing Director, Equity Research Analyst, Natural Resources, Noble Capital Markets, Inc.
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Lithium carbonate production at the pilot plant. Century Lithium successfully added a lithium carbonate stage at the company’s lithium extraction facility which is part of the company’s Angel Island Mine project. Recall that Century recently changed the name of its Clayton Valley Lithium project to Angel Island Mine to distinguish it from other projects. Previously, concentrated lithium solutions from the pilot plant were treated by Saltworks Inc. at their facility in Richmond, British Columbia to produce samples of battery grade lithium carbonate.
Following through on the feasibility study. Adding the lithium carbonate stage at the pilot plant satisfies one of the recommendations contained in the recently published feasibility study. Being able to produce battery grade lithium on site further demonstrates the commercial viability of the project and will also help the company to better optimize the process from the direct lithium extraction (DLE) phase through to production of the final product. Century successfully treated 200 liters of concentrated lithium solution and produced 20 kilograms of high-grade lithium carbonate on site.
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Joe Gomes, CFA, Managing Director, Equity Research Analyst, Generalist , Noble Capital Markets, Inc.
Joshua Zoepfel, Research Associate, Noble Capital Markets, Inc.
Refer to the full report for the price target, fundamental analysis, and rating.
AI and Staking. Bit Digital had 256 servers generating revenue during the quarter and earned an estimated $4.3 million of revenue during the month. The staking side had approximately 17,184 ETH actively staked, flat with last month, and earned a blended APY of approximately 3.3% on its staked ETH in the month of July, slightly down from last month’s 3.5%.
Mining Side. The Company produced 60.5 BTC in the month, a slight 1.9% decrease from the previous month. The active hash rate was roughly 2.46 EH/s, a decline from 2.57 EH/s in June. With the active goal of 6.0 EH/s at the end of 2024, we anticipate a ramp up in the hash rate during the last few months of the year.
Equity Research is available at no cost to Registered users of Channelchek. Not a Member? Click ‘Join’ to join the Channelchek Community. There is no cost to register, and we never collect credit card information.
This Company Sponsored Research is provided by Noble Capital Markets, Inc., a FINRA and S.E.C. registered broker-dealer (B/D).
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Key Points: – Rate cuts typically stimulate economic growth by reducing borrowing costs. – In today’s market, rate cuts may have limited impact due to already low rates and economic uncertainties. – Potential consequences include increased inflation risk and asset bubbles.
The Federal Reserve’s decision to cut interest rates is a powerful tool in monetary policy, often employed to stimulate economic growth during periods of slowdown or recession. Traditionally, rate cuts have been associated with increased borrowing, spending, and investment. However, in today’s unique economic landscape, the effects of such a move may be more nuanced and less predictable than in the past.
Typically, when the Fed lowers its benchmark interest rate, it sets off a chain reaction throughout the economy. Banks respond by reducing their prime lending rates, which in turn lowers the cost of borrowing for businesses and consumers. This cheaper access to credit can lead to increased spending and investment, potentially boosting economic growth and employment.
For businesses, lower interest rates can make it more attractive to take out loans for expansion, equipment purchases, or research and development. Consumers may find it easier to finance big-ticket items like homes and cars, or to refinance existing debt at more favorable terms. Additionally, lower rates often lead to a depreciation in the value of the dollar, which can benefit U.S. exporters by making their products more competitive in global markets.
However, the current economic environment presents unique challenges that may alter the effectiveness of rate cuts. Interest rates are already at historically low levels, leaving less room for significant reductions. The COVID-19 pandemic has introduced unprecedented uncertainties into the global economy, affecting consumer behavior, supply chains, and business operations in ways that may not be easily addressed by traditional monetary policy tools.
In today’s market conditions, a rate cut might have limited impact on stimulating growth. Many businesses and consumers are hesitant to take on new debt or make major investments due to ongoing economic uncertainties. The effectiveness of rate cuts may also be dampened by other factors such as high levels of existing debt, concerns about future tax increases to address growing government deficits, or fears of potential asset bubbles.
One potential consequence of further rate cuts in the current environment is an increased risk of inflation. As more money enters the economy through easier credit, there’s a possibility that prices could rise more rapidly, especially if supply chain disruptions persist. This could erode purchasing power and potentially lead to economic instability if not carefully managed.
Another consideration is the impact on savers and retirees who rely on interest income. Lower rates mean reduced returns on savings accounts, certificates of deposit, and other fixed-income investments. This can be particularly challenging for older adults who depend on these income streams to supplement their retirement.
The stock market often reacts positively to rate cuts in the short term, as lower borrowing costs can boost corporate profits and make stocks more attractive compared to bonds. However, this effect may be less pronounced in today’s market, where stock valuations are already high and investors are weighing numerous other factors beyond interest rates.
For the housing market, lower rates typically lead to increased affordability and demand. However, in the current climate of limited housing supply and already high home prices in many areas, further rate cuts may have a muted effect on home sales and could potentially contribute to unsustainable price increases.
In conclusion, while Federal Reserve rate cuts have historically been a reliable tool for stimulating economic growth, their effectiveness in today’s unique market conditions is less certain. Policymakers and market participants alike must carefully consider the potential benefits and risks of further rate reductions, given the complex interplay of factors affecting the current economy. As always, a balanced approach that considers monetary policy alongside fiscal measures and structural reforms may be necessary to navigate the challenges and opportunities presented by today’s economic landscape.
