Are Social Security Benefits Inflation-Adjusted?

A:

Social Security benefits are adjusted for inflation. This adjustment is known as the cost of living adjustment (COLA). For the program’s initial four decades, benefit amounts did not increase based on higher living costs. However, the high rates of inflation from the 1970s — which was particularly hard on seniors with fixed incomes — prompted the Social Security Administration (SSA) to modify the program so inflation would trigger increases in benefit amounts.

How the Cost of Living Adjustment Got Started

The SSA enacted the cost of living adjustment in 1972. The removal of the dollar from the gold standard, rising oil prices, supply shocks and other factors had triggered unprecedented inflation that would plague the remainder of the decade.

While workers received some relief from rising prices — since their wages also climbed — seniors on fixed incomes struggled badly. The COLA was a necessary addition to Social Security to ensure that beneficiaries with no other sources of income could still make a living.

How the Cost of Living Adjustment Is Determined

The COLA is based on the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W). This index measures what workers with modest incomes pay on average for retail goods.

When the CPI-W increases by more than 0.1 percent from one year to the next, the SSA makes a COLA to the Social Security program accordingly. During years when the CPI-W increase is nominal or negative, Social Security recipients receive no COLA.

On Jan. 1, 2018, more than 61 million Social Security beneficiaries received a cost of living adjustment of two percent over their 2017 benefit amounts.

https://www.investopedia.com/ask/answers/081715/are-social-security-benefits-adjusted-inflation.asp?utm_campaign=rss_headlines&utm_source=rss_www&utm_medium=referral

What Are the Key Barriers to Entry in Electronics?

A:

The electronics industry includes consumer electronics, specialized electronics for other industries and component parts such as semiconductors. Barriers to entry are specific to each part of the industry. These barriers make it costly or cumbersome for new firms to enter the market and shield established firms from competition. The presence of these barriers and the resulting lack of competition enable established firms to set higher prices, which limits demand.

Barriers to Entry in the Electronics Industry

Economies of Scale and Scope

Consumer electronics with mass popularity are more susceptible to economies of scale and scope as barriers. Economies of scale mean that an established company can easily produce and distribute a few more units of existing products cheaply because overhead costs, such as management and real estate, are spread over a large number of units. A small firm attempting to produce these same few units must divide overhead costs by its relatively small number of units, making each unit very costly to produce.

Similarly, economies of scope give established firms an advantage because they can use their existing machines and facilities to launch new products. If Apple (AAPL), for example, wanted to launch a new device, the company could use its existing marketing staff, factories and other facilities to support the launch. Any variable costs associated with Apple’s new product launch would be the same variable costs new firms face, but the overall cost per unit to Apple would be lower since the new firm would be required to take on the fixed costs of salaried staff and leased space.

Research, Development and Capital-Intensive Production

Research, development and capital-intensive production are more typically the barriers to entry in the field of semiconductors and non-consumer electronics. While consumers may accept generic and simple electronics, businesses demand electronics that are specialized to their industries — requiring more intensive research and development.

Existing semiconductor firms have invested billions of dollars in developing patents and acquiring cutting-edge technology. New firms are forced to either license processes and technology from established firms or tie up capital in an attempt to match established firms’ capabilities.

High Switching Costs and Brand Loyalty

In the electronics industry as a whole, high customer switching costs and brand loyalty are common barriers to entry. Naturally occurring switching costs include the difficulty of learning to use a new company’s products and installing new electronics in a company or home.

Established electronics companies may strategically build in switching costs to retain customers. These strategies may include contracts that are costly and complicated to terminate or software and data storage that cannot be transferred to new electronic devices. This is prevalent in the smartphone industry, where consumers may pay termination fees and face the cost of reacquiring applications when they consider switching phone service providers.

As in many other industries, brand loyalty keeps buyers coming back to a company with which they have positive associations, and new firms must invest heavily to match years of advertising and user experience.

https://www.investopedia.com/ask/answers/042115/what-are-key-barriers-entry-companies-electronics-sector.asp?utm_campaign=rss_headlines&utm_source=rss_www&utm_medium=referral

ReShape Lifesciences Announces Pricing of Underwritten Public Offering of Common Stock

SAN CLEMENTE, CA / ACCESSWIRE / August 7, 2018 / ReShape Lifesciences Inc. (NASDAQ: RSLS), a developer of minimally invasive medical devices to treat obesity and metabolic diseases, today announced the pricing of its previously announced underwritten public offering of 12,514,412 shares of its common stock at a public offering price of $0.085 per share. The offering is expected to close on or about August 10, 2018, subject to the satisfaction of customary closing conditions. The gross proceeds from the offering, before deducting underwriting discounts and commissions and estimated offering expenses payable by ReShape Lifesciences, are expected to be approximately $1.06 million. All of the shares in the offering are to be sold by ReShape Lifesciences.

H.C. Wainwright & Co. is acting as sole book-running manager for the offering.

ReShape Lifesciences intends to use the net proceeds from this offering to continue its commercialization efforts, for clinical and product development activities, and for other working capital and general corporate purposes.

A shelf registration statement on Form S-3 relating to the public offering of the shares of common stock described above was filed with the Securities and Exchange Commission (the “SEC”) and is effective. The offering will be made solely by means of a prospectus supplement and accompanying prospectus. A preliminary prospectus supplement relating to the offering has been filed with the SEC and a final prospectus supplement relating to the offering will be filed with the SEC and will be available on the SEC’s website located at www.sec.gov. When available, copies of the final prospectus supplement and the accompanying prospectus may also be obtained by contacting H.C. Wainwright & Co., LLC at 430 Park Avenue, 3rd Floor, New York, NY 10022, by phone at 646-975-6996 or by e-mail at [email protected].

This press release does not constitute an offer to sell, a solicitation of an offer to sell or a solicitation of an offer to buy the securities described herein, nor shall there be any sale of these securities in any state or other jurisdiction in which such offer, solicitation or sale would be unlawful prior to the registration or qualification under the securities laws of any such state or other jurisdiction.

About ReShape Lifesciences Inc.

ReShape Lifesciences™ is a medical device company focused on technologies to treat obesity and metabolic diseases. The FDA-approved ReShape Balloon™ System involves a non-surgical weight loss procedure that uses advanced balloon technology designed to take up room in the stomach to help people with a 30-40 kg/m2 Body Mass Index (BMI) and at least one co-morbidity lose weight. ReShape vBloc™ Therapy, delivered by an FDA-approved pacemaker-like device called the ReShape vBloc System, is designed to help patients with a 40-45 kg/m2, or a 35-39.9 kg/m2 BMI and at least one co- morbidity feel full and eat less by intermittently blocking hunger signals on the vagus nerve. The ReShape Vest™ System is an investigational, minimally invasive, laparoscopically implanted medical device that wraps around the stomach, emulating the gastric volume reduction effect of conventional weight-loss surgery, and is intended to enable rapid weight loss in obese and morbidly obese patients without permanently changing patient anatomy.

Forward-Looking Statements

This press release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements in this release include statements regarding the satisfaction of customary closing conditions in connection with the public offering and the anticipated use of proceeds therefrom. These forward-looking statements generally can be identified by the use of words such as “expect,” “plan,” “anticipate,” “could,” “may,” “intend,” “will,” “continue,” “future,” other words of similar meaning and the use of future dates. These forward-looking statements are based on the current expectations of our management and involve known and unknown risks and uncertainties that may cause our actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by the forward-looking statements. Such risks and uncertainties include, among others: statements relating to the completion, size and use of proceeds of the registered direct offering that involve risks and uncertainties, including, without limitation, risks and uncertainties related to market conditions and the satisfaction of closing conditions related to the registered direct offering, risks and uncertainties related to our acquisitions of ReShape Medical, Inc. and BarioSurg, Inc.; risks related to the U.S. Food and Drug Administration’s announcement, including updates thereto, to alert health care providers of unanticipated deaths involving the ReShape Balloon; our proposed ReShape Vest product may not be successfully developed and commercialized; our ability to continue as a going concern if we are unsuccessful in our pursuit of various funding options; our limited history of operations; our losses since inception and for the foreseeable future; our limited commercial sales experience; the competitive industry in which we operate; our ability to maintain compliance with the Nasdaq continued listing requirements; our dependence on third parties to initiate and perform our clinical trials; the need to obtain regulatory approval for our ReShape Vest and any modifications to our vBloc system or ReShape Balloon; physician adoption of our products; our ability to obtain third party coding, coverage or payment levels; ongoing regulatory compliance; our dependence on third party manufacturers and suppliers; the successful development of our sales and marketing capabilities; our ability to raise additional capital when needed; international commercialization and operation; our ability to attract and retain management and other personnel and to manage our growth effectively; potential product liability claims; the cost and management time of operating a public company; potential healthcare fraud and abuse claims; healthcare legislative reform; and our ability to obtain and maintain intellectual property protection for our technology and products. These and additional risks and uncertainties are described more fully in the Company’s filings with the Securities and Exchange Commission, particularly those factors identified as “risk factors” in our annual report on Form 10-K filed April 2, 2018. We are providing this information as of the date of this press release and do not undertake any obligation to update any forward-looking statements contained in this document as a result of new information, future events or otherwise, except as required by law.

SOURCE: ReShape Lifesciences Inc.

https://www.accesswire.com/viewarticle.aspx?id=509095

Salesforce.com names Keith Block co-CEO

Salesforce.com Inc.
CRM, +1.21%
has promoted Chief Operating Officer Keith Block to co-chief executive alongside founder Marc Benioff, the company announced in a surprise move Tuesday night. “Keith has been my trusted partner in running Salesforce for the past five years, and I’m thrilled to welcome him as co-CEO,” Benioff said in a statement. “Keith has outstanding operational expertise and corporate leadership experience, and I could not be happier for his promotion and this next level of our partnership.” The company said Benioff would remain chairman of the board and lead Salesforce’s “vision and innovation,” while Block would lead the company’s growth strategy, execution and operations. Salesforce shares are up more than 40% year to date.


Have breaking news sent to your inbox. Subscribe to MarketWatch’s free Bulletin emails. Sign up here.

http://feeds.marketwatch.com/~r/marketwatch/marketpulse/~3/dzyt8ME-Gqc/story.aspx

Inseego Reports Second Quarter 2018 Financial Results

SAN DIEGO–()–Inseego Corp. (Nasdaq: INSG) (the “Company”), an industry leader in solutions for intelligent mobile enterprises, today reported the following results for the second quarter ended June 30, 2018. The Company reports second quarter revenues of $49.1 million, GAAP operating loss of $0.8 million, GAAP net loss of $6.7 million, or a net loss of $0.11 per share, adjusted EBITDA of $3.8 million and non-GAAP net loss of $0.02 per share. Cash and cash equivalents at the end of the period, including restricted cash, was $18.9 million.

“Inseego met the top end of guidance and delivered record adjusted EBITDA, which demonstrates the continued progress we’re making on our strategy. The infusion of close to $20 million in cash from the financing led by Tavistock Group, and the settlement of a former lawsuit, significantly deleverages the balance sheet and provides ample liquidity to accelerate development of 5G and IoT Cloud products, and to further strengthen our go-to-market capability,” said Dan Mondor, Chairman and CEO of Inseego. “We are winning new customers and launching new products into high growth 5G and IoT Cloud markets.”

Recent Corporate Highlights

– Closed a $19.7 million private placement transaction led by Tavistock Group, providing additional investment and working capital to be used towards accelerating development in next generation products

– Reduced total liabilities associated with a former lawsuit by approximately $17 million with a settlement agreement, including a potential reduction of cash liabilities from approximately $15.8 million to as low as $1.0 million

– Solid progress on adjusted EBITDA growth, reaching an annualized run rate in excess of $15 million

IoT & Mobile Solutions

– Q2 2018 revenue of $31.7 million

– Continued expansion of our IoT & Mobile Solutions customer base:

  • Awarded a new 4G LTE Gigabit hotspot design with a Tier 1 U.S. wireless service provider
  • Won two 4G LTE hotspot awards with US Cellular and a large Canadian service provider

– Launched new Skyus product portfolio for Industrial IoT device-to-cloud use cases

– Announced a joint solution with Riverbed Technologies to expand our reach in the SD-WAN market

Enterprise SaaS Solutions

– Q2 2018 revenue of $17.3 million

– Ctrack SaaS subscription revenue continued year-over-year growth in the quarter

– Signed a 3-year contract extension with T-Mobile for the DMS subscription management SaaS solution

– Announced partnership with KLM Equipment Services (KES) for the global aviation vertical market

– Awarded two aviation solution contracts in the UK and EMEA and engaged in a successful trial with a global logistics provider at Brussels International Airport

“We continue to see positive forward progress in adjusted EBITDA and our strategic initiatives,” said Steve Smith, CFO of Inseego. “The improvements in our financial performance and new financing with long term strategic investors enhances liquidity, deleverages the balance sheet and increases operational flexibility.”

Third Quarter Outlook

The following statements are forward-looking and actual results may differ materially. Please see the section titled “Cautionary Note Regarding Forward-Looking Statements” at the end of this news release. A more detailed description of risks related to our business is included in the reports filed by the Company with the Securities and Exchange Commission (the “SEC”). Our guidance for the third quarter of 2018 reflects current business indicators and expectations as of the date of this news release, including current exchange rates for foreign currencies.

Inseego Consolidated

 

Third Quarter 2018 Outlook

Revenue $49 million – $56 million
Adjusted EBITDA $3.8 million – $4.8 million
 

IoT & Mobile Solutions

Revenue $32 million – $38 million
 

Enterprise SaaS Solutions

Revenue $17 million – $18 million

Conference Call Information

Inseego will host a conference call and live webcast for analysts and investors today at 5:00 p.m. ET. A Q&A session with analysts will be held live directly after the prepared remarks. To access the conference call:

  • In the United States, call 1-844-881-0135
  • International parties can access the call at 1-412-317-6727

Inseego will offer a live audio webcast of the conference call, which will be accessible from the “Investors” section of the Company’s website at investor.inseego.com. The webcast will be archived for a period of two weeks. An audio replay of the conference call will also be available beginning one hour after the call, through August 21, 2018. To hear the replay, parties in the United States may call 1-877-344-7529 and enter access code 10122312#. International parties may call 1-412-317-0088 and enter the same code.

About Inseego Corp.

Inseego Corp. (Nasdaq: INSG) enables high performance mobile applications for large enterprise verticals, service providers and small-medium businesses around the globe. Our product portfolio consists of Enterprise SaaS Solutions and IoT & Mobile Solutions, which together form the backbone of compelling, intelligent, reliable and secure IoT services with deep business intelligence. Inseego powers mission critical applications with a “zero unscheduled downtime” mandate, such as asset tracking, fleet management, industrial IoT, SD WAN failover management and mobile broadband services. Our solutions are powered by our key innovations in IoT, purpose-built SaaS cloud platforms and mobile technologies, including the newly emerging 5G technology. Inseego is headquartered in San Diego, California with offices worldwide. www.inseego.com Twitter @inseego

Cautionary Note Regarding Forward-Looking Statements

Some of the information presented in this news release may constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. In this context, forward-looking statements often address expected future business and financial performance and often contain words such as “may,” “estimate,” “anticipate,” “believe,” “expect,” “intend,” “plan,” “project,” “will” and similar words and phrases indicating future results. The information presented in this news release related to our outlook for the third quarter ending September 30, 2018 and our future business outlook, the future demand for our products, as well as other statements that are not purely statements of historical fact, are forward-looking in nature. These forward-looking statements are made on the basis of management’s current expectations, assumptions, estimates and projections and are subject to significant risks and uncertainties that could cause actual results to differ materially from those anticipated in such forward-looking statements. We therefore cannot guarantee future results, performance or achievements. Actual results could differ materially from our expectations.

Factors that could cause actual results to differ materially from the Company’s expectations include: (1) the future demand for wireless broadband access to data and fleet management software and services; (2) the growth of wireless wide-area networking and fleet management software and services; (3) customer and end-user acceptance of the Company’s current product and service offerings and market demand for the Company’s anticipated new product and service offerings; (4) increased competition and pricing pressure from participants in the markets in which the Company is engaged; (5) dependence on third-party manufacturers and key component suppliers worldwide; (6) unexpected liabilities or expenses; (7) the Company’s ability to introduce new products and services in a timely manner, including the ability to develop and launch 5G technology at the speed and functionality required by our customers; (8) litigation, regulatory and IP developments related to our products or components of our products; (9) dependence on a small number of customers for a significant portion of the Company’s revenues; and (10) the Company’s plans and expectations relating to acquisitions, divestitures, strategic relationships, international expansion, software and hardware developments, personnel matters and cost containment initiatives, including restructuring activities and the timing of their implementation.

These factors, as well as other factors set forth as risk factors or otherwise described in the reports filed by the Company with the SEC (available at www.sec.gov), could cause actual results to differ materially from those expressed in the Company’s forward-looking statements. The Company assumes no obligation to update publicly any forward-looking statements for any reason, even if new information becomes available or other events occur in the future, except as otherwise required pursuant to applicable law and our on-going reporting obligations under the Securities Exchange Act of 1934, as amended.

Non-GAAP Financial Measures

Inseego Corp. has provided financial information in this news release that has not been prepared in accordance with GAAP. Non-GAAP operating expenses, adjusted EBITDA, net loss and net loss per share exclude restructuring charges, net of recoveries, share-based compensation expense, amortization of intangible assets purchased through acquisitions, amortization of discount and issuance costs related to the Company’s convertible senior notes and term loan and an impairment charge related to certain product lines the Company abandoned, net of recoveries. Adjusted EBITDA also excludes interest, taxes, depreciation and amortization (unrelated to acquisitions, the convertible senior notes and the term loans) and foreign currency transaction gains and losses.

Non-GAAP operating expenses, adjusted EBITDA, net loss and net loss per share are supplemental measures of our performance that are not required by, or presented in accordance with, GAAP. These non-GAAP financial measures have limitations as an analytical tool and are not intended to be used in isolation or as a substitute for operating expenses, net loss, net loss per share or any other performance measure determined in accordance with GAAP. We present non-GAAP operating expenses, adjusted EBITDA, net loss and net loss per share because we consider each to be an important supplemental measure of our performance.

Management uses these non-GAAP financial measures to make operational decisions, evaluate the Company’s performance, prepare forecasts and determine compensation. Further, management believes that both management and investors benefit from referring to these non-GAAP financial measures in assessing the Company’s performance when planning, forecasting and analyzing future periods. Share-based compensation expenses are expected to vary depending on the number of new incentive award grants issued to both current and new employees, the number of such grants forfeited by former employees, and changes in the Company’s stock price, stock market volatility, expected option term and risk-free interest rates, all of which are difficult to estimate. In calculating non-GAAP operating expenses, adjusted EBITDA, net loss and net loss per share, management excludes certain non-cash and one-time items in order to facilitate comparability of the Company’s operating performance on a period-to-period basis because such expenses are not, in management’s view, related to the Company’s ongoing operating performance. Management uses this view of the Company’s operating performance for purposes of comparison with its business plan and individual operating budgets and in the allocation of resources.

The Company further believes that these non-GAAP financial measures are useful to investors in providing greater transparency to the information used by management in its operational decision-making. The Company believes that the use of non-GAAP operating expenses, adjusted EBITDA, net loss and net loss per share also facilitates a comparison of our underlying operating performance with that of other companies in our industry, which use similar non-GAAP financial measures to supplement their GAAP results.

In the future, the Company expects to continue to incur expenses similar to the non-GAAP adjustments described above, and exclusion of these items in the presentation of our non-GAAP financial measures should not be construed as an inference that these costs are unusual, infrequent or non-recurring. Investors and potential investors are cautioned that there are material limitations associated with the use of non-GAAP financial measures as an analytical tool. The limitations of relying on non-GAAP financial measures include, but are not limited to, the fact that other companies, including other companies in our industry, may calculate non-GAAP financial measures differently than we do, limiting their usefulness as a comparative tool.

Investors and potential investors are encouraged to review the reconciliation of our non-GAAP financial measures contained within this news release with our GAAP financial results.

 
INSEEGO CORP.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(In thousands, except share and per share data)

(Unaudited)

 
Three Months Ended
June 30,
Six Months Ended
June 30,
2018   2017 2018   2017
Net revenues:
IoT & Mobile Solutions $ 31,741 $ 43,265 $ 60,621 $ 82,027
Enterprise SaaS Solutions 17,316   16,648   35,169   33,275  
Total net revenues 49,057 59,913 95,790 115,302
Cost of net revenues:
IoT & Mobile Solutions 24,623 35,615 48,375 67,638
Enterprise SaaS Solutions 6,998 5,662 13,860 12,842
Impairment of abandoned product line, net of recoveries (221 ) 1,407   355   1,407  
Total cost of net revenues 31,400   42,684   62,590   81,887  
Gross profit 17,657   17,229   33,200   33,415  
Operating costs and expenses:
Research and development 4,968 5,400 9,944 11,689
Sales and marketing 5,635 7,002 11,050 14,159
General and administrative 6,302 8,094 12,797 20,131
Amortization of purchased intangible assets 931 905 1,895 1,809
Restructuring charges, net of recoveries 643   1,443   920   2,252  
Total operating costs and expenses 18,479   22,844   36,606   50,040  
Operating loss (822 ) (5,615 ) (3,406 ) (16,625 )
Other income (expense):
Interest expense, net (5,147 ) (4,881 ) (10,247 ) (9,037 )
Other expense, net (438 ) (985 ) (374 ) (1,628 )
Loss before income taxes (6,407 ) (11,481 ) (14,027 ) (27,290 )
Income tax provision 272   556   712   861  
Net loss (6,679 ) (12,037 ) (14,739 ) (28,151 )
Less: Net loss attributable to noncontrolling interests 19   13   29   27  
Net loss attributable to Inseego Corp. $ (6,660 ) $ (12,024 ) $ (14,710 ) $ (28,124 )
Per share data:
Net loss per share:
Basic and diluted $ (0.11 ) $ (0.21 ) $ (0.24 ) $ (0.49 )
Weighted-average shares used in computation of net loss per share:
Basic and diluted 61,468,129   57,970,033   61,096,886   57,726,475  
 
 
INSEEGO CORP.

CONDENSED CONSOLIDATED BALANCE SHEETS

(In thousands)

 
June 30,
2018
December 31,
2017
(Unaudited)
ASSETS
Current assets:
Cash and cash equivalents $ 18,836 $ 21,198
Restricted cash 61 61
Accounts receivable, net 23,418 15,674
Inventories, net 12,937 20,403
Prepaid expenses and other 6,165   9,101  
Total current assets 61,417   66,437  
Property, plant and equipment, net 6,031 6,991
Rental assets, net 6,300 7,563
Intangible assets, net 33,510 38,671
Goodwill 34,358 37,681
Other assets 870   864  
Total assets $ 142,486   $ 158,207  
LIABILITIES AND STOCKHOLDERS’ DEFICIT
Current liabilities:
Accounts payable $ 29,270 $ 29,332
Accrued expenses and other current liabilities 35,397 27,558
DigiCore bank facilities 2,505   3,075  
Total current liabilities 67,172   59,965  
Long-term liabilities:
Convertible senior notes, net 88,913 84,773
Term loan, net 44,801 44,055
Deferred tax liabilities, net 4,673 5,261
Other long-term liabilities 1,570   9,768  
Total liabilities 207,129   203,822  
Stockholders’ deficit:
Common stock 60 59
Additional paid-in capital 522,033 519,531
Accumulated other comprehensive income (loss) (2,188 ) 4,604
Accumulated deficit (584,469 ) (569,759 )
Total stockholders’ deficit attributable to Inseego Corp. (64,564 ) (45,565 )
Noncontrolling interests (79 ) (50 )
Total stockholders’ deficit (64,643 ) (45,615 )
Total liabilities and stockholders’ deficit $ 142,486   $ 158,207  
 
 
INSEEGO CORP.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)

(Unaudited)

 
Three Months Ended
June 30,
Six Months Ended
June 30,
2018   2017 2018   2017
Cash flows from operating activities:
Net loss $ (6,679 ) $ (12,037 ) $ (14,739 ) $ (28,151 )
Adjustments to reconcile net loss to net cash provided by (used in) operating activities:
Depreciation and amortization 3,432 3,583 7,319 7,662
Provision for bad debts, net of recoveries 82 631 314 732
Loss on impairment of abandoned product line, net of recoveries (221 ) 1,407 355 1,407
Provision for excess and obsolete inventory, net of recoveries 256 201 1,076 172
Share-based compensation expense 802 888 1,944 1,979
Amortization of debt discount and debt issuance costs 2,443 2,734 4,886 5,082
Loss on disposal of assets 383 41 501 171
Deferred income taxes (2 ) (36 ) (6 ) (15 )
Unrealized foreign currency transaction loss, net 373 20 49 57
Other (322 ) 203 60 494
Changes in assets and liabilities:
Accounts receivable (5,535 ) 3,403 (8,676 ) (4,972 )
Inventories 705 2,447 3,503 2,844
Prepaid expenses and other assets (674 ) 1,615 2,881 (2,205 )
Accounts payable 9,997 (7,125 ) 904 7,194
Accrued expenses, income taxes, and other 243   (7,738 ) 532   (5,391 )
Net cash provided by (used in) operating activities 5,283   (9,763 ) 903   (12,940 )
Cash flows from investing activities:
Purchases of property, plant and equipment (327 ) (527 ) (653 ) (1,444 )
Proceeds from the sale of property, plant and equipment 5 124 30 182
Purchases of intangible assets and additions to capitalized software development costs (544 ) (645 ) (1,099 ) (1,500 )
Net cash used in investing activities (866 ) (1,048 ) (1,722 ) (2,762 )
Cash flows from financing activities:
Proceeds from term loans 18,000 18,000
Payment of issuance costs related to term loans (424 ) (424 )
Net borrowings under (repayment of) DigiCore bank and overdraft facilities 10 665 (208 ) 581
Net repayment of revolving credit facility (2,750 )
Principal payments under capital lease obligations (150 ) (221 ) (359 ) (462 )
Principal payments on mortgage bond (81 ) (72 ) (166 ) (142 )
Proceeds from stock option exercises and employee stock purchase plan, net of taxes paid on vested restricted stock units 176   54   558   (731 )
Net cash provided by (used in) financing activities (45 ) 15,252 (175 ) 16,822
Effect of exchange rates on cash, cash equivalents and restricted cash (1,648 ) 540   (1,368 ) 352  
Net increase (decrease) in cash, cash equivalents and restricted cash 2,724 4,981 (2,362 ) 1,472
Cash, cash equivalents and restricted cash, beginning of period 16,173   6,385   21,259   9,894  
Cash, cash equivalents and restricted cash, end of period $ 18,897   $ 11,366   $ 18,897   $ 11,366  
 
 
INSEEGO CORP.

Reconciliation of GAAP Net Income (Loss) to Non-GAAP Net Income (Loss)

(In thousands, except per share data)

(Unaudited)

 
Three Months Ended
June 30, 2018
Six Months Ended
June 30, 2018

Net Income
(Loss)

 

Income (Loss)
Per Share

Net Income
(Loss)

 

Income (Loss)
Per Share

GAAP net loss $ (6,679 ) $ (0.11 ) $ (14,739 ) $ (0.24 )
Adjustments:
Share-based compensation expense(a) 802 0.01 1,944 0.03
Purchased intangibles amortization(b) 1,485 0.02 3,033 0.05
Debt discount and issuance costs amortization 2,443 0.04 4,886 0.07
Restructuring charges, net of recoveries 643 0.02 920 0.02
Impairment of abandoned product line, net of recoveries(c) (221 )   355   0.01  
Non-GAAP net loss $ (1,527 ) $ (0.02 ) $ (3,601 ) $ (0.06 )
    (a)   Includes share-based compensation expense recorded under ASC Topic 718.
(b) Includes amortization of intangible assets purchased through acquisitions.
(c) Includes the additional write down of certain inventory related to product lines the Company abandoned during the fourth quarter of 2016, net of recoveries related to the subsequent sale of such abandoned products.
 
 
See “Non-GAAP Financial Measures” for information regarding our use of Non-GAAP financial measures.
 
         
INSEEGO CORP.

Reconciliation of GAAP Operating Costs and Expenses to Non-GAAP Operating Costs and Expenses

Three Months Ended June 30, 2018

(In thousands)

(Unaudited)

 
GAAP

Share-based
compensation
expense
(a)

Purchased
intangibles
amortization
(b)

Restructuring
charges, net of
recoveries

Impairment
of abandoned
product line,
net of
recoveries
(c)

Non-GAAP
Cost of net revenues $ 31,400   $ 20   $ 554   $   $ (221 ) $ 31,047
Operating costs and expenses:
Research and development 4,968 193 4,775
Sales and marketing 5,635 139 5,496
General and administrative 6,302 450 5,852
Amortization of purchased intangible assets 931 931
Restructuring charges, net of recoveries 643       643    
Total operating costs and expenses $ 18,479   782   931   643     $ 16,123
Total $ 802   $ 1,485   $ 643   $ (221 )
(a)   Includes share-based compensation expense recorded under ASC Topic 718.
(b) Includes amortization of intangible assets purchased through acquisitions.
(c) Includes the sale of certain inventory related to product lines the Company abandoned during the fourth quarter of 2016, net of additional impairments.
 
 
See “Non-GAAP Financial Measures” for information regarding our use of Non-GAAP financial measures.
 
           
INSEEGO CORP.

Reconciliation of GAAP Operating Costs and Expenses to Non-GAAP Operating Costs and Expenses

Six Months Ended June 30, 2018

(In thousands)

(Unaudited)

 
GAAP

Share-based
compensation
expense
(a)

Purchased
intangibles
amortization
(b)

Restructuring
charges, net
of recoveries

Impairment
of abandoned
product line,
net of
recoveries
(c)

Non-GAAP
Cost of net revenues $ 62,590   $ 74   $ 1,138   $   $ 355   $ 61,023
Operating costs and expenses:
Research and development 9,944 408 9,536
Sales and marketing 11,050 448 10,602
General and administrative 12,797 1,014 11,783
Amortization of purchased intangible assets 1,895 1,895
Restructuring charges, net of recoveries 920       920    
Total operating costs and expenses $ 36,606   1,870   1,895   920     $ 31,921
Total $ 1,944   $ 3,033   $ 920   $ 355  
(a)   Includes share-based compensation expense recorded under ASC Topic 718.
(b) Includes amortization of intangible assets purchased through acquisitions.
(c) Includes the additional write down of certain inventory related to product lines the Company abandoned during the fourth quarter of 2016, net of recoveries related to the subsequent sale of such abandoned products.
 
 
See “Non-GAAP Financial Measures” for information regarding our use of Non-GAAP financial measures.
 
 
INSEEGO CORP.

Reconciliation of GAAP Loss before Income Taxes to Adjusted EBITDA

(In thousands)

(Unaudited)

 
Three Months Ended
June 30, 2018
Six Months Ended
June 30, 2018
Loss before income taxes $ (6,407 ) $ (14,027 )
Depreciation and amortization(a) 3,432 7,319
Share-based compensation expense(b) 802 1,944
Restructuring charges, net of recoveries 643 920
Impairment of abandoned product line, net of recoveries(c) (221 ) 355
Interest expense, net(d) 5,147 10,247
Other income, net(e) 438   374  
Adjusted EBITDA $ 3,834   $ 7,132  
(a)   Includes depreciation and amortization charges, including amortization of intangible assets purchased through acquisitions.
(b) Includes share-based compensation expense recorded under ASC Topic 718.
(c) Includes the additional write down of certain inventory related to product lines the Company abandoned during the fourth quarter of 2016, net of recoveries related to the subsequent sale of such abandoned products.
(d) Includes the amortization of debt discount and issuance costs related to the convertible senior notes and term loan.
(e) Includes foreign currency transaction gains and losses.
 
 
See “Non-GAAP Financial Measures” for information regarding our use of Non-GAAP financial measures.
 
 
INSEEGO CORP.

Quarterly Net Revenues by Product Grouping

(In thousands)

(Unaudited)

 
Three Months Ended
June 30, 2018   March 31, 2018   December 31, 2017   September 30, 2017   June 30, 2017
IoT & Mobile Solutions $ 31,741 $ 28,880 $ 29,708 $ 41,116 $ 43,265
Enterprise SaaS Solutions 17,316   17,853   16,826   16,345   16,648
Total net revenues $ 49,057   $ 46,733   $ 46,534   $ 57,461   $ 59,913
 

http://www.businesswire.com/news/home/20180807005883/en/Inseego-Reports-Quarter-2018-Financial-Results/?feedref=JjAwJuNHiystnCoBq_hl-bV7DTIYheT0D-1vT4_bKFzt_EW40VMdK6eG-WLfRGUE1fJraLPL1g6AeUGJlCTYs7Oafol48Kkc8KJgZoTHgMu0w8LYSbRdYOj2VdwnuKwa

Boot Barn Holdings, Inc. Announces First Quarter Fiscal Year 2019 Financial Results and Increased Annual Guidance

IRVINE, Calif.–()–Boot Barn Holdings, Inc. (NYSE:BOOT) today announced its financial results for the first fiscal quarter ended June 30, 2018.

Highlights for the quarter ended June 30, 2018, were as follows:

  • Net sales increased 16.2% to $162.0 million.
  • Same store sales increased 11.6%.
  • Net income was $6.8 million, or $0.24 per diluted share, compared to net income of $0.8 million, or $0.03 per diluted share in the prior-year period. Net income per diluted share in the first quarter of fiscal 2019 includes approximately $0.09 per share of tax benefit related to stock option exercises.
  • Added 6 stores through new openings and acquisitions.

Jim Conroy, Chief Executive Officer, commented, “We are encouraged by our very strong start to fiscal 2019 as sales, merchandise margin, and earnings per share were up significantly year-over-year and outperformed our guidance. Same store sales increased 11.6%, in line with our prior quarter. We expanded our merchandise margin in the quarter by 140 basis points, driven by more full-price selling and increased exclusive brand penetration. I am equally pleased that the positive momentum in the business continued in July.”

Operating Results for the First Quarter Ended June 30, 2018

  • Net sales increased 16.2% to $162.0 million from $139.4 million in the prior-year period. The increase in net sales was driven by an 11.6% increase in same store sales and the sales contribution from the addition of 14 stores over the past twelve months.
  • Gross profit was $51.4 million, or 31.8% of net sales, compared to $41.4 million, or 29.7% of net sales in the prior-year period. Gross profit increased primarily due to increased sales and an increase in merchandise margin rate. Gross profit rate increased primarily from a 140 basis point increase in merchandise margin rate and 70 basis points of leverage in buying and occupancy costs. The higher merchandise margin was driven by more full-price selling and increased exclusive brand penetration.
  • Selling, general and administrative expense was $41.6 million, or 25.7% of net sales, compared to $36.5 million, or 26.2% of net sales in the prior-year period. Selling, general and administrative expenses increased primarily as a result of increased sales, higher compensation expense and additional costs for both new and acquired stores. Selling, general and administrative expenses as a percentage of sales decreased as a result of expense leverage on higher sales.
  • Income from operations was $9.8 million, or 6.1% of net sales, compared to $4.9 million, or 3.5% of net sales in the prior-year period.
  • Net income was $6.8 million, or $0.24 per diluted share, compared to $0.8 million, or $0.03 per diluted share in the prior-year period. Net income per diluted share in the first quarter of fiscal 2019 includes approximately $0.09 per share of tax benefit related to stock option exercises.
  • Added 6 stores through new openings and acquisitions, bringing the total count at quarter-end to 230 stores (net of two store closures) in 31 states.

Balance Sheet Highlights as of June 30, 2018

  • Cash of $7.4 million.
  • Average inventory per store decreased 1.6% on a same store basis compared to July 1, 2017.
  • Total net debt of $204.2 million, including $30.7 million drawn under the revolving credit facility.

Fiscal Year 2019 Outlook

For the fiscal year ending March 30, 2019, the Company now expects:

  • To add 23 new stores, including the 6 stores added in the first quarter.
  • Same store sales growth of mid-single digits.
  • Income from operations between $54.0 million and $57.9 million compared to the Company’s prior outlook of $52.5 million and $56.5 million.
  • Interest expense of $17.0 million to $18.0 million.
  • Net income of $29.9 million to $32.8 million, compared to the Company’s prior outlook of $26.2 million to $29.2 million.
  • Net income per diluted share of $1.04 to $1.14 based on 28.8 million weighted average diluted shares outstanding, compared to the Company’s prior outlook of $0.92 to $1.02.

For the fiscal second quarter ending September 29, 2018, the Company expects:

  • Same store sales growth of high single digits.
  • Net income per diluted share of $0.07 to $0.09 based on 28.8 million weighted average diluted shares outstanding.

Conference Call Information

A conference call to discuss the financial results for the first quarter of fiscal year 2019 is scheduled for today, August 7, 2018, at 4:30 p.m. ET (1:30 p.m. PT). Investors and analysts interested in participating in the call are invited to dial (866) 548-4713. The conference call will also be available to interested parties through a live webcast at investor.bootbarn.com. Please visit the website and select the “Events and Presentations” link at least 15 minutes prior to the start of the call to register and download any necessary software. A telephone replay of the call will be available until September 7, 2018, by dialing (844) 512-2921 (domestic) or (412) 317-6671 (international) and entering the conference identification number: 1335864. Please note participants must enter the conference identification number in order to access the replay.

About Boot Barn

Boot Barn is the nation’s leading lifestyle retailer of western and work-related footwear, apparel and accessories for men, women and children. The Company offers its loyal customer base a wide selection of work and lifestyle brands. As of the date of this release, Boot Barn operates 232 stores in 31 states, in addition to an e-commerce channel www.bootbarn.com. The Company also operates www.sheplers.com, the nation’s leading pure play online western and work retailer and www.countryoutfitter.com, an e-commerce site selling to customers who live a country lifestyle. For more information, call 888-Boot-Barn or visit www.bootbarn.com.

Forward Looking Statements

This press release contains forward-looking statements that are subject to risks and uncertainties. All statements other than statements of historical fact included in this press release are forward-looking statements. Forward-looking statements refer to our current expectations and projections relating to, by way of example and without limitation, our financial condition, liquidity, profitability, results of operations, margins, plans, objectives, strategies, future performance, business and industry. You can identify forward-looking statements by the fact that they do not relate strictly to historical or current facts. These statements may include words such as “anticipate”, “estimate”, “expect”, “project”, “plan“, “intend”, “believe”, “may”, “might”, “will”, “could”, “should”, “can have”, “likely”, “outlook” and other words and terms of similar meaning in connection with any discussion of the timing or nature of future operating or financial performance or other events, but not all forward-looking statements contain these identifying words. These forward-looking statements are based on assumptions that the Company’s management has made in light of their industry experience and on their perceptions of historical trends, current conditions, expected future developments and other factors they believe are appropriate under the circumstances. As you consider this press release, you should understand that these statements are not guarantees of performance or results. They involve risks, uncertainties (some of which are beyond the Company’s control) and assumptions. These risks, uncertainties and assumptions include, but are not limited to, the following: decreases in consumer spending due to declines in consumer confidence, local economic conditions or changes in consumer preferences; the Company’s ability to effectively execute on its growth strategy; and the Company’s failure to maintain and enhance its strong brand image, to compete effectively, to maintain good relationships with its key suppliers, and to improve and expand its exclusive product offerings. The Company discusses the foregoing risks and other risks in greater detail under the heading “Risk factors” in the periodic reports filed by the Company with the Securities and Exchange Commission. Although the Company believes that these forward-looking statements are based on reasonable assumptions, you should be aware that many factors could affect the Company’s actual financial results and cause them to differ materially from those anticipated in the forward-looking statements. Because of these factors, the Company cautions that you should not place undue reliance on any of these forward-looking statements. New risks and uncertainties arise from time to time, and it is impossible for the Company to predict those events or how they may affect the Company. Further, any forward-looking statement speaks only as of the date on which it is made. Except as required by law, the Company does not intend to update or revise the forward-looking statements in this press release after the date of this press release.

   
Boot Barn Holdings, Inc.
Consolidated Balance Sheets

(In thousands, except per share data)

(Unaudited)

 
June 30, March 31,
2018 2018
Assets
Current assets:
Cash and cash equivalents $ 7,374 $ 9,016
Accounts receivable, net 5,440 4,389
Inventories 204,434 211,472
Prepaid expenses and other current assets   17,452   16,250
Total current assets 234,700 241,127
Property and equipment, net 93,180 89,208
Goodwill 195,858 193,095
Intangible assets, net 63,297 63,383
Other assets   1,127   1,128
Total assets $ 588,162 $ 587,941
Liabilities and stockholders’ equity
Current liabilities:
Line of credit $ 30,737 $ 21,006
Accounts payable 77,807 89,958
Accrued expenses and other current liabilities   39,373   40,034

Total current liabilities

147,917 150,998
Deferred taxes 13,424 13,030
Long-term portion of notes payable, net 173,462 183,200
Capital lease obligation 7,165 7,303
Other liabilities   19,483   18,804
Total liabilities   361,451   373,335
 
Stockholders’ equity:
Common stock, $0.0001 par value; June 30, 2018 – 100,000 shares authorized, 28,040 shares issued; March 31, 2018 – 100,000 shares authorized, 27,331 shares issued 3 3
Preferred stock, $0.0001 par value; 10,000 shares authorized, no shares issued or outstanding

Additional paid-in capital 153,777 148,127
Retained earnings 73,431 66,670
Less: Common stock held in treasury, at cost, 45 and 31 shares at June 30, 2018 and March 31, 2018, respectively   (500)   (194)
Total stockholders’ equity   226,711   214,606
Total liabilities and stockholders’ equity $ 588,162 $ 587,941
 
 
Boot Barn Holdings, Inc.
Consolidated Statements of Operations

(In thousands, except per share data)

(Unaudited)

 
Thirteen Weeks Ended
June 30,   July 1,
2018 2017
Net sales $ 161,984 $ 139,379
Cost of goods sold   110,537   97,987
Gross profit 51,447 41,392
Selling, general and administrative expenses   41,618   36,451
Income from operations 9,829 4,941
Interest expense, net   4,100   3,658
Income before income taxes 5,729 1,283
Income tax (benefit)/expense   (1,032)   506
Net income $ 6,761 $ 777
 
Earnings per share:
Basic shares $ 0.24 $ 0.03
Diluted shares $ 0.24 $ 0.03
Weighted average shares outstanding:
Basic shares 27,604 26,559
Diluted shares 28,542 26,969
 
   
Boot Barn Holdings, Inc.
Consolidated Statements of Cash Flows

(In thousands)

(Unaudited)

 
Thirteen Weeks Ended
June 30, July 1,
2018 2017
Cash flows from operating activities
Net income $ 6,761 $ 777
Adjustments to reconcile net income to net cash provided by/(used in) operating activities:
Depreciation 4,238 3,751
Stock-based compensation 612 575
Amortization of intangible assets 193 362
Amortization of debt issuance fees and debt discount 305 289
Loss on disposal of property and equipment

14
Store impairment charge 213

Deferred taxes 394 564
Changes in operating assets and liabilities, net of acquisition:
Accounts receivable, net (1,051 ) 210
Inventories 8,910 (3,247 )
Prepaid expenses and other current assets (1,245 ) (1,296 )
Other assets (14 ) (16 )
Accounts payable (13,468 ) (16,922 )
Accrued expenses and other current liabilities (745 ) (113 )
Other liabilities   403     737  
Net cash provided by/(used in) operating activities $ 5,506   $ (14,315 )
Cash flows from investing activities
Purchases of property and equipment $ (7,064 ) $ (5,258 )
Acquisition of business, net of cash acquired   (4,424 )  

 
Net cash used in investing activities $ (11,488 ) $ (5,258 )
Cash flows from financing activities
Borrowings on line of credit – net $ 9,731 $ 29,545
Repayments on debt and capital lease obligations (10,123 ) (10,105 )
Debt issuance fees paid

(519 )
Tax withholding payments for net share settlement (306 ) (78 )
Proceeds from the exercise of stock options   5,038    

 
Net cash provided by financing activities $ 4,340   $ 18,843  
 
Net decrease in cash and cash equivalents (1,642 ) (730 )
Cash and cash equivalents, beginning of period   9,016     8,035  
Cash and cash equivalents, end of period $ 7,374   $ 7,305  
 
Supplemental disclosures of cash flow information:
Cash paid for income taxes $ 240 $ 308
Cash paid for interest $ 3,769 $ 3,384
Supplemental disclosure of non-cash activities:
Unpaid purchases of property and equipment $ 2,559 $ 2,086
 
 
Boot Barn Holdings, Inc.
Store Count
         
Fiscal Year Ended Fiscal Year Ended Fiscal Year Ended Fiscal Year Ended Quarter Ended
March 28, March 26, April 1, March 31, June 30,
2015 2016 2017 2018 2018
Store Count (BOP) 152 169 208 219 226
Opened/Acquired 18 47 12 9 6
Closed Boot Barn Stores (1 ) (2 ) (1 ) (2 ) (2 )
Closed Sheplers Stores

  (6 )

 

 

 
Store Count (EOP) 169   208   219   226   230  
 
         
Debt Covenant EBITDA Reconciliation

(Unaudited)

 
Thirteen Weeks Ended
June 30, March 31, December 30, September 30, July 1,
2018 2018 2017 2017 2017
Boot Barn’s Net income $ 6,761 $ 6,855 $ 20,149 $ 1,098 $ 777
Income tax (benefit)/expense (1,032 ) 619 425 751 506
Interest expense, net 4,100 3,808 3,821 3,789 3,658
Depreciation and intangible asset amortization   4,431     4,610     4,263   4,142     4,113
Boot Barn’s EBITDA $ 14,260 $ 15,892 $ 28,658 $ 9,780 $ 9,054
 
Non-cash stock-based compensation (a) $ 612 $ 398 $ 597 $ 678 $ 575
Non-cash accrual for future award redemptions (b) 22 (120 ) 47 (162 ) 5
Loss on disposal of assets (c) 179 12 47 14
Store impairment charge (d) 213 83
Secondary offering costs (e)   176     294          
Boot Barn’s Adjusted EBITDA $ 15,283 $ 16,726 $ 29,314 $ 10,343 $ 9,648
 
Additional adjustments (f)   935     546     862   418     628
Consolidated EBITDA per Loan Agreements $ 16,218   $ 17,272   $ 30,176 $ 10,761   $ 10,276
 

(a) Represents non-cash compensation expenses related to stock options, restricted stock awards and restricted stock units granted to certain of our employees and directors.

(b) Represents the non-cash accrual for future award redemptions in connection with our customer loyalty program.

(c) Represents loss on disposal of assets from store closures.

(d) Represents store impairment charges recorded in order to reduce the carrying amount of the assets to their estimated fair values.

(e) Represents professional fees and expenses incurred in connection with the January 2018 and May 2018 secondary offerings.

(f) Adjustments to Boot Barn’s Adjusted EBITDA as provided in the 2015 Golub Term Loan and June 2015 Wells Fargo Revolver include pre-opening costs, franchise and state taxes, and other miscellaneous adjustments.

http://www.businesswire.com/news/home/20180807005832/en/Boot-Barn-Holdings-Announces-Quarter-Fiscal-Year/?feedref=JjAwJuNHiystnCoBq_hl-bV7DTIYheT0D-1vT4_bKFzt_EW40VMdK6eG-WLfRGUE1fJraLPL1g6AeUGJlCTYs7Oafol48Kkc8KJgZoTHgMu0w8LYSbRdYOj2VdwnuKwa

Snap Inc. Reports Second Quarter 2018 Results

SANTA MONICA, Calif.–()–Snap Inc. (NYSE: SNAP) today announced financial results for the quarter ended June 30, 2018.

Financial Highlights

Cash used in operating activities was $(199) million in Q2 2018, compared to cash used in operating activities of $(210) million in Q2 2017.

Free Cash Flow was $(234) million in Q2 2018, compared to $(229) million in Q2 2017.

Common shares outstanding plus shares underlying stock-based awards totaled 1.5 billion at June 30, 2018, compared with 1.4 billion one year ago.

Revenue increased 44% to $262 million in Q2 2018, compared to revenue of $182 million in Q2 2017.

Net loss decreased 20% to $(353) million in Q2 2018, compared to a net loss of $(443) million in Q2 2017.

Adjusted EBITDA loss decreased 13% to $(169) million in Q2 2018, compared to an Adjusted EBITDA loss of $(194) million in Q2 2017.

We are excited by the progress we have been making and are optimistic about the opportunities ahead as we continue to invest in innovation,” said Evan Spiegel, Snap CEO and Co-Founder.

  Three Months Ended June 30,   Percent   Six Months Ended June 30,   Percent
2018   2017 Change 2018   2017 Change
(Unaudited) (dollars in thousands) (dollars in thousands)
   
Cash used in operating activities $ (199,346 ) $ (209,574 ) 5 % $ (431,327 ) $ (364,571 ) (18 )%
Free Cash Flow $ (234,247 ) $ (228,939 ) (2 )% $ (502,543 ) $ (401,929 ) (25 )%
Common shares outstanding plus shares underlying stock-based awards 1,478,758 1,434,346 3 % 1,478,758 1,434,346 3 %
Revenue $ 262,263 $ 181,671 44 % $ 492,929 $ 331,319 49 %
Net loss $ (353,310 ) $ (443,093 ) (20 )% $ (739,095 ) $ (2,651,930 ) (72 )%
Adjusted EBITDA $ (169,032 ) $ (193,990 ) 13 % $ (386,897 ) $ (382,233 ) (1 )%
 

Business Highlights

  • Daily Active Users (DAU) increased 8% to 188 million in Q2 2018, compared to 173 million in Q2 2017, and decreased 2% in Q2 2018, compared to 191 million in Q1 2018.
  • Average revenue per user (ARPU) increased 34% to $1.40 in Q2 2018, compared to $1.05 in Q2 2017.
  • In Q2 2018, 11 Shows reached a monthly audience of over 10 million users, up from 7 in Q1 2018.
  • We introduced Group Video Chat, which allows users to video chat with up to 16 friends at one time.
  • We launched Snappables, new Lenses for sharing augmented reality experiences with one or many friends. Users can control Snappables using touch, motion, and facial expressions.
  • We released a new version of Spectacles, which has a smaller profile and is water resistant. Users can record videos with improved audio as well as press and hold to take a photo. Snaps captured transfer to Snapchat in HD up to 4 times faster than the original version of Spectacles.
  • We introduced Snap Kit (kit.snapchat.com) to help developers build products powered by features of Snapchat. We have partnered with companies such as Pandora and Tinder to make it possible for Snapchat features to be shared within each of their platforms and on Snapchat.
    • Creative Kit helps developers integrate their own stickers, filters, links, and other highlights right into the Snapchat camera.
    • Login Kit lets users unlock new features on Snapchat and other apps, or use their Snapchat account as a quick, secondary way to log in.
    • Bitmoji Kit lets conversations come alive with Bitmoji stickers when messaging on other apps.
    • Story Kit lets developers filter and embed publicly shared Snapchat Stories into their own apps and services.
  • We introduced Lens Explorer, an easier way to discover and unlock thousands of Lenses built by Snapchat users around the world. Since we launched Lens Studio in late 2017, creators have submitted over 100,000 unique Lenses which have been viewed by Snapchat users over 3.5 billion times.

Advertising Highlights

  • We transitioned our Story Ad product from our managed ecosystem to our programmatic auction.
  • Snap Pixel, which helps advertisers measure the cross-device impact of their campaigns, is now available to all advertisers, regardless of size. Since beta launch in Q4 2017, Snap Pixel has measured more than 100 million purchase events, 70 million of which were recorded in Q2 2018 alone as we released Snap Pixel globally.
  • We introduced updates to our self-serve platform to provide performance-focused advertisers with a full-suite of tools needed to optimize and measure their Snapchat campaigns. These updates include the ability to bid on goals such as web conversions, return on ad spend reporting, and conversion lift capabilities, effectively rounding out our Snap Pixel offering.
  • We announced that advertisers can purchase Lens campaigns using our Reach & Frequency tool in Ads Manager. This means that all of our advertising formats – Snap Ads (including Story Ads) and Creative Tools (Lenses and Filters) – are now available programmatically.
  • We launched two new initiatives to help our content creators monetize via our programmatic marketplace. We brought Commercials, a non-skippable 6-second Snap Ad that appears in Discover Shows, to Ads Manager. We also launched our Private Marketplace, which is an invite-only tool within Ads Manager that publishers can use to allow specific advertisers to target their content.
  • We’ve provided more insights to advertisers by launching three new initiatives for campaign planning and analysis. Audience Insights help advertisers understand characteristics about Snap’s audience, which they can now better target with our Advanced Location Targeting, including location categories and point + radius, and then better understand their performance with Delivery Insights.

Definitions

Free Cash Flow is defined as net cash provided by (used in) operating activities, reduced by purchases of property and equipment.

Common shares outstanding plus shares underlying stock-based awards includes common shares outstanding, restricted stock units, and outstanding stock options.

Adjusted EBITDA is defined as net income (loss), excluding interest income; interest expense; other income (expense) net; income tax benefit (expense); depreciation and amortization; stock-based compensation expense and related payroll tax expense; and certain other non-cash or non-recurring items impacting net income (loss) from time to time.

A DAU is defined as a registered Snapchat user who opens the Snapchat application at least once during a defined 24-hour period. We calculate average Daily Active Users for a particular quarter by adding the number of DAUs on each day of that quarter and dividing that sum by the number of days in that quarter.

ARPU is defined as quarterly revenue divided by the average Daily Active Users.

A Monthly Active User (MAU) is defined as a registered Snapchat user who opens the Snapchat application at least once during the 30-day period ending on the calendar month-end. We calculate average Monthly Active Users for a particular quarter by calculating the average of the MAUs as of each calendar month-end in that quarter.

Note: For adjustments and additional information regarding the non-GAAP financial measures and other items discussed, please see “Non-GAAP Financial Measures,” “Reconciliation of GAAP to Non-GAAP Financial Measures,” and “Supplemental Financial Information and Business Metrics.”

Financial Guidance

The following forward-looking statements reflect our expectations for the third quarter of 2018 as of August 7, 2018, and are subject to substantial uncertainty. This guidance assumes, among other things, that no business acquisitions, investments, restructurings, or legal settlements are concluded in the quarter. Our results are based on assumptions that we believe to be reasonable as of this date, but may be materially affected by many factors, as discussed below in “Forward-Looking Statements.”

Q3 2018 Outlook

  • Revenue is expected to be between $265 million and $290 million, growth of between 27% and 39% compared to Q3 2017.
  • Adjusted EBITDA loss is expected to be between $(185) million and $(160) million, compared to $(179) million in Q3 2017.

Conference Call Information

Snap Inc. will host a conference call to discuss the results at 2:00 p.m. Pacific / 5:00 p.m. Eastern today. The live audio webcast along with supplemental information will be accessible at investor.snap.com. A recording of the webcast will also be available following the conference call.

Snap Inc. uses the investor.snap.com and snap.com/news websites as means of disclosing material non-public information and for complying with its disclosure obligation under Regulation FD.

About Snap Inc.

Snap Inc. is a camera company. We believe that reinventing the camera represents our greatest opportunity to improve the way people live and communicate. We contribute to human progress by empowering people to express themselves, live in the moment, learn about the world, and have fun together. For more information, visit snap.com.

Forward-Looking Statements

This press release contains “forward-looking” statements that are based on our management’s beliefs and assumptions and on information currently available to management. Forward-looking statements include statements about guidance or expected financial metrics, such as revenue, non-GAAP Adjusted EBITDA, capital expenditures, and stock-based compensation, as well as non-financial metrics, such as DAU, MAU, and video views. They also include statements about our possible or assumed business strategies, potential growth opportunities, new products, and potential market opportunities.

Forward-looking statements include all statements that are not historical facts and can be identified by terms such as “believe,” “could,” “expect,” “potential,” “will,” “would” or similar expressions and the negatives of those terms. Forward-looking statements involve known and unknown risks, uncertainties, and other factors that may cause our actual results, performance, or achievements to be materially different from any future results, performance, or achievements expressed or implied by the forward-looking statements. These risks include, but are not limited to, risks and uncertainties related to: our limited operating history, our lack of profitability to date, changes to our business model, our ability to monetize our products, the highly competitive and rapidly changing market for internet and advertising companies, user reception of changes to existing products, infrastructure costs, our ability to create new and innovative products, our ability to maintain users and manage any future user growth, litigation, and our international expansion strategies. Additional risks and uncertainties that could affect our financial results are included in the section titled “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in our quarterly report on Form 10-Q for the quarter ended March 31, 2018, which is available on the SEC’s website at www.sec.gov. Additional information will be made available in Snap Inc.’s quarterly report on Form 10-Q for the quarter ended June 30, 2018 and other filings that we make from time to time with the SEC. In addition, any forward-looking statements contained in this press release are based on assumptions that we believe to be reasonable as of this date. Except as required by law, we assume no obligation to update these forward-looking statements, or to update the reasons if actual results differ materially from those anticipated in the forward-looking statements.

Non-GAAP Financial Measures

To supplement our consolidated financial statements, which are prepared and presented in accordance with GAAP, we use certain non-GAAP financial measures, as described below, to understand and evaluate our core operating performance. These non-GAAP financial measures, which may be different than similarly titled measures used by other companies, are presented to enhance investors’ overall understanding of our financial performance and should not be considered a substitute for, or superior to, the financial information prepared and presented in accordance with GAAP.

We use the non-GAAP financial measure of Adjusted EBITDA, which is defined as net income (loss); excluding interest income; interest expense; other income (expense), net; income tax benefit (expense); depreciation and amortization; stock-based compensation expense and related payroll tax expense; and certain other non-cash or non-recurring items impacting net income (loss) from time to time. We believe that Adjusted EBITDA helps identify underlying trends in our business that could otherwise be masked by the effect of the expenses that we exclude in Adjusted EBITDA.

We use the non-GAAP financial measure of Free Cash Flow, which is defined as net cash provided by (used in) operating activities, reduced by purchases of property and equipment. We believe Free Cash Flow is an important liquidity measure of the cash that is available, after capital expenditures, for operational expenses and investment in our business and is a key financial indicator used by management. Additionally, we believe that Free Cash Flow is an important measure since we use third-party infrastructure partners to host our services and therefore we do not incur significant capital expenditures to support revenue generating activities. Free Cash Flow is useful to investors as a liquidity measure because it measures our ability to generate or use cash. Once our business needs and obligations are met, cash can be used to maintain a strong balance sheet and invest in future growth.

We use the non-GAAP financial measure of Non-GAAP Net Loss, which is defined as net income (loss); excluding amortization of intangible assets; stock-based compensation expense and related payroll tax expense; certain other non-cash or non-recurring items impacting net income (loss) from time to time; and related income tax adjustments. Non-GAAP Net Loss and weighted average diluted shares are then used to calculate Non-GAAP diluted net loss per share. Similar to Adjusted EBITDA, we believe these measures help identify underlying trends in our business that could otherwise be masked by the effect of the expenses we exclude in the measure.

We believe that these non-GAAP financial measures provide useful information about our financial performance, enhance the overall understanding of our past performance and future prospects, and allow for greater transparency with respect to key metrics used by our management for financial and operational decision-making. We are presenting these non-GAAP measures to assist investors in seeing our financial performance through the eyes of management, and because we believe that these measures provide an additional tool for investors to use in comparing our core financial performance over multiple periods with other companies in our industry.

For a reconciliation of these non-GAAP financial measures to the most directly comparable GAAP financial measure, please see “Reconciliation of GAAP to Non-GAAP Financial Measures.”

Snap Inc., “Snapchat,” and our other registered and common law trade names, trademarks, and service marks are the property of Snap Inc. or our subsidiaries.

SNAP INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands, unaudited)

   
Three Months Ended June 30, Six Months Ended June 30,
2018   2017 2018   2017
Cash flows from operating activities
Net loss $ (353,310 ) $ (443,093 ) $ (739,095 ) $ (2,651,930 )
Adjustments to reconcile net loss to net cash used in operating

activities:

Depreciation and amortization 22,514 12,585 44,068 25,035
Stock-based compensation 156,371 245,028 289,630 2,237,149
Deferred income taxes 17 (277 ) 253 (1,765 )
Other (5,893 ) (3,564 ) (9,287 ) (1,672 )
Change in operating assets and liabilities, net of effect of

acquisitions:

Accounts receivable, net of allowance (13,926 ) (21,653 ) 34,771 (8,209 )
Prepaid expenses and other current assets 7,815 (4,399 ) (2,624 ) (47,835 )
Other assets 9,021 (12,823 ) 13,225 (10,108 )
Accounts payable (9,653 ) 3,698 (46,722 ) 9,317
Accrued expenses and other current liabilities (19,356 ) 12,986 (29,505 ) 82,190
Other liabilities   7,054   1,938   13,959   3,257
Net cash used in operating activities   (199,346 )   (209,574 )   (431,327 )   (364,571 )
Cash flows from investing activities
Purchases of property and equipment (34,901 ) (19,365 ) (71,216 ) (37,358 )
Purchases of intangible assets (2,505 ) (7,720 ) (2,565 ) (7,720 )
Non-marketable investments (21,010 ) (6,905 ) (21,010 ) (7,530 )
Cash paid for acquisitions, net of cash acquired (206,163 ) (224,176 )
Purchases of marketable securities (396,885 ) (1,319,156 ) (874,098 ) (2,742,370 )
Sales of marketable securities 237,095 45,007 237,095
Maturities of marketable securities   578,509   602,432   1,366,337   1,047,479
Net cash provided by (used in) investing activities   123,208   (719,782 )   442,455   (1,734,580 )
Cash flows from financing activities
Proceeds from the exercise of stock options 1,914 189 47,723 783
Stock repurchases from employees for tax withholdings (1,828 ) (551 ) (208,407 )
Proceeds from issuance of Class A common stock in initial public offering, net of underwriting commissions 2,657,797
Payments of initial public offering issuance costs     (4,341 )     (9,365 )
Net cash provided by (used in) financing activities   1,914   (5,980 )   47,172   2,440,808
Change in cash, cash equivalents, and restricted cash (74,224 ) (935,336 ) 58,300 341,657
Cash, cash equivalents, and restricted cash, beginning of period   469,531   1,440,329   337,007   163,336
Cash, cash equivalents, and restricted cash, end of period $ 395,307 $ 504,993 $ 395,307 $ 504,993
Supplemental disclosures
Cash paid for income taxes $ 1,406 $ 1,945 $ 2,397 $ 5,490
Supplemental disclosures of non-cash activities
Purchase consideration liabilities related to acquisitions $ $ 9,341 $ $ 11,242
Construction in progress related to financing lease obligations $ 431 $ 426 $ 856 $ 683
Net change in accounts payable and accrued expenses and other

current liabilities related to property and equipment additions

$ 143 $ 612 $ 588 $ (3,743 )
 

SNAP INC.

CONSOLIDATED STATEMENTS OF OPERATIONS

(In thousands, except per share amounts, unaudited)

   
Three Months Ended June 30, Six Months Ended June 30,
2018   2017 2018   2017
 
Revenue $ 262,263 $ 181,671 $ 492,929 $ 331,319
Costs and expenses:
Cost of revenue 191,565 152,148 388,363 315,506
Research and development 203,246 255,735 404,232 1,061,583
Sales and marketing 101,685 90,903 203,798 310,636
General and administrative   123,609   131,903   246,908   1,306,379
Total costs and expenses   620,105   630,689   1,243,301   2,994,104
Loss from operations (357,842 ) (449,018 ) (750,372 ) (2,662,785 )
Interest income 6,600 6,349 12,704 8,773
Interest expense (930 ) (998 ) (1,864 ) (1,693 )
Other income (expense), net   (61 )   786   3,092   973
Loss before income taxes (352,233 ) (442,881 ) (736,440 ) (2,654,732 )
Income tax benefit (expense)   (1,077 )   (212 )   (2,655 )   2,802
Net loss $ (353,310 ) $ (443,093 ) $ (739,095 ) $ (2,651,930 )
Net loss per share attributable to Class A, Class B, and Class C common stockholders:
Basic $ (0.27 ) $ (0.36 ) $ (0.58 ) $ (2.43 )
Diluted $ (0.27 ) $ (0.36 ) $ (0.58 ) $ (2.43 )
 

SNAP INC.

CONSOLIDATED BALANCE SHEETS

(In thousands, except per share amounts)

   
June 30,

2018

December 31,

2017

(Unaudited)
Assets
Current assets
Cash and cash equivalents $ 393,183 $ 334,063
Marketable securities 1,176,820 1,708,976
Accounts receivable, net of allowance 244,815 279,473
Prepaid expenses and other current assets   54,032   44,282
Total current assets 1,868,850 2,366,794
Property and equipment, net 214,230 166,762
Intangible assets, net 147,197 166,473
Goodwill 635,482 639,882
Other assets   84,954   81,655
Total assets $ 2,950,713 $ 3,421,566
Liabilities and Stockholders’ Equity
Current liabilities
Accounts payable $ 22,644 $ 71,194
Accrued expenses and other current liabilities   256,698   275,062
Total current liabilities 279,342 346,256
Other liabilities   87,303   82,983
Total liabilities   366,645   429,239
Commitments and contingencies
Stockholders’ equity
Class A non-voting common stock, $0.00001 par value. 3,000,000 shares

authorized, 958,801 shares issued and outstanding at June 30, 2018,

and 3,000,000 shares authorized, 883,022 shares issued and outstanding

at December 31, 2017.

10 9
Class B voting common stock, $0.00001 par value. 700,000 shares

authorized, 94,471 shares issued and outstanding at June 30, 2018,

and 700,000 shares authorized, 122,564 shares issued and outstanding

at December 31, 2017.

1 1
Class C voting common stock, $0.00001 par value. 260,888 shares

authorized, 219,891 shares issued and outstanding at June 30, 2018,

and 260,888 shares authorized and 216,616 shares issued and outstanding

at December 31, 2017.

2 2
Additional paid-in capital 7,971,610 7,634,825
Accumulated other comprehensive income (loss) 8,207 14,157
Accumulated deficit   (5,395,762 )   (4,656,667 )
Total stockholders’ equity   2,584,068   2,992,327
Total liabilities and stockholders’ equity $ 2,950,713 $ 3,421,566
 

SNAP INC.

RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL MEASURES

(In thousands, unaudited)

   
Three Months Ended June 30, Six Months Ended June 30,
2018   2017 2018   2017
Adjusted EBITDA reconciliation:
Net loss $ (353,310 ) $ (443,093 ) $ (739,095 ) $ (2,651,930 )
Add (deduct):
Interest income (6,600 ) (6,349 ) (12,704 ) (8,773 )
Interest expense 930 998 1,864 1,693
Other (income) expense, net 61 (786 ) (3,092 ) (973 )
Income tax (benefit) expense 1,077 212 2,655 (2,802 )
Depreciation and amortization 22,514 12,585 44,068 25,035
Stock-based compensation expense 156,371 245,028 289,630 2,237,149
Payroll tax expense related to stock-based compensation 5,997 (2,585 ) 15,965 18,368
Reduction in force charges(1) 9,884
Lease exit charges(2)   3,928     3,928  
Adjusted EBITDA $ (169,032 ) $ (193,990 ) $ (386,897 ) $ (382,233 )
 

Total depreciation and amortization expense by function:

Three Months Ended June 30, Six Months Ended June 30,
2018 2017 2018 2017
Depreciation and amortization expense:
Cost of revenue $ 5,610 $ 2,970 $ 10,812 $ 4,639
Research and development 9,489 5,983 18,280 11,738
Sales and marketing 3,991 1,589 7,560 4,189
General and administrative   3,424   2,043   7,416   4,469
Total $ 22,514 $ 12,585 $ 44,068 $ 25,035
 

Total stock-based compensation expense by function:

Three Months Ended June 30, Six Months Ended June 30,
2018 2017 2018 2017
Stock-based compensation expense:
Cost of revenue $ 1,467 $ 2,223 $ 1,743 $ 21,931
Research and development 92,303 163,848 170,118 881,928
Sales and marketing 21,996 20,558 38,182 180,284
General and administrative   40,605   58,399   79,587   1,153,006
Total $ 156,371 $ 245,028 $ 289,630 $ 2,237,149

(1) Reduction in force charges during the first quarter of 2018 were related to a reduction in force plan we implemented during March 2018, impacting approximately 7% of our global headcount, primarily in engineering and sales. The charges are composed primarily of severance expense and related payroll tax expense. These charges are non-recurring and not reflective of underlying trends in our business. Additionally, we recognized a stock-based compensation forfeiture benefit of $31.5 million, which is included in the stock-based compensation expense line item above.

(2) Lease exit charges were related to our exit of various operating leases prior to the end of the contractual lease term, primarily as a result of moving to a centralized corporate office located in Santa Monica, California. We recorded a lease exit charge of $3.9 million in the second quarter of 2018. The charge reflects the present value of our remaining lease obligation on the cease use dates that occurred during the quarter, net of sublease income. We expect to incur total lease exit charges of approximately $25 million to $45 million in 2018, primarily in the third quarter, based on current exit plans. These charges are non-recurring and not reflective of underlying trends in our business.

SNAP INC.

RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL MEASURES (continued)

(In thousands, except per share amounts, unaudited)

   
Three Months Ended June 30, Six Months Ended June 30,
2018   2017 2018   2017
Free Cash Flow reconciliation:
Net cash used in operating activities $ (199,346 ) $ (209,574 ) $ (431,327 ) $ (364,571 )
Less:
Purchases of property and equipment   (34,901 )   (19,365 )   (71,216 )   (37,358 )
Free Cash Flow $ (234,247 ) $ (228,939 ) $ (502,543 ) $ (401,929 )
 
Three Months Ended June 30, Six Months Ended June 30,
2018 2017 2018 2017
Non-GAAP Net Loss reconciliation:
Net loss $ (353,310 ) $ (443,093 ) $ (739,095 ) $ (2,651,930 )
Amortization of intangible assets 10,754 5,767 21,577 11,204
Stock-based compensation expense 156,371 245,028 289,630 2,237,149
Payroll tax expense related to stock-based compensation 5,997 (2,585 ) 15,965 18,368
Reduction in force charges 9,884
Lease exit charges 3,928 3,928
Income tax adjustments   (339 )   (623 )   (119 )   (2,190 )
Non-GAAP net loss $ (176,599 ) $ (195,506 ) $ (398,230 ) $ (387,399 )
 
Weighted-average common shares – Diluted 1,294,846 1,223,443 1,283,668 1,090,751
 
Non-GAAP Diluted Net Loss Per Share reconciliation:
Diluted net loss per share $ (0.27 ) $ (0.36 ) $ (0.58 ) $ (2.43 )
Non-GAAP adjustment to net loss   0.13   0.20   0.27   2.08
Non-GAAP diluted Net Loss per share $ (0.14 ) $ (0.16 ) $ (0.31 ) $ (0.36 )
 

SNAP INC.

SUPPLEMENTAL FINANCIAL INFORMATION AND BUSINESS METRICS

(Dollars in thousands, except as noted below, unaudited)

           
Q1 2017 Q2 2017 Q3 2017 Q4 2017 Q1 2018 Q2 2018
Cash Flows and Shares
Net cash used in operating activities $ (154,997 ) $ (209,574 ) $ (194,013 ) $ (176,083 ) $ (231,981 ) $ (199,346 )
Net cash used in operating activities – YoY (year-over-year) (67 )% (56 )% 11 % (5 )% (50 )% 5 %
Net cash used in operating activities – TTM (trailing twelve months) $ (673,701 ) $ (749,165 ) $ (726,312 ) $ (734,667 ) $ (811,651 ) $ (801,423 )
Purchases of property and equipment $ (17,993 ) $ (19,365 ) $ (25,948 ) $ (21,212 ) $ (36,315 ) $ (34,901 )
Purchases of property and equipment – YoY 44 % 18 % 51 % 4 % 102 % 80 %
Purchases of property and equipment – TTM $ (71,982 ) $ (74,926 ) $ (83,682 ) $ (84,518 ) $ (102,840 ) $ (118,376 )
Free Cash Flow $ (172,990 ) $ (228,939 ) $ (219,961 ) $ (197,295 ) $ (268,296 ) $ (234,247 )
Free Cash Flow – YoY (65 )% (52 )% 6 % (5 )% (55 )% (2 )%
Free Cash Flow – TTM $ (745,683 ) $ (824,091 ) $ (809,994 ) $ (819,185 ) $ (914,491 ) $ (919,799 )
Common shares outstanding 1,178,850 1,180,002 1,201,736 1,222,202 1,254,439 1,273,163
Common shares outstanding – YoY NM NM NM NM 6 % 8 %
Shares underlying stock-based awards 253,300 254,344 239,564 230,802 202,175 205,595
Shares underlying stock-based awards – YoY NM NM NM NM (20 )% (19 )%
Total common shares outstanding plus shares underlying stock-based awards 1,432,150 1,434,346 1,441,300 1,453,004 1,456,613 1,478,758
Total common shares outstanding plus shares underlying stock-based awards – Y/Y NM NM NM NM 2 % 3 %
 
Results of Operations
Revenue $ 149,648 $ 181,671 $ 207,937 $ 285,693 $ 230,666 $ 262,263
Revenue – YoY 286 % 153 % 62 % 72 % 54 % 44 %
Revenue – TTM $ 515,332 $ 625,205 $ 704,938 $ 824,949 $ 905,967 $ 986,559
Revenue by region(1)
North America $ 128,718 $ 147,638 $ 167,306 $ 219,394 $ 170,488 $ 177,410
North America – YoY 259 % 126 % 46 % 51 % 32 % 20 %
North America – TTM $ 454,048 $ 536,467 $ 589,018 $ 663,057 $ 704,827 $ 734,599
Europe $ 13,102 $ 22,052 $ 27,262 $ 39,976 $ 32,721 $ 40,241
Europe – YoY NM 254 % 131 % 173 % 150 % 82 %
Europe – TTM $ 45,794 $ 61,610 $ 77,081 $ 102,392 $ 122,011 $ 140,200
Rest of World $ 7,829 $ 11,981 $ 13,368 $ 26,323 $ 27,458 $ 44,612
Rest of World – YoY NM NM NM NM 251 % 272 %
Rest of World – TTM $ 15,491 $ 27,129 $ 38,839 $ 59,501 $ 79,130 $ 111,761
Loss from operations $ (2,213,767 ) $ (449,018 ) $ (461,827 ) $ (360,964 ) $ (392,530 ) $ (357,842 )
Loss from operations – YoY NM (288 )% (253 )% (113 )% 82 % 20 %
Loss from operations – Margin NM (247 )% (222 )% (126 )% (170 )% (136 )%
Loss from operations – TTM $ (2,630,331 ) $ (2,963,490 ) $ (3,294,349 ) $ (3,485,576 ) $ (1,664,339 ) $ (1,573,163 )
Net loss(2) $ (2,208,837 ) $ (443,093 ) $ (443,159 ) $ (349,977 ) $ (385,785 ) $ (353,310 )
Net loss – YoY NM 282 % 257 % 106 % (83 )% (20 )%
Net loss – TTM $ (2,618,904 ) $ (2,946,103 ) $ (3,265,034 ) $ (3,445,066 ) $ (1,622,014 ) $ (1,532,231 )
Adjusted EBITDA $ (188,243 ) $ (193,990 ) $ (178,901 ) $ (158,922 ) $ (217,867 ) (169,032 )
Adjusted EBITDA – YoY (102 )% (85 )% (65 )% (4 )% (16 )% 13 %
Adjusted EBITDA – Margin (126 )% (107 )% (86 )% (56 )% (94 )% (64 )%
Adjusted EBITDA – TTM $ (554,252 ) $ (643,121 ) $ (713,418 ) $ (720,056 ) $ (749,680 ) $ (724,722 )

(1) Total revenue for geographic reporting is apportioned to each region based on our determination of the geographic location in which advertising impressions are delivered, as this approximates revenue based on user activity. This allocation is consistent with how we determine ARPU.

SNAP INC.

SUPPLEMENTAL FINANCIAL INFORMATION AND BUSINESS METRICS (continued)

(Dollars in thousands, except as noted below, unaudited)

           
Q1 2017 Q2 2017 Q3 2017 Q4 2017 Q1 2018 Q2 2018
Other
DAU (in millions) 166 173 178 187 191 188
DAU – YoY 36 % 21 % 17 % 18 % 15 % 8 %
DAU by region (in millions)
North America 71 75 77 80 81 80
North America – YoY 32 % 22 % 18 % 18 % 14 % 7 %
Europe 55 57 57 60 62 61
Europe – YoY 41 % 24 % 17 % 17 % 13 % 7 %
Rest of World 40 42 44 47 48 47
Rest of World – YoY 38 % 16 % 14 % 21 % 18 % 12 %
ARPU $ 0.90 $ 1.05 $ 1.17 $ 1.53 $ 1.21 $ 1.40
ARPU – YoY 183 % 109 % 39 % 46 % 34 % 34 %
ARPU by region
North America $ 1.81 $ 1.97 $ 2.17 $ 2.75 $ 2.10 $ 2.21
North America – YoY 172 % 85 % 24 % 28 % 16 % 12 %
Europe $ 0.24 $ 0.39 $ 0.48 $ 0.66 $ 0.53 $ 0.66
Europe – YoY 245 % 186 % 98 % 133 % 120 % 70 %
Rest of World $ 0.19 $ 0.29 $ 0.30 $ 0.56 $ 0.58 $ 0.96
Rest of World – YoY NM NM NM 284 % 198 % 233 %
Employees (full-time; excludes part-time, contractors, and temporary personnel) 2,360 2,607 2,958 3,069 2,989 2,879
Employees – YoY 201 % 146 % 109 % 65 % 27 % 10 %
 
Depreciation and amortization expense
Cost of revenue $ 1,669 $ 2,970 $ 5,404 $ 5,179 $ 5,202 5,610
Research and development 5,755 5,983 6,401 6,937 8,791 9,489
Sales and marketing 2,600 1,589 2,820 3,441 3,569 3,991
General and administrative   2,426   2,043   2,842   3,229   3,991   3,424
Total $ 12,450 $ 12,585 $ 17,467 $ 18,786 $ 21,553 $ 22,514
Depreciation and amortization expense – YoY 147 % 110 % 135 % 77 % 73 % 79 %
 
Stock-based compensation expense
Cost of revenue $ 19,708 $ 2,223 $ 1,951 $ 2,189 $ 276 1,467
Research and development 718,080 163,848 143,303 129,199 77,815 92,303
Sales and marketing 159,726 20,558 27,254 28,936 16,185 21,996
General and administrative   1,094,607   58,399   49,194   20,720   38,982   40,605
Total $ 1,992,121 $ 245,028 $ 221,702 $ 181,044 $ 133,258 $ 156,371
Stock-based compensation expense – YoY NM NM NM NM (93 )% (36 )%

http://www.businesswire.com/news/home/20180807005781/en/Snap-Reports-Quarter-2018-Results/?feedref=JjAwJuNHiystnCoBq_hl-bV7DTIYheT0D-1vT4_bKFzt_EW40VMdK6eG-WLfRGUE1fJraLPL1g6AeUGJlCTYs7Oafol48Kkc8KJgZoTHgMu0w8LYSbRdYOj2VdwnuKwa

LSC Communications Awarded Supply Chain Services Agreement with Sussman Education Company, Inc./Lightswitch Learning, LLC.

CHICAGO–()–LSC Communications, Inc. (LKSD), a leader in traditional and digital printing solutions, announced today that it has been awarded a multi-year supply chain services agreement with educational publishing company Sussman Education Company, Inc. and its publishing imprint, Lightswitch Learning, LLC. Under the new agreement, LSC will provide warehousing and fulfillment services for Sussman Education Company, Inc. and Lightswitch Learning, LLC which includes a catalog of titles covering family engagement, social-emotional learning, career choice, bullying, financial literacy, and more.

“Building on almost 50 years of success as a trusted partner with our customers, this exciting new collaboration enables us to efficiently and proactively provide solutions to best meet diverse customer needs,” said Ron Sussman, President, Sussman Education Company, Inc./Lightswitch Learning, LLC.

David McCree, President of LSC’s Book Sales division commented, “LSC worked very closely with Sussman Education Company, Inc. to establish workflows that best support their publishing model. We are very pleased to expand our existing print relationship with them with our value-added supply chain solutions.”

About LSC Communications

With a rich history of industry experience, innovative solutions and service reliability, LSC Communications (NYSE: LKSD) is a global leader in print and digital media solutions. The company’s traditional and digital print-related services and office products serve the needs of publishers, merchandisers and retailers around the world. With advanced technology and a consultative approach, LSC’s supply chain solutions meet the needs of each business by getting their content into the right hands as efficiently as possible.

About Lightswitch Learning, LLC/Sussman Education Company, Inc.

Sussman Education Company, Inc., the parent company of Lightswitch Learning, LLC is an educational sales company founded in 1971 to provide innovative K-12 web and print solutions to support instruction in schools nationwide.

Lightswitch Learning, LLC develops inspiring K-12 content designed to empower families, schools, and communities with resources that connect them to the teaching and learning process while also preparing students for college, career and life. Products include parent guides, high-interest informational texts, and picture books that build on social-emotional development through literacy. In addition, Lightswitch Learning, LLC promotes safe and positive learning environments with bullying prevention and character education resources.

http://www.businesswire.com/news/home/20180807005693/en/LSC-Communications-Awarded-Supply-Chain-Services-Agreement/?feedref=JjAwJuNHiystnCoBq_hl-bV7DTIYheT0D-1vT4_bKFzt_EW40VMdK6eG-WLfRGUE1fJraLPL1g6AeUGJlCTYs7Oafol48Kkc8KJgZoTHgMu0w8LYSbRdYOj2VdwnuKwa

Renovation & Maintenance in France 2018 – ResearchAndMarkets.com

DUBLIN–()–The “Renovation and maintenance France 2018” report has been added to ResearchAndMarkets.com‘s offering.

Renovation and maintenance measures account for more than 50% of investments in residential building. Accordingly, these measures are the most important market for many products and materials. When it comes to renovation and maintenance in residential building, the private renovators are an important target group for the placement of products and services.

In order to provide relevant information for addressing this target group, the study analyses the following questions among others:

  • Who are the private renovators?
  • What are the motivations behind the decisions to renovate?
  • What measures are conducted most often?

To answers these questions, the study analyses a broad range of 18 renovation measures from the building shell to interior works. Spent budgets, information sources and advisors, relevant product features, and the realization of the measures have been surveyed for every measure.

Thereby, the study generates far-reaching insights on the renovation market in general and on the target group specifically, in order to support the placement of products and services. Data collection is based on an online survey of private renovators and additional interviews with craftsmen and architects.

Key Topics Covered

1 Introduction

1.1 Methods

1.2 Basic Results

2 Renovation of Building Sections and Components in Detail

2.1 Roofing

2.2 Exterior Walls and Facade

2.3 Windows and Exterior Doors

2.4 Flooring (Parquet, Laminate, Carpet, Tiles, PVC/Vinyl)

2.5 Bathroom

2.6 Installation of Interior Walls

2.7 Interior Doors

2.8 Heating and Radiators

3 Key Findings

For more information about this report visit https://www.researchandmarkets.com/research/6xn9z5/renovation_and?w=4

http://www.businesswire.com/news/home/20180807005902/en/Renovation-Maintenance-France-2018—ResearchAndMarkets.com/?feedref=JjAwJuNHiystnCoBq_hl-bV7DTIYheT0D-1vT4_bKFzt_EW40VMdK6eG-WLfRGUE1fJraLPL1g6AeUGJlCTYs7Oafol48Kkc8KJgZoTHgMu0w8LYSbRdYOj2VdwnuKwa

Camping World Holdings, Inc. Reports Second Quarter Results

LINCOLNSHIRE, IL–()–Camping World Holdings, Inc. (NYSE:CWH) (“Camping World,” “CWH,” “Company,” “we,” “us” or “our”) today reported results for the second quarter ended June 30, 2018.

Second quarter highlights and year-over-year financial comparisons include:

  • Total revenue of $1.445 billion, an increase of 13.0%, and an all-time Company high
  • Record total gross profit of $416.2 million, an increase of 11.7%
  • Sales of new and used recreational vehicles (“RVs”) were over $1.0 billion, an increase of 6.5%
  • A record 33,637 new and used RVs sold, an increase of 8.5%
  • A record 21,745 new towable units sold, an increase of 14.1% in total and 5.1% on a same store basis, with travel trailer same store units increasing 6.7%
  • Finance and insurance revenue and gross profit of $124.1 million, an increase of 23.7%, and an all-time high
  • Good Sam Club file size of over 1.92 million members, an increase of 9.2% over the prior year, and the highest since inception
  • Income from operations, net income and diluted earnings per share of Class A common stock decreased to $120.2 million, $81.8 million, and $0.72, respectively, and included $15.4 million of pre-opening expenses related to the Gander Outdoors store openings
  • Adjusted pro forma net income(1) increased 10.6% to $85.6 million, and adjusted pro forma earnings per fully exchanged and diluted share(1) increased 6.8% to $0.96
  • Adjusted EBITDA(1) decreased 1.2% to $140.2 million
_______________
(1) Adjusted pro forma net income, adjusted pro forma earnings per fully exchanged and diluted share, adjusted EBITDA, and adjusted EBITDA margin are non-GAAP measures. For reconciliations of these non-GAAP measures to the most directly comparable GAAP measures, see the “Non-GAAP Financial Measures” section later in this press release.
 

Marcus A. Lemonis, Chairman and Chief Executive Officer, stated, “Our RV business is on pace for another record year. While the early part of the RV selling season was impacted by unseasonal weather, we saw nice improvements as the second quarter progressed and our team did an excellent job of balancing our promotional activity to maintain strong profitability while driving sales growth and dramatically lowering our inventory levels of new RVs. We continue to invest in the growth of RV dealerships through traditional RV acquisitions, new store openings, and the launch of Gander RV Sales which will transform our recently acquired Gander Outdoors’ locations through the integration of RV sales and service. The launch of Gander RV Sales has provided the opportunity to rapidly expand our RV business in key states like Wisconsin, Minnesota, Texas, Michigan, Ohio, Pennsylvania, New York, North Carolina, and Illinois, which represent nine of the top 16 RV states, according to Statistical Survey, Inc.’s new RV registration data, and accounted for nearly 35% of all RV registrations over the past twelve months.”

Strategic Growth Initiatives

The Company continues to pursue opportunities to expand its customer base and grow its market share in the RV, outdoor and active lifestyle categories. Recent strategic highlights include:

  • Completed six dealership acquisitions and added new RV dealerships in Sioux City, SD; Sherwood, AR; Nashville, TN; Redding, CA; Oklahoma City, OK and Newport News, VA in the second quarter 2018
  • Opened 52 Gander Outdoors stores in key markets with very strong RV registrations in the first half of 2018
  • Added RV sales to the Gander Outdoors stores in Kenosha, WI and Fayetteville, NC in the second quarter 2018
  • Signed agreement to purchase Russ Dean RV in the Pasco, Washington market
  • On track to add RV parts, accessories and services to all Gander Outdoors locations and operate co-branded Camping World and Gander Outdoors stores by the end of 2018
  • Announced plans to expand the number of RV sales locations by more than 30% through next year with the launch of Gander RV Sales in up to 40 locations, new store openings and continued acquisitions

Second Quarter 2018 Segment Results

The Company has two reportable segments: (1) Consumer Services and Plans, and (2) Retail. The Consumer Services and Plans segment is comprised of emergency roadside assistance; property and casualty insurance programs; travel assist programs; extended vehicle service contracts; co-branded credit cards; vehicle financing and refinancing; membership clubs; and publications and directories. The Company’s Retail segment is comprised of new and used RVs; parts and service; finance and insurance, camping, fishing, hunting, hiking, rock climbing, marine and other active sports products.

Revenue, income and other operating highlights for the two segments in the second quarter were as follows:

Consumer Services and Plans

  • Consumer Services and Plans revenue increased 9.7% to $52.7 million
  • Consumer Services and Plans segment income(2) increased 15.2% to $27.6 million

    Other highlights:

    • The number of RV-related active customers increased 4.6% to 3.714 million over the prior year
    • The number of members in Good Sam Club increased 4.6%, or 85,000, from March 31, 2018 and membership reached an all-time-high of more than 1.92 million members

Retail

  • Retail revenue increased 13.1% to $1.392 billion
  • Retail segment income(2) decreased 18.4% to $95.5 million

    Other highlights:

    • Vehicles sold increased 8.5% to 33,637 units
      • New vehicles increased 11.5% to 24,442 units
      • Used vehicles increased 1.3% to 9,195 units
    • Average selling price per unit sold decreased 1.9% to $30,269
      • New vehicles decreased 4.8% to $33,038 per unit
      • Used vehicles increased 6.3% to $22,909 per unit
    • Same store unit volume of new vehicles increased 2.4%, with travel trailers increasing 6.7%
    • New travel trailer unit sales to total new unit sales increased 259 basis points to 72.2%, contributing to the decrease in average selling price per vehicle
    • Gross profit per vehicle sold including finance and insurance decreased 2.2% to $8,384
    • Finance and insurance revenue as a percentage of total vehicle revenue increased 170 basis points to 12.2%
    • Inventory of new vehicles decreased 14.2% in total and 17.5% on a per dealership basis from March 31, 2018
    • There were 223 retail locations as of June 30, 2018, including: 147 Camping World retail locations, 54 Gander Outdoors locations, two Overton’s locations, two TheHouse.com locations, two W82 locations, five Uncle Dan’s locations, four Erehwon locations and seven Rock Creek locations
    • Of the 223 locations, 132 sold recreational vehicles
_______________
(2) Segment income is defined as income from operations before depreciation and amortization plus floor plan interest expense.
 

Select Balance Sheet and Cash Flow Items

The Company’s working capital and cash and cash equivalents on June 30, 2018 were $593.2 million and $212.4 million, respectively, compared to $478.7 million and $224.2 million, respectively, at December 31, 2017. Total inventories increased 5.0% to $1.49 billion on June 30, 2018 from $1.42 billion on December 31, 2017, primarily from the new stores acquired or opened. New vehicle inventory decreased 12.7% to $971.6 million and new vehicle inventory per dealership decreased 18.0% to $7.4 million on June 30, 2018 from $1,113.2 million and $9.0 million, respectively, on December 31, 2017. Parts, accessories, and miscellaneous inventory increased $212.8 million to $409.4 million on June 30, 2018 from $196.5 million on December 31, 2017, primarily attributable to the growth in the Outdoor and Active Sports businesses. At June 30, 2018, the Company had $24.4 million of borrowings under its revolving line of credit as part of its Floor Plan Facility, $1.16 billion of term loans outstanding under the Senior Secured Credit Facilities, and $854.6 million of floor plan notes payable under the Floor Plan Facility.

Earnings Conference Call and Webcast Information

A conference call to discuss the Company’s second quarter fiscal 2018 financial results is scheduled for today, August 7, 2018, at 4:30 p.m. Eastern Time. Investors and analysts can participate on the conference call by dialing (800) 263-0877 or (646) 828-8143 and using conference ID # 1927229. Interested parties can also listen to a live webcast or replay of the conference call by logging on to the Investor Relations section on the Company’s website at http://investor.campingworld.com. The replay of the conference call webcast will be available on the investor relations website for approximately 90 days.

Presentation

This press release presents historical results, for the periods presented, of the Company and its subsidiaries, that are presented in accordance with accounting principles generally accepted in the United States (“GAAP”), unless noted as a non-GAAP financial measure. The Company’s initial public offering (“IPO”) and related reorganization transactions (“Reorganization Transactions”) that occurred on October 6, 2016 resulted in the Company as the sole managing member of CWGS Enterprises, LLC (“CWGS, LLC”), with sole voting power in and control of the management of CWGS, LLC. Despite its position as sole managing member of CWGS, LLC, the Company has a minority economic interest in CWGS, LLC. As of June 30, 2018, the Company owned 41.7% of CWGS, LLC. Accordingly, the Company consolidates the financial results of CWGS, LLC and reports a non-controlling interest in its consolidated financial statements. Unless otherwise indicated, all financial comparisons in this press release compare our financial results from the second quarter of 2018 to the second quarter of 2017.

About Camping World Holdings, Inc.

Camping World Holdings, headquartered in Lincolnshire, Illinois, is the leading outdoor and camping retailer, offering an extensive assortment of recreational vehicles for sale, RV and camping gear, RV maintenance and repair, other outdoor and active sports products, and the industry’s broadest and deepest range of services, protection plans, products and resources. Since the Company’s founding in 1966, Camping World has grown to become one of the most well-known destinations for everything RV, with more than 145 RV centric locations in 36 states and a comprehensive e-commerce platform.

For more information, visit www.CampingWorld.com.

Forward Looking Statements

This press release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. All statements contained in this press release that do not relate to matters of historical fact should be considered forward-looking statements, including, without limitation, statements about our business plans and goals, including our plans to expand the number of RV sales locations, including certain Gander Outdoors locations, add RV parts, accessories and services to Gander Outdoors locations, and operate co-branded Camping World and Gander Outdoors stores, and the timing related to the foregoing plans. These forward-looking statements are based on management’s current expectations.

These statements are neither promises nor guarantees, but involve known and unknown risks, uncertainties and other important factors that may cause our actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by the forward-looking statements, including, but not limited to, the following: potential impact of the recently identified material weaknesses in our internal control over financial reporting; the availability of financing to us and our customers; fuel shortages, or high prices for fuel; the well-being, as well as the continued popularity and reputation for quality, of our manufacturers; general economic conditions in our markets and ongoing economic and financial uncertainties; our ability to attract and retain customers; competition in the market for services, protection plans, products and resources targeting the RV lifestyle or RV enthusiast; our expansion into new, unfamiliar markets, businesses, or product lines or categories, as well as delays in opening or acquiring new retail locations; unforeseen expenses, difficulties, and delays frequently encountered in connection with expansion through acquisitions; our failure to maintain the strength and value of our brands; our ability to successfully order and manage our inventory to reflect consumer demand in a volatile market and anticipate changing consumer preferences and buying trends; fluctuations in our same store sales and whether they will be a meaningful indicator of future performance; the cyclical and seasonal nature of our business; our ability to operate and expand our business and to respond to changing business and economic conditions, which depends on the availability of adequate capital; our reliance on seven fulfillment and distribution centers for our retail, e-commerce and catalog businesses; our dependence on our relationships with third party providers of services, protection plans, products and resources and a disruption of these relationships or of these providers’ operations; whether third party lending institutions and insurance companies will continue to provide financing for RV purchases; our inability to retain senior executives and attract and retain other qualified employees; our ability to meet our labor needs; risks associated with leasing substantial amounts of space, including our inability to maintain the leases for our retail locations or locate alternative sites for our stores in our target markets and on terms that are acceptable to us; our dealerships’ susceptibility to termination, non-renewal or renegotiation of dealer agreements if state dealer laws are repealed or weakened; our failure to comply with certain environmental regulations; a failure in our e-commerce operations, security breaches and cybersecurity risks; our inability to enforce our intellectual property rights and accusations of our infringement on the intellectual property rights of third parties; disruptions to our information technology systems or breaches of our network security; feasibility, delays, and difficulties in opening of Gander Outdoors retail locations; realization of anticipated benefits and cost savings related to recent acquisitions; potential litigation relating to products we sell as a result of recent acquisitions, including firearms and ammunition; and whether we are able to realize any tax benefits that may arise from our organizational structure and any redemptions or exchanges of CWGS, LLC common units for cash or stock.

These and other important factors discussed under the caption “Risk Factors” in our Annual Report on Form 10-K filed for the year ended December 31, 2017, and our other reports filed with the SEC could cause actual results to differ materially from those indicated by the forward-looking statements made in this press release. Any such forward-looking statements represent management’s estimates as of the date of this press release. While we may elect to update such forward-looking statements at some point in the future, we disclaim any obligation to do so, even if subsequent events cause our views to change, except as required under applicable law. These forward-looking statements should not be relied upon as representing our views as of any date subsequent to the date of this press release.

Results of Operations

Camping World Holdings, Inc. and Subsidiaries
Condensed Consolidated Statements of Operations
(In Thousands Except Per Share Amounts)
 
  Three Months Ended June 30,   Six Months Ended June 30,
2018   2017 2018   2017
(unaudited) (unaudited) (unaudited) (unaudited)
Revenue:
Consumer services and plans $ 52,748 $ 48,103 $ 106,556 $ 98,349
Retail
New vehicles 807,519 760,806 1,387,029 1,264,110
Used Vehicles 210,646 195,615 382,737 341,434
Parts, services and other 250,203 174,196 414,511 290,419
Finance and insurance, net   124,060     100,306     215,909     166,349  
Subtotal 1,392,428 1,230,923 2,400,186 2,062,312
 
Total revenue 1,445,176 1,279,026 2,506,742 2,160,661
 

Costs applicable to revenue (exclusive of depreciation and amortization shown separately below):

Consumer services and plans 20,832 20,560 43,557 41,707
Retail
New vehicles 697,694 646,009 1,201,578 1,081,071
Used Vehicles 162,506 144,926 296,799 256,828
Parts, services and other   147,980     94,951     243,868     156,546  
Subtotal 1,008,180 885,886 1,742,245 1,494,445
 
Total costs applicable to revenue 1,029,012 906,446 1,785,802 1,536,152
 
Gross profit:
Consumer services and plans 31,916 27,543 62,999 56,642
Retail
New vehicles 109,825 114,797 185,451 183,039
Used Vehicles 48,140 50,689 85,938 84,606
Parts, services and other 102,223 79,245 170,643 133,873
Finance and insurance, net   124,060     100,306     215,909     166,349  
Subtotal 384,248 345,037 657,941 567,867
 
Total gross profit 416,164 372,580 720,940 624,509
 
Operating expenses:
Selling, general, and administrative 284,295 228,444 529,409 403,934
Debt restructure expense (44 ) 380
Depreciation and amortization 11,628 7,584 21,028 14,437
Loss (gain) on sale of assets   59     31     144     (287 )
Total operating expenses   295,938     236,059     550,961     418,084  
 
Income from operations 120,226 136,521 169,979 206,425
 
Other income (expense):
Floor plan interest expense (10,202 ) (6,587 ) (20,945 ) (11,889 )
Other interest expense, net (16,107 ) (10,557 ) (28,946 ) (19,961 )
Loss on debt restructure (1,676 )
Tax Receivable Agreement liability adjustment               17  
  (26,309 )   (17,144 )   (51,567 )   (31,833 )
 
Income before income taxes 93,917 119,377 118,412 174,592
Income tax expense   (12,102 )   (14,284 )   (19,321 )   (19,876 )
Net income 81,815 105,093 99,091 154,716
Less: net income attributable to non-controlling interests   (53,784 )   (85,749 )   (67,879 )   (127,850 )
Net income attributable to Camping World Holdings, Inc. $ 28,031   $ 19,344   $ 31,212   $ 26,866  
 
Earnings per share of Class A common stock:
Basic $ 0.76 $ 0.84 $ 0.85 $ 1.28
Diluted $ 0.72 $ 0.84 $ 0.81 $ 1.24
Weighted average shares of Class A common stock outstanding:
Basic 36,964 22,977 36,890 20,973
Diluted 88,764 22,977 88,956 84,673
 
Camping World Holdings, Inc. and Subsidiaries
Condensed Consolidated Balance Sheets
($ in Thousands Except Share and Per Share Amounts)
 
  June 30,   December 31,

2018

2017

(unaudited)
Assets
Current assets:
Cash and cash equivalents $ 212,442 $ 224,163
Contracts in transit 124,427 46,227
Accounts receivable, net 96,507 79,881
Inventories 1,486,736 1,415,915
Prepaid expenses and other assets   46,841     32,721  
Total current assets 1,966,953 1,798,907
 
Property and equipment, net 363,212 198,022
Deferred tax asset, net 147,077 155,551
Intangibles assets, net 36,789 38,707
Goodwill 388,545 348,387
Other assets   21,474     21,903  
Total assets $ 2,924,050   $ 2,561,477  
 
Liabilities and stockholders’ equity
Current liabilities:
Accounts payable $ 233,398 $ 125,616
Accrued liabilities 150,617 101,929
Deferred revenues and gains 82,433 77,669
Current portion of capital lease obligation 389 844
Current portion of Tax Receivable Agreement liability 9,457 8,093
Current portion of long-term debt 11,991 9,465
Notes payable – floor plan, net 854,588 974,043
Other current liabilities   30,879     22,510  
Total current liabilities 1,373,752 1,320,169
 
Capital lease obligations, net of current portion 23
Right to use liability 10,115 10,193
Tax Receivable Agreement liability, net of current portion 121,994 129,596
Revolving line of credit 24,403
Long-term debt, net of current portion 1,148,447 907,437
Deferred revenues and gains 68,047 64,061
Other long-term liabilities   59,220     39,161  
Total liabilities 2,805,978 2,470,640
 
Commitments and contingencies
 
Stockholders’ equity:

Preferred stock, par value $0.01 per share – 20,000,000 shares authorized; none issued and outstanding as of June 30, 2018 and December 31, 2017

Class A common stock, par value $0.01 per share – 250,000,000 shares authorized; 37,016,786 issued and 37,007,619 outstanding as of June 30, 2018 and 36,758,233 issued and 36,749,072,outstanding as of December 31, 2017 370 367
Class B common stock, par value $0.0001 per share – 75,000,000 shares authorized; 69,066,445 issued; and 50,706,629 outstanding as of June 30, 2018 and 50,836,629 outstanding as of December 31, 2017 5 5
Class C common stock, par value $0.0001 per share – one share authorized, issued and outstanding as of June 30, 2018 and December 31, 2017
Additional paid-in capital 43,152 49,941
Retained earnings   27,387     6,192  
Total stockholders’ equity attributable to Camping World Holdings, Inc. 70,914 56,505
Non-controlling interests   47,158     34,332  
Total stockholders’ equity 118,072 90,837
   
Total liabilities and stockholders’ equity $ 2,924,050   $ 2,561,477  
 

Earnings Per Share

  Three Months Ended June 30,   Six Months Ended June 30,
(In thousands except per share amounts) 2018   2017 2018   2017
Numerator:
Net income $ 81,815 $ 105,093 $ 99,091 $ 154,716
Less: net income attributable to non-controlling interests   (53,784 )   (85,749 )   (67,879 )   (127,850 )
Net income attributable to Camping World Holdings, Inc. — basic 28,031 19,344 31,212 26,866
Add: reallocation of net income attributable to non-controlling interests from the assumed dilutive effect of stock options and RSUs   36,156         40,508     78,160  
Net income attributable to Camping World Holdings, Inc. — diluted $ 64,187 $ 19,344 $ 71,720 $ 105,026
Denominator:
Weighted-average shares of Class A common stock outstanding — basic 36,964 22,997 36,890 20,973
Dilutive options to purchase Class A common stock 157
Dilutive restricted stock units 83 136
Dilutive common units of CWGS, LLC that are convertible into Class A common stock   51,717         51,773     63,700  
Weighted-average shares of Class A common stock outstanding — diluted 88,764 22,997 88,956 84,673
 
Earnings per share of Class A common stock — basic $ 0.76 $ 0.84 $ 0.85 $ 1.28
Earnings per share of Class A common stock — diluted $ 0.72 $ 0.84 $ 0.81 $ 1.24
 

Same Store Sales and Gross Profit Per Vehicle Sold Including Finance and Insurance

We use certain operating metrics such as same store sales and gross profit per vehicle sold including finance and insurance. Same store sales calculations for a given period include only those stores that were open both at the end of the corresponding period and at the beginning of the preceding fiscal year. Gross profit per vehicle sold including finance and insurance is calculated as the sum of new vehicle gross profit, used vehicle gross profit and finance and insurance gross profit divided by total new and used vehicles unit sales.

Non-GAAP Financial Measures

To supplement our consolidated financial statements, which are prepared and presented in accordance with accounting principles generally accepted in the U.S. (“GAAP”), we use the following non-GAAP financial measures: EBITDA, Adjusted EBITDA, Adjusted EBITDA margin, Adjusted Pro Forma Net Income, Adjusted Pro Forma Earnings per Fully Exchanged and Diluted Share, (collectively the “Non-GAAP Financial Measures”). We believe that these Non-GAAP Financial Measures, when used in conjunction with GAAP financial measures, provide useful information about operating results, enhance the overall understanding of past financial performance and future prospects, and allow for greater transparency with respect to the key metrics we use in our financial and operational decision-making. These non-GAAP measures are also frequently used by analysts, investors and other interested parties to evaluate companies in the Company’s industry. The presentation of this financial information is not intended to be considered in isolation or as a substitute for, or superior to, the financial information prepared and presented in accordance with GAAP, and they should not be construed as an inference that the Company’s future results will be unaffected by any items adjusted for in these non-GAAP measures. In evaluating these non-GAAP measures, you should be aware that in the future the Company may incur expenses that are the same as or similar to some of those adjusted in this presentation. The Non-GAAP Financial Measures that we use are not necessarily comparable to similarly titled measures used by other companies due to different methods of calculation.

EBITDA, Adjusted EBITDA and Adjusted EBITDA Margin

We define “EBITDA” as net income before other interest expense (excluding floor plan interest expense), provision for income taxes and depreciation and amortization. We define “Adjusted EBITDA” as EBITDA further adjusted for the impact of certain non-cash and other items that we do not consider in our evaluation of ongoing operating performance. These items include, among other things, loss and expense on debt restructure, loss (gain) on sale of assets, equity-based compensation, Tax Receivable Agreement liability adjustment, transaction expenses related to acquisitions into new or complementary markets, Gander Outdoors pre-opening costs, and other unusual or one-time items. We define “Adjusted EBITDA Margin” as Adjusted EBITDA as a percentage of total revenue. We caution investors that amounts presented in accordance with our definitions of EBITDA, Adjusted EBITDA and Adjusted EBITDA Margin may not be comparable to similar measures disclosed by our competitors, because not all companies and analysts calculate EBITDA, Adjusted EBITDA and Adjusted EBITDA Margin in the same manner. We present EBITDA, Adjusted EBITDA and Adjusted EBITDA Margin because we consider them to be important supplemental measures of our performance and believe they are frequently used by securities analysts, investors and other interested parties in the evaluation of companies in our industry. Management believes that investors’ understanding of our performance is enhanced by including these Non-GAAP Financial Measures as a reasonable basis for comparing our ongoing results of operations.

The following tables reconcile EBITDA, Adjusted EBITDA, and Adjusted EBITDA Margin to the most directly comparable GAAP financial performance measure, which are net income, net income and net income margin, respectively:

  Three Months Ended   Six Months Ended
June 30, June 30,
($ in thousands) 2018   2017 2018   2017
 
Net income $ 81,815 $ 105,093 $ 99,091 $ 154,716
Other interest expense, net 16,107 10,557 28,946 19,961
Depreciation and amortization 11,628 7,584 21,028 14,437
Income tax expense   12,102     14,284     19,321     19,876  
EBITDA 121,652 137,518 168,386 208,990
 
Loss and expense on debt restructure (a) (44 ) 2,056
Loss (gain) on sale of assets (b) 59 31 144 (287 )
Equity-based compensation (c) 3,129 869 6,347 1,588
Tax Receivable Agreement liability adjustment (d) (17 )
Acquisitions- transaction expense (e) 2,100 2,100
Gander Outdoors pre-opening costs (f)   15,355     1,351     35,006     1,351  
Adjusted EBITDA $ 140,151   $ 141,869   $ 211,939   $ 213,725  
 
 
Three Months Ended Year Ended
June 30, June 30,
(as percentage of total revenue) 2018 2017 2018 2017
EBITDA margin:
Net income margin 5.7 % 8.2 % 4.0 % 7.2 %
Other interest expense, net 1.1 % 0.8 % 1.2 % 0.9 %
Depreciation and amortization 0.8 % 0.6 % 0.8 % 0.7 %
Income tax expense   0.8 %   1.1 %   0.8 %   0.9 %
Subtotal EBITDA margin 8.4 % 10.8 % 6.7 % 9.7 %
 
Loss and expense on debt restructure (a) (0.0 %) 0.1 %
Loss (gain) on sale of assets (b) 0.0 % 0.0 % 0.0 % (0.0 %)
Equity-based compensation (c) 0.2 % 0.1 % 0.3 % 0.1 %
Tax Receivable Agreement liability adjustment (d) (0.0 %)
Acquisitions- transaction expense (e)

 

0.2 % 0.1 %
Gander Outdoors pre-opening costs (f)   1.1 %   0.1 %   1.4 %   0.1 %
Adjusted EBITDA margin   9.7 %   11.1 %   8.5 %   9.9 %

__________________________

(a)

 

Represents the loss and expense incurred on debt restructure and financing expense incurred from the Third Amendment to the Credit Agreement in 2018.

(b)

Represents an adjustment to eliminate the losses and gains on sales of various assets.

(c)

Represents non-cash equity-based compensation expense relating to employees and directors of the Company.

(d)

Represents an adjustment to eliminate the gains on remeasurement of the Tax Receivable Agreement primarily due to changes in our effective income tax rate.

(e)

Represents transaction expenses, primarily legal costs, associated with acquisitions into new or complementary markets, including the Gander Mountain acquisition. This amount excludes transaction expenses related to the acquisition of RV dealerships, consumer shows, Active Sports, Inc., W82, Erehwon, and Rock Creek.

(f)

Represents pre-opening store costs, which are expensed as incurred, associated with opening Gander Outdoors retail stores.

 

Adjusted Pro Forma Net Income and Adjusted Pro Forma Earnings Per Fully Exchanged and Diluted Share

We define “Adjusted Pro Forma Net Income” as net income attributable to CWH adjusted for the reallocation of net income attributable to non-controlling interests from the assumed exchange of all outstanding common units in CWGS, LLC for newly-issued shares of Class A common stock of CWH and further adjusted for the impact of certain non-cash and other items that we do not consider in our evaluation of ongoing operating performance. These items include, among other things, loss and expense on debt restructure, loss (gain) on sale of assets, equity-based compensation, Tax Receivable Agreement liability adjustment, transaction expenses related to acquisitions into new or complementary markets, Gander Outdoors pre-opening costs, other unusual or one-time items, and the income tax expense effect of these adjustments. We define “Adjusted Pro Forma Earnings Per Fully Exchanged and Diluted Share” as Adjusted Pro Forma Net Income divided by the weighted-average shares of Class A common stock outstanding, assuming the full exchange of all outstanding common units in CWGS, LLC for newly-issued shares of Class A common stock of CWH and the dilutive effect of stock options and restricted stock units, if any. We present Adjusted Pro Forma Net Income and Adjusted Pro Forma Earnings Per Fully Exchanged and Diluted Share because we consider them to be important supplemental measures of our performance and we believe that investors’ understanding of our performance is enhanced by including these Non-GAAP financial measures as a reasonable basis for comparing our ongoing results of operations.

The following table reconciles Adjusted Pro Forma Net Income and Adjusted Pro Forma Earnings Per Fully Exchanged and Diluted Share to the most directly comparable GAAP financial performance measure, which is net income attributable to Camping World Holdings, Inc. and weighted-average shares of Class A common stock outstanding — diluted:

  Three Months Ended June 30,   Six Months Ended June 30,
(In thousands except per share amounts) 2018   2017 2018   2017
Numerator:
Net income attributable to Camping World Holdings, Inc. $ 28,031 $ 19,344 $ 31,212 $ 26,866
Adjustments:
Reallocation of net income attributable to non-controlling interests from the assumed exchange of common units in CWGS, LLC (a) 53,784 85,749 67,879 127,850
Loss and expense on debt restructure (b) (44 ) 2,056
Loss (gain) on sale of assets (c) 59 31 144 (287 )
Equity-based compensation (d) 3,129 869 6,347 1,588
Tax Receivable Agreement liability adjustment (e) (17 )
Acquisitions – transaction expense (f) 2,100 2,100
Gander Outdoor pre-opening costs (g) 15,355 1,351 35,006 1,351
Income tax expense (h)   (14,691 )   (32,028 )   (20,080 )   (50,320 )
Adjusted pro forma net income $ 85,623   $ 77,416   $ 122,564   $ 109,131  
Denominator:
Weighted-average Class A common shares outstanding – diluted 88,764 22,977 88,956 84,673
Adjustments:
Assumed exchange of post-IPO common units in CWGS, LLC for shares of Class A common stock (i) 62,586
Dilutive options to purchase Class A common stock 56 101
Dilutive restricted stock units       61         59  
Adjusted pro forma fully exchanged weighted average Class A common shares outstanding – diluted   88,764     85,680     88,956     84,833  
Adjusted pro forma earnings per fully exchanged and diluted share $ 0.96   $ 0.90   $ 1.38   $ 1.29  
___________________________

(a)

 

Represents the reallocation of net income attributable to non-controlling interests from the assumed exchange of common units of CWGS, LLC in periods where income was attributable to non-controlling interests.

(b)

Represents the loss and expense incurred on debt restructure and financing expense incurred from the Third Amendment to the Credit Agreement in 2018.

(c)

Represents an adjustment to eliminate the losses and gains on sales of various assets.

(d)

Represents non-cash equity-based compensation expense relating to employees and directors of the Company.

(e)

Represents an adjustment to eliminate the loss on remeasurement of the Tax Receivable Agreement primarily due to changes in our effective income tax rate.

(f)

Represents transaction expenses, primarily legal costs, associated with acquisitions into new or complementary markets, including the Gander Mountain acquisition. This amount excludes transaction expenses related to the acquisition of RV dealerships, consumer shows, Active Sports, Inc., W82, Erehwon, and Rock Creek.

(g)

Represents pre-opening store costs, associated with the Gander Outdoors store openings.

(h)

Represents the income tax expense effect of the above adjustments. This assumption uses an effective tax rate of 25.3 % and 38.5% for the adjustments for 2018 and 2017, respectively.

(i)

Represents the assumed exchange of post-IPO common units in CWGS, LLC at their common unit equivalent amount.

 

Uses and Limitations of Non-GAAP Financial Measures

Management and our board of directors use the Non-GAAP financial measures:

  • as a measurement of operating performance because they assist us in comparing the operating performance of our business on a consistent basis, as they remove the impact of items not directly resulting from our core operations;
  • for planning purposes, including the preparation of our internal annual operating budget and financial projections;
  • to evaluate the performance and effectiveness of our operational strategies; and
  • to evaluate our capacity to fund capital expenditures and expand our business.

By providing these Non-GAAP financial measures, together with reconciliations, we believe we are enhancing investors’ understanding of our business and our results of operations, as well as assisting investors in evaluating how well we are executing our strategic initiatives. In addition, our Senior Secured Credit Facilities use EBITDA to measure our compliance with covenants such as consolidated leverage ratio. The Non-GAAP financial measures have limitations as analytical tools, and should not be considered in isolation, or as an alternative to, or a substitute for net income or other financial statement data presented in our unaudited condensed consolidated financial statements included in this press release as indicators of financial performance. Some of the limitations are:

  • such measures do not reflect our cash expenditures, or future requirements for capital expenditures or contractual commitments;
  • such measures do not reflect changes in, or cash requirements for, our working capital needs;
  • some of such measures do not reflect the interest expense, or the cash requirements necessary to service interest or principal payments on our debt;
  • some of such measures do not reflect our tax expense or the cash requirements to pay our taxes;
  • although depreciation and amortization are non-cash charges, the assets being depreciated and amortized will often have to be replaced in the future and such measures do not reflect any cash requirements for such replacements; and
  • other companies in our industry may calculate such measures differently than we do, limiting their usefulness as comparative measures.

Due to these limitations, the Non-GAAP financial measures should not be considered as measures of discretionary cash available to us to invest in the growth of our business. We compensate for these limitations by relying primarily on our GAAP results and using these Non-GAAP financial measures only supplementally. As noted in the tables above, certain of the Non-GAAP financial measures include adjustments for reallocation of net income attributable to non-controlling interests, loss and expense on debt restructure, loss (gain) on sale of assets, equity-based compensation, Tax Receivable Agreement liability adjustment, transaction expenses related to acquisitions into new or complementary markets, Gander Outdoors pre-opening costs, other unusual or one-time items, and the income tax expense effect described above, as applicable. It is reasonable to expect that certain of these items will occur in future periods. However, we believe these adjustments are appropriate because the amounts recognized can vary significantly from period to period, do not directly relate to the ongoing operations of our business and complicate comparisons of our internal operating results and operating results of other companies over time. Each of the normal recurring adjustments and other adjustments described in this paragraph, and in the reconciliation tables above, help management with a measure of our core operating performance over time by removing items that are not related to day to day operations.

http://www.businesswire.com/news/home/20180807005879/en/Camping-World-Holdings-Reports-Quarter-Results/?feedref=JjAwJuNHiystnCoBq_hl-bV7DTIYheT0D-1vT4_bKFzt_EW40VMdK6eG-WLfRGUE1fJraLPL1g6AeUGJlCTYs7Oafol48Kkc8KJgZoTHgMu0w8LYSbRdYOj2VdwnuKwa

Quidel Reports Second Quarter 2018 Financial Results

SAN DIEGO–()–Quidel Corporation (NASDAQ: QDEL), a provider of rapid diagnostic testing solutions, cellular-based virology assays and molecular diagnostic systems, announced today financial results for the second quarter ended June 30, 2018.

Second Quarter 2018 Highlights

  • Total revenue was $103.2 million as compared to $38.3 million in the second quarter of 2017.
  • Cardiac Immunoassay revenue was $69.9 million.
  • Influenza revenue was $5.5 million as compared to $10.1 million in the second quarter of 2017.
  • Reduced debt by an additional $98.6 million through convertible note exchange and accelerated Senior Credit Facility debt payment.
  • Reported GAAP EPS of $(0.08) per share in the second quarter of 2018, as compared to $(0.35) per share in the second quarter of 2017 and reported non-GAAP EPS of $0.36 per diluted share in the second quarter of 2018, as compared to $(0.12) per share in the second quarter of 2017.

Second Quarter 2018 Results

Total revenue for the second quarter of 2018 was $103.2 million, versus $38.3 million for the second quarter of 2017. The 170% increase in sales from the second quarter of 2018 was driven by incremental revenue from the acquired Cardiac Immunoassay business, that was partially offset by a 24% decline in the Rapid Immunoassay business, due to an earlier end to the Influenza season in 2018 than in 2017.

Cardiac Immunoassay revenue, which includes revenue from the Triage, Triage Toxicology and Beckman BNP products acquired in October 2017, totaled $69.9 million in the second quarter of 2018. Rapid Immunoassay product revenue (which includes QuickVue, Sofia and Eye Health products) decreased 24% in the second quarter of 2018 to $16.7 million, due in large part to a $4.5 million decrease in Influenza revenue from the second quarter of 2017. Molecular Diagnostic Solutions revenue increased 22% to $3.9 million, led by 103% revenue growth from Solana, our instrumented molecular diagnostic system. Specialized Diagnostic Solutions revenue, which includes revenue from Virology/DHI, Specialty and Other, decreased 3% from the second quarter of 2017 to $12.7 million.

“We delivered another successful quarter, marked by strong demand for our Cardiac Immunoassay products internationally and better-than-expected performance from our Cardiac business overall. As anticipated, demand for Respiratory Immunoassay products was lower as the Influenza season came to an end,” said Douglas Bryant, president and CEO of Quidel Corporation.

“Operationally, we achieved a number of milestones during the second quarter. First, we shipped our 10,000th Sofia 2 instrument, a testament to the demand for the new system and the power of the Sofia brand. Sofia 2 now accounts for about a third of all Sofia placements in the field. Second, integration of the acquired Triage businesses remains on track, highlighted by the grand opening of our shared service center in Galway, Ireland, which will support our customers and commercial teams across the EMEA region, allowing us to roll off transition service agreements in more than 30 countries and strengthen our international presence. Third, we further de-levered the business by retiring $38.6 million in debt through the exchange of convertible notes for shares, and by an accelerated payment of $60.0 million in cash on our Senior Credit Facility. We are optimistic as we enter the second half of the year and remain focused on delivering long-term growth and creating value for our shareholders.”

Gross Profit in the second quarter of 2018 increased to $57.7 million, driven by the addition of the Cardiac Immunoassay products from the acquisition of the Triage and BNP Businesses in October 2017. Overall, gross margin for the quarter was 56% as compared to 49% for the same period last year, due to improved product mix and increased production volumes. Amortization of intangibles reduced the gross margin by 2 percentage points, and the Triage/BNP inventory step-up of fair value did not impact the consolidated gross margin. R&D expense increased by $5.7 million in the second quarter as compared to the same period last year, primarily due to incremental expense for the Triage and Beckman BNP Businesses, as well as increased investment for the Savanna molecular diagnostic platform. Sales and Marketing expense increased by $14.5 million in the second quarter of 2018, as compared to the second quarter of 2017, largely due to incremental personnel costs associated with the international Triage business. G&A expense increased by $4.7 million in the quarter, primarily due to additional costs associated with the Triage and BNP Businesses, change in fair value of acquisition contingencies of $0.7 million, increased compensation costs and legal fees. Acquisition and Integration Costs were $4.9 million, driven by integration activities associated with the Triage and BNP Businesses. The loss on extinguishment of debt includes one-time costs of $1.6 million related to the partial write down of unamortized debt issuance costs related to the Senior Credit Facility, and $0.8 million loss associated with the Convertible Senior Note exchange agreements.

Net loss for the second quarter of 2018 was $3.1 million, or $(0.08) per diluted share, as compared to net loss of $11.8 million, or $(0.35) per diluted share, for the second quarter of 2017. On a non-GAAP basis, net income for the second quarter of 2018 was $15.4 million, or $0.36 per diluted share, as compared to net loss of $4.0 million, or $(0.12) per diluted share, for the same period in 2017.

Results for the Six Months Ended June 30, 2018

Total revenue for the six-month period ended June 30, 2018 was $272.3 million, versus $112.0 million for the same period in 2017. The 143% increase in sales was driven by $138.3 million in incremental revenue from the acquired Cardiac Immunoassay business, as well as 22% revenue growth from the Rapid Immunoassay business, primarily driven by $70.2 million in sales of Influenza immunoassay products.

Cardiac Immunoassay revenue, which includes revenues from the Triage, Triage Toxicology and Beckman BNP products acquired in October 2017, totaled $138.3 million in the six-month period ended June 30, 2018. Rapid Immunoassay product revenue increased 22% in the six-month period ended June 30, 2018 to $97.4 million. This was led by a 92% rise in Sofia revenue, while QuickVue sales declined 32% from the same period of 2017. Molecular Diagnostic Solutions revenue increased 43% to $9.1 million, led by 141% revenue growth from Solana, our instrumented molecular diagnostic system. Specialized Diagnostic Solutions revenue increased 6% from the six-month period ended June 30, 2018 to $27.6 million.

Gross Profit in the six-month period ended June 30, 2018 increased to $163.9 million, the result of increased sales volumes associated with the acquired Triage and BNP Businesses and Rapid Immunoassay products, as well as favorable product mix. Gross margin for the six-month period ended June 30, 2018 was flat to prior year, at 60%. Included in the 2018 gross margin is the one-time impact of the Triage/BNP inventory step-up of fair value which reduced the consolidated gross margin by 1 additional percentage point. R&D expense increased by $10.4 million in the six-month period ended 2018 as compared to the same period last year, primarily due to the acquired Triage business, and additional investments made on the Savanna molecular diagnostic platform. Sales and Marketing expense increased by $28.8 million in the six-month period ended 2018, as compared to the same period in 2017, largely due to incremental costs associated with the international Triage business, as well as higher compensation costs associated with improved company performance. G&A expense increased by $8.1 million, primarily due to costs associated with Triage and BNP Businesses, higher compensation costs, and legal fees. Acquisition and Integration Costs were $8.4 million in the period and represented integration costs associated with the Triage and BNP Businesses. The loss on extinguishment of debt includes one-time costs of $4.7 million related to the partial write down of unamortized debt issuance costs related to the Senior Credit Facility, and $2.3 million loss associated with the Convertible Senior Note exchange agreements.

Net income for the six-month period ended June 30, 2018 was $30.9 million, or $0.81 per diluted share, as compared to net income of $2.4 million, or $0.07 per diluted share, for the same period in 2017. On a non-GAAP basis, net income for the six months ended June 30, 2018 was $69.7 million, or $1.65 per diluted share, as compared to net income of $11.3 million, or $0.33 per diluted share, for the same period in 2017.

Non-GAAP Financial Information

The Company is providing non-GAAP financial information to exclude the effect of stock-based compensation, amortization of intangibles, non-cash interest expense, impact of the valuation allowance for deferred tax assets and certain non-recurring items on income and net earnings per share as a supplement to its consolidated financial statements, which are presented in accordance with generally accepted accounting principles in the U.S., or GAAP.

Management is providing the adjusted net income (loss) and adjusted net earnings (loss) per share information for the periods presented because it believes this enhances the comparison of the Company’s financial performance from period-to-period, and to that of its competitors. This press release is not meant to be considered in isolation, or as a substitute for results prepared in accordance with GAAP. A reconciliation of the non-GAAP financial measures to the comparable GAAP measures is included in this press release as part of the attached financial tables.

Conference Call Information

Quidel management will host a conference call to discuss the second quarter 2018 results as well as other business matters today beginning at 5:00 p.m. Eastern Time (2:00 p.m. Pacific Time). During the conference call, management may answer questions concerning business and financial developments and trends. Quidel’s responses to these questions, as well as other matters discussed during the conference call, may contain or constitute material information that has not been previously disclosed.

To participate in the live call by telephone from the U.S., dial 877-930-5791, or from outside the U.S. dial 253-336-7286, and enter the audience pass code 485-7326.

A live webcast of the call can be accessed on the Investor Relations section of the Quidel website (http://ir.quidel.com). The website replay will be available for 14 days. The telephone replay will be available for 48 hours beginning at 8:00 p.m. Eastern Time (5:00 p.m. Pacific Time) today by dialing 855-859-2056 from the U.S., or by dialing 404-537-3406 for international callers, and entering pass code 485-7326.

About Quidel Corporation

Quidel Corporation serves to enhance the health and well-being of people around the globe through the development of diagnostic solutions that can lead to improved patient outcomes and provide economic benefits to the healthcare system. Marketed under the Sofia®, QuickVue®, D3® Direct Detection, Thyretain®, Triage® and InflammaDry® leading brand names, as well as under the new Solana®, AmpliVue® and Lyra® molecular diagnostic brands, Quidel’s products aid in the detection and diagnosis of many critical diseases and conditions, including, among others, influenza, respiratory syncytial virus, Strep A, herpes, pregnancy, thyroid disease and fecal occult blood. Quidel’s recently acquired Triage® system of tests comprises a comprehensive test menu that provides rapid, cost-effective treatment decisions at the point-of-care (POC), offering a diverse immunoassay menu in a variety of tests to provide healthcare providers with diagnostic answers for quantitative BNP, CK-MB, d-dimer, myoglobin, troponin I and qualitative TOX Drug Screen. Quidel’s research and development engine is also developing a continuum of diagnostic solutions from advanced immunoassay to molecular diagnostic tests to further improve the quality of healthcare in physicians’ offices, hospital and reference laboratories, and other alternate sites, like urgent care centers and retail clinics, where healthcare is provided. For more information about Quidel’s comprehensive product portfolio, visit quidel.com.

This press release contains forward-looking statements within the meaning of the federal securities laws that involve material risks, assumptions and uncertainties. Many possible events or factors could affect our future financial results and performance, such that our actual results and performance may differ materially from those that may be described or implied in the forward-looking statements. As such, no forward-looking statement can be guaranteed. Differences in actual results and performance may arise as a result of a number of factors including, without limitation; our reliance on sales of our influenza diagnostic tests; fluctuations in our operating results resulting from the timing of the onset, length and severity of cold and flu seasons, seasonality, government and media attention focused on influenza and the related potential impact on humans from novel influenza viruses, adverse changes in competitive conditions in domestic and international markets, the reimbursement system currently in place and future changes to that system, changes in economic conditions in our domestic and international markets, lower than anticipated market penetration of our products, the quantity of our product in our distributors’ inventory or distribution channels, changes in the buying patterns of our distributors, and changes in the healthcare market and consolidation of our customer base; our development and protection of proprietary technology rights; our development of new technologies, products and markets; our reliance on a limited number of key distributors; intellectual property risks, including but not limited to, infringement litigation; our need for additional funds to finance our capital or operating needs; the financial soundness of our customers and suppliers; acceptance of our products among physicians and other healthcare providers; competition with other providers of diagnostic products; adverse actions or delays in new product reviews or related to currently-marketed products by the U.S. Food and Drug Administration (the “FDA”) or other regulatory authorities or loss of any previously received regulatory approvals or clearances; changes in government policies; our exposure to claims and litigation, including litigation currently pending against us; costs of or our failure to comply with government regulations in addition to FDA regulations; compliance with government regulations relating to the handling, storage and disposal of hazardous substances; third-party reimbursement policies; our failure to comply with laws and regulations relating to billing and payment for healthcare services; our ability to meet demand for our products; interruptions in our supply of raw materials; product defects; business risks not covered by insurance; our exposure to cyber-based attacks and security breaches; competition for and loss of management and key personnel; international risks, including but not limited to, compliance with product registration requirements, exposure to currency exchange fluctuations and foreign currency exchange risk sharing arrangements, longer payment cycles, lower selling prices and greater difficulty in collecting accounts receivable, reduced protection of intellectual property rights, political and economic instability, taxes, and diversion of lower priced international products into U.S. markets; changes in tax rates and exposure to additional tax liabilities or assessments; risks relating to the acquisition and integration of the Triage and BNP Businesses; Alere’s failure to perform under various transition agreements relating to our acquisition of the Triage and BNP Businesses; that we may incur substantial costs to build our information technology infrastructure to transition the Triage and BNP Businesses; that we may have to write off goodwill relating to our acquisition of the Triage and BNP Businesses; our ability to manage our growth strategy; the level of our indebtedness; the amount of, and our ability to repay, renew or extend, our outstanding debt and its impact on our operations and our ability to obtain financing; that substantially the Senior Credit Facility is secured by substantially all of our assets; our prepayment requirements under the Senior Credit Facility; the agreements for our indebtedness place operating and financial restrictions on the Company; that an event of default could trigger acceleration of our outstanding indebtedness; the effect on our operating results from the trigger of the conditional conversion feature of our Convertible Senior Notes; that we may incur additional indebtedness; increases in interest rate relating to our variable rate debt; dilution resulting from future sales of our equity; volatility in our stock price; provisions in our charter documents, Delaware law and the indenture governing our Convertible Senior Notes that might delay or impede stockholder actions with respect to business combinations or similar transactions; and our intention of not paying dividends. Forward-looking statements typically are identified by the use of terms such as “may,” “will,” “should,” “might,” “expect,” “anticipate,” “estimate,” “plan,” “intend,” “goal,” “project,” “strategy,” “future,” and similar words, although some forward-looking statements are expressed differently. The risks described in reports and registration statements that we file with the Securities and Exchange Commission (the “SEC”) from time to time, should be carefully considered. You are cautioned not to place undue reliance on these forward-looking statements, which reflect management’s analysis only as of the date of this press release. Except as required by law, we undertake no obligation to publicly release the results of any revision or update of these forward-looking statements, whether as a result of new information, future events or otherwise.

QUIDEL CORPORATION

(In thousands, except per share data; unaudited)

 
Three Months Ended June 30,
Consolidated Statements of Operations: 2018   2017
Total revenues $ 103,155 $ 38,267
Cost of sales 45,487   19,441  
Gross profit 57,668   18,826  
Research and development 13,284 7,627
Sales and marketing 27,545 13,064
General and administrative 11,500 6,783
Acquisition and integration costs 4,935   2,379  
Total costs and expenses 57,264   29,853  
Operating income (loss) 404 (11,027 )
Other expense, net:
Interest expense, net (6,839 ) (2,778 )
Loss on extinguishment of debt (2,398 )  
Total other expense, net (9,237 ) (2,778 )
(Loss) income before income taxes (8,833 ) (13,805 )
(Benefit) provision for income taxes (5,757 ) (1,963 )
Net (loss) income $ (3,076 ) $ (11,842 )
 
Basic and diluted loss per share $ (0.08 ) $ (0.35 )
Shares used in basic and diluted per share calculation 37,925 33,500
 
Gross profit as a % of total revenues 56 % 49 %
Research and development as a % of total revenues 13 % 20 %
Sales and marketing as a % of total revenues 27 % 34 %
General and administrative as a % of total revenues 11 % 18 %
 
Consolidated net revenues by product category are as follows:
Rapid Immunoassay $ 16,689 $ 21,983
Cardiac Immunoassay 69,850
Specialized Diagnostic Solutions 12,694 13,070
Molecular Diagnostic Solutions 3,922   3,214  
Total revenues $ 103,155   $ 38,267  
 
Condensed balance sheet data: 6/30/2018 12/31/2017
Cash and cash equivalents $ 38,675 $ 36,086
Accounts receivable, net 44,703 67,046
Inventories 59,714 67,078
Total assets 763,501 935,251
Short-term debt 53,421 20,184
Long-term debt 84,729 381,110
Stockholders’ equity 368,908 227,104
 
  Six Months Ended June 30,
Consolidated Statements of Operations: 2018   2017
Total revenues $ 272,298 $ 111,959
Cost of sales 108,359   44,634  
Gross profit 163,939   67,325  
Research and development 25,905 15,502
Sales and marketing 56,103 27,287
General and administrative 22,032 13,903
Acquisition and integration costs 8,402   2,431  
Total costs and expenses 112,442   59,123  
Operating income 51,497 8,202
Other expense, net:
Interest expense, net (14,689 ) (5,603 )
Loss on extinguishment of debt (6,965 )  
Total other expense, net (21,654 ) (5,603 )
Income before income taxes 29,843 2,599
(Benefit) provision for income taxes (1,039 ) 151  
Net income $ 30,882   $ 2,448  
 
Basic earnings per share $ 0.84 $ 0.07
Diluted earnings per share $ 0.81 $ 0.07
Shares used in basic per share calculation 36,586 33,351
Shares used in diluted per share calculation 42,255 34,295
 
Gross profit as a % of total revenues 60 % 60 %
Research and development as a % of total revenues 10 % 14 %
Sales and marketing as a % of total revenues 21 % 24 %
General and administrative as a % of total revenues 8 % 12 %
 
Consolidated net revenues by product category are as follows:
Rapid Immunoassay $ 97,374 $ 79,516
Cardiac Immunoassay 138,294
Specialized Diagnostic Solutions 27,565 26,118
Molecular Diagnostic Solutions 9,065   6,325  
Total revenues $ 272,298   $ 111,959  
 

QUIDEL CORPORATION

Reconciliation of Non-GAAP Financial Information

(In thousands, except per share data; unaudited)

   
Three months ended June 30, Six months ended June 30,
2018   2017 2018   2017
(unaudited) (unaudited)
Net (loss) income – GAAP $ (3,076 ) $ (11,842 ) $ 30,882 $ 2,448
Interest expense on Convertible Senior Notes, net of tax (a)     3,361    
Net (loss) income used for diluted earnings per share, if-converted method (3,076 ) (11,842 ) 34,243   2,448  
Add:
Interest expense on Convertible Senior Notes (a) 1,497 1,375 2,741
Non-cash stock compensation expense 3,479 2,138 6,415 4,059
Amortization of intangibles 6,998 2,515 14,859 4,885
Amortization of debt discount and issuance costs on credit facility 284 615
Non-cash interest expense for deferred consideration 2,608 5,401
Loss on extinguishment of Convertible Senior Notes 766 2,304
Loss on extinguishment of Senior Credit Facility 1,631 4,660
Amortization of inventory step-up of fair value 3,650
Change in fair value of acquisition contingencies 745 745
Acquisition and integration costs 4,935 2,379 8,402 2,431
Income tax impact of adjustments (a) (4,355 ) (2,940 ) (8,940 ) (4,940 )
Income tax impact of valuation allowance for deferred tax assets (79 ) 2,359   (2,622 ) (326 )
Adjusted net income (loss) for diluted earnings per share, if-converted method $ 15,433   $ (4,016 ) $ 69,732   $ 11,298  
Diluted (loss) earnings per share:

Net (loss) earnings per share – GAAP

$ (0.08 ) $ (0.35 ) $ 0.81 $ 0.07

Adjusted net earnings (loss) per share (b)

  $ 0.36     $ (0.12 )   $ 1.65     $ 0.33  

(a) Due to the net loss incurred in the second quarter of 2018, interest expense on Convertible Senior Notes and related tax impact are not adjusted for the purposes of calculating GAAP diluted loss per share as the Convertible Seniors Notes are anti-dilutive. The if-converted method was not applicable during 2017 as the Convertible Senior Notes were not convertible.

(b) Adjusted net earnings per share for the second quarter of 2018 was calculated using an adjusted diluted weighted average shares outstanding of 42,562 thousand shares. Adjustments from GAAP diluted weighted average shares outstanding consisted of 2,817 thousand potentially dilutive shares issuable from Convertible Senior Notes and 1,820 thousand potentially dilutive shares issuable from stock options and unvested RSUs.

http://www.businesswire.com/news/home/20180807005818/en/Quidel-Reports-Quarter-2018-Financial-Results/?feedref=JjAwJuNHiystnCoBq_hl-bV7DTIYheT0D-1vT4_bKFzt_EW40VMdK6eG-WLfRGUE1fJraLPL1g6AeUGJlCTYs7Oafol48Kkc8KJgZoTHgMu0w8LYSbRdYOj2VdwnuKwa

Bloom Energy Announces Second Quarter 2018 Financial Results

SUNNYVALE, Calif.–()–Bloom Energy Corporation (NYSE: BE) today announced financial results for its second quarter ended June 30, 2018. The Company’s financial results were at the high end of the range of the preliminary financial results provided in its final prospectus filed with the Securities and Exchange Commission. Bloom Energy has issued a shareholder letter with a discussion of its second quarter 2018 financial results and forward estimates, which may be accessed on the Investor Relations section of the Company’s website at: https://investor.bloomenergy.com or via www.bloomenergy.com

“Electricity is the lifeblood of the digital economy. The strength of our results in the second quarter reflects the critical value and importance that customers place on the highly reliable, resilient, clean and cost effective power that our solutions provide. The world needs better electricity, and that is what Bloom offers,” said KR Sridhar, Founder, Chairman and Chief Executive Officer. “We are gratified by the response to our recent initial public offering and look forward to delivering significant value to our shareholders in the years to come.”

Bloom Energy is in the post-effective period after the pricing of its initial public offering on July 24, 2018, and no conference call will be held to discuss the results. The Company believes it is prudent to release its results and forward estimates in a timely manner, and intends to begin conducting earnings conference calls when reporting its third quarter financial results.

About Bloom Energy

Bloom Energy’s mission is to make clean, reliable, and affordable energy for everyone in the world. The Company’s product, the Bloom Energy Server, is capable of delivering highly reliable, uninterrupted, 24×7 constant electric power that is clean and sustainable. Twenty-five of the Fortune 100 companies are Bloom Energy’s customers, and some of its largest deployments are at Equinix, AT&T, The Home Depot, The Wonderful Company, Caltech, Kaiser Permanente, and Delmarva Power. For more information, visit www.bloomenergy.com.

http://www.businesswire.com/news/home/20180807005905/en/Bloom-Energy-Announces-Quarter-2018-Financial-Results/?feedref=JjAwJuNHiystnCoBq_hl-bV7DTIYheT0D-1vT4_bKFzt_EW40VMdK6eG-WLfRGUE1fJraLPL1g6AeUGJlCTYs7Oafol48Kkc8KJgZoTHgMu0w8LYSbRdYOj2VdwnuKwa

Renovation & Maintenance in the United Kingdom 2018 – ResearchAndMarkets.com

DUBLIN–()–The “Renovation and maintenance United Kingdom 2018” report has been added to ResearchAndMarkets.com‘s offering.

Renovation and maintenance measures account for more than 50% of investments in residential building. Accordingly, these measures are the most important market for many products and materials. When it comes to renovation and maintenance in residential building, the private renovators are an important target group for the placement of products and services.

In order to provide relevant information for addressing this target group, the study analyses the following questions among others:

  • Who are the private renovators?
  • What are the motivations behind the decisions to renovate?
  • What measures are conducted most often?

To answers these questions, the study analyses a broad range of 18 renovation measures from the building shell to interior works. Spent budgets, information sources and advisors, relevant product features, and the realisation of the measures have been surveyed for every measure.

Thereby, the study generates far-reaching insights on the renovation market in general and on the target group specifically, in order to support the placement of products and services. Data collection is based on an online survey of private renovators and additional interviews with craftsmen and architects.

Key Topics Covered

1 Introduction

1.1 Methods

1.2 Basic Results

2 Renovation of Building Sections and Components in Detail

2.1 Roofing

2.1.1 Measures

2.1.2 Buildings

2.1.3 Building Owners

2.1.4 Budget

2.1.5 Motivation

2.1.6 Advisors and Sources of Information when Choosing Products

2.1.7 Conduct of Measures

2.1.8 Importance of Product Characteristics for Roofing

2.1.9 Single Measures

2.2 Exterior Walls and Facade

(subitems similar to 2.1 roofing)

2.3 Windows and Exterior Doors

(subitems similar to 2.1 roofing)

2.4 Flooring (Parquet, Laminate, Carpet, Tiles, PVC/Vinyl)

(subitems similar to 2.1 roofing)

2.5 Bathroom

(subitems similar to 2.1 roofing)

2.6 Installation of Interior Walls

(subitems similar to 2.1 roofing)

2.7 Interior Doors

(subitems similar to 2.1 roofing)

2.8 Heating and Radiators

(subitems similar to 2.1 roofing)

3 Key Findings

For more information about this report visit https://www.researchandmarkets.com/research/rtlmsf/renovation_and?w=4

http://www.businesswire.com/news/home/20180807005908/en/Renovation-Maintenance-United-Kingdom-2018—ResearchAndMarkets.com/?feedref=JjAwJuNHiystnCoBq_hl-bV7DTIYheT0D-1vT4_bKFzt_EW40VMdK6eG-WLfRGUE1fJraLPL1g6AeUGJlCTYs7Oafol48Kkc8KJgZoTHgMu0w8LYSbRdYOj2VdwnuKwa

DXC Technology and Amazon Web Services (AWS) Collaborate to Modernize IT Services and Accelerate Client Migrations to AWS

TYSONS, Va. & SEATTLE–()–DXC Technology (NYSE: DXC) and Amazon Web Services, Inc. (AWS), an Amazon.com company (NASDAQ: AMZN), today announced a multi-year, global agreement to build a new multi-billion dollar DXC – AWS Integrated Practice that will deliver IT migration, application transformation, and business innovation to global Fortune 1000 clients.

The DXC – AWS Integrated Practice will offer clients secure, cloud-first solutions that combine the breadth and depth of cloud services offered through AWS with DXC enterprise services to enable them to innovate in their industries, be more agile, and better adapt to dynamic market conditions with speed and at scale — while also modernizing their operations for a digital era.

DXC clients are global enterprises that are looking to accelerate their digital transformations by migrating to AWS with DXC, leveraging the trusted relationships they have relied on for years. The new collaboration will focus on application migration, digital transformation, and industry-specific services that optimize DXC’s industry intellectual property (IP) running on AWS, the world’s leading cloud.

About the Practice

The new DXC – AWS Integrated Practice builds on the existing DXC and AWS relationship and is focused on enabling clients to easily migrate their existing IT environments and applications to the cloud. It is a direct response to growing client demand for integrated, highly-secure, industry-based solutions that leverage the advanced cloud technologies, reliability, scale, and pace of innovation of AWS. The practice is the centerpiece of a far-reaching, multi-year agreement between the two companies that also encompasses joint development, marketing, sales, and delivery of AWS solutions.

“Today’s agreement combines DXC’s deep expertise in enterprise services and industry-specific IP with the power of the AWS cloud to speed our clients’ digital transformations,” said Mike Lawrie, chairman, president and CEO, of DXC Technology. “In addition to driving new levels of performance and productivity, clients will realize cost savings that can be reinvested in game-changing digital technologies that benefit their customers, employees, and all stakeholders.”

“For many years, successful enterprises have relied on DXC’s expertise to manage their IT,” said Andy Jassy, CEO of AWS. “This agreement represents a commitment for both DXC and AWS to make it much easier to enable long-time and newer DXC clients to take advantage of the Cloud with the most functionality, the most innovation, the largest partner ecosystem, and the most experience at helping companies run at scale—all of which allows customers to access the best set of capabilities to evolve and differentiate their customer experience.”

For two decades Union Insurance Group has designed its policies to specifically meet the unique needs of more than 6,000 labor organizations. They have recently deployed DXC’s Integral, an end-to-end insurance solution that covers the entire insurance lifecycle, from point of sale to claims and payouts, with functions accessed from a single web portal, on AWS.

“Union Insurance has engaged DXC and AWS to work on Union’s digital transformation strategy in order to better serve and engage with Union’s clients and partners,” said Anshul Srivastav, CIO of UAE-based Union Insurance. “Digital transformation is a game changer and helps position Union Insurance for continued success.

“We’re excited about the power of DXC and AWS coming together to accelerate our migration to the cloud,” Srivastav continued. “Now, our time-to-market with innovative products that are designed to thrill our customers is almost real-time. As a result, a lot more new, technology-based insurance products are getting rolled out and are generating revenue for the company.”

The DXC – AWS Integrated Practice will work to optimize DXC’s AWS offerings, with an initial focus on:

  • Managed security and compliance Services for AWS
  • Dedicated VMware Cloud on AWS migration solution
  • Analytics services on AWS
  • Application services for AWS
  • Mission critical support for SAP on AWS
  • DXC Managed Services for AWS is underpinned by DXC Bionix™, its digital-generation services delivery model that provides a comprehensive approach to intelligent automation at the scale.

“Public cloud adoption is accelerating in large part as enterprises recognize that the cloud has become the launchpad for virtually every new IT innovation in the last 24 months – including AI, blockchain, quantum computing and more. Organizations not on the public cloud will be increasingly isolated from the world of tech innovation,” said Frank Gens, senior vice president and chief analyst at IDC. “Strong partnerships, such as DXC Technology and AWS, will help turbocharge this move to public cloud, while creating digital offerings that transform organizations and enrich relationships with partners, customers, and prospects.”

DXC is already a Premier Partner in the AWS Partner Network (APN) and is an audited AWS Managed Service Provider, and holds multiple AWS Migration Competencies demonstrating technical proficiency with proven success in helping enterprise customers accelerate AWS adoption. DXC has more than 8,000 AWS Business and Technical Professional Accreditations, which is the most held by one company outside of AWS. In addition, DXC holds more than 900 AWS certifications including associate and professional level certifications, with plans to double that number in the next year, as part of the DXC AWS collaboration. For more information, visit https://www.dxc.technology/amazon.

About DXC Technology

DXC Technology (DXC: NYSE) is the world’s leading independent, end-to-end IT services company, serving nearly 6,000 private and public-sector clients from a diverse array of industries across 70 countries. The company’s technology independence, global talent and extensive partner network deliver transformative digital offerings and solutions that help clients harness the power of innovation to thrive on change. DXC Technology is recognized among the best corporate citizens globally. For more information, visit dxc.technology.

About Amazon Web Services

For over 12 years, Amazon Web Services has been the world’s most comprehensive and broadly adopted cloud platform. AWS offers over 125 fully featured services for compute, storage, databases, networking, analytics, machine learning and artificial intelligence (AI), Internet of Things (IoT), mobile, security, hybrid, virtual and augmented reality (VR and AR), media, and application development, deployment, and management from 55 Availability Zones (AZs) within 18 geographic regions and one Local Region around the world, spanning the U.S., Australia, Brazil, Canada, China, France, Germany, India, Ireland, Japan, Korea, Singapore, and the UK. AWS services are trusted by millions of active customers around the world—including the fastest-growing startups, largest enterprises, and leading government agencies—to power their infrastructure, make them more agile, and lower costs. To learn more about AWS, visit https://aws.amazon.com.

About Amazon

Amazon is guided by four principles: customer obsession rather than competitor focus, passion for invention, commitment to operational excellence, and long-term thinking. Customer reviews, 1-Click shopping, personalized recommendations, Prime, Fulfillment by Amazon, AWS, Kindle Direct Publishing, Kindle, Fire tablets, Fire TV, Amazon Echo, and Alexa are some of the products and services pioneered by Amazon. For more information, visit www.amazon.com/about and follow @AmazonNews.

http://www.businesswire.com/news/home/20180807005910/en/DXC-Technology-Amazon-Web-Services-AWS-Collaborate/?feedref=JjAwJuNHiystnCoBq_hl-bV7DTIYheT0D-1vT4_bKFzt_EW40VMdK6eG-WLfRGUE1fJraLPL1g6AeUGJlCTYs7Oafol48Kkc8KJgZoTHgMu0w8LYSbRdYOj2VdwnuKwa

Maxar Technologies Responds to Misleading Short Sell Report

WESTMINSTER, Colo. & VANCOUVER, British Columbia–()–The report on Maxar Technologies Ltd. (“Maxar” or the “Company”, formerly MacDonald, Dettwiler and Associates Ltd.) (NYSE and TSX: MAXR) released today by Spruce Point Capital Management contains a number of inaccurate claims and misleading statements. Maxar believes it is a direct attempt by a short-seller to profit, at the expense of Maxar shareholders, by manipulating Maxar’s stock price.

Maxar continues to execute against its strategy, and recently reaffirmed its full year 2018 guidance for revenue and cash flow from operations, while increasing its full-year adjusted EPS outlook. Maxar believes that the Company remains positioned for future growth. Management and the Board of Directors are focused on delivering enhanced value for all Maxar shareholders.

Maxar continues to be fully committed to transparency in all of its investor presentations and financial reports. Please refer to the Company’s disclosure materials filed with Canadian and U.S. securities regulatory authorities, which are available online under the Company’s SEDAR profile at www.sedar.com, under the Company’s EDGAR profile at www.sec.gov or on the Company’s website at www.maxar.com, for more information.

Forward-Looking Statements

Certain statements and other information included in this press release constitute “forward-looking information” or “forward-looking statements” (collectively, “forward-looking statements”) under applicable securities laws. Statements including words such as “may”, “will”, “could”, “should”, “would”, “plan”, “potential”, “intend”, “anticipate”, “believe”, “estimate” or “expect” and other words, terms and phrases of similar meaning are forward-looking statements. Forward-looking statements involve estimates, expectations, projections, goals, forecasts, assumptions, risks and uncertainties. Such forward-looking statements include, but are not limited to, statements as to managements’ expectations with respect to: guidance for revenue, cash flow from operations and full-year adjusted EPS outlook, of Maxar Technologies Ltd. (the “Company”); and other statements that are not historical facts.

Forward-looking statements in this press release are based on certain key expectations and assumptions made by the Company, including expectations and assumptions concerning: market and general economic conditions; planned synergies, capital efficiencies and cost-savings; applicable tax laws; and the availability and cost of labor, services and materials. Although management of the Company believes that the expectations and assumptions on which such forward-looking statements are based are reasonable, undue reliance should not be placed on the forward-looking statements because the Company can give no assurance that they will prove to be correct.

Forward-looking statements are subject to various risks and uncertainties which could cause actual results to differ materially from the anticipated results or expectations expressed in this press release. Some of the key risks and uncertainties include, but are not limited to: changes in government priorities, mandates, policies, funding levels, contracts and regulations, including the loss or reduction in scope of any of the Company’s primary contracts, or decisions by customers not to exercise renewal options; inherent risks of performance on firm fixed price construction contracts and termination of contracts by customers for convenience; decrease in demand for the Company’s products and services; failure to maintain technological advances and offer new products to retain customers and market position; potential for product liability or the occurrence of defects in products or systems and resulting loss of revenue and harm to the Company’s reputation; increased competition that may reduce the Company’s market share or cause the Company to lower its prices; changes in political or economic conditions, including fluctuations in the value of foreign currencies, interest rates, energy and commodity prices, trade laws and the effects of governmental initiatives to manage economic conditions; the Company’s ability to recruit, hire or retain key employees or a highly skilled and diverse workforce; potential for work stoppages; failure to obtain or maintain required regulatory approvals and licenses; failure to comply with environmental regulations; and changes in Canadian or foreign law or regulation that may limit the Company’s ability to distribute its products and services. As a result of the foregoing, readers should not place undue reliance on the forward-looking statements contained in this press release.

For additional information with respect to certain of these risks or factors, plus additional risks or factors, reference should be made to the Company’s continuous disclosure materials filed from time to time with Canadian and U.S. securities regulatory authorities, which are available online under the Company’s SEDAR profile at www.sedar.com, under the Company’s EDGAR profile at www.sec.gov or on the Company’s website at www.maxar.com.

The forward-looking statements contained in this press release are expressly qualified in their entirety by the foregoing cautionary statements. All such forward-looking statements are based upon data available as of the date of this release or other specified date and speak only as of such date. The Company disclaims any intention or obligation to update or revise any forward-looking statements in this press release as a result of new information or future events, except as may be required under applicable securities legislation.

http://www.businesswire.com/news/home/20180807005907/en/Maxar-Technologies-Responds-Misleading-Short-Sell-Report/?feedref=JjAwJuNHiystnCoBq_hl-bV7DTIYheT0D-1vT4_bKFzt_EW40VMdK6eG-WLfRGUE1fJraLPL1g6AeUGJlCTYs7Oafol48Kkc8KJgZoTHgMu0w8LYSbRdYOj2VdwnuKwa

Aspen Appoints Emil Issavi to Lead Its Reinsurance Business

HAMILTON, Bermuda–()–Aspen Insurance Holdings Limited (“Aspen” or the “Company”) (NYSE:AHL) announced today that Emil Issavi, President and Chief Underwriting Officer of Aspen Re, has been appointed to lead its reinsurance business with immediate effect.

Mr. Issavi succeeds Thomas Lillelund who is leaving Aspen to take a senior leadership position with a global P&C insurance company. Mr. Lillelund is expected to remain with Aspen for a period of time to ensure a smooth transition.

Chris O’Kane, Aspen’s Group Chief Executive Officer, said: “We are delighted to name Emil as our new leader for Aspen Re. His appointment recognizes the deep knowledge and insights that he brings to the role with over 20 years in the reinsurance business, including 12 years at Aspen. As a highly-respected leader, Emil’s appointment will provide continuity and is testament to the significant strength-in-depth that we have across our leadership team at Aspen.

“I would like to express my sincere gratitude to Thomas Lillelund for his significant contribution to Aspen Re over the last 10 years, most recently as Chief Executive Officer of Aspen Re and before that as Managing Director of our Asia Pacific business. We wish him every success in the future.”

Emil Issavi commented: “I am honored to have been appointed to lead Aspen Re. The business is a highly respected player in our chosen markets, we have an outstanding team of people and we are well positioned to sustain the long-standing success of the business moving forward.”

Notes to Editors:

About Emil Issavi

Emil has served as Chief Underwriting Officer of Aspen Re, Aspen’s reinsurance business, since August 2012 and as President of Aspen Re since September 2014. Emil joined Aspen in 2006 as the head of casualty treaty at Aspen Re America before becoming the head of casualty reinsurance in 2008. He was previously at Swiss Re America where he was the senior treaty account executive responsible for various global and national property casualty clients. Emil began his career at Gen Re as a casualty facultative underwriter.

About Aspen Insurance Holdings Limited

Aspen provides reinsurance and insurance coverage to clients in various domestic and global markets through wholly-owned subsidiaries and offices in Australia, Bermuda, Canada, Ireland, Singapore, Switzerland, the United Arab Emirates, the United Kingdom and the United States. For the year ended December 31, 2017, Aspen reported $12.9 billion in total assets, $6.7 billion in gross reserves, $2.9 billion in total shareholders’ equity and $3.4 billion in gross written premiums. Its operating subsidiaries have been assigned a rating of “A” by Standard & Poor’s Financial Services LLC, an “A” (“Excellent”) by A.M. Best Company Inc. and an “A2” by Moody’s Investors Service, Inc.

For more information about Aspen, please visit www.aspen.co.

http://www.businesswire.com/news/home/20180807005906/en/Aspen-Appoints-Emil-Issavi-Lead-Reinsurance-Business/?feedref=JjAwJuNHiystnCoBq_hl-bV7DTIYheT0D-1vT4_bKFzt_EW40VMdK6eG-WLfRGUE1fJraLPL1g6AeUGJlCTYs7Oafol48Kkc8KJgZoTHgMu0w8LYSbRdYOj2VdwnuKwa

Two Harbors Investment Corp. Reports Second Quarter 2018 Financial Results

NEW YORK–()–Two Harbors Investment Corp. (NYSE: TWO), a leading hybrid mortgage real estate investment trust (REIT) that invests in residential mortgage-backed securities (RMBS), mortgage servicing rights (MSR) and other financial assets, today announced its financial results for the quarter ended June 30, 2018.

Summary

  • Reported book value of $15.69 per common share, representing a 3.4% total quarterly return on book value.(1)
  • Generated Comprehensive Income of $90.8 million, or $0.52 per weighted average basic common share.
  • Reported Core Earnings, including dollar roll income, of $93.9 million, or $0.53 per weighted average basic common share, representing a return on average common equity of 13.5%.(2)
    • Dollar roll income of $16.5 million, or $0.09 per weighted average basic common share.
  • Added $10.5 billion unpaid principal balance (UPB) of MSR through a bulk acquisition and monthly flow-sale arrangements, bringing total holdings to $119.5 billion UPB.
  • Added $330 million facility to finance conventional MSR collateral; continued to advance discussions with other potential MSR financing counterparties.
  • Post quarter-end, completed the acquisition of CYS Investments, Inc. on July 31, 2018, increasing the company’s total capital to approximately $4.8 billion.
  • Post quarter-end, declared interim dividend of $0.158370 per share, representing a partial payment of Two Harbors’ regular third quarter common stock dividend, which is expected to be $0.47 per share; anticipate declaring the remaining $0.311630 per common share portion in the ordinary course in September 2018.

Our strong performance this quarter, highlighted by growth in both our Core Earnings and book value, underscores that there is continued opportunity in what can be viewed as a challenging environment,” stated Thomas Siering, Two Harbors’ President and Chief Executive Officer. “Additionally, post quarter end we completed the acquisition of CYS Investments, Inc. Going forward, we believe that our larger company will enhance our ability to drive returns for our stockholders.”

(1) Return on book value for the quarter ended June 30, 2018 is defined as the increase in book value per common share from March 31, 2018 to June 30, 2018 of $0.06, plus the dividend declared of $0.47 per common share, divided by March 31, 2018 book value of $15.63 per common share.
(2) Core Earnings and Core Earnings, including dollar roll income, are non-GAAP measures. Please see page 13 for a definition of Core Earnings and a reconciliation of GAAP to non-GAAP financial information.

Operating Performance
The following table summarizes the company’s GAAP and non-GAAP earnings measurements and key metrics for the second quarter of 2018:

 
Two Harbors Investment Corp. Operating Performance (unaudited)
(dollars in thousands, except per common share data)
 
  Three Months Ended
June 30, 2018
  Six Months Ended
June 30, 2018

Earnings attributable to common stockholders

Earnings  

Per
weighted
average
basic
common
share

 

Annualized
return on
average
common
equity

Earnings  

Per
weighted
average
basic
common
share

 

Annualized
return on
average
common
equity

Comprehensive Income $ 90,856 $ 0.52 13.1% $ 67,141 $ 0.38 4.8%
GAAP Net Income $ 125,743 $ 0.72 18.1% $ 446,805 $ 2.55 31.8%
Core Earnings, including dollar roll income(1) $ 93,865 $ 0.53 13.5% $ 177,690 $ 1.01 12.6%
 

Operating Metrics

Dividend per common share $ 0.47
Dividend per Series A preferred share $ 0.50781
Dividend per Series B preferred share $ 0.47656
Dividend per Series C preferred share $ 0.45313
Book value per common share at period end $ 15.69
Other operating expenses as a percentage of average equity(2) 1.8 %

________________
(1) Please see page 13 for a definition of Core Earnings and Core Earnings, including dollar roll income, and a reconciliation of GAAP to non-GAAP financial information.
(2) Includes non-cash equity compensation expense of $3.5 million.

 

Earnings Summary
Two Harbors generated Comprehensive Income of $90.8 million, or $0.52 per weighted average basic common share, for the quarter ended June 30, 2018, as compared to a Comprehensive Loss of ($23.7) million, or ($0.14) per weighted average basic common share, for the quarter ended March 31, 2018. The company records unrealized fair value gains and losses on the majority of RMBS, classified as available-for-sale, in Other Comprehensive Income. On a Comprehensive Income basis, the company recognized an annualized return on average common equity of 13.1% and (3.3%) for the quarters ended June 30, 2018 and March 31, 2018, respectively.

The company reported GAAP Net Income of $125.7 million, or $0.72 per weighted average basic common share, for the quarter ended June 30, 2018, as compared to GAAP Net Income of $321.1 million, or $1.83 per weighted average basic common share, for the quarter ended March 31, 2018. On a GAAP Net Income basis, the company recognized an annualized return on average common equity of 18.1% and 45.2% for the quarters ended June 30, 2018 and March 31, 2018, respectively.

For the second quarter of 2018, the company recognized non-Core Earnings of:

  • net realized losses on RMBS and mortgage loans held-for-sale of $39.0 million;
  • net unrealized gains on certain RMBS, equity securities and mortgage loans held-for-sale of $6.7 million;
  • other-than-temporary impairment loss of $0.2 million;
  • net losses of $20.5 million related to swap and swaption terminations and expirations;
  • net unrealized gains of $35.7 million associated with interest rate swaps and swaptions economically hedging interest rate exposure (or duration);
  • net realized and unrealized gains on other derivative instruments of $6.0 million;
  • net realized and unrealized gains on MSR of $55.8 million(1);
  • servicing reserve release of $0.2 million;
  • non-cash equity compensation expense of $3.5 million; and
  • net benefit from income taxes on non-Core Earnings of $7.1 million.

The company reported Core Earnings, including dollar roll, income for the quarter ended June 30, 2018 of $93.9 million, or $0.53 per weighted average basic common share outstanding. The company reported Core Earnings, including dollar roll income, from the quarter ended March 31, 2018 of $83.8 million or $0.48 per weighted average basic common share outstanding. On a Core Earnings, including dollar roll income basis, the company recognized an annualized return on average common equity of 13.5% for the quarter ended June 30, 2018, compared to 11.8% for the quarter ended March 31, 2018.

Other Key Metrics
Two Harbors declared a quarterly cash dividend of $0.47 per common share for the quarter ended June 30, 2018. The annualized dividend yield on the company’s common stock for the quarter, based on the June 30, 2018 closing price of $15.80, was 11.9%.

Two Harbors declared quarterly dividends of $0.50781 per share on its 8.125% Series A fixed-to-floating rate cumulative redeemable preferred stock, $0.47656 per share on its 7.625% Series B fixed-to-floating rate cumulative redeemable preferred stock and a dividend of $0.45313 per share of the 7.25% Series C fixed-to-floating rate cumulative redeemable preferred stock. Each of the foregoing preferred dividends were paid on July 27, 2018 to the applicable preferred stockholders of record at the close of business on July 12, 2018.

The company’s book value per common share, after taking into account the second quarter 2018 common and preferred stock dividends, was $15.69 as of June 30, 2018, compared to $15.63 as of March 31, 2018, which represented a total return on book value for the quarter of 3.4%.(2)

Other operating expenses for the quarter ended June 30, 2018 were approximately $15.5 million. The company’s annualized expense ratio was 1.8% of average equity, compared to other operating expenses of $14.5 million, or 1.6% of average equity, for the quarter ended March 31, 2018. These include non-cash equity compensation expense of $3.5 million and $2.3 million, respectively.

Portfolio Summary
The company’s aggregate portfolio is principally comprised of RMBS available-for-sale securities, inverse interest-only securities (Agency Derivatives) and MSR. As of June 30, 2018, the total value of the company’s portfolio was $20.8 billion.

The company’s portfolio includes rates and credit strategies. The rates strategy consisted of $17.3 billion of Agency RMBS, Agency Derivatives and MSR as well as their associated notional hedges as of June 30, 2018. The credit strategy consisted of $3.5 billion of non-Agency securities, as well as their associated notional hedges as of June 30, 2018.

(1) Excludes estimated amortization of $42.2 million, net of tax, included in Core Earnings, including dollar roll income.
(2) Return on book value for the quarter ended June 30, 2018 is defined as the increase in book value per common share from March 31, 2018 to June 30, 2018 of $0.06, plus the dividend declared of $0.47 per common share, divided by March 31, 2018 book value of $15.63 per common share.

For the quarter ended June 30, 2018, the annualized yield on the company’s average aggregate portfolio was 3.91% and the annualized cost of funds on the associated average borrowings, which includes net interest rate spread on interest rate swaps, was 1.98%. This resulted in a net interest rate spread of 1.93%.

RMBS and Agency Derivatives
For the quarter ended June 30, 2018, the annualized yield on average RMBS and Agency Derivatives was 3.7%, consisting of an annualized yield of 3.0% in Agency RMBS and Agency Derivatives and 8.1% in non-Agency securities.

The company experienced a three-month average constant prepayment rate (CPR) of 9.2% for Agency RMBS and Agency Derivatives held as of June 30, 2018, compared to 7.0% as of March 31, 2018. The weighted average cost basis of the principal and interest Agency portfolio was 106.7% of par and 106.4% of par as of June 30, 2018 and March 31, 2018, respectively. The net premium amortization was $45.3 million and $44.2 million for the quarters ended June 30, 2018 and March 31, 2018, respectively.

The company experienced a three-month average CPR of 6.9% for legacy non-Agency securities held as of June 30, 2018, compared to 5.7% as of March 31, 2018. The weighted average cost basis of the legacy non-Agency securities was 61.2% of par as of June 30, 2018, compared to 59.5% of par as of March 31, 2018. The discount accretion was $22.5 million for the quarter ended June 30, 2018, compared to $22.2 million for the quarter ended March 31, 2018. The total net discount remaining was $1.5 billion as of June 30, 2018, compared to $1.3 billion as of March 31, 2018, with $923.8 million designated as credit reserve as of June 30, 2018.

As of June 30, 2018, fixed-rate investments composed 83.1% and adjustable-rate investments composed 16.9% of the company’s RMBS and Agency Derivatives portfolio.

Mortgage Servicing Rights
As of June 30, 2018, the company held MSR on mortgage loans with UPB totaling $119.5 billion.(1) The MSR had a fair market value of $1.5 billion, as of June 30, 2018, and the company recognized fair value gains of $9.9 million during the quarter ended June 30, 2018.

The company does not directly service mortgage loans, but instead contracts with appropriately licensed subservicers to handle substantially all servicing functions in the name of the subservicer for the loans underlying the company’s MSR. The company recognized $77.7 million of servicing income, $11.6 million(1) of servicing expenses and $0.2 million in servicing reserve release during the quarter ended June 30, 2018.

Other Investments and Risk Management Derivatives
The company held $3.0 billion notional of net long to-be-announced securities (“TBAs”) as of June 30, 2018, compared to $0.4 billion notional of net long TBAs as of March 31, 2018, which are accounted for as derivative instruments in accordance with GAAP.

As of June 30, 2018, the company was a party to interest rate swaps and swaptions with a notional amount of $26.8 billion. Of this amount, $26.1 billion notional in swaps were utilized to economically hedge interest rate exposure (or duration), and $0.7 billion net notional in swaptions were utilized as macroeconomic hedges.

(1) Excludes residential mortgage loans in securitization trusts for which the company is the named servicing administrator.

The following tables summarize the company’s investment portfolio, excluding the net TBA positions, as of June 30, 2018 and March 31, 2018:

 
Two Harbors Investment Corp. Portfolio
(dollars in thousands)
 
Portfolio Composition   As of June 30, 2018   As of March 31, 2018
(unaudited) (unaudited)
Rates Strategy        
Agency
Fixed Rate $ 15,768,380 75.6% $ 18,020,641 80.2%
Hybrid ARMs   20,611   0.1%   21,523   0.1%
Total Agency 15,788,991 75.7% 18,042,164 80.3%
Agency Derivatives 73,650 0.4% 81,628 0.4%
Mortgage servicing rights 1,450,261 7.0% 1,301,023 5.8%
Residential mortgage loans held-for-sale 19,490 0.1% 19,679 0.1%
Credit Strategy
Non-Agency
Senior 2,448,062 11.7% 2,026,035 9.0%
Mezzanine 981,326 4.7% 916,877 4.1%
Other   74,975   0.4%   74,301   0.3%
Total Non-Agency 3,504,363 16.8% 3,017,213 13.4%
Residential mortgage loans held-for-sale   9,323   —%   9,749   —%
Aggregate Portfolio $ 20,846,078   $ 22,471,456  
 
   
Portfolio Metrics

Three Months Ended
June 30, 2018

Three Months Ended
March 31, 2018

(unaudited) (unaudited)
Annualized portfolio yield during the quarter 3.91 % 3.77 %
Rates Strategy
Agency RMBS, Agency Derivatives and mortgage servicing rights 3.3 % 3.2 %
Credit Strategy
Non-Agency securities, Legacy(1) 7.8 % 7.5 %
Non-Agency securities, New issue(1) 9.7 % 10.9 %
Residential mortgage loans held-for-sale 4.5 % 4.7 %
 
Annualized cost of funds on average borrowing balance during the quarter(2) 1.98 % 1.84 %
Annualized interest rate spread for aggregate portfolio during the quarter 1.93 % 1.93 %
Debt-to-equity ratio at period-end(3) 5.3:1.0 5.9:1.0
Economic debt-to-equity ratio at period-end(4) 6.2:1.0 6.0:1.0
 
Portfolio Metrics Specific to RMBS and Agency Derivatives As of June 30, 2018 As of March 31, 2018
(unaudited) (unaudited)
Weighted average cost basis of principal and interest securities
Agency(5) $ 106.66 $ 106.41
Non-Agency(6) $ 61.15 $ 59.51
Weighted average three month CPR
Agency 9.2 % 7.0 %
Non-Agency 6.9 % 5.7 %
Fixed-rate investments as a percentage of aggregate RMBS and Agency Derivatives portfolio 83.1 % 86.8 %
Adjustable-rate investments as a percentage of aggregate RMBS and Agency Derivatives portfolio 16.9 % 13.2 %
 

________________
(1) Legacy non-Agency securities includes non-Agency bonds issued up to and including 2009. New issue non-Agency securities includes bonds issued after 2009.
(2) Cost of funds includes interest spread income/expense associated with the portfolio’s interest rate swaps.
(3) Defined as total borrowings to fund RMBS, MSR and Agency Derivatives, divided by total equity.
(4) Defined as total borrowings to fund RMBS, MSR and Agency Derivatives, plus the implied debt on net TBA positions, divided by total equity.
(5) Weighted average cost basis includes RMBS principal and interest securities only. Average purchase price utilized carrying value for weighting purposes.
(6) Average purchase price utilized carrying value for weighting purposes. If current face were utilized for weighting purposes, the average purchase price for total legacy non-Agency securities excluding the company’s non-Agency interest-only portfolio, would be $58.52 at June 30, 2018 and $57.00 at March 31, 2018.

 

In the second quarter, we increased our capital allocation to MSR and non-Agency securities as we took advantage of attractive opportunities in the market,” stated Bill Roth, Two Harbors’ Chief Investment Officer. “Moreover, higher rates and a flatter yield curve during the quarter had little impact on our performance, consistent with our expectations given our low risk positioning.”

Financing Summary
The company reported a debt-to-equity ratio, defined as total borrowings under repurchase agreements, FHLB advances, revolving credit facilities and convertible senior notes to fund RMBS, Agency Derivatives and MSR divided by total equity, of 5.3:1.0 as of June 30, 2018. The company reported an economic debt-to-equity ratio, defined as total borrowings under repurchase agreements, FHLB advances, revolving credit facilities and convertible senior notes to fund RMBS, Agency Derivatives and MSR, plus the implied debt on net TBA positions, divided by total equity, of 6.2:1.0 as of June 30, 2018.

As of June 30, 2018, the company had outstanding $16.9 billion of repurchase agreements funding RMBS and Agency Derivatives with 25 different counterparties. Excluding the effect of the company’s interest rate swaps, the repurchase agreements funding RMBS and Agency Derivatives had a weighted average borrowing rate of 2.30% as of June 30, 2018.

The company’s wholly owned subsidiary, TH Insurance Holdings Company LLC (TH Insurance), is a member of the FHLB. As a member of the FHLB, TH Insurance has access to a variety of products and services offered by the FHLB, including secured advances. As of June 30, 2018, TH Insurance had $865.0 million in outstanding secured advances funding RMBS, with a weighted average borrowing rate of 2.39%.

As of June 30, 2018, the company had outstanding $170.0 million of short and long-term borrowings secured by MSR collateral under revolving credit facilities with a weighted average borrowing rate of 5.33% and remaining maturities of 4.4 years and an additional $250.0 million of available capacity for borrowings. Additionally, the company had outstanding $300.0 million of long-term repurchase agreements for MSR, with a weighted average borrowing rate of 4.26%, with additional available capacity of $100.0 million.

As of June 30, 2018, the company’s aggregate repurchase agreements, FHLB advances, revolving credit facilities and convertible senior notes funding RMBS, Agency Derivatives and MSR had a weighted average of 5.3 months to maturity.

The following table summarizes the company’s borrowings by collateral type under repurchase agreements, FHLB advances, revolving credit facilities and convertible senior notes outstanding as of June 30, 2018 and March 31, 2018, and the related cost of funds for the three months ended June 30, 2018 and March 31, 2018:

   
As of June 30, 2018 As of March 31, 2018
(in thousands) (unaudited) (unaudited)
Collateral type:
Agency RMBS and Agency Derivatives $ 15,442,916 $ 17,731,102
Mortgage servicing rights 470,000 270,000
Non-Agency securities 2,327,931 2,032,601
Other(1)   283,268     283,054  
$ 18,524,115   $ 20,316,757  
 
Cost of Funds Metrics

Three Months Ended
June 30, 2018

Three Months Ended
March 31, 2018

(unaudited) (unaudited)
Annualized cost of funds on average borrowings during the quarter: 2.3% 1.9%
Agency RMBS and Agency Derivatives 2.0% 1.7%
Mortgage servicing rights(2) 5.2% 5.2%
Non-Agency securities 3.5% 3.1%
Other(1)(2) 6.6% 6.7%

________________
(1) Includes unsecured convertible senior notes.
(2) Includes amortization of debt issuance costs.

 

Acquisition of CYS Investments, Inc.
On July 31, 2018, the company completed its previously announced acquisition of CYS Investments, Inc. Upon the closing of the merger, each share of CYS common stock was converted into the right to receive 0.4680 newly issued shares of Two Harbors common stock as well as cash consideration of $0.0965 per share. Based on the number of CYS shares outstanding as of the closing date, approximately 72.6 million shares of Two Harbors common stock and $15 million in cash consideration will be issued to CYS common stockholders in connection with the merger. Also in connection with the merger, each share of CYS 7.75% Series A Cumulative Redeemable Preferred Stock was converted into the right to receive one share of newly classified TWO 7.75% Series D Cumulative Redeemable Preferred Stock, and each share of CYS 7.50% Series B Cumulative Redeemable Preferred Stock was converted into the right to receive one share of newly classified TWO 7.50% Series E Cumulative Redeemable Preferred Stock.

Additionally, in connection with the merger, the company announced an interim dividend of $0.158370, which represented a partial payment of its regular third quarter 2018 common stock dividend, which is expected to be $0.47 per share. The company expects the remaining $0.311630 per share portion of its regular third quarter common stock dividend to be declared in the ordinary course in September 2018.

Conference Call
Two Harbors Investment Corp. will host a conference call on August 8, 2018 at 9:00 a.m. EDT to discuss second quarter 2018 financial results and related information. To participate in the teleconference, please call toll-free (877) 868-1835 (or (914) 495-8581 for international callers), conference code 4095063, approximately 10 minutes prior to the above start time. You may also listen to the teleconference live via the Internet on the company’s website at www.twoharborsinvestment.com in the Investor Relations section under the Events and Presentations link. For those unable to attend, a telephone playback will be available beginning at 12:00 p.m. EDT on August 8, 2018, through 12:00 a.m. EDT on August 15, 2018. The playback can be accessed by calling (855) 859-2056 (or (404) 537-3406 for international callers), conference code 4095063. The call will also be archived on the company’s website in the Investor Relations section under the Events and Presentations link.

Two Harbors Investment Corp.
Two Harbors Investment Corp., a Maryland corporation, is a real estate investment trust that invests in residential mortgage-backed securities, mortgage servicing rights and other financial assets. Two Harbors is headquartered in New York, New York, and is externally managed and advised by PRCM Advisers LLC, a wholly owned subsidiary of Pine River Capital Management L.P. Additional information is available at www.twoharborsinvestment.com.

Forward-Looking Statements
This presentation includes “forward-looking statements” within the meaning of the safe harbor provisions of the United States Private Securities Litigation Reform Act of 1995. Actual results may differ from expectations, estimates and projections and, consequently, readers should not rely on these forward-looking statements as predictions of future events. Words such as “expect,” “target,” “assume,” “estimate,” “project,” “budget,” “forecast,” “anticipate,” “intend,” “plan,” “may,” “will,” “could,” “should,” “believe,” “predicts,” “potential,” “continue,” and similar expressions are intended to identify such forward-looking statements. These forward-looking statements involve significant risks and uncertainties that could cause actual results to differ materially from expected results, including, among other things, those described in our Annual Report on Form 10-K for the year ended December 31, 2017, and any subsequent Quarterly Reports on Form 10-Q, under the caption “Risk Factors.” Factors that could cause actual results to differ include, but are not limited to: the state of credit markets and general economic conditions; changes in interest rates and the market value of our assets; changes in prepayment rates of mortgages underlying our target assets; the rates of default or decreased recovery on the mortgages underlying our target assets; the occurrence, extent and timing of credit losses within our portfolio; the concentration of credit risks we are exposed to; declines in home prices; our ability to establish, adjust and maintain appropriate hedges for the risks in our portfolio; the availability and cost of our target assets; the availability and cost of financing; changes in the competitive landscape within our industry; our ability to effectively execute and to realize the benefits of strategic transactions and initiatives we have pursued or may in the future pursue; our acquisition of CYS and our ability to realize the benefits related thereto; our ability to manage various operational risks and costs associated with our business; interruptions in or impairments to our communications and information technology systems; our ability to acquire MSR and successfully operate our seller-servicer subsidiary and oversee our subservicers; the impact of any deficiencies in the servicing or foreclosure practices of third parties and related delays in the foreclosure process; our exposure to legal and regulatory claims; legislative and regulatory actions affecting our business; the impact of new or modified government mortgage refinance or principal reduction programs; our ability to maintain our REIT qualification; and limitations imposed on our business due to our REIT status and our exempt status under the Investment Company Act of 1940.

Readers are cautioned not to place undue reliance upon any forward-looking statements, which speak only as of the date made. Two Harbors does not undertake or accept any obligation to release publicly any updates or revisions to any forward-looking statement to reflect any change in its expectations or any change in events, conditions or circumstances on which any such statement is based. Additional information concerning these and other risk factors is contained in Two Harbors’ most recent filings with the Securities and Exchange Commission (SEC). All subsequent written and oral forward-looking statements concerning Two Harbors or matters attributable to Two Harbors or any person acting on its behalf are expressly qualified in their entirety by the cautionary statements above.

Non-GAAP Financial Measures
In addition to disclosing financial results calculated in accordance with United States generally accepted accounting principles (GAAP), this press release and the accompanying investor presentation present non-GAAP financial measures, such as Core Earnings, Core Earnings, including dollar roll income, Core Earnings per basic common share and Core Earnings per basic common share, including dollar roll income, that exclude certain items. Two Harbors’ management believes that these non-GAAP measures enable it to perform meaningful comparisons of past, present and future results of the company’s core business operations, and uses these measures to gain a comparative understanding of the company’s operating performance and business trends. The non-GAAP financial measures presented by the company represent supplemental information to assist investors in analyzing the results of its operations. However, because these measures are not calculated in accordance with GAAP, they should not be considered a substitute for, or superior to, the financial measures calculated in accordance with GAAP. The company’s GAAP financial results and the reconciliations from these results should be carefully evaluated. See the GAAP to non-GAAP reconciliation table on page 13 of this release.

Additional Information
Stockholders of Two Harbors and other interested persons may find additional information regarding the company at the SEC’s Internet site at www.sec.gov or by directing requests to: Two Harbors Investment Corp., Attn: Investor Relations, 575 Lexington Avenue, Suite 2930, New York, NY 10022, telephone (612) 629-2500.

 
TWO HARBORS INVESTMENT CORP.
CONDENSED CONSOLIDATED BALANCE SHEETS
(dollars in thousands, except share data)
 
 

June 30,
2018

 

December 31,
2017

(unaudited)
ASSETS
Available-for-sale securities, at fair value $ 19,293,354 $ 21,220,819
Mortgage servicing rights, at fair value 1,450,261 1,086,717
Residential mortgage loans held-for-sale, at fair value 28,813 30,414
Cash and cash equivalents 417,515 419,159
Restricted cash 564,705 635,836
Accrued interest receivable 61,108 68,309
Due from counterparties 35,385 842,303
Derivative assets, at fair value 257,917 309,918
Other assets   166,930     175,838  
Total Assets $ 22,275,988   $ 24,789,313  
LIABILITIES AND STOCKHOLDERS’ EQUITY
Liabilities
Repurchase agreements $ 17,205,823 $ 19,451,207
Federal Home Loan Bank advances 865,024 1,215,024
Revolving credit facilities 170,000 20,000
Convertible senior notes 283,268 282,827
Derivative liabilities, at fair value 39,429 31,903
Due to counterparties 25,957 88,898
Dividends payable 96,219 12,552
Accrued interest payable 84,296 87,698
Other liabilities   25,727     27,780  
Total Liabilities 18,795,743 21,217,889
Stockholders’ Equity
Preferred stock, par value $0.01 per share; 50,000,000 shares authorized:
8.125% Series A cumulative redeemable: 5,750,000 and 5,750,000 shares issued and outstanding, respectively ($143,750 liquidation preference) 138,872 138,872
7.625% Series B cumulative redeemable: 11,500,000 and 11,500,000 shares issued and outstanding, respectively ($287,500 liquidation preference) 278,094 278,094
7.25% Series C cumulative redeemable: 11,800,000 and 11,800,000 shares issued and outstanding, respectively ($295,000 liquidation preference) 285,584 285,571
Common stock, par value $0.01 per share; 450,000,000 shares authorized and 175,470,398 and 174,496,587 shares issued and outstanding, respectively 1,755 1,745
Additional paid-in capital 3,678,586 3,672,003
Accumulated other comprehensive (loss) income (34,933 ) 334,813
Cumulative earnings 2,850,985 2,386,604
Cumulative distributions to stockholders   (3,718,698 )   (3,526,278 )
Total Stockholders’ Equity   3,480,245     3,571,424  
Total Liabilities and Stockholders’ Equity $ 22,275,988   $ 24,789,313  
 
 
TWO HARBORS INVESTMENT CORP.
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(dollars in thousands)
Certain prior period amounts have been reclassified to conform to the current period presentation
 
  Three Months Ended
June 30,
  Six Months Ended
June 30,
2018   2017 2018   2017
(unaudited) (unaudited)
Interest income:
Available-for-sale securities $ 183,467 $ 149,910 $ 374,183 $ 285,237
Residential mortgage loans held-for-investment in securitization trusts 30,826 62,454
Residential mortgage loans held-for-sale 349 503 656 901
Other   3,544     3,502     6,540     5,303  
Total interest income 187,360 184,741 381,379 353,895
Interest expense:
Repurchase agreements 97,812 43,806 184,392 76,062
Collateralized borrowings in securitization trusts 24,843 50,229
Federal Home Loan Bank advances 4,896 11,444 9,354 20,237
Revolving credit facilities 999 597 1,803 1,026
Convertible senior notes   4,707     4,591     9,425     8,412  
Total interest expense   108,414     85,281     204,974     155,966  
Net interest income 78,946 99,460 176,405 197,929
Other-than-temporary impairment losses (174 ) (429 ) (268 ) (429 )
Other income (loss):
(Loss) gain on investment securities (31,882 ) 31,249 (52,553 ) (21,103 )
Servicing income 77,665 51,308 148,855 91,081
Gain (loss) on servicing asset 9,853 (46,630 ) 81,660 (61,195 )
Gain (loss) on interest rate swap and swaption agreements 29,133 (76,710 ) 179,678 (66,783 )
Gain (loss) on other derivative instruments 7,675 (19,540 ) 15,728 (47,404 )
Other income   730     3,126     1,788     12,622  
Total other income (loss) 93,174 (57,197 ) 375,156 (92,782 )
Expenses:
Management fees 11,453 9,847 23,161 19,655
Servicing expenses 11,539 11,296 26,093 16,594
Other operating expenses   15,515     17,471     30,007     31,235  
Total expenses   38,507     38,614     79,261     67,484  
Income from continuing operations before income taxes 133,439 3,220 472,032 37,234
(Benefit from) provision for income taxes   (6,051 )   8,759     (2,267 )   (15,758 )
Net income (loss) from continuing operations 139,490 (5,539 ) 474,299 52,992
Income from discontinued operations, net of tax       14,197         27,651  
Net income 139,490 8,658 474,299 80,643
Income from discontinued operations attributable to noncontrolling interest       40         40  
Net income attributable to Two Harbors Investment Corp. 139,490 8,618 474,299 80,603
Dividends on preferred stock   13,747     4,285     27,494     4,285  
Net income attributable to common stockholders $ 125,743   $ 4,333   $ 446,805   $ 76,318  
 
 
TWO HARBORS INVESTMENT CORP.
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME, continued
(dollars in thousands)
Certain prior period amounts have been reclassified to conform to the current period presentation
 

Three Months Ended
June 30,

Six Months Ended
June 30,

2018 2017 2018 2017
(unaudited) (unaudited)
Basic earnings per weighted average common share:
Continuing operations $ 0.72 $ (0.06 ) $ 2.55 $ 0.28
Discontinued operations       0.08         0.16  
Net income $ 0.72   $ 0.02   $ 2.55   $ 0.44  
Diluted earnings per weighted average common share:
Continuing operations $ 0.68 $ (0.06 ) $ 2.36 $ 0.28
Discontinued operations       0.08         0.16  
Net income $ 0.68   $ 0.02   $ 2.36   $ 0.44  
Dividends declared per common share $ 0.47   $ 0.52   $ 0.94   $ 1.02  
Weighted average number of shares of common stock:
Basic   175,451,989     174,473,168     175,299,822     174,378,095  
Diluted   193,212,877     174,473,168     193,016,793     174,378,095  
Comprehensive income:
Net income $ 139,490 $ 8,658 $ 474,299 $ 80,643
Other comprehensive (loss) income, net of tax:
Unrealized (loss) gain on available-for-sale securities   (34,887 )   81,628     (379,664 )   155,390  
Other comprehensive (loss) income   (34,887 )   81,628     (379,664 )   155,390  
Comprehensive income 104,603 90,286 94,635 236,033
Comprehensive income attributable to noncontrolling interest       42         42  
Comprehensive income attributable to Two Harbors Investment Corp. 104,603 90,244 94,635 235,991
Dividends on preferred stock   13,747     4,285     27,494     4,285  
Comprehensive income attributable to common stockholders $ 90,856   $ 85,959   $ 67,141   $ 231,706  
 
 
TWO HARBORS INVESTMENT CORP.
RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL INFORMATION
(dollars in thousands, except share data)
Certain prior period amounts have been reclassified to conform to the current period presentation
 
 

Three Months Ended
June 30,

 

Six Months Ended
June 30,

2018   2017 2018   2017
(unaudited) (unaudited)
Reconciliation of Comprehensive income to Core Earnings:
 
Comprehensive income attributable to common stockholders $ 90,856 $ 85,959 $ 67,141 $ 145,833
 
Adjustment for other comprehensive loss (income) attributable to common stockholders:
Unrealized loss (gain) on available-for-sale securities attributable to common stockholders   34,887     (81,626 )   379,644     (155,388 )
Net income attributable to common stockholders $ 125,743   $ 4,333   $ 446,805   $ 76,318  
 
Adjustments for non-Core Earnings:
Realized loss (gain) on securities and residential mortgage loans held-for-sale 39,040 (33,542 ) 58,771 15,507
Unrealized (gain) loss on securities and residential mortgage loans held-for-sale (6,735 ) 1,960 (5,482 ) 3,802
Other-than-temporary impairment loss 174 429 268 429
Realized losses (gains) on termination or expiration of swaps and swaptions 20,450 30,083 (72,029 ) (35,948 )
Unrealized (gain) loss on interest rate swaps and swaptions economically hedging interest rate exposure (or duration) (35,743 ) 44,053 (90,000 ) 92,253
(Gain) loss on other derivative instruments (6,047 ) 22,873 (11,646 ) 54,562
Realized and unrealized gains on financing securitizations (1,415 ) (7,992 )
Realized and unrealized (gain) loss on mortgage servicing rights (55,793 ) 14,698 (170,485 ) 2,702
Change in servicing reserves (154 ) (25 ) 111 (2,848 )
Non-cash equity compensation expense 3,530 3,682 5,871 7,637
Net (benefit from) provision for income taxes on non-Core Earnings (7,139 ) 8,206 (4,487 ) (16,129 )
Transaction expenses associated with the contribution of TH Commercial Holdings LLC to Granite Point       2,193         2,193  
Core Earnings attributable to common stockholders(1) 77,326 $ 97,528   157,697 $ 192,486  
Dollar roll income   16,539     19,993  
Core Earnings attributable to common stockholders, including dollar roll income(1) $ 93,865   $ 177,690  
 
Weighted average basic common shares outstanding 175,451,989 174,473,168 175,299,822 174,378,095
Core Earnings attributable to common stockholders per weighted average basic common share outstanding $ 0.44 $ 0.56 $ 0.90 $ 1.10
Dollar roll income per weighted average basic common share outstanding   0.09     0.11  
Core Earnings, including dollar roll income, attributable to common stockholders per weighted average basic common share outstanding $ 0.53   $ 1.01  

_______________
(1) Core Earnings is a non-U.S. GAAP measure that we define as comprehensive income attributable to common stockholders, excluding “realized and unrealized gains and losses” (impairment losses, realized and unrealized gains and losses on the aggregate portfolio, reserve expense for representation and warranty obligations on MSR and non-cash compensation expense related to restricted common stock and transaction costs related to the contribution of TH Commercial Holdings LLC to Granite Point). As defined, Core Earnings includes interest income or expense and premium income or loss on derivative instruments and servicing income, net of estimated amortization on MSR. Dollar roll income is the economic equivalent to holding and financing Agency RMBS using short-term repurchase agreements. We believe the presentation of Core Earnings, including dollar roll income, provides investors greater transparency into our period-over-period financial performance and facilitates comparisons to peer REITs.

 
 
TWO HARBORS INVESTMENT CORP.
SUMMARY OF QUARTERLY CORE EARNINGS
(dollars in millions, except per share data)
Certain prior period amounts have been reclassified to conform to the current period presentation
 
  Three Months Ended
June 30,
2018
  March 31,
2018
  December 31,
2017
  September 30,
2017
  June 30,
2017
(unaudited)
Net Interest Income:
Interest income $ 187.3 $ 194.0 $ 195.1 $ 195.6 $ 184.7
Interest expense   108.4     96.6     94.8     99.0     85.3  
Net interest income 78.9 97.4 100.3 96.6 99.4
Other income:
Gain on investment securities 0.7 0.6 0.7
Servicing income, net of amortization(1) 31.7 28.3 19.8 18.0 19.4
Interest spread on interest rate swaps 13.8 3.8 2.0 (0.4 ) (2.6 )
Gain on other derivative instruments 1.7 2.5 2.8 2.8 3.3
Other income   0.5     0.7     1.1     1.2     1.4  
Total other income 48.4 35.9 26.4 21.6 21.5
Expenses   35.1     38.1     31.1     28.8     32.7  
Core Earnings before income taxes 92.2 95.2 95.6 89.4 88.2
Income tax expense   1.1     1.1     2.4     2.0     0.6  
Core Earnings from continuing operations 91.1 94.1 93.2 87.4 87.6
Core Earnings attributable to discontinued operations(2)               10.7     14.2  
Core Earnings 91.1 94.1 93.2 98.1 101.8
Dividends on preferred stock   13.7     13.7     11.9     8.9     4.3  
Core Earnings attributable to common stockholders(3) 77.4 80.4 $ 81.3   $ 89.2   $ 97.5  
Dollar roll income   16.5     3.4  
Core Earnings, including dollar roll income, attributable to common stockholders(3) $ 93.9   $ 83.8  
 
Weighted average basic Core EPS $ 0.44   $ 0.46   $ 0.47   $ 0.51   $ 0.56  
Weighted average basic Core EPS, including dollar roll income $ 0.53   $ 0.48  
 
Core earnings return on average common equity 11.1% 11.3% 11.3%

(4)

10.2% 11.2%
Core earnings return on average common equity, including dollar roll income 13.5% 11.8%

________________
(1) Amortization refers to the portion of change in fair value of MSR primarily attributed to the realization of expected cash flows (runoff) of the portfolio. This amortization has been deducted from Core Earnings. Amortization of MSR is deemed a non-GAAP measure due to the company’s decision to account for MSR at fair value.
(2) For the six months ended December 31, 2017, Core Earnings excludes our controlling interest in Granite Point’s Core Earnings and, for the three months ended September 30, 2017, includes our share of Granite Point’s declared dividend. We believe this presentation is the most accurate reflection of our incoming cash associated with holding shares of Granite Point common stock and assists with the understanding of the forward-looking financial presentation of the company.
(3) Please see page 13 for a definition of Core Earnings and a reconciliation of GAAP to non-GAAP financial information.
(4) Core Earnings return on average common equity for the quarter ended December 31, 2017 excludes the company’s controlling interest in Granite Point equity.

 

http://www.businesswire.com/news/home/20180807005896/en/Harbors-Investment-Corp.-Reports-Quarter-2018-Financial/?feedref=JjAwJuNHiystnCoBq_hl-bV7DTIYheT0D-1vT4_bKFzt_EW40VMdK6eG-WLfRGUE1fJraLPL1g6AeUGJlCTYs7Oafol48Kkc8KJgZoTHgMu0w8LYSbRdYOj2VdwnuKwa

Kaman Board of Directors Declares Dividend

BLOOMFIELD, Conn.–()–(NYSE:KAMN) The Kaman Corporation board of directors today declared a regular quarterly dividend of 20 cents per common share. The dividend will be paid on October 4, 2018, to shareholders of record on September 18, 2018.

About Kaman Corporation

Kaman Corporation, founded in 1945 by aviation pioneer Charles H. Kaman, and headquartered in Bloomfield, Connecticut conducts business in the aerospace and industrial distribution markets. The company produces and markets proprietary aircraft bearings and components; super precision, miniature ball bearings; complex metallic and composite aerostructures for commercial, military and general aviation fixed and rotary wing aircraft; safe and arming solutions for missile and bomb systems for the U.S. and allied militaries; subcontract helicopter work; restoration, modification and support of our SH-2G Super Seasprite maritime helicopters; manufacture and support of our K-MAX® manned and unmanned medium-to-heavy lift helicopters; and engineering design, analysis and certification services. The company is a leading distributor of industrial parts, and operates approximately 220 customer service centers including five distribution centers across the U.S. and Puerto Rico. Kaman offers more than five million items including electro-mechanical products, bearings, power transmission, motion control and electrical and fluid power components, automation and MRO supplies to customers in virtually every industry. Additionally, Kaman provides engineering, design and support for automation, electrical, linear, hydraulic and pneumatic systems as well as belting and rubber fabrication, customized mechanical services, hose assemblies, repair, fluid analysis and motor management. More information is available at www.kaman.com.

http://www.businesswire.com/news/home/20180807005911/en/Kaman-Board-Directors-Declares-Dividend/?feedref=JjAwJuNHiystnCoBq_hl-bV7DTIYheT0D-1vT4_bKFzt_EW40VMdK6eG-WLfRGUE1fJraLPL1g6AeUGJlCTYs7Oafol48Kkc8KJgZoTHgMu0w8LYSbRdYOj2VdwnuKwa

EQUITY ALERT: Rosen Law Firm Announces Investigation of Securities Claims Against Maxar Technologies Ltd. – MAXR

NEW YORK–()–Rosen Law Firm, a global investor rights law firm, announces it is investigating potential securities claims on behalf of shareholders of Maxar Technologies Ltd. (NYSE:MAXR) resulting from allegations that Maxar may have issued materially misleading business information to the investing public.

On August 7, 2018, Spruce Point Capital Management published a research report on Maxar alleging that Maxar “has pulled one of the most aggressive accounting schemes Spruce Point has ever seen to inflate Non-IFRS earnings by 79%.” Specifically, the report asserted that Maxar had used its acquisition of DigitalGlobe “to inflate [its] intangible assets” and had “amended its post-retirement benefit plan to book one-time gains” in a manner that “was not fully disclosed across its investor communications.” On this news, shares of Maxar fell $5.97 or over 13.4% per share to close at $38.44 on August 7, 2018.

Rosen Law Firm is preparing a class action lawsuit to recover losses suffered by Maxar investors. If you purchased shares of Maxar please visit the firm’s website at http://www.rosenlegal.com/cases-1396.html to join the class action. You may also contact Phillip Kim or Zachary Halper of Rosen Law Firm toll free at 866-767-3653 or via email at pkim@rosenlegal.com or zhalper@rosenlegal.com.

Follow us for updates on LinkedIn: https://www.linkedin.com/company/the-rosen-law-firm or on Twitter: https://twitter.com/rosen_firm.

Rosen Law Firm represents investors throughout the globe, concentrating its practice in securities class actions and shareholder derivative litigation. Rosen Law Firm was Ranked No. 1 by ISS Securities Class Action Services for number of securities class action settlements in 2017. The firm has been ranked in the top 3 each year since 2013.

Attorney Advertising. Prior results do not guarantee a similar outcome.

http://www.businesswire.com/news/home/20180807006030/en/EQUITY-ALERT-Rosen-Law-Firm-Announces-Investigation/?feedref=JjAwJuNHiystnCoBq_hl-bV7DTIYheT0D-1vT4_bKFzt_EW40VMdK6eG-WLfRGUE1fJraLPL1g6AeUGJlCTYs7Oafol48Kkc8KJgZoTHgMu0w8LYSbRdYOj2VdwnuKwa

Why Do Investors Use the S&P 500 as a Benchmark?

A:

The Standard & Poor’s 500 Index is the most commonly used benchmark for determining the state of the overall economy. Many investors also use the S&P 500 as a benchmark for their individual portfolios.

The Dow Jones Industrial Average used to be the main gauge of economic health for the United States, but that index only contains 30 companies and is limited in the sectors it represents. The S&P 500 has become the leading stock index due to its broader scope. Many hedge funds compare their annual performance to the S&P 500 — seeking to realize alpha in excess of the index’s returns.

Advantages of Using the S&P 500 as a Benchmark

The central advantage of using the S&P 500 as a benchmark is the wide market breadth of the large-cap companies included in the index. The index can provide a broad view on the economic health of the United States.

In addition to its broad scope, another advantage of the S&P 500 is that components of the index are updated on a quarterly basis. A committee determines which companies to include in the index. The factors considered include a market capitalization in excess of $6.1 billion, a public float of at least 50 percent, headquarters in the U.S., adequate liquidity and financial viability.

Companies must have traded for six to 12 months after their initial public offerings (IPOs) before being considered for inclusion in the index. By updating the index components, the index can accurately reflect the state of the large-cap market.

Disadvantages of Using the S&P 500 as a Benchmark

There are also some disadvantages to using the S&P 500 as a benchmark for individual portfolio performance. Most investors are widely-diversified in assets other than stocks, such as bonds, precious metals and cash — the values of which are not reflected in the S&P 500.

Also, the index contains only larger market cap companies from the United States. In contrast, investors may own small-cap or foreign companies in their portfolios. Using the S&P 500 as a benchmark may be an inaccurate measure of portfolio return for individual investors.

Another drawback to using the S&P 500 for benchmark purposes is that the index is disproportionately weighted towards larger companies. The top 50 companies by market capitalization account for more than half of the index’s value. As a result, these 50 companies have a larger impact on the calculation of the index. Sharp price movements in the larger companies have an undue influence on the overall index.

The S&P 500 uses a weighted market capitalization for its construction. The index takes the number of shares multiplied by the current market share price to determine the market capitalization for each company. All the market capitalizations are then added together and then divided by a number known as the index divisor. The result of that calculation is the index value.

https://www.investopedia.com/ask/answers/041315/what-are-pros-and-cons-using-sp-500-benchmark.asp?utm_campaign=rss_headlines&utm_source=rss_www&utm_medium=referral