Tandem Diabetes Care Announces Full Repayment of Outstanding CRG Debt

SAN DIEGO–()–Tandem Diabetes Care®, Inc. (NASDAQ: TNDM), a medical device company and manufacturer of the only touchscreen insulin pumps with continuous glucose monitoring (CGM) integration, today announced that it has fully repaid its term loan made by Capital Royalty Partners II L.P. and its affiliated funds (CRG). The balance of the outstanding debt plus accrued interest owed to CRG was approximately $83.8 million, plus approximately $5.0 million in associated financing fees that became due upon repayment. The interest rate on the term loan was 11.5 percent.

“The repayment of our outstanding loan and the elimination of our interest burden marks an extraordinary transformation of our balance sheet,” said Kim Blickenstaff, President and Chief Executive Officer. “This allows us to dedicate our financial resources to the achievement of our profitability objectives and advance our new product offerings to improve the lives of people with diabetes.”

As of June 30, 2018, the Company had $96.5 million in cash, cash equivalents, short-term investments and restricted cash. The Company generated an additional $115.0 million in gross proceeds from a public offering of common stock completed on August 7, 2018, before deducting underwriting discounts and commissions and other offering expenses. Proceeds from this recent equity offering were used for the repayment of the Company’s outstanding obligations to CRG.

About Tandem Diabetes Care, Inc.

Tandem Diabetes Care, Inc. (www.tandemdiabetes.com) is a medical device company dedicated to improving the lives of people with diabetes through relentless innovation and revolutionary customer experience. Tandem takes an innovative, user-centric approach to the design, development and commercialization of products for people with diabetes who use insulin. Tandem manufactures and sells the t:slim X2™ Insulin Pump with Basal-IQ™ Technology. The t:slim X2 Pump is capable of remote feature updates using a personal computer, and is the first insulin pump designated as compatible with integrated continuous glucose monitoring (iCGM) devices. Tandem is based in San Diego, California.

Tandem Diabetes Care is a registered trademark, and t:slim X2 and Basal-IQ are trademarks of Tandem Diabetes Care, Inc.

Forward Looking Statement

This press release contains “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, that concern matters that involve risks and uncertainties that could cause actual results to differ materially from those anticipated or projected in the forward-looking statements. These forward-looking statements relate to, among other things, the anticipated growth objectives of the Company and its ability to reach profitability. The Company’s actual results may differ materially from those indicated in these forward-looking statements due to numerous risks and uncertainties. For instance, the Company’s ability to achieve projected financial results will be impacted by the Company’s ability to obtain regulatory approval for new products and products under development and the timing of any such approvals; market acceptance of the Company’s existing products and products under development by physicians and people with diabetes; and the potential that newer products that compete with the Company’s products, or other technological breakthroughs for the monitoring, treatment or prevention of diabetes, may render the Company’s products obsolete or less desirable. Other risks and uncertainties include the Company’s inability to manufacture products in commercial quantities at an acceptable cost and in accordance with quality requirements; the Company’s inability to contract with additional third-party payors for reimbursement of the Company’s products; uncertainty associated with the development and approval of new products generally; possible future actions of the FDA or any other regulatory body or governmental authority; as well as other risks identified in Tandem’s most recent Annual Report on Form 10-K and Quarterly Reports on Form 10-Q, respectively, and other documents that we file with the Securities and Exchange Commission. Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date of this release. Tandem undertakes no obligation to update or review any forward-looking statement in this press release because of new information, future events or other factors.

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Carvana Announces Second Quarter 2018 Financial Results

PHOENIX–()–Carvana Co. (NYSE: CVNA), a leading e-commerce platform for buying used cars, today announced financial results for the quarter ended June 30, 2018. Carvana’s complete second quarter 2018 financial results and management commentary can be found by accessing the Company’s shareholder letter on the quarterly results page of the investor relations website.

“Second quarter results exceeded our prior guidance. We delivered triple-digit growth in retail units sold, revenue, and gross profit dollars, and drove a record total GPU of $2,173. We achieved these results while opening 9 new markets and 4 new car vending machines, and Carvana’s network now covers half of the U.S. population,” said Ernie Garcia, Carvana co-founder and CEO. “We had a strong first half of the year and are on track for our fifth consecutive year of triple-digit revenue growth in 2018. We are well-positioned to benefit from continued momentum as consumers demand a new way to buy a car.”

Conference Call Details

Carvana will host a conference call today, August 8, 2018, at 5:30 p.m. EDT (2:30 p.m. PDT) to discuss financial results. To participate in the live call, analysts and investors should dial (833) 255-2830 or (412) 902-6715 and ask for “Carvana Earnings.” A live audio webcast of the conference call along with supplemental financial information will also be accessible on the company’s website at https://investors.carvana.com/. Following the webcast, an archived version will be available on the website for one year. A telephonic replay of the conference call will be available until August 15, 2018, by dialing (877) 344-7529 or (412) 317-0088 and entering passcode 10122530#.

Forward Looking Statements

This letter contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements reflect Carvana’s current expectations and projections with respect to, among other things, its financial condition, results of operations, plans, objectives, future performance, and business. These statements may be preceded by, followed by or include the words “on track,” “well-positioned,” “believe,” “expect,” “projection,” “continued,” the negatives thereof and other words and terms of similar meaning. Forward-looking statements include all statements that are not historical facts. Such forward-looking statements are subject to various risks and uncertainties. Accordingly, there are or will be important factors that could cause actual outcomes or results to differ materially from those indicated in these statements. Among these factors are risks related to the “Risk Factors” identified in our Annual Report on Form 10-K for 2017 and our Quarterly Report on Form 10-Q for Q2 2018. There is no assurance that any forward-looking statements will materialize. You are cautioned not to place undue reliance on forward-looking statements, which reflect expectations only as of this date. Carvana does not undertake any obligation to publicly update or review any forward-looking statement, whether as a result of new information, future developments, or otherwise.

About Carvana (NYSE: CVNA)

Founded in 2012 and based in Phoenix, Carvana’s (NYSE: CVNA) mission is to change the way people buy cars. By removing the traditional dealership infrastructure and replacing it with technology and exceptional customer service, Carvana offers consumers an intuitive and convenient online automotive retail platform. Carvana.com enables consumers to quickly and easily buy a car online, including finding their preferred vehicle, qualifying for financing, getting a trade-in value, signing contracts, and receiving as-soon-as-next-day delivery or pickup of the vehicle from one of Carvana’s proprietary automated Car Vending Machines.

For further information on Carvana, please visit www.carvana.com, or connect with us on FacebookInstagram or Twitter.

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2018 Plant Biotechnology Services in North America by Type and End User – ResearchAndMarkets.com

DUBLIN–()–The “Plant Biotechnology Services in North America by Type, and End User – Global Opportunity Analysis, 2017” report has been added to ResearchAndMarkets.com‘s offering.

This study focuses upon biotechnology services in North America for plant or agriculture-based studies.

The report is segmented on the basis of type of services into genomics services, and transformation services.

The genomics services considered in the report include sanger sequencing, SSR marker analysis, transcriptome analysis using microarray and RNA-seq, Real-Time qRT-PCR, in situ hybridization, RNA isolation, and next-generation sequencing services.

Similarly, the transformation services considered in the study include transgenic transformation services in plants and excludes sisgenic services.

The report focuses on the revenues generated by major players in North America from the aforementioned services. The top players considered in the report include Thermo Fisher Scientific Inc., Agilent Technologies, Inc., GenScript Biotech Corporation, and Eurofins Scientific SE.

Key Topics Covered

Chapter: 1: Introduction

1.1. Key Segments

1.2. Research Methodology

1.2.1. Secondary Research

1.2.2. Primary Research

1.2.3. Analyst Tools and Models

Chapter: 2: Key Service Providers

2.1. Thermo Fisher Scientific Inc.

2.1.1. Company Revenue, by Type of Service

2.1.2. Company Revenue, by End User

2.2. Agilent Technologies Inc.

2.2.1. Company Revenue, by Type of Service

2.2.2. Company Revenue, by End User

2.3. Genscript Biotech Corporation

2.3.1. Company Revenue, by Type of Service

2.3.2. Company Revenue, by End User

2.4. Eurofins Scientific SE

2.4.1. Company Revenue, by Type of Service

2.4.2. Company Revenue, by End User

For more information about this report visit https://www.researchandmarkets.com/research/4sm6n2/2018_plant?w=4

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ParkOhio Announces Record Second Quarter 2018 Results

CLEVELAND, OHIO–()–Park-Ohio Holdings Corp. (NASDAQ: PKOH) today announced its results for the second quarter of 2018.

SECOND QUARTER RESULTS

Net sales were a record $432.2 million in the second quarter of 2018, an increase of 23% from net sales of $350.9 million in the second quarter of 2017, driven by organic growth of 13%. The Company reported net income attributable to ParkOhio common shareholders of $14.8 million, or $1.18 per diluted share, in the second quarter of 2018, compared to $3.0 million, or $0.24 per diluted share, in the second quarter of 2017. On an adjusted basis, net income attributable to ParkOhio common shareholders was $1.08 per diluted share in the second quarter of 2018 compared to $0.87 per diluted share in the 2017 period, an increase of 24%. Please refer to the table that follows for a reconciliation of net income to adjusted earnings.

Matthew V. Crawford, Chairman and Chief Executive Officer, stated, “We are pleased to announce our second quarter earnings, which achieved a number of sales and profitability records. While these achievements are meaningful, we continue to be focused on the recent investments across our businesses, which are in line with our growth strategy. I would like to thank all of our associates, who have worked very hard to meet our customer expectations during this period of rapid expansion.”

EBITDA was $41.1 million in the second quarter of 2018, an increase of 21% from $34.0 million in the second quarter of 2017. Please refer to the table that follows for a reconciliation of net income to EBITDA. At June 30, 2018, the Company had $88.4 million of cash and cash equivalents on hand.

YEAR-TO-DATE RESULTS

Net sales were a record $837.9 million in the first six months of 2018, an increase of 21% from net sales of $694.7 million in the first six months of 2017, driven by organic growth of 11%. The Company reported net income attributable to ParkOhio common shareholders of $24.6 million, or $1.96 per diluted share, in the first six months of 2018, compared to $12.8 million, or $1.03 per diluted share, in the 2017 period. On an adjusted basis, net income attributable to ParkOhio common shareholders was $2.00 per diluted share in the first six months of 2018 compared to $1.54 per diluted share in the 2017 period, an increase of 30%. EBITDA was $76.5 million in the first six months of 2018, an increase of 16% from $65.9 million in the first six months of 2017. Please refer to the tables that follow for reconciliations of net income to adjusted earnings and net income to EBITDA.

CONFERENCE CALL

A conference call reviewing ParkOhio’s second quarter 2018 results will be broadcast live over the Internet on Thursday, August 9, commencing at 10:00 am Eastern Time. Simply log on to http://www.pkoh.com.

ParkOhio is a diversified international company providing world-class customers with a supply chain management outsourcing service, capital equipment used on their production lines, and manufactured components used to assemble their products. Headquartered in Cleveland, Ohio, ParkOhio operates more than 125 manufacturing sites and supply chain logistics facilities worldwide, through three reportable segments: Supply Technologies, Assembly Components and Engineered Products.

This news release contains forward-looking statements, including statements regarding future performance of the Company, that are subject to known and unknown risks, uncertainties and other factors that may cause our actual results, performance and achievements, or industry results, to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. These factors that could cause actual results to differ materially from expectations include, but are not limited to, the following: our substantial indebtedness; the uncertainty of the global economic environment; general business conditions and competitive factors, including pricing pressures and product innovation; demand for our products and services; raw material availability and pricing; fluctuations in energy costs; component part availability and pricing; changes in our relationships with customers and suppliers; the financial condition of our customers, including the impact of any bankruptcies; our ability to successfully integrate recent and future acquisitions into existing operations; the amounts and timing, if any, of purchases of our common stock; changes in general economic conditions such as inflation rates, interest rates, tax rates, unemployment rates, higher labor and healthcare costs, recessions and changing government policies, laws and regulations, including those related to the current global uncertainties and crises, such as tariffs and surcharges; adverse impacts to us, our suppliers and customers from acts of terrorism or hostilities; our ability to meet various covenants, including financial covenants, contained in the agreements governing our indebtedness; disruptions, uncertainties or volatility in the credit markets that may limit our access to capital; potential disruption due to a partial or complete reconfiguration of the European Union; increasingly stringent domestic and foreign governmental regulations, including those affecting the environment or import and export controls and other trade barriers; inherent uncertainties involved in assessing our potential liability for environmental remediation-related activities; the outcome of pending and future litigation and other claims and disputes with customers; the outcome of the review conducted by the special committee of our board of directors; our dependence on the automotive and heavy-duty truck industries, which are highly cyclical; the dependence of the automotive industry on consumer spending; our ability to negotiate contracts with labor unions; our dependence on key management; our dependence on information systems; our ability to continue to pay cash dividends, and the other factors we describe under “Item 1A. Risk Factors” included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2017. Any forward-looking statement speaks only as of the date on which such statement is made, and we undertake no obligation to update any forward-looking statement, whether as a result of new information, future events or otherwise, except as required by law. In light of these and other uncertainties, the inclusion of a forward-looking statement herein should not be regarded as a representation by us that our plans and objectives will be achieved. The Company assumes no obligation to update the information in this release.

   
Park-Ohio Holdings Corp. and Subsidiaries
Condensed Consolidated Statements of Income (Unaudited)
 
Three Months Ended June 30, Six Months Ended June 30,
2018   2017 (2) 2018   2017 (2)
(In millions, except per share data)
Net sales $ 432.2 $ 350.9 $ 837.9 $ 694.7
Cost of sales (1) 359.1   291.1   699.7   579.9  
Gross profit 73.1 59.8 138.2 114.8
Selling, general and administrative expenses (1) 47.8 37.2 90.8 74.9
Litigation settlement gain       (3.3 )
Operating income 25.3 22.6 47.4 43.2
Other components of pension income and other postretirement benefits expense, net (1) 2.1 1.5 4.4 3.1
Gain on sale of assets 1.9 1.9
Interest expense (8.8 ) (7.9 ) (17.2 ) (15.3 )
Loss on extinguishment of debt   (11.0 )   (11.0 )
Income before income taxes 20.5 5.2 36.5 20.0
Income tax expense (5.5 ) (2.0 ) (11.3 ) (6.7 )
Net income 15.0 3.2 25.2 13.3
Net income attributable to noncontrolling interests (0.2 ) (0.2 ) (0.6 ) (0.5 )
Net income attributable to Park-Ohio Holdings Corp. common shareholders $ 14.8   $ 3.0   $ 24.6   $ 12.8  
 
Earnings per common share attributable to Park-Ohio Holdings Corp. common shareholders:
Basic $ 1.20   $ 0.25   $ 2.00   $ 1.05  
Diluted $ 1.18   $ 0.24   $ 1.96   $ 1.03  
Weighted-average shares used to compute earnings per share:
Basic 12.3   12.2   12.3   12.2  
Diluted 12.6   12.4   12.6   12.5  
 
Dividends per common share $ 0.125   $ 0.125   $ 0.25   $ 0.25  
 
Other financial data:
EBITDA, as defined $ 41.1   $ 34.0   $ 76.5   $ 65.9  
 
(1) – The Company adopted ASU 2017-07 in the first quarter of 2018, resulting in a change to the presentation of components of pension income and other postretirement benefits expense, net. The following amounts are reflected in the condensed consolidated statements of income:
 
  Three Months Ended June 30,   Six Months Ended June 30,
2018   2017   2018   2017
Amounts recorded in Cost of sales $ (0.8 )   $ (0.5 )   $ (1.5 )   $ (1.0 )
Amounts recorded in SG&A expenses (0.2 ) (0.2 ) (0.5 ) (0.3 )
Amounts recorded in Other components of pension income and other postretirement benefits expense, net 2.1     1.5     4.4     3.1  
Total pension income and other postretirement benefit expense, net $ 1.1     $ 0.8     $ 2.4     $ 1.8  
 
(2) – 2017 pension and other postretirement amounts have been reclassified to conform to the 2018 presentation.
 

Park-Ohio Holdings Corp. and Subsidiaries
Supplemental Non-GAAP Financial Measures (Unaudited)

Adjusted earnings is a non-GAAP financial measure that the Company is providing in this press release. Adjusted earnings is net income calculated in accordance with generally accepted accounting principles (“GAAP”), adjusted for special items. The Company presents this non-GAAP financial measure because management uses adjusted earnings to compare its operating performance on a consistent basis over multiple periods because they remove the impact of certain significant non-cash credits or charges and certain infrequent items impacting net income. Adjusted earnings is not a measure of performance under GAAP and should not be considered in isolation from, or as a substitute for, net income calculated in accordance with GAAP. Adjusted earnings herein may not be comparable to similarly titled measures of other companies. The following table reconciles net income to adjusted earnings:

  Three Months Ended June 30,   Six Months Ended June 30,
2018   2017 2018   2017
Earnings  

Diluted
EPS

Earnings  

Diluted
EPS

Earnings  

Diluted
EPS

Earnings  

Diluted
EPS

(In millions, except for earnings per share (EPS))
Net income $ 15.0 $ 1.20 $ 3.2 $ 0.26 $ 25.2 $ 2.01 $ 13.3 $ 1.07
Net income attributable to noncontrolling interests (0.2 ) (0.02 ) (0.2 ) (0.02 ) (0.6 ) (0.05 ) (0.5 ) (0.04 )
Net income attributable to Park-Ohio Holdings Corp. common shareholders 14.8 1.18 3.0 0.24 24.6 1.96 12.8 1.03
Adjustments:
Acquisition-related expenses 0.3 0.02 0.1 0.01 1.0 0.08 0.4 0.03
Gain on sale of assets (1.9 ) (0.15 ) (1.9 ) (0.15 )
Loss on extinguishment of debt 11.0 0.89 11.0 0.88
Litigation settlement gain

(3.3 ) (0.26 )
Plant relocation and related costs

0.7 0.05
Tax effect of above adjustments 0.4 0.03 (3.3 ) (0.27 ) 0.2 0.01 (2.2 ) (0.19 )
U.S. Tax Act adjustment         1.2   0.10      
Adjusted earnings $ 13.6   $ 1.08   $ 10.8   $ 0.87   $ 25.1   $ 2.00   $ 19.4   $ 1.54  
 

Park-Ohio Holdings Corp. and Subsidiaries
Supplemental Non-GAAP Financial Measures (Unaudited)

EBITDA, as defined is a non-GAAP financial measure that the Company is providing in this press release. EBITDA, as defined reflects net income attributable to Park-Ohio Holdings Corp. common shareholders before interest expense, income taxes, depreciation and amortization, and also excludes certain non-cash charges and corporate-level expenses as defined in the Company’s current revolving credit facility. The Company presents this non-GAAP financial measure because management uses EBITDA, as defined to assess the Company’s performance and believes that EBITDA is useful to investors as an indication of the Company’s satisfaction of its Debt Service Ratio covenant in its current revolving credit facility. Additionally, EBITDA, as defined is a measure used under the Company’s current revolving credit facility to determine whether the Company may incur additional debt under such facility. EBITDA, as defined is not a measure of performance under GAAP and should not be considered in isolation from, or as a substitute for, net income or cash flow information calculated in accordance with GAAP. EBITDA, as defined herein may not be comparable to similarly titled measures of other companies. The following table reconciles net income to EBITDA, as defined:

   
Three Months Ended June 30, Six Months Ended June 30,
2018   2017 2018   2017
(In millions)
Net income attributable to Park-Ohio Holdings Corp. common shareholders $ 14.8 $ 3.0 $ 24.6 $ 12.8
Add back:
Interest expense 8.8 7.9 17.2 15.3
Loss on extinguishment of debt 11.0 11.0
Income tax expense 5.5 2.0 11.3 6.7
Depreciation and amortization 9.3 8.0 18.1 15.8
Stock-based compensation expense 2.4 1.9 4.6 4.1
Acquisition-related expenses and other 0.3   0.2   0.7   0.2  
EBITDA, as defined $ 41.1   $ 34.0   $ 76.5   $ 65.9  
 
 
Park-Ohio Holdings Corp. and Subsidiaries
Condensed Consolidated Balance Sheets
 
(Unaudited)
June 30, 2018 December 31, 2017
(In millions)
ASSETS
Current assets:
Cash and cash equivalents $ 88.4 $ 82.8
Accounts receivable, net 287.8 242.6
Inventories, net 304.8 282.8
Other current assets 87.4   61.4
Total current assets 768.4 669.6
Property, plant and equipment, net 198.4 177.0
Goodwill 102.1 100.2
Intangible assets, net 103.9 99.5
Other long-term assets 86.5   86.2
Total assets $ 1,259.3   $ 1,132.5
 
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current liabilities:
Trade accounts payable $ 183.9 $ 173.7
Current portion of long-term debt and short-term debt 15.6 17.7
Accrued expenses and other 101.4   84.7
Total current liabilities 300.9 276.1
Long-term liabilities, less current portion:
Debt 591.9 515.5
Deferred income taxes 27.5 22.3
Other long-term liabilities 30.8   30.6
Total long-term liabilities 650.2 568.4
Park-Ohio Holdings Corp. and Subsidiaries shareholders’ equity 295.6 276.0
Noncontrolling interests 12.6   12.0
Total equity 308.2   288.0
Total liabilities and shareholders’ equity $ 1,259.3   $ 1,132.5
 
 
Park-Ohio Holdings Corp. and Subsidiaries
Condensed Consolidated Statements of Cash Flows (Unaudited)
 
Six Months Ended June 30,
2018   2017
(In millions)
OPERATING ACTIVITIES
Net income $ 25.2 $ 13.3
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization 18.1 15.8
Stock-based compensation expense 4.6 4.1
Net impact of U.S. Tax Act 1.2
Gain on sale of assets (1.9 )
Loss on extinguishment of debt 11.0
Litigation settlement gain (3.3 )
Changes in operating assets and liabilities:
Accounts receivable (36.4 ) (24.0 )
Inventories (17.7 ) (5.4 )
Other current assets (13.5 ) (8.3 )
Accounts payable and accrued expenses 22.0 14.9
Litigation settlement payment (4.0 )
Other (2.9 ) (5.1 )
Net cash (used by) provided by operating activities (1.3 ) 9.0
INVESTING ACTIVITIES
Purchases of property, plant and equipment (22.3 ) (12.4 )
Proceeds from sale of assets 2.8
Business acquisitions, net of cash acquired (35.6 ) (10.5 )
Net cash used by investing activities (55.1 ) (22.9 )
FINANCING ACTIVITIES
Proceeds from (payments on) revolving credit facility, net 74.6 (28.8 )
Payments on term loans and other debt (2.6 ) (28.9 )
Proceeds from term loans and other debt 2.2
(Payments on) proceeds from capital lease facilities, net (2.3 ) 1.2
Issuance of 6.625% Senior Notes due 2027 350.0
Debt financing costs (7.2 )
Repurchase of 8.125% Senior Notes due 2021 (250.0 )
Premium on early extinguishment of debt (8.0 )
Dividends (3.2 ) (3.1 )
Purchase of treasury shares (0.6 ) (3.6 )
Payments of withholding taxes on share awards (3.5 ) (2.3 )
Net cash provided by financing activities 64.6 19.3
Effect of exchange rate changes on cash (2.6 ) 3.0  
Increase in cash and cash equivalents 5.6 8.4
Cash and cash equivalents at beginning of period 82.8   64.3  
Cash and cash equivalents at end of period $ 88.4   $ 72.7  
Income taxes paid $ 8.1 $ 7.1
Interest paid $ 16.3 $ 14.7
 
   
Park-Ohio Holdings Corp. and Subsidiaries
Business Segment Information (Unaudited)
 
Three Months Ended June 30, Six Months Ended June 30,
2018   2017 2018   2017
(In millions)
Net sales:
Supply Technologies $ 166.2 $ 142.4 $ 327.1 $ 275.6
Assembly Components 153.2 126.0 298.6 265.3
Engineered Products 112.8   82.5   212.2   153.8  
$ 432.2   $ 350.9   $ 837.9   $ 694.7  
 
Segment operating income:
Supply Technologies $ 13.5 $ 11.8 $ 26.0 $ 22.5
Assembly Components 11.7 12.5 24.3 24.4
Engineered Products 9.5   5.5   15.2   6.8  
Total segment operating income 34.7 29.8 65.5 53.7
Corporate costs (9.4 ) (7.2 ) (18.1 ) (13.8 )
Litigation settlement gain       3.3  
Operating income 25.3 22.6 47.4 43.2
Other components of net pension income and other postretirement benefits expense, net 2.1 1.5 4.4 3.1
Gain on sale of assets 1.9 1.9
Interest expense (8.8 ) (7.9 ) (17.2 ) (15.3 )
Loss on extinguishment of debt   (11.0 )     (11.0 )
Income before income taxes $ 20.5   $ 5.2   $ 36.5   $ 20.0  
 

Park-Ohio Holdings Corp. and Subsidiaries
Supplemental Non-GAAP Financial Measures (Unaudited)

Adjusted earnings per share is a non-GAAP financial measure that the Company is providing in this press release. Adjusted earnings per share is earnings per share calculated in accordance with GAAP, adjusted for special items. The Company presents this non-GAAP financial measure because management uses adjusted earnings per share to compare its operating performance on a consistent basis over multiple periods because they remove the impact of certain significant non-cash credits or charges and certain infrequent items impacting earnings per share. Adjusted earnings per share is not a measure of performance under GAAP and should not be considered in isolation from, or as a substitute for, earnings per share calculated in accordance with GAAP. Adjusted earnings per share herein may not be comparable to similarly titled measures of other companies. The following table reconciles earnings per share to adjusted earnings per share:

 
FY 2018 Guidance
Low   High
Diluted EPS-GAAP basis $ 3.75 $ 3.95
 
Acquisition-related expenses 0.08 0.08
Gain on sale of assets (0.15 ) (0.15 )
Tax effect of adjustments 0.02 0.02
U.S. Tax Act Adjustment 0.10   0.10  
Impact of adjustments 0.05 0.05
   
Diluted EPS-Adjusted basis $ 3.80   $ 4.00  
 

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Jamieson Wellness Inc. Announces Advancements in Growth Strategy in China

TORONTO–()–Jamieson Wellness Inc. (“Jamieson Wellness” or the “Company”) (TSX:JWEL), Canada’s number one manufacturer and marketer of branded vitamins, minerals and supplements, announced today that the Company has received its first Orange Hat registration certification from China’s Food and Drug Administration and is establishing infrastructure and staff in China. The Orange Hat certification, along with three existing Blue Hat registrations, provides the opportunity for the Company to launch into both the Chinese domestic e-commerce and retail channels.

“The completion of our first Orange Hat registration is a significant milestone in our long-term growth strategy for China,” said Mark Hornick, President and CEO, Jamieson Wellness. “We expect this success to allow us to accelerate future registrations, shortening the application and approval timeline. We anticipate having up to 20 Orange Hat registrations by the end of 2019. The Jamieson brand already resonates with the Chinese consumer and we are excited to provide this significant additional access to our high-quality products.”

To support this growing opportunity, the Company has extended its distribution agreement with its existing Chinese partner for an additional five years, which includes the right for Jamieson to acquire the distributor at the end of the term. This agreement allows the distributor to maintain the exclusive right to distribute Jamieson owned brands through cross border e-commerce as well as through domestic retail and online channels.

The company has also established a wholly owned foreign entity in China to better service global retail partners currently excluded from the scope of its Chinese distribution agreement. Jamieson has secured office and warehousing space in Shanghai and is currently recruiting for general management and product quality positions based in Shanghai.

To date, the Company’s distributor has been selling 50 Canadian made Jamieson brand products in China through cross border e-commerce, utilizing a virtual duty free store. The Orange Hat certifications allow products to be sold in the much larger domestic market, both on-line and at physical retail, as well as to global players directly from the China operations. Nutritional supplement sales in China are forecast to exceed $20 billion in 2018 and are outpacing global industry growth, according to Nutrition Business Journal.

About Jamieson Wellness

Jamieson Wellness is dedicated to improving the world’s health and wellness with its portfolio of innovative natural health brands. Established in 1922, Jamieson is the Company’s heritage brand and Canada’s #1 consumer health brand. Jamieson Wellness manufactures and markets sports nutrition products and specialty supplements under its Progressive, Precision and Iron Vegan brands. The Company also markets products by Lorna Vanderhaeghe Health Solutions (LVHS), the #1 women’s natural health focused brand in Canada. In 2017, Jamieson Wellness was named one of the top ten most reputable companies in Canada. For more information please visit jamiesonwellness.com.

Source: Jamieson Wellness Inc.

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Senseonics Holdings, Inc. Reports Second Quarter 2018 Financial Results

GERMANTOWN, Md.–()–Senseonics Holdings, Inc. (NYSE-American: SENS), a medical technology company focused on the development and commercialization of a long-term, implantable continuous glucose monitoring (CGM) system for people with diabetes, today reported financial results for the second quarter ended June 30, 2018.

RECENT HIGHLIGHTS & ACCOMPLISHMENTS:

  • Received FDA approval for the Eversense® CGM System, the first and only long-term implantable continuous glucose monitoring system
  • Completed first commercial insertion in the U.S.
  • Secured first U.S. payor coverage of Eversense from Horizon Blue Cross Blue Shield of New Jersey
  • Eversense Mobile Clinic traveling across the U.S. training physicians
  • Eversense® XL System introduced across the existing European markets
  • Strengthened balance sheet with additional $150 million of gross proceeds through completion of underwritten equity offering

“Second quarter was a very significant period for Senseonics. We received FDA approval for the Eversense System, began our U.S. commercial launch at ADA, and subsequently, in just six weeks, secured reimbursement from BCBS New Jersey. Additionally, our penetration in the EMEA market continues to grow as we have expanded availability of the Eversense XL across Europe,” said Tim Goodnow, President and Chief Executive Officer of Senseonics. “As we go forward in the balance of 2018, we will continue to execute on our commercial strategy and clinical development programs as we work toward label expansion and additional regulatory approvals.”

SECOND QUARTER 2018 RESULTS:

Revenue was $3.6 million for the second quarter of 2018, compared to $0.8 million for the second quarter of 2017 and $2.9 million for the first quarter of 2018.

Second quarter 2018 sales and marketing expenses increased $2.7 million versus first quarter 2018, to $6.2 million. The increase in sales and marketing expenses was primarily driven by an increase in compensation expense associated with adding additional sales resources to prepare for a United States launch in 2018, as well as to support and expand the distribution of Eversense in Europe.

Second quarter 2018 research and development expense was essentially flat compared to first quarter 2018 and $2.7 million greater than second quarter 2017. The year-over-year increase in research and development expenses was primarily driven by the on-going support of our pre-market approval application including the completion of the Advisory Panel activity.

Second quarter 2018 general and administrative expenses increased $1.4 million over first quarter 2018 and increased $1.5 million over second quarter 2017, to $5.4 million. The year-over-year increase in general and administration expenses was primarily driven by an increase in compensation, legal and other administrative expense associated with supporting operational growth.

Net loss was $32.5 million, or $0.23 per share, in the second quarter of 2018, compared to $12.4 million, or $0.12 per share, in the second quarter of 2017. This compares to a first quarter 2018 net loss of $22.3 million or $0.16 per share. The increase in net loss in the second quarter of 2018 compared to the first quarter of 2018 was driven primarily by a $5.3 million increase in the loss from the change in fair value of the derivative liability and a $4.1 million increase in operating expense. Excluding the change in the increase of the derivative liability during the second quarter 2018, net loss for the three months ended June 30, 2018 would have been $22.3 million or $0.16 per share. Second quarter 2018 net loss per share for the three months ended June 30, 2018 was based on 138.8 million weighted average shares outstanding, compared to 103.7 million weighted average shares outstanding in the second quarter of 2017.

As of June 30, 2018, cash, cash equivalents, and marketable securities were $191.9 million and outstanding indebtedness was $72.7 million.

CONFERENCE CALL AND WEBCAST INFORMATION

Company management will host a conference call at 4:30 pm (Eastern Time) today, August 8, 2018, to discuss these financial results. This conference call can be accessed live by telephone or through Senseonics’ website.

 

         

 

Live Teleconference Information:

Live Webcast Information:

Dial in number: (877)883-0383

Visit http://www.senseonics.com and select the “Investor Relations” section

 

International dial in: (412)902-6506

 

A replay of the call can be accessed on Senseonics’ website http://www.senseonics.com under “Investor Relations.”

About Senseonics

Senseonics Holdings, Inc. is a medical technology company focused on the development and commercialization of transformational glucose monitoring products designed to help people with diabetes confidently live their lives with ease. Senseonics’ CGM systems, Eversense and Eversense XL, include a small sensor inserted completely under the skin that communicates with a smart transmitter worn over the sensor. The glucose data are automatically sent every 5 minutes to a mobile application on the user’s smartphone.

FORWARD LOOKING STATEMENTS

Any statements in this press release about future expectations, plans and prospects for Senseonics, including statements about the clinical development of future generations of Eversense, the expanded commercialization of Eversense and Eversense XL in Europe, label expansion, additional regulatory approvals, and other statements containing the words “expect,” “intend,” “may,” “projects,” “will,” and similar expressions, constitute forward-looking statements within the meaning of The Private Securities Litigation Reform Act of 1995. Actual results may differ materially from those indicated by such forward-looking statements as a result of various important factors, including: uncertainties inherent in the regulatory approval process, uncertainties inherent in the expanded commercial launch of Eversense and Eversense XL in Europe and such other factors as are set forth in the risk factors detailed in Senseonics’ Annual Report on Form 10-K for the year ended December 31, 2017, Senseonics’ Quarterly Report on Form 10-Q for the quarter ended June 30, 2018, and Senseonics’ other filings with the SEC under the heading “Risk Factors.” In addition, the forward-looking statements included in this press release represent Senseonics’ views as of the date hereof. Senseonics anticipates that subsequent events and developments will cause Senseonics’ views to change. However, while Senseonics may elect to update these forward-looking statements at some point in the future, Senseonics specifically disclaims any obligation to do so except as required by law. These forward-looking statements should not be relied upon as representing Senseonics’ views as of any date subsequent to the date hereof.

FINANCIAL STATEMENTS TO FOLLOW:

         
Senseonics Holdings, Inc.
 
Condensed Consolidated Balance Sheets
(in thousands, except share and per share data)
 
June 30, December 31,
2018 2017
 
(unaudited)
Assets
Current assets:
Cash and cash equivalents $ 183,928 $ 16,150
Marketable securities 7,954 20,300
Accounts receivable, primarily from a related party 2,988 3,382
Inventory, net 8,400 2,991
Prepaid expenses and other current assets   4,195     2,092  
Total current assets 207,465 44,915
 
Deposits and other assets 205 176
Property and equipment, net   998     853  
Total assets $ 208,668   $ 45,944  
 
Liabilities and Stockholders’ Equity
Current liabilities:
Accounts payable $ 5,172 $ 7,712
Accrued expenses and other current liabilities 9,863 5,428
Notes payable, current portion   10,000     10,000  
Total current liabilities 25,035 23,140
 
Notes payable, net of discount 9,619 14,414
Convertible senior notes, net of discount 34,469
Derivative liability 32,312
Notes payable, accrued interest 1,444 1,054
Other liabilities   73     69  
Total liabilities 102,952 38,677
 
Commitments and contingencies (Note 8)
 
Stockholders’ equity:
Common stock, $0.001 par value per share; 450,000,000 and 250,000,000 shares authorized, 175,897,790 and 136,882,735 shares issued and outstanding as of June 30, 2018 and December 31, 2017 177 137
Additional paid-in capital 424,131 270,953
Accumulated deficit   (318,592 )   (263,823 )
Total stockholders’ equity   105,716     7,267  
Total liabilities and stockholders’ equity $ 208,668   $ 45,944  
 
                 
Senseonics Holdings, Inc.
 
Unaudited Condensed Consolidated Statement of Operations and Comprehensive Loss
(in thousands, except share and per share data)
 
Three Months Ended Six Months Ended
June 30, June 30,
2018 2017 2018 2017
Revenue, primarily from a related party $ 3,623 $ 814 $ 6,569 $ 1,367
Cost of sales   3,839     1,714     7,147     2,759  
Gross profit (216 ) (900 ) (578 ) (1,392 )
 
Expenses:
Sales and marketing expenses 6,177 1,249 9,618 2,389
Research and development expenses 8,289 5,604 16,402 12,602
General and administrative expenses   5,382     3,888     9,393     7,655  
Operating loss (20,064 ) (11,641 ) (35,991 ) (24,038 )
Other income (expense), net:
Interest income 241 37 425 58
Interest expense (2,236 ) (767 ) (4,007 ) (1,451 )
Change in fair value of 2023 derivative (10,166 ) (15,013 )
Other expense   (271 )   (3 )   (183 )   (16 )
Total other expense, net   (12,432 )   (733 )   (18,778 )   (1,409 )
 
Net loss (32,496 ) (12,374 ) (54,769 ) (25,447 )
Total comprehensive loss $ (32,496 ) $ (12,374 ) $ (54,769 ) $ (25,447 )
 
Basic and diluted net loss per common share $ (0.23 ) $ (0.12 ) $ (0.40 ) $ (0.26 )
Basic and diluted weighted-average shares outstanding   138,767,873     103,689,994     137,923,135     98,825,088  

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Alcoa Corporation Takes Additional Actions on U.S. Pension and Other Postemployment Benefit Obligations

PITTSBURGH–()–Alcoa Corporation (NYSE: AA), a global leader in bauxite, alumina, and aluminum products, announced today the signing of a group annuity contract to transfer assets and related obligations of defined benefit pension plans for certain U.S. retirees and beneficiaries.

The Company also has made a discretionary contribution of $100 million to further fund its U.S. defined benefit pension plans.

Both the annuitization and the discretionary payment reduce the risk to the Company associated with the volatility of its pension obligations and align with Alcoa’s strategic priority to strengthen the balance sheet.

As part of the annuity contract, approximately $290 million in obligations and related assets will be transferred later this month to Athene Annuity and Life Company, a subsidiary of Athene Holding, Ltd. (NYSE: ATH).

Athene, through its subsidiaries, has more than 800,000 policyholders and is rated “A” from A.M. Best and “A-” from both Standard and Poor’s Global Ratings and Fitch Ratings with $114.8 billion in assets as of June 30, 2018. It will assume benefit payments for approximately 10,500 participants. Those payments will begin in October of 2018; participants will not see any change in the amount of their benefits.

Separately, Alcoa is notifying certain U.S. salaried retirees that the Company will no longer provide retiree life insurance, effective September 1, 2018. As part of this change, Alcoa will make a one-time transition payment to the affected retirees totaling approximately $25 million.

In connection with both the annuity transaction and the elimination of retiree life insurance, Alcoa will record an estimated non-cash net settlement charge of $184 million (pre- and after-tax), or $0.98 per share, in the third quarter of 2018.

On July 18, 2018, Alcoa reported that its net liability for pension and other postemployment benefits (OPEB) was $2.7 billion as of June 30, 2018, down from $3.5 billion at year end 2017. Today’s announced actions will further reduce the net pension and OPEB liability by approximately $175 million, before remeasurements for affected plans, and will be reflected in the Company’s third quarter 2018 financial results.

The year-to-date reduction in the referenced net liability reflects several other actions taken in 2018, including the $500 million in debt proceeds used to make discretionary contributions to U.S. defined benefit pension plans, the $105 million for additional Canadian pension contributions, and other actions related to pension and other postemployment benefits.

Dissemination of Company Information

Alcoa Corporation intends to make future announcements regarding company developments and financial performance through its website at www.alcoa.com.

About Alcoa Corporation

Alcoa is a global industry leader in bauxite, alumina, and aluminum products, built on a foundation of strong values and operating excellence dating back nearly 130 years to the world-changing discovery that made aluminum an affordable and vital part of modern life. Since developing the aluminum industry, and throughout our history, our talented Alcoans have followed on with breakthrough innovations and best practices that have led to efficiency, safety, sustainability, and stronger communities wherever we operate.

Forward-Looking Statements

This press release contains statements that relate to future events and expectations and as such constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements include those containing such words as “anticipates,” “believes,” “could,” “estimates,” “expects,” “forecasts,” “intends,” “may,” “outlook,” “plans,” “projects,” “seeks,” “sees,” “should,” “targets,” “will,” “would,” or other words of similar meaning. All statements that reflect the Company’s expectations, assumptions or projections about the future, other than statements of historical fact, are forward-looking statements. Forward-looking statements are not guarantees of future performance and are subject to known and unknown risks, uncertainties, and changes in circumstances that are difficult to predict. Although the Company believes that the expectations reflected in any forward-looking statements are based on reasonable assumptions, it can give no assurance that these expectations will be attained and it is possible that actual results may differ materially from those indicated by these forward-looking statements due to a variety of risks and uncertainties. Additional information concerning factors that could cause actual results to differ materially from those projected in the forward-looking statements is contained in the Company’s filings with the U.S. Securities and Exchange Commission. The Company disclaims any obligation to update publicly any forward-looking statements, whether in response to new information, future events or otherwise, except as required by applicable law.

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Pianist, Kathy Robert’s Summer Concert Bringing the Audience To their Feet at the Scientology Info Center

CLEARWATER, Fla., Aug. 08, 2018 (GLOBE NEWSWIRE) — In celebration of Summer the Scientology Information Center hosted a Piano Concert with performing artist Kathy Robert for over 30 guests at the Historic Clearwater Building in downtown Clearwater on Sunday, July 29th.

Kathy Roberts has entertained an average of 6 days a week at the Bon Appetit restaurant for the past 16 years. Roberts has been playing piano for over 40 years and arranged her first piano song at the age of 5. Roberts considers the piano “an old friend” whom she “never gets tired of.”
       
At Sunday’s concert, a first of a series this year, Roberts performed a wide array of songs from artists such as: Beethoven, Nat King Cole, Stevie Wonder, Led Zeppelin, Clearwater Credence Revival, John Legend, Ed Sheeran and more. She also played several requests including Duke Ellington’s Harlem Nocturne and Gershwin’s Rhapsody in Blue which brought the audience to its feet.

“Wow that was really beautiful! I didn’t think anyone could play Rhapsody in Blue without horns – but she sure did, what an amazing performance,” said Glenn, concert attendee.

“Kathy shares her excitement and joy for the piano with her audience when she plays. She’s vivacious and brings their spirits up,” said Amber Skjelset – Center Manager and event organizer. “The Center brings the community together, provides events that people enjoy and answers questions about Scientology for those who are curious. Since our opening we have hosted over 150 events like these.”

The Center regularly hosts free concerts for the community. The upcoming concerts are:

Sept 8th – Joanie Sigal concert
Sept 23rd – Kathy Roberts Piano Concert

The 100 year-old historic Clearwater Building was purchased by the Church of Scientology in 1975. Built in 1918, the property originally served as the Bank of Clearwater. On July 15th, 2015, it was re-opened to the public as the Scientology Information Center.

For more information about the Scientology Information Center or to attend upcoming event, please contact Amber Skjelset, the Scientology Info Center Manager, at (727) 467-6966 or by e-mail: amber@cos.flag.org

The Scientology Information Center:

The Scientology Information Center, located in the century-old Clearwater Building in downtown Clearwater, opened on July 11, 2015, and currently houses a gallery of audiovisual displays with some 400 videos. The Center is open to all and provides a self-guided tour showing basic Scientology beliefs, Churches around the world, ongoing social programs and the life of L. Ron Hubbard, Scientology’s founder. The Center offers tours to the broad public and civic leaders; holds concerts, theatrical performances and receptions for the community; and opens up the use of its conference room to social, civic and non-profit groups.

For more information on Scientology, visit www.scientology.org or the Scientology Network on DirecTV channel 320, or streaming at www.scientology.tv or apps at appleTV, fireTV and ROKU.

Contact Amber Skjelset
(727) 467-6966

A photo accompanying this announcement is available at http://www.globenewswire.com/NewsRoom/AttachmentNg/37d4965f-8256-48ce-95c2-c400d1a50c9f

 

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J. Alexander’s Holdings, Inc. Reports Results For Second Quarter Ended July 1, 2018

NASHVILLE, Tenn.–()–J. Alexander’s Holdings, Inc. (NYSE: JAX) (the Company), owner and operator of a collection of restaurants which includes J. Alexander’s, Redlands Grill, Stoney River Steakhouse and Grill and selected other restaurants, today reported financial results for the second quarter ended July 1, 2018.

Second Quarter 2018 Highlights Compared to the Second Quarter of 2017

  • Net sales were $60,420,000, an increase of 3.8% from $58,216,000 achieved in the second quarter of 2017.
  • For the J. Alexander’s/Grill restaurants, average weekly same store sales per restaurant (1) were $116,200, an increase of 1.9% from $114,000 reported in the second quarter of 2017. For the Stoney River Steakhouse and Grill restaurants, average weekly same store sales were $78,900, up 6.2% from $74,300 recorded in the second quarter of 2017.
  • Pre-opening expense totaled $504,000 for the quarter ended July 1, 2018 compared to $10,000 during the second quarter of 2017, with the increase attributable to the timing of new restaurant openings.
  • Income from continuing operations before income taxes was $2,203,000 for the second quarter of 2018 compared to income from continuing operations before income taxes of $42,000 for the corresponding quarter of 2017. The sharp increase in results for the most recent quarter was primarily due to a favorable swing in the quarterly valuation of the Black Knight Advisory Services, LLC (Black Knight) profits interest grant. For the second quarter of 2018, the Company realized income of $53,000 compared to a profits interest expense of $1,714,000 in the same quarter a year ago. The Black Knight profits interest grant was issued in October 2015 and requires a quarterly valuation. The non-cash expense (income) associated with this grant is being recognized over a three‐year vesting period which runs through October 6, 2018. It is calculated each quarter based upon the most recent valuation performed using the Black‐Scholes valuation model, with any cumulative change associated with the most recent valuation impacting the most recent quarter. Primarily due to the $11.15 per share closing price of the Company’s stock at the end of the most recent quarter, the grant’s valuation decreased from $6,684,000 at April 1, 2018 to $6,018,000 at July 1, 2018. The Company also incurred consulting fees of $205,000 under its management agreement with Black Knight for the most recent quarter compared to $174,000 in the second quarter of 2017.
  • Net income for the second quarter of 2018 was $2,105,000, up from net income of $186,000 recorded for the comparable quarter of 2017.
  • Basic and diluted earnings per share were $0.14 for the second quarter of 2018 compared to $0.01 for the second quarter of 2017.
  • Adjusted EBITDA(2) rose 9.9% from $5,465,000 in the second quarter of 2017 to $6,007,000 in the second quarter of 2018.
  • Restaurant Operating Profit Margin (3) as a percent of net saleswas 12.5% in the most recent quarter compared to 12.1% for the second quarter of 2017.
  • Cost of sales as a percentage of net sales in the second quarter of 2018 was 32.2% compared to 33.0% in the corresponding quarter of 2017.

(1)Average weekly same store sales per restaurant is computed by dividing total restaurant same store sales for the period by the total number of days all same store restaurants were open for the period to obtain a daily sales average. The daily same store sales average is then multiplied by seven to arrive at average weekly same store sales per restaurant. Days on which restaurants are closed for business for any reason other than scheduled closures on Thanksgiving and Christmas are excluded from this calculation. Sales and sales days used in this calculation and amounts of other “same store” figures in this release include only those for restaurants in operation at the end of the period which have been open for more than 18 months. Revenue associated with reduction in liabilities for gift cards, which is recognized in proportion to guest redemptions based on historical redemption rates and commonly referred to as gift card breakage, is not included in the calculation of average weekly same store sales per restaurant. Average weekly same store sales is computed from sales amounts that have been determined in accordance with U.S. generally accepted accounting principles (GAAP).

(2)Please refer to the financial information accompanying this release for our definition of and a reconciliation of the non‐GAAP financial measure Adjusted EBITDA to net income. Management uses Adjusted EBITDA to evaluate operating performance and the effectiveness of its business strategies.

(3)“Restaurant Operating Profit Margin” is the ratio of Restaurant Operating Profit, a non‐GAAP financial measure, to net sales. Please refer to the financial information accompanying this release for our definition of and a reconciliation of the non‐GAAP financial measure Restaurant Operating Profit to Operating Income. Management uses Restaurant Operating Profit to measure operating performance at the restaurant level.

For the second quarter of 2018, the Company’s restaurant labor and related costs as a percentage of net sales were 31.1% compared to 30.8% of net sales in the second quarter of 2017. Other restaurant operating expenses were 19.8% of net sales in both the second quarter of 2018 and second quarter of 2017.

The Company’s operating income for the second quarter of 2018 was $2,334,000 compared to operating income of $215,000 for the second quarter of 2017.

The average weekly guest counts within the same store base of the Company’s J. Alexander’s/Grills collection were down 0.6% in the second quarter of 2018 compared to the second quarter of the prior year. Guest counts within the same store base at the Company’s Stoney River Steakhouse and Grill restaurants were up 6.2% for the second quarter of 2018 over the second quarter of 2017. With respect to average guest checks, which include alcoholic beverage sales, the average guest check within the J. Alexander’s/Grills same store base of restaurants during the second quarter of 2018 was $31.60, up 2.6% from $30.80 during the second quarter of 2017. The average guest check within the same store base of Stoney River Steakhouse and Grill restaurants reached $42.27 during the second quarter of 2018, up 0.1% from $42.23 recorded in the corresponding quarter of 2017.

On a consolidated basis, average weekly guest counts within the Company’s J. Alexander’s/Grills locations in the second quarter of 2018 were down 2.0% from the second quarter of 2017, while average weekly guest counts within the Company’s Stoney River Steakhouse and Grill locations increased 7.8% for the second quarter of 2018 compared to the second quarter of 2017. Average guest checks for the combined J. Alexander’s/Grills concepts rose 2.7% from $30.85 in the second quarter of 2017 to $31.69 for the second quarter of 2018. Average guest checks for the Stoney River Steakhouse and Grill restaurants decreased 0.6% from $42.17 in the second quarter of 2017 to $41.90 in the second quarter of 2018.

The effect of menu pricing for the second quarter of 2018 was estimated to be a 1.8% increase for the J. Alexander’s/Grills restaurants and a 1.9% increase for the Stoney River Steakhouse and Grill restaurants compared to the corresponding quarter of 2017. Deflation in food costs for the second quarter of 2018 was estimated to total 0.9% for the J. Alexander’s/Grills restaurants, with beef costs decreasing by an estimated 4.6% compared to the second quarter of 2017. For the Stoney River Steakhouse and Grill restaurants, deflation for the second quarter of 2018 was estimated to total 3.0%, with beef costs down by approximately 7.2% from the comparable quarter of 2017.

Chief Executive Officer’s Comments

“The second quarter of 2018 again reflected increases in average weekly same store sales for both of our restaurant groups,” Lonnie J. Stout II, President and Chief Executive Officer, said. “It was a solid quarter that included improvement not only at the top line, but also in several key operating areas. We were pleased with our overall performance.”

During the second quarter, Stout said the Company continued to execute strategies allowing it to build guest loyalty in both of its restaurant collections.

“We were encouraged that guest counts at our J. Alexander’s/Grill restaurants showed improvement over the first quarter’s performance. We realize, however, that further improvement is needed in the final half of 2018 and we remain tightly focused on making certain each guest visit is an outstanding experience.” Stout noted that the modest decrease in guest counts within the Company’s J. Alexander’s/Grills group during the second quarter of 2018 was significantly influenced by three specific locations. “From time to time, we will encounter situations that impact our traditional guest traffic patterns and require us to work that much harder to recapture or replace the business. Examples include the relocation of a major corporate presence within a specific market or, for limited periods of time, competitive intrusion of a new restaurant opened within a specific market. As we analyze our same store guest traffic, excluding three specific restaurants that have been subject to events similar to these examples, our performance for the second quarter of 2018 would have reflected a slight increase instead of the 0.6% decrease previously noted.”

Stout said the recent addition of lunch and brunch at several Stoney River locations in the last quarter has positively impacted guest traffic and sales of the restaurant group, but that the primary factor influencing the increase in average weekly same store sales per restaurant was organic growth in guest counts. “This collection has continued to show stronger than anticipated momentum, including our newer restaurants.”

The Company’s cost of sales decreased in the most recent quarter due principally to falling beef prices. Restaurant operating margins also showed improvement, rising 0.4% for the quarter ended July 1, 2018 over the same quarter a year earlier.

“We remain cautiously optimistic that the beef market will continue to perform within acceptable parameters,” Stout continued. “On balance, we continue to be encouraged by the performance of our newer restaurants in both operating groups, and look forward to announcing plans for additional locations as soon as leases are executed,” he added.

Highlights for the First Six Months of 2018

For the six months ended July 1, 2018, the Company posted net sales of $122,329,000, up 3.6% from $118,038,000 recorded in the first half of 2017. Within the J. Alexander’s/Grill restaurants, average weekly same store sales per restaurant were $118,100 for the six months ended July 1, 2018, an increase of 1.0% from $116,900 achieved in the same two quarters of 2017. For the Stoney River Steakhouse and Grill restaurants, average weekly same store sales per restaurant advanced 6.1% from $76,600 in the first six months of 2017 to $81,300 in the first half of 2018.

Income from continuing operations before income taxes for the six months ended July 1, 2018 was $4,045,000, up 9.8% from $3,683,000 reported for the same two quarters a year ago.

During the first half of 2018, the Black Knight profits interest grant resulted in non-cash profits interest expense of $1,854,000, an increase of 10.6% from profits interest expense of $1,676,000 reported in the same six months of 2017. For the first six months of 2018, the Company had consulting fees of $449,000 from its management agreement with Black Knight compared to $439,000 of expense in the first half of 2017.

The Company posted net income of $3,698,000 in the first six months of 2018, up 28.9% from $2,870,000 for the same two quarters of 2017. Adjusted EBITDA for the first two quarters of 2018 totaled $14,158,000, up 8.4% from $13,066,000 recorded in the first six months of 2017. Basic earnings per share and diluted earnings per share totaled $0.25 in the first half of 2018. In the comparable two quarters of 2017, basic earnings per share totaled $0.20 while diluted earnings per share totaled $0.19. See attached “Adjusted EBITDA Reconciliation” for our definition of Adjusted EBITDA and a reconciliation to net income.

Guest counts within the same store base of restaurants decreased by 1.4% within the J. Alexander’s/Grill restaurants for the first half of 2018, and increased 7.2% within the Stoney River Steakhouse and Grill restaurants during the same two quarters. The average guest check within the same store base at the combined J. Alexander’s/Grill restaurants increased 2.5% from $30.95 for the first six months of 2017 to $31.73 for the first half of 2018, while the Stoney River average guest check decreased by 0.8% from $42.94 in the first two quarters of 2017 to $42.58 for the first half of 2018. The effect of menu price changes for the first half of 2018 was estimated to be a 1.8% increase at the J. Alexander’s/Grill locations and a 1.7% increase at the Stoney River Steakhouse and Grill restaurants compared to the first six months of 2017.

Cost of sales as a percentage of net sales for the first two quarters of 2018 was 31.6% compared to 31.9% for the first six months of 2017. The estimated effect of inflation in food costs for the first half of 2018 was 1.0% for the J. Alexander’s/Grill restaurants, with beef costs declining by approximately 1.1% compared to the same six months a year earlier. For the Stoney River Steakhouse and Grill restaurants, deflation was an estimated 0.3%, including an estimated decrease of 2.7% in beef costs compared to the first half of 2017.

Restaurant Development

During the second quarter of 2018, the Company opened a new J. Alexander’s restaurant in King of Prussia, PA, marking the Company’s entry into Pennsylvania. The Company continued construction on a new Stoney River Steakhouse and Grill in Troy, MI. This new restaurant is expected to open in the fourth quarter of 2018. The Company anticipates opening three to four new restaurants in 2019, and will announce details once leases related to such sites have been executed.

Guidance For 2018 Unchanged

Our performance outlook is based on current information as of August 8, 2018. The Company does not expect to update its 2018 guidance before next quarter’s earnings release. However, the information on which the outlook is based is subject to change, and the Company may update its full business outlook or any portion thereof at any time for any reason. Based upon current information, the guidance for the 2018 fiscal year is the same as reported on May 3, 2018.

Conference Call

The Company will hold a conference call on Thursday, August 9, 2018, at 10 a.m., Central time to discuss its financial results for the second quarter ended July 1, 2018. The conference call can be accessed live over the phone by dialing 1‐877‐407‐0789 (Toll‐Free) or 1‐201‐689‐8562 (Toll/International). To access the call via the internet, go to J. Alexander’s website at http://investor.jalexandersholdings.com or http://public.viavid.com/index.php?id=130771. A replay of the conference call will be available shortly following the conclusion of the call at http://investor.jalexandersholdings.com and http://public.viavid.com/index.php?id=130771, as well as by dialing 1‐844‐512‐2921 or 1‐412‐317‐6671 and providing the access code 13682084. The replay will be accessible through August 16, 2018 via telephone and for 30 days on the internet.

About J. Alexander’s Holdings, Inc.

J. Alexander’s Holdings, Inc. is a collection of restaurants that focus on providing high quality food, outstanding professional service and an attractive ambiance. The Company presently operates 45 restaurants in 16 states. The Company has its headquarters in Nashville, TN.

For additional information, visit www.jalexandersholdings.com.

Forward‐Looking Statements

This press release issued by J. Alexander’s Holdings, Inc. contains forward‐looking statements, which include all statements that do not relate solely to historical or current facts, such as statements regarding our expectations, intentions or strategies regarding the future. These forward‐looking statements are based on management’s beliefs, as well as assumptions made by, and information currently available to, management. Because such statements are based on expectations as to future financial and operating results and are not statements of fact, actual results may differ materially from those projected and are subject to a number of known and unknown risks and uncertainties, including the Company’s ability to maintain satisfactory guest count levels and maintain or increase sales and operating margins in its restaurants under varying economic conditions; the effect of higher commodity prices, unemployment and other economic factors on consumer demand; increases in food input costs or product shortages and the Company’s response to them; the number and timing of new restaurant openings and the Company’s ability to operate them profitably; competition within the casual dining industry and within the markets in which our restaurants are located; adverse weather conditions in regions in which the Company’s restaurants are located; factors that are under the control of third parties, including government agencies; as well as other risks and uncertainties described under the headings “Forward‐Looking Statements,” “Risk Factors” and other sections of the Company’s Annual Report on Form 10‐K filed with the Securities and Exchange Commission on March 15, 2018 and subsequent filings. The Company undertakes no obligation to update any forward‐looking statements, whether as a result of new information, future events or otherwise.

           
J. Alexander’s Holdings, Inc. and Subsidiaries
Condensed Consolidated Statements of Income
(Unaudited in thousands, except per share amounts)
Quarter Ended Six Months Ended
July 1 July 2 July 1 July 2
  2018     2017     2018     2017  
 
Net sales $ 60,420 $ 58,216 $ 122,329 $ 118,038
Costs and expenses:
Cost of sales 19,433 19,197 38,694 37,628
Restaurant labor and related costs 18,781 17,959 37,007 35,904

Depreciation and amortization of restaurant property and equipment

2,696 2,500 5,265 4,878
Other operating expenses   11,943     11,539     23,961     23,109  
Total restaurant operating expenses 52,853 51,195 104,927 101,519
Transaction and integration expenses 7 460 933 460
General and administrative expenses 4,722 6,336 11,247 11,164
Pre-opening expense   504     10     830     886  
Total operating expenses   58,086     58,001     117,937     114,029  
Operating income 2,334 215 4,392 4,009
Other income (expense):
Interest expense (186 ) (224 ) (360 ) (398 )
Other, net   55     51     13     72  
Total other expense   (131 )   (173 )   (347 )   (326 )

Income from continuing operations before income taxes

2,203 42 4,045 3,683
Income tax benefit (expense) 12 254 (126 ) (590 )
Loss from discontinued operations, net   (110 )   (110 )   (221 )   (223 )
Net income $ 2,105   $ 186   $ 3,698   $ 2,870  
 
Basic Earnings per share:
Income from continuing operations, net of tax $ 0.15 $ 0.02 $ 0.27 $ 0.21
Loss from discontinued operations, net   (0.01 )   (0.01 )   (0.02 )   (0.02 )
Basic earnings per share $ 0.14   $ 0.01   $ 0.25   $ 0.20  
 
Diluted Earnings per share:
Income from continuing operations, net of tax $ 0.15 $ 0.02 $ 0.26 $ 0.21
Loss from discontinued operations, net   (0.01 )   (0.01 )   (0.01 )   (0.02 )
Diluted earnings per share $ 0.14   $ 0.01   $ 0.25   $ 0.19  
 
Weighted average common shares outstanding:
Basic 14,695 14,695 14,695 14,695
Diluted 14,901 14,905 14,869 14,800
     
J. Alexander’s Holdings, Inc. and Subsidiaries
Condensed Consolidated Statements of Income Data as a Percentage of Net Sales and
Other Financial and Performance Data (Unaudited)
  Quarter Ended Six Months Ended
July 1 July 2 July 1 July 2
  2018     2017     2018     2017  
Net sales 100.0 % 100.0 % 100.0 % 100.0 %
Costs and expenses:
Cost of sales 32.2 33.0 31.6 31.9
Restaurant labor and related costs 31.1 30.8 30.3 30.4

Depreciation and amortization of restaurant property and equipment

4.5 4.3 4.3 4.1
Other operating expenses   19.8     19.8     19.6     19.6  
Total restaurant operating expenses 87.5 87.9 85.8 86.0
Transaction and integration expenses 0.0 0.8 0.8 0.4
General and administrative expenses 7.8 10.9 9.2 9.5
Pre-opening expense   0.8     0.0     0.7     0.8  
Total operating expenses   96.1     99.6     96.4     96.6  
Operating income 3.9 0.4 3.6 3.4
Other income (expense):
Interest expense (0.3 ) (0.4 ) (0.3 ) (0.3 )
Other, net   0.1     0.1     0.0     0.1  
Total other expense   (0.2 )   (0.3 )   (0.3 )   (0.3 )

Income from continuing operations before income taxes

3.6 0.1 3.3 3.1
Income tax benefit (expense) 0.0 0.4 (0.1 ) (0.5 )
Loss from discontinued operations, net   (0.2 )   (0.2 )   (0.2 )   (0.2 )
Net income   3.5   %   0.3   %   3.0   %   2.4   %
 
Note: Certain percentage totals do not sum due to rounding.
 
Other Financial and Performance Data:
 
Adjusted EBITDA(1) $ 6,007 $ 5,465 $ 14,158 $ 13,066
As a % of net sales 9.9 % 9.4 % 11.6 % 11.1 %
 
Average weekly sales per restaurant:
 
J. Alexander’s Restaurant/ Grills $ 113,200 $ 112,600 $ 115,700 $ 115,400
Percent change 0.5 % 0.3 %
 
Stoney River Steakhouse and Grill $ 78,400 $ 73,100 $ 80,500 $ 75,400
Percent change 7.3 % 6.8 %
 
Average weekly same store sales per restaurant:
 
J. Alexander’s Restaurant/ Grills $ 116,200 $ 114,000 $ 118,100 $ 116,900
Percent change 1.9 % 1.0 %
 
Stoney River Steakhouse and Grill $ 78,900 $ 74,300 $ 81,300 $ 76,600
Percent change 6.2 % 6.1 %

(1) See definitions and reconciliation attached.

   
J. Alexander’s Holdings, Inc. and Subsidiaries
Condensed Consolidated Balance Sheets
(Unaudited in thousands)
July 1 December 31
  2018   2017
Assets
Current assets:
Cash and cash equivalents $ 7,259 $ 10,711
Other current assets   7,563   8,019
Total current assets 14,822 18,730
 
Other assets 5,776 6,183
Property and equipment, net 107,033 103,615
Goodwill 15,737 15,737
Tradename and other indefinite-lived intangibles 25,631 25,202
Deferred Charges, net   167   184
$ 169,166 $ 169,651
 
Liabilities and Stockholders’ Equity
 
Current liabilities $ 26,304 $ 30,027

Long term debt, net of portion classified as current and unamortized deferred loan costs

8,322 10,781
Deferred compensation obligations 6,592 6,451
Deferred income taxes 1,193 2,075
Other long-term liabilities 6,779 6,456
Stockholders’ equity   119,976   113,861
$ 169,166 $ 169,651
     
J. Alexander’s Holdings, Inc. and Subsidiaries
Condensed Consolidated Statements of Cash Flows
(Unaudited in thousands) Six Months Ended
  July 1 July 2
  2018     2017  
 
Cash flows from operating activities:
Net income $ 3,698 $ 2,870
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization of property and equipment 5,411 5,021
Equity-based compensation expense 2,383 2,308
Other, net (282 ) 52
Changes in assets and liabilities, net   (2,631 )   (2,147 )
Net cash provided by operating activities 8,579 8,104
 
Cash flows from investing activities:
Purchase of property and equipment (9,019 ) (6,597 )
Other investing activities   (512 )   (273 )
Net cash used in investing activities (9,531 ) (6,870 )
 
Cash flows from financing activities:
Payments on long-term debt and obligations under capital leases (2,500 ) (1,111 )
Other financing activities       (2 )
Net cash used in financing activities   (2,500 )   (1,113 )
Increase (decrease) in cash and cash equivalents (3,452 ) 121
Cash and cash equivalents at beginning of period   10,711     6,632  
Cash and cash equivalents at end of period $ 7,259   $ 6,753  
 
Supplemental disclosures:
Property and equipment obligations accrued at beginning of period $ 1,854 $ 2,587
Property and equipment obligations accrued at end of period 1,760 969
Cash paid for interest 402 395
Cash paid for income taxes 234 1,838
       
J. Alexander’s Holdings, Inc. and Subsidiaries
Non-GAAP Financial Measures and Reconciliations
(Unaudited in thousands)
 
Non-GAAP Financial Measures

Within this press release, we present the following non-GAAP financial measures which we believe are useful to investors as key measures of our operating performance:

 

We define Adjusted Earnings Before Interest, Taxes, Depreciation and Amortization, or “Adjusted EBITDA”, as net income (loss) before interest expense, income tax expense (benefit), depreciation and amortization, and adding asset impairment charges and restaurant closing costs, loss on disposals of fixed assets, transaction and integration costs, non-cash compensation, loss from discontinued operations, gain on debt extinguishment and pre-opening costs.

 

Adjusted EBITDA is a non-GAAP financial measure that we believe is useful to investors because it provides information regarding certain financial and business trends relating to our operating results and excludes certain items that are not indicative of our operations. Adjusted EBITDA does not fully consider the impact of investing or financing transactions as it specifically excludes depreciation and interest charges, which should also be considered in the overall evaluation of our results of operations.

 
We define “Restaurant Operating Profit” as net sales less restaurant operating costs, which are cost of sales, restaurant labor and related costs, depreciation and amortization of restaurant property and equipment, and other operating expenses. Restaurant Operating Profit is a non-GAAP financial measure that we believe is useful to investors because it provides a measure of profitability for evaluation that does not reflect corporate overhead and other non-operating or unusual costs. “Restaurant Operating Profit Margin” is the ratio of Restaurant Operating Profit to net sales.
 
Our management uses Adjusted EBITDA and Restaurant Operating Profit to evaluate the effectiveness of our business strategies. We caution investors that amounts presented in accordance with the above definitions of Adjusted EBITDA or Restaurant Operating Profit may not be comparable to similar measures disclosed by other companies, because not all companies calculate these non-GAAP financial measures in the same manner. Adjusted EBITDA and Restaurant Operating Profit should not be assessed in isolation from, or construed as a substitute for, net income or other measures presented in accordance with GAAP.
 
A reconciliation of these non-GAAP financial measures to the closest GAAP measure is set forth in the following tables:
 
Quarter Ended Six Months Ended
July 1 July 2 July 1 July 2
2018   2017   2018 2017
 
Net income $ 2,105 $ 186 $ 3,698 $ 2,870
 
Income tax (benefit) expense (12 ) (254 ) 126 590
Interest expense 186 224 360 398
Depreciation and amortization   2,780     2,586     5,433   5,048
 
EBITDA 5,059 2,742 9,617 8,906
 
Transaction and integration expenses 7 460 933 460
Loss on disposal of fixed assets 38 54 96 88

Asset impairment charges and restaurant closing costs

12 27 10 133
Non-cash compensation 277 2,062 2,451 2,370
Loss from discontinued operations, net 110 110 221 223
Pre-opening expense   504     10     830   886
 
Adjusted EBITDA $ 6,007   $ 5,465   $ 14,158 $ 13,066
 
 
Note: For purposes of computing Adjusted EBITDA, the $(53) and $1,714 for the quarters ended July 1, 2018 and July 2, 2017, respectively, and $1,854 and $1,676 for the six months ended July 1, 2018 and July 2, 2017, respectively, in non-cash compensation associated with a profits interest grant issued to Black Knight Advisory Services, LLC (“BKAS”) on October 6, 2015 has been included in “Non-cash compensation” above. Additional expenses associated with the Company’s management agreement with BKAS totaling $205 and $174 for the quarters ended July 1, 2018 and July 2, 2017, respectively, and totaling $449 and $439 for the six months ended July 1, 2018 and July 2, 2017, respectively, are included in general and administrative expenses and have not been included in the reconciliation set forth above.
                       
J. Alexander’s Holdings, Inc. and Subsidiaries
Non-GAAP Financial Measures and Reconciliations
(Unaudited in thousands)
        Quarter Ended Six Months Ended
July 1 July 2 July 1 July 2
  2018   2017 2018   2017
Amount    

Percent of Net

Sales

Amount    

Percent of Net

Sales

Amount    

Percent of Net

Sales

Amount    

Percent of Net

Sales

   
Operating income $ 2,334 3.9 % $ 215 0.4 % $ 4,392 3.6 % $ 4,009 3.4 %
 
General and administrative expenses 4,722 7.8 % 6,336 10.9 % 11,247 9.2 % 11,164 9.5 %
Transaction and integration expenses 7 0.0 % 460 0.8 % 933 0.8 % 460 0.4 %
Pre-opening expense   504     0.8 %   10     0.0 %   830     0.7 %   886     0.8 %
 
Restaurant Operating Profit $ 7,567     12.5 % $ 7,021     12.1 % $ 17,402     14.2 % $ 16,519     14.0 %

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$564 Million Portable Spectrum Analyzer Market – Forecasts from 2018 to 2023 – ResearchAndMarkets.com

DUBLIN–()–The “Portable Spectrum Analyzer Market – Forecasts from 2018 to 2023” report has been added to ResearchAndMarkets.com‘s offering.

The portable spectrum analyzer market is projected to grow at a CAGR of 9.68% to reach US$564.979 million by 2023, from US$324.531 million in 2017.

Rapid technological advancements in wireless technology coupled with increasing investment in application areas such as automotive, aerospace and defense is boosting the global portable spectrum analyzer market growth. An increase in the number of outside applications for is driving the demand for portable spectrum analyzers globally. Advancements in computer and battery technology is further contributing to the market growth.

Major industry players profiled as part of the report are Advantest Corporation, LP Technologies, and Good Will Instruments Co.,Ltd. among others.

Segmentation:

The portable spectrum analyzer market has been analyzed through following segments:

By Network Technology

  • Wired
  • Wireless

By Type

  • Swept Tuned Analyzer
  • Real Time Analyzer
  • FFT Analyzer

By End-User Industry

  • Automotive
  • Semiconductor and Electronics
  • IT and Telecommunication
  • Industrial
  • Aerospace and Defense
  • Others

Companies Mentioned

  • Advantest Corporation
  • Viavi Solutions Inc.
  • Anritsu Corporation
  • Good Will Instruments Co., Ltd.
  • LP Technologies

For more information about this report visit https://www.researchandmarkets.com/research/z6q5tt/564_million?w=4

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U.S. Cheese Market 2018-2025: Analysis by Source, Type, Product, Distribution Channel and Label Type – ResearchAndMarkets.com

DUBLIN–()–The “U.S. Cheese Market by Source, Type, Product, Distribution Channel and Label Type – Opportunity Analysis and Industry Forecast, 2017-2025” report has been added to ResearchAndMarkets.com‘s offering.

The U.S. cheese market size was valued at $32,291 million in 2017, and is projected to reach $40,467 million by 2025, growing at a CAGR of 2.8% from 2018 to 2025.

Increase in fast food consumption and awareness among people about the health benefits of cheese increases the demand for cheese products. In addition, growth in popularity of European food culture in the U.S. majorly drive the growth of the cheese market.

Based on product, the market is segmented into mozzarella, cheddar, feta, parmesan, Roquefort, and others. Others include Camembert, Ricotta, and Brie. In 2017, cheddar cheese experienced the highest growth rate, the cheddar cheese market share is valued to be more than one-third of the U.S. cheese market in terms of volume.

Key Findings

  • The cheddar cheese market is expected to grow at the high CAGR of 3.7%, in terms of revenue, during the forecast period.
  • The hypermarket and food specialty stores segments are anticipated to be the fastest developing B2C distribution channels, in terms of value, growing at a CAGR of 2.7% & 3.7% respectively, from 2018 to 2025.
  • Private label companies are expected to witness the highest growth rate at a CAGR of 3.1% in terms of value.
  • The cow milk segment as a source occupied more than four-fifths share in the U.S. cheese market in 2017 in terms of value and is anticipated to witness CAGR of 2.9% during the forecast period.

Companies Profiled

  • Arla Foods amba
  • Associated Milk Producers Inc.
  • Fonterra Co-operative Group
  • Groupe Lactalis
  • Savencia SA
  • Saputo Inc.
  • The Kraft Heinz Company
  • Almarai
  • Cady Cheese Factory
  • Bel Group
  • Leprino Foods Company, Inc.
  • Glanbia Food Inc.
  • Pacific Cheese Co. Inc.
  • Hilmar Cheese Company, Inc.
  • Great Lakes Cheese Company, Inc.
  • Darigold, Inc.
  • Masters Gallery Foods

For more information about this report visit https://www.researchandmarkets.com/research/zm567w/u_s_cheese?w=4

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Ring Energy Announces Second Quarter and Six Month 2018 Financial and Operational Results

MIDLAND, Texas–()–Ring Energy, Inc. (NYSE American: REI) (“Ring”) (“Company”) announced today financial results for the three months and six months ended June 30, 2018. For the three month period ended June 30, 2018, Ring reported oil and gas revenues of $29,924,883, compared to revenues of $14,503,309 for the quarter ended June 30, 2017. For the six months ended June 30, 2018, the Company reported oil and gas revenues of $59,816,274, compared to $26,747,102 for the six months ended June 30, 2017.

For the three months ended June 30, 2018, Ring reported net income of $4,719,806, or $0.08 per diluted share. For the six months ended June 30, 2018, the Company reported net income of $10,385,440, or $0.17 per diluted share. This compares to net income of $1,910,763, or $0.04 per fully diluted share for the three months ended June 30, 2017, and net income of $3,190,044, or $0.06 per fully diluted share for the six month period ended June 30, 2017.

For the three months ended June 30, 2018, the net income included a pre-tax “Unrealized Loss on Derivatives” of $1,099,273. Excluding this item, the net income per diluted share would have been $0.09. For the six months ended June 30, 2018, the net income included a pre-tax “Unrealized Loss on Derivatives” of $1,889,974. Excluding this item, the net income per diluted share would have been $0.20.

For the three months ended June 30, 2018, oil sales volume increased to 469,446 barrels, compared to 306,402 barrels for the same period in 2017, a 53.2% increase, and gas sales volume increased to 319,056 MCF (thousand cubic feet), compared to 190,044 MCF for the same period in 2017, a 67.8% increase. On a barrel of oil equivalent (“BOE”) basis for the three months ended June 30, 2018, production sales increased to 522,622 BOEs, compared to 338,076 BOEs for the same period in 2017, a 54.5% increase, and 514,869 BOEs for the first quarter of 2018, a 1.5% increase. For the six months ended June 30, 2018, oil sales volume increased to 949,310 barrels, compared to 546,662 barrels for the same period in 2017, a 73.6% increase, and gas sales volume increased to 529,087 MCF, compared to 358,393 MCF for the same period in 2017, a 47.6% increase. On a BOE basis for the six months ended June 30, 2018, production sales increased to 1,037,491 BOEs, compared to 606,394 BOEs for the same period in 2017, a 71.1% increase.

The average commodity prices received by the Company were $61.70 per barrel of oil and $3.02 per MCF of natural gas for the quarter ended June 30, 2018, compared to $45.34 per barrel of oil and $3.22 per MCF of natural gas for the quarter ended June 30, 2017. The average prices received for the six months ended June 30, 2018 were $61.21 per barrel of oil and $3.24 per MCF of natural gas, compared to $46.81 per barrel of oil and $3.23 per MCF of natural gas for the six month period ended June 30, 2017.

Lease operating expenses, including production taxes, for the three months ended June 30, 2018 were $15.43 per BOE, a 24% increase from the prior year. Depreciation, depletion and amortization costs, including accretion, increased 13.5% to $17.82 per BOE. General and administrative costs, which included a $1,002,348 charge for stock based compensation, were $6.03 per BOE, a 14% decrease. For the six months ended June 30, 2018, lease operating expenses, including production taxes, were $14.72 per BOE, a 19% increase. Depreciation, depletion and amortization costs, including accretion, were $17.32 per BOE, a 17.7% increase, and general and administrative costs, which included a $2,083,547 charge for stock based compensation, were $6.01 per BOE, a 30% decrease.

Cash provided by operating activities, before changes in working capital, for the three and six months ended June 30, 2018 was $17,389,257, or $0.28 per fully diluted share, and $36,557,519, or $0.61 per fully diluted share, compared to $8,791,004 and $16,012,940, or $0.17 and $0.32 per fully diluted share for the same periods in 2017. Earnings before interest, taxes, depletion and other non-cash items (“Adjusted EBITDA”) for the three and six months ended June 30, 2018 was $17,306,266, or $0.28 per fully diluted share, and $36,510,058, or $0.61 per fully diluted share, compared to $8,743,693 and $15,848,950, or $0.17 and $0.31 in 2017. (See accompanying table for a reconciliation of net income to adjusted EBITDA).

On June 20, 2018, the Company announced it had increased the borrowing base on its $500 million senior secured credit facility from $60 million to $175 million. There was no outstanding debt on the Company’s $500 million senior secured credit facility at June 30, 2018.

Mr. Kelly Hoffman, the Company’s Chief Executive Officer, commented, “We resolved a couple of minor drilling and production delays early in the quarter and have seen our production continue to grow, exceeding 6,600 BOEs per day by the end of June. With the continued success of our horizontal drilling and development program and the positive results from both the North Gaines and Brushy Canyon wells, that growth will not only continue but accelerate, moving us closer to our goal of cash flow positive by the end of the year. We continue to see many acquisition opportunities in both the Central Basin Platform and Delaware Basin. We have increased our borrowing base to $175 million on our senior secured credit facility and will continue to look for opportunities that will be immediately accretive to the Company and its shareholders.”

Non-GAAP Financial Measures:

Net income for the three months ended June 30, 2018 includes a non-cash charge for stock based compensation of $1,002,348. Net income for the six months ended June 30, 2018 includes a non-cash charge for stock based compensation of $2,083,547. Excluding such items, the Company’s net loss would have been $0.09 per diluted share for the three months ended June 30, 2018, and net earnings of $0.20 for the six months ended June 30, 2018. The Company believes results excluding these items are more comparable to estimates provided by security analysts and, therefore, are useful in evaluating operational trends of the Company and its performance, compared to other similarly situated oil and gas producing companies.

About Ring Energy, Inc.

Ring Energy, Inc. is an oil and gas exploration, development and production company with current operations in Texas.
www.ringenergy.com

Safe Harbor Statement

This release contains forward-looking statements within the meaning of the “safe-harbor” provisions of the Private Securities Litigation Reform Act of 1995 that involve a wide variety of risks and uncertainties, including, without limitations, statements with respect to the Company’s strategy and prospects. Such statements are subject to certain risks and uncertainties which are disclosed in the Company’s reports filed with the SEC, including its Form 10-K for the fiscal year ended December 31, 2017, its Form 10-Q for the quarter ended June 30, 2018 and its other filings with the SEC. Readers and investors are cautioned that the Company’s actual results may differ materially from those described in the forward-looking statements due to a number of factors, including, but not limited to, the Company’s ability to acquire productive oil and/or gas properties or to successfully drill and complete oil and/or gas wells on such properties, general economic conditions both domestically and abroad, and the conduct of business by the Company, and other factors that may be more fully described in additional documents set forth by the Company.

             
RING ENERGY, INC.
STATEMENTS OF OPERATIONS
 
Three Months Ended Six Months Ended

June 30,

June 30,

2018

2017

2018

2017

 
Oil and Gas Revenues $ 29,924,883       $ 14,503,309   $ 59,816,274       $ 26,747,102  
 
Costs and Operating Expenses .
Oil and gas production costs 6,638,313 3,514,375 12,420,223 6,219,746
Oil and gas production taxes 1,428,995 691,174 2,854,877 1,274,438
Depreciation, depletion and amortization 9,144,115 5,136,426 17,645,494 8,610,445
Asset retirement obligation accretion 164,670 173,573 325,790 310,749
General and administrative expense   3,151,231         2,366,149     6,237,211         5,207,260  
 
Total Costs and Operating Expenses   20,527,324         11,881,697     39,483,595         21,622,638  
 
Income from Operations   9,397,559         2,621,612         20,332,679         5,124,464  
 
Other Income (Expense)
Interest Income 82,991 47,311 91,944 163,990
Interest Expense (44,483 )
Realized loss on derivatives (2,402,426 ) (3,877,452 )
Unrealized loss on change in fair value of derivatives   (1,099,273 )               (1,889,974 )        
 
Net Other Income (Expense)   (3,418,708 )       47,311         (5,719,965 )       163,990  
 
Income before Tax Provision 5,978,851 2,668,923 14,612,714 5,288,454
 
Provision for Income Taxes   (1,259,045 )       (758,160 )   (4,227,274 )       (2,098,410 )
 
Net Income $ 4,719,806       $ 1,910,763   $ 10,385,440       $ 3,190,044  
 
Basic Earnings Per Common Share $ 0.08 $ 0.04 $ 0.18 $ 0.06
Diluted Earnings Per Common Share $ 0.08 $ 0.04 $ 0.17 $ 0.06
 
 
Basic Weighted-Average Common Shares Outstanding 60,388,029 49,156,895 58,412,825 49,135,929
Diluted Weighted-Average Common Shares Outstanding 61,964,010 50,474,397 59,967,309 50,434,490
 
         
COMPARATIVE OPERATING STATISTICS
   
Three Months Ended June 30,
2018 2017 Change
 
Net Sales – BOE per day 5,743 3,715 55 %
Per BOE:
Average Sales Price $ 57.26 $ 42.90 33 %
 
Lease Operating Expenses 12.70 10.40 22 %
Production Taxes 2.73 2.04 34 %
DD&A 17.50 15.19 15 %
Accretion 0.32 0.51 -37 %
General & Administrative Expenses 6.03 7.00 -14 %
 
Six Months Ended June 30,
2018 2017 Change
 
Net Sales – BOE per day 5,732 3,350 71 %
Per BOE:
Average Sales price $ 57.65 $ 44.11 31 %
 
Lease Operating Expenses 11.97 10.26 17 %
Production Taxes 2.75 2.10 31 %
DD&A 17.01 14.20 20 %
Accretion 0.31 0.51 -39 %
General & Administrative Expenses 6.01 8.59 -30 %
 
             
RING ENERGY, INC.
BALANCE SHEET
 
June 30,

 

December 31,

2018

2017

 
ASSETS
Current Assets
Cash $ 13,431,146 $ 15,006,581
Accounts receivable 11,344,504 12,833,883
Joint interest billing receivable 1,331,682 1,054,022
Prepaid expenses   437,733     229,438  
Total Current Assets   26,545,065     29,123,924  
Property and Equipment
Oil and natural gas properties subject to amortization 547,069,209 433,591,134

Fixed assets subject to depreciation

  1,465,551     1,884,818  
Total Property and Equipment 548,534,760 435,475,952
Accumulated depreciation, depletion and amortization   (79,196,695 )   (61,864,932 )
Net Property and Equipment   469,338,065     373,611,020  
Deferred Income Taxes 7,004,926 11,232,200
Deferred Financing Costs   565,415     135,342  
Total Assets $ 503,453,471   $ 414,102,486  
 
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current Liabilities
Accounts payable $ 36,887,834 $ 44,475,163
Derivative liabilities   5,858,260     3,968,286  
Total Current Liabilities   42,746,094     48,443,449  
 
Asset retirement obligations   9,815,977     9,055,697  
Total Liabilities   52,562,071     57,499,146  
 
Stockholders’ Equity

Preferred stock – $0.001 par value; 50,000,000 shares authorized; no shares issued or outstanding

Common stock – $0.001 par value; 150,000,000 shares authorized; 60,388,029 shares and 54,224,029 shares issued and outstanding, respectively

60,388 54,224
Additional paid-in capital 481,801,225 397,904,769
Accumulated deficit   (30,970,213 )   (41,355,653 )
Total Stockholders’ Equity   450,891,400     356,603,340  
Total Liabilities and Stockholders’ Equity $ 503,453,471   $ 414,102,486  
 
               
RING ENERGY, INC.
STATEMENTS OF CASH FLOW
  Six Months Ended
June 30, June 30,

2018

2017

 
Cash Flows From Operating Activities
Net income $ 10,385,440 $ 3,190,044
Adjustments to reconcile net income to net cash
Provided by operating activities:
Depreciation, depletion and amortization 17,645,494 8,610,445
Asset retirement obligation accretion 325,790 310,749
Share-based compensation 2,083,547 1,803,292
Deferred income tax provision 3,068,670 1,787,513
Excess tax deficiency related to share-based compensation 1,158,604 310,897
Change in fair value of derivative instruments 1,889,974
Changes in assets and liabilities:
Accounts receivable 1,211,719 (4,948,634 )
Prepaid expenses and retainers (638,368 ) (57,620 )
Accounts payable (3,587,329 ) 7,424,473
Settlement of asset retirement obligation   (265,728 )   (309,511 )
Net Cash Provided by Operating Activities   33,277,813     18,121,648  
Cash Flows from Investing Activities
Payments to purchase oil and natural gas properties (3,270,000 ) (24,727,390 )
Payments to develop oil and natural gas properties (113,507,857 ) (49,184,297 )
Proceeds from disposal of fixed assets subject to depreciation 105,536
Purchase of inventory for development (2,816,165 )
Purchase of equipment, vehicles and leasehold improvements       (186,599 )
Net Cash Used in Investing Activities   (116,672,321 )   (76,914,451 )
Cash Flows From Financing Activities
Amounts paid for registration statement for future offerings (157,200 )
Proceeds from issuance of common stock, net of offering costs 81,819,073
Net Cash Provided by Financing Activities   81,819,073     (157,200 )
Net Decrease in Cash (1,575,435 ) (58,950,003 )
Cash at Beginning of Period   15,006,581     71,086,381  
Cash at End of Period $ 13,431,146   $ 12,136,378  
 
Supplemental Cash flow Information
Cash paid for interest $ 44,483      
 
Noncash Investing and Financing Activities
Asset retirement obligation incurred during development 700,218 476,437
Use of inventory in property development $ 2,521,265

Capitalized expenditures attributable to drilling projects financed through current liabilities

19,000,000 8,000,000
 
RECONCILIATION OF CASH FLOW FROM OPERATIONS
 
Net cash provided by operating activities $ 33,277,813 $ 18,121,648
Change in operating assets and liabilities   3,279,706     (2,108,708 )
 
Cash flow from operations $ 36,557,519   $ 16,012,940  
 
Management believes that the non-GAAP measure of cash flow from operations is useful information for investors because it is used internally and is accepted by the investment community as a means of measuring the Company’s ability to fund its capital program. It is also used by professional research analysts in providing investment recommendations pertaining to companies in the oil and gas exploration and production industry.
         
RING ENERGY, INC.
NON-GAAP DISCLOSURE RECONCILIATION
ADJUSTED EBITDA
 
Six Months Ended
June 30, June 30,

2018

2017

 
NET INCOME $ 10,385,440 $ 3,190,044
 
Net other income expense 5,719,965 (163,990 )
Realized loss on derivatives (3,877,452 )
Income tax expense (benefit) 4,227,274 2,098,410
Depreciation, depletion and amortization 17,645,494 8,610,445
Accretion of discounted liabilities 325,790 310,749
Stock based compensation 2,083,547 1,803,292
 
ADJUSTED EBITDA $ 36,510,058   $ 15,848,950  
 

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Essential Properties Announces Second Quarter 2018 Results

PRINCETON, N.J.–()–Essential Properties Realty Trust, Inc. (NYSE:EPRT; “Essential Properties” or the “Company”), today announced operating results for the three and six months ended June 30, 2018.

Second Quarter 2018 Financial and Operating Highlights

  • Invested $214.4 million in 86 properties at a 7.6% weighted average cash cap rate
  • Increased total revenues 63% to $21.7 million
  • Net income increased 71% to $3.5 million
  • Increased Funds from Operations (“FFO”) 81% to $9.6 million
  • Increased Adjusted Funds from Operations (“AFFO”) 68% to $8.5 million

First Half 2018 Financial and Operating Highlights

  • Invested $278.5 million in 114 properties at a 7.7% weighted average cash cap rate
  • Increased total revenue 79% to $41.9 million
  • Net income increased 75% to $4.6 million
  • Increased FFO 87% to $17.8 million
  • Increased AFFO 79% to $15.9 million

CEO Comments

Commenting on the second quarter results, Essential Properties’ President and Chief Executive Officer, Pete Mavoides, said, “We are excited to report our second quarter results, which are our first as a public company. These results reflect nearly two and a half years of effort invested in building an experienced team of net lease professionals and developing the systems required to source, underwrite, close and manage a diversified portfolio of single-tenant net lease assets that are primarily leased to service-oriented and experience-based businesses. On June 20, 2018, we priced our initial public offering of common stock and a concurrent institutional private placement, raising approximately $618.8 million of gross proceeds (inclusive of the underwriters’ partial exercise of an option to purchase additional shares). During the quarter, we grew our portfolio 20% by investing a record $214.4 million into high-quality net lease properties with long-term leases. Accomplishing this record level of quarterly investments while simultaneously completing this transformative capital raise is testament to the quality, depth and experience of the team at Essential Properties. In addition, we are highly optimistic entering the second half of the year having fortified our balance sheet with over $450 million of liquidity to capitalize on our growing investment pipeline. I would like to thank our team for their outstanding commitment, dedication and hard work during the quarter.”

Financial Results

Total Revenue

Total revenue for the quarter ended June 30, 2018 increased 63% to $21.7 million, as compared to $13.3 million for the same quarter in 2017.

Total revenue for the six months ended June 30, 2018 increased 79% to $41.9 million, as compared to $23.4 million for the same period in 2017.

Net Income

Net income for the quarter ended June 30, 2018 increased 71% to $3.5 million, as compared to $2.0 million for the same quarter in 2017.

Net income for the six months ended June 30, 2018 increased 75% to $4.6 million, as compared to $2.6 million for the same period in 2017.

Funds from Operations (“FFO”)

FFO for the quarter ended June 30, 2018 increased 81% to $9.6 million, as compared to $5.3 million for the same quarter in 2017.

FFO for the six months ended June 30, 2018 increased 87% to $17.8 million, as compared to $9.5 million for the same period in 2017.

Adjusted Funds from Operations (“AFFO”)

AFFO for the quarter ended June 30, 2018 increased 68% to $8.5 million, as compared to $5.0 million for the same quarter in 2017.

AFFO for the six months ended June 30, 2018 increased 79% to $15.9 million, as compared to $8.9 million for the same period in 2017.

Net Investment Activity

Acquisitions

During the quarter ended June 30, 2018, Essential Properties invested $214.4 million in 86 properties in 23 separate transactions at a weighted average cash and GAAP cap rate of 7.6% and 8.7%, respectively. These properties are 100% leased with a weighted average lease term of approximately 17.2 years. As a percentage of cash ABR, 89.6% of our acquisitions for the three months ended June 30, 2018 came from sale-leaseback transactions, 85.4% were subject to a master lease and 96.5% are required to provide us with financial reporting.

During the six months ended June 30, 2018, Essential Properties invested $278.5 million in 114 properties in 39 separate transactions at a weighted average cash and GAAP cap rate of 7.7% and 8.6%, respectively. These properties are 100% leased with a weighted average lease term of approximately 16.5 years. As a percentage of cash ABR, 84.4% of our acquisitions for the six months ended June 30, 2018 came from sale-leaseback transactions, 73.2% were subject to a master lease and 97.3% are required to provide us with financial reporting.

Dispositions

During the three months ended June 30, 2018, Essential Properties sold 10 properties for $13.8 million, with a gain on sales of $2.4 million. Excluding one property sold pursuant to a tenant purchase option, the disposition weighted average cash cap rate on the seven leased properties sold in the three months ended June 30, 2018 was 7.1%.

During the six months ended June 30, 2018, Essential Properties sold 16 properties for $21.5 million, with a gain on sales of $3.6 million. Excluding one property sold pursuant to a tenant purchase option, the disposition weighted average cash cap rate on the 12 leased properties sold in the six months ended June 30, 2018 was 6.8%.

Portfolio Update

Portfolio Highlights

As of June 30, 2018, Essential Properties’ portfolio consisted of 604 freestanding net lease properties, which included two properties that secure a mortgage note receivable, with a weighted average lease term of 14.3 years and a weighted average rent coverage ratio of 2.8x. As of the same date, the portfolio was 99.3% occupied by 134 tenants operating 136 different concepts across 41 states in 15 distinct industries. At second quarter end, 89.6% of our cash ABR was generated from tenants that operate service-oriented or experience-based businesses, and 68.6% of our cash ABR was derived from properties subject to a master lease.

Leasing Activity

During the six months ended June 30, 2018, Essential Properties renewed seven leases at a 96.1% recovery rate vs. prior cash rents and signed two new leases without vacancy at a 102.3% recovery rate. In total, we recovered 98.8% of prior cash rents from leasing efforts during the first half of 2018, which amounted to 1.4% of our cash ABR as of June 30, 2018.

Capital Markets, Leverage and Balance Sheet and Liquidity

Capital Markets Activity

On June 25, 2018, the Company completed its initial public offering (“IPO”) of 32,500,000 shares of common stock and the concurrent private placement to an affiliate of Eldridge Industries, LLC (“Eldridge”) of 7,785,611 shares of common stock and 1,142,960 units of limited partnership interest (“OP Units”) in Essential Properties, L.P., a Delaware limited partnership and the Company’s operating partnership. On July 24, 2018, the Company issued an additional 2,772,191 shares of common stock pursuant to the underwriter’s option to purchase additional shares. In total, the Company received approximately $589.2 million in net proceeds from the aforementioned transactions after deducting underwriting discounts and other IPO-related expenses.

Leverage

As of June 30, 2018, the Company’s Net Debt to Annualized Adjusted EBITDAre was 4.4x times while Pro Forma Net Debt to Annualized Adjusted EBITDAre was 3.9x (i.e., adjusted for the receipt of net proceeds resulting from the underwriters’ partial exercise of an option to purchase additional shares).

Balance Sheet and Liquidity

Essential Properties has a $300 million unsecured credit facility with no amounts outstanding as of August 7, 2018. The credit facility includes an accordion feature to increase, subject to certain conditions, the maximum availability of the facility by up to $200 million. In addition, we had approximately $151 million of cash and cash equivalents and restricted cash as of August 7, 2018.

Conference Call Information

In conjunction with the release of Essential Properties’ operating results, the Company will host a conference call on August 9, 2018 at 10:00 a.m. EDT to discuss the results. To access the conference, dial 877-407-0782. A live webcast will also be available in listen-only mode by clicking on the webcast link in the investors section at www.essentialproperties.com.

A telephone replay of the conference call can also be accessed by calling (877)-481-4010 and entering the access code: 36648. The telephone replay will be available through August 23, 2018.

A replay of the conference call webcast will be available approximately two hours after the conclusion of the live broadcast. The webcast replay will be available for 90 days. No access code is required for this replay.

Supplemental Materials

The Company’s Supplemental Operating & Financial Data—Second Quarter Ended June 30, 2018 are available on Essential Properties’ website at investors.essentialproperties.com.

About Essential Properties Realty Trust, Inc.

Essential Properties Realty Trust, Inc. is an internally managed real estate company that acquires, owns and manages primarily single-tenant properties that are net leased on a long-term basis to companies operating service-oriented or experience-based businesses. As of June 30, 2018, our portfolio consisted of 604 freestanding net lease properties with a weighted average lease term of 14.3 years and a weighted average rent coverage ratio of 2.8x. As of the same date, the portfolio was 99.3% leased to 134 tenants operating 136 different concepts in 15 distinct industries across 41 states.

Forward-Looking Statements

This press release contains forward-looking statements within the meaning of the federal securities laws. When used in this press release, the words “estimate,” “anticipate,” “expect,” “believe,” “intend,” “may,” “will,” “should,” “seek,” “approximately” or “plan,” or the negative of these words and phrases or similar words or phrases that are predictions of or indicate future events or trends and that do not relate solely to historical matters are intended to identify forward-looking statements. You can also identify forward-looking statements by discussions of strategy, plans or intentions of management. Forward-looking statements involve numerous risks and uncertainties and you should not rely on them as predictions of future events. Forward-looking statements depend on assumptions, data or methods that may be incorrect or imprecise and the Company may not be able to realize them. The Company does not guarantee that the transactions and events described will happen as described (or that they will happen at all). You are cautioned not to place undue reliance on forward-looking statements, which speak only as of the date of this press release. While forward-looking statements reflect the Company’s good faith beliefs, they are not guarantees of future performance. The Company undertakes no obligation to publicly release the results of any revisions to these forward-looking statements that may be made to reflect events or circumstances after the date of this press release or to reflect the occurrence of unanticipated events, except as required by law. In light of these risks and uncertainties, the forward-looking events discussed in this press release might not occur as described, or at all.

Additional information concerning factors that could cause actual results to differ materially from these forward-looking statements is contained from time to time in the company’s Securities and Exchange Commission (the “Commission”) filings, including, but not limited to, the Company’s Quarterly Report on Form 10-Q. Copies of each filing may be obtained from the Company or the Commission. Such forward-looking statements should be regarded solely as reflections of the company’s current operating plans and estimates. Actual operating results may differ materially from what is expressed or forecast in this press release.

The results reported in this press release are preliminary and not final. There can be no assurance that these results will not vary from the final results reported in our Quarterly Report on Form 10-Q for the quarter ended June 30, 2018 that we will file with the Commission.

Non-GAAP Financial Measures and Certain Definitions

FFO and AFFO

In addition to net income computed in accordance with U.S. generally accepted accounting principles (“GAAP”), we also disclose funds from operations (“FFO”) and adjusted funds from operations (“AFFO”), both of which are non-GAAP financial measures. We believe these two non-GAAP financial measures are useful to investors because they are widely accepted industry measures used by analysts and investors to compare the operating performance of REITs.

FFO and AFFO do not include all items of revenue and expense included in net income, nor do they represent cash generated from operating activities and are not necessarily indicative of cash available to fund cash requirements; accordingly, they should not be considered alternatives to net income as a performance measure or cash flows from operations as a liquidity measure and should be considered in addition to, and not in lieu of, GAAP financial measures.

We compute FFO in accordance with the definition adopted by the Board of Governors of the National Association of Real Estate Investment Trusts (“NAREIT”). NAREIT defines FFO as GAAP net income or loss adjusted to exclude extraordinary items (as defined by GAAP), net gain or loss from sales of depreciable real estate assets, impairment write-downs associated with depreciable real estate assets and real estate related depreciation and amortization (excluding amortization of deferred financing costs and depreciation of non-real estate assets), including the pro rata share of such adjustments of unconsolidated subsidiaries. FFO is used by management, investors and analysts to facilitate meaningful comparisons of operating performance between periods and among our peers primarily because it excludes the effect of real estate depreciation and amortization and net gains on sales (which are dependent on historical costs and implicitly assume that the value of real estate diminishes predictably over time, rather than fluctuating based on existing market conditions).

To derive AFFO, we modify the NAREIT computation of FFO to include other adjustments to GAAP net income related to non-cash and certain other revenues and expenses such as straight-line rental revenue, non-cash interest expense, non-cash compensation expense, amortization of market lease-related intangibles, amortization of capitalized lease incentives, capitalized interest expense and transaction costs. Such items may cause short-term fluctuations in net income but have no impact on operating cash flows or long-term operating performance. We believe that AFFO is an additional useful supplemental measure for investors to consider, because it will help them to better assess our operating performance without the distortions created by non-cash and certain other revenues or expenses.

FFO and AFFO may not be comparable to similarly titled measures employed by other companies.

EBITDA and EBITDAre

We calculate earnings before interest, taxes and depreciation and amortization (“EBITDA”) as earnings (GAAP net income) before interest expense, taxes and depreciation and amortization. In 2017, NAREIT issued a white paper recommending that companies that report EBITDA also report EBITDA further adjusted to exclude gains (or losses) on sales of depreciable property and real estate impairment losses (“EBITDAre”). We compute EBITDAre in accordance with the definition adopted by NAREIT. NAREIT defines EBITDAre as EBITDA (as defined above) excluding gains (or losses) from the sales of depreciable property and real estate impairment losses. We present EBITDA and EBITDAre as they are measures commonly used in our industry, and we believe that these measures are useful to investors and analysts because they provide important supplemental information concerning our operating performance exclusive of certain non-cash items and other costs.

EBITDA and EBITDAre are not measurements of financial performance under GAAP, and our EBITDA and EBITDAre may not be comparable to similarly titled measures of other companies. You should not consider EBITDA and EBITDAre as alternatives to net income or cash flows from operating activities determined in accordance with GAAP.

Net Debt

Net debt represents our gross debt (defined as total debt plus deferred financing costs, net) less cash and cash equivalents and restricted cash deposits held for the benefit of lenders. We believe excluding cash and cash equivalents and restricted cash deposits held for the benefit of lenders from gross debt, both of which could be used to repay debt, provides an estimate of the net contractual amount of borrowed capital to be repaid, which we believe is a beneficial disclosure to investors and analysts.

NOI and Cash NOI

Net operating income (“NOI”) and cash NOI (“Cash NOI”) are non-GAAP financial measures used by us to evaluate the operating performance of our real estate. NOI is equal to total revenues less property expenses. NOI excludes all other items of expense and income included in the financial statements in calculating net income or loss. Cash NOI further excludes non-cash items included in total revenues and property expenses, such as straight-line rental revenue and amortization of capitalized lease incentives and above- and below-market lease-related intangibles. We believe NOI and Cash NOI provide useful and relevant information because they reflect only those income and expense items that are incurred at the property level and present such items on an unlevered basis.

NOI and Cash NOI are not measurements of financial performance under GAAP, and our NOI and Cash NOI may not be comparable to similarly titled measures of other companies. You should not consider our NOI and Cash NOI as alternatives to net income or cash flows from operating activities determined in accordance with GAAP.

Adjusted EBITDAre / Adjusted NOI / Adjusted Cash NOI

We report Adjusted EBITDAre, Adjusted NOI and Adjusted Cash NOI as if all acquisition and disposition activity that took place during the relevant quarter had occurred on the first day of the quarter. We then annualize these estimates for the relevant quarter by multiplying them by four, which we believe provides a meaningful estimate of our current run rate for all properties owned as of the end of the relevant quarter. You should not unduly rely on these metrics as they are based on assumptions and estimates that may prove to be inaccurate. Our actual reported EBITDAre, NOI and Cash NOI for future periods may be significantly less than these estimates of current run rates for a variety of reasons.

Cash ABR

Cash ABR means annualized contractually specified cash base rent in effect as of the end of the relevant quarter for all of our leases (including those accounted for as direct financing leases) commenced as of that date, as well as interest on our mortgage loans receivable.

Cash Cap Rate

Cash Cap Rate means annualized contractually specified cash base rent for the first full month after acquisition or disposition divided by the purchase or sale price, as applicable, for the property.

GAAP Cap Rate

GAAP Cap Rate means annualized rental income computed in accordance with GAAP for the first full month after acquisition divided by the purchase price, as applicable, for the property.

Rent Coverage Ratio

Rent coverage ratio means the ratio of tenant-reported or, when unavailable, management’s estimate based on tenant-reported financial information, annual EBITDA and cash rent attributable to the leased property (or properties, in the case of a master lease) to the annualized base rental obligation as of a specified date.

 

Essential Properties Realty Trust, Inc.

Consolidated Statements of Operations

 
  Three Months Ended June 30,     Six Months Ended June 30,
(unaudited, in thousands) 2018     2017 2018     2017
Revenues:
Rental revenue1 $ 21,548 $ 12,670 $ 41,623 $ 22,678
Interest income on loans and direct financing leases 89 82 159 165
Other revenue   56   565   113   571
Total revenues   21,693   13,317   41,895   23,414
 
Expenses:
Interest 8,634 5,160 16,911 8,875
General and administrative 2,987 2,331 6,343 4,275
Property expenses 380 479 727 689
Depreciation and amortization 7,611 4,305 14,079 8,087
Provision for impairment of real estate   907   428   2,756   579
Total expenses   20,519   12,703   40,816   22,505
Income before income tax expense 1,174 614 1,079 909
Income tax expense   87   35   117   42
Income before gain on dispositions of real estate 1,087 579 962 867
Gain on dispositions of real estate, net   2,412   1,468   3,645   1,762
Net income $ 3,499 $ 2,047 $ 4,607 $ 2,629

1. Includes $0.2 million, $0.5 million, $0.7 million and $0.7 million of contingent rent (based on a percentage of the tenant’s gross sales at the leased property) during the three months ended June 20, 2018 and 2017 and the six months ended June 30, 2018 and 2017, respectively.

 

Essential Properties Realty Trust, Inc.

Consolidated Balance Sheets

 
(in thousands, except share, per share, unit and per unit amounts)   June 30, 2018   December 31, 2017
(Unaudited) (Audited)
ASSETS
Investments:
Real estate investments, at cost:
Land and improvements $ 355,184 $ 278,985
Building and improvements 748,004 584,385
Lease incentive 2,275 2,275
Construction in progress 11,263 4,076
Intangible lease assets   64,315   62,453
Total real estate investments, at cost 1,181,041 932,174
Less: accumulated depreciation and amortization   (36,310 )   (24,825 )
Total real estate investments, net 1,144,731 907,349
Loans and direct financing lease receivables, net 6,322 2,725
Real estate investments held for sale, net   7,195   4,173
Net investments 1,158,248 914,247
Cash and cash equivalents 131,387 7,250
Restricted cash 8,644 12,180
Straight-line rent receivable, net 9,015 5,498
Prepaid expenses and other assets, net   5,115   3,045
Total assets $ 1,312,409 $ 942,220
 
LIABILITIES AND EQUITY
Secured borrowings, net of deferred financing costs $ 508,821 $ 511,646
Notes payable to related party 230,000
Intangible lease liabilities, net 12,152 12,321
Intangible lease liabilities held for sale, net 256 129
Accrued liabilities and other payables   6,736   6,722
Total liabilities   527,965   760,818
Commitments and contingencies
Stockholders’ equity:
Preferred stock, $0.01 par value; 150,000,000 authorized; none issued and outstanding as of June 30, 2018
Common stock, $0.01 par value; 500,000,000 authorized; 40,976,901 issued and outstanding as of June 30, 2018 403
Additional paid-in capital 531,589
Retained earnings 222
Members’ equity:
Class A units, $1,000 per unit, 83,700 issued and outstanding as of December 31, 2017 86,668
Class B units, 8,550 issued, 1,610 vested and outstanding as of December 31, 2017 574
Class C units, $1,000 per unit, 91,450 issued and outstanding as of December 31, 2017 94,064
Class D Units, 3,000 issued, 600 vested and outstanding as of December 31, 2017     96
Total stockholders’ / members’ equity   532,214   181,402
Non-controlling interests   252,230  
Total equity   784,444   181,402
Total liabilities and equity $ 1,312,409 $ 942,220
 
 

Essential Properties Realty Trust, Inc.

Reconciliation of Non-GAAP Financial Measures

 
  Three Months Ended June 30,   Six Months Ended June 30,
(in thousands) 2018   2017 2018   2017
Net income $ 3,499 $ 2,047 $ 4,607 $ 2,629
Depreciation and amortization of real estate 7,610 4,304 14,077 8,086
Provision for impairment of real estate 907 428 2,756 579
Gain on dispositions of real estate   (2,412 )   (1,468 )   (3,645 )   (1,762 )
Funds from Operations 9,604 5,311 17,795 9,532
Adjustments:
Straight-line rental revenue, net (1,867 ) (1,020 ) (3,517 ) (1,960 )
Non-cash interest expense 589 380 1,165 758
Non-cash compensation expense 169 233 347 399
Amortization of market lease-related intangibles (8 ) 134 130 143
Amortization of capitalized lease incentives 39 34 77 67
Capitalized interest expense (83 ) (44 ) (136 ) (75 )
Transaction costs   18     26  
Adjusted Funds from Operations $ 8,461 $ 5,028 $ 15,887 $ 8,864
 
 

Essential Properties Realty Trust, Inc.

Reconciliation of Non-GAAP Financial Measures

 
  Three Months Ended
(in thousands) June 30, 2018
Net income $ 3,499
Depreciation and amortization 7,611
Interest expense 8,634
Income tax expense   87
EBITDA 19,831
Provision for impairment of real estate 907
Gain on dispositions of real estate   (2,412 )
EBITDAre 18,326
Adjustment for current quarter acquisition and disposition activity1   3,379
Adjusted EBITDAre 21,705
General and administrative   2,987
Adjusted net operating income (“NOI”) 24,692
Straight-line rental revenue, net1 (2,207 )
Amortization of market lease-related intangibles (8 )
Amortization of capitalized lease incentives   39
Adjusted Cash NOI $ 22,515
 
Annualized EBITDAre $ 73,304
Annualized Adjusted EBITDAre $ 86,818
Annualized Adjusted NOI $ 98,766
Annualized Adjusted Cash NOI $ 90,061

1. These adjustments are made to reflect EBITDAre, NOI and Cash NOI as if all acquisitions and dispositions of real estate investments made during the three months ended June 30, 2018 had occurred on April 1, 2018.

 

Essential Properties Realty Trust, Inc.

Reconciliation of Non-GAAP Financial Measures

 
(in thousands, except share and per share amounts)   June 30, 2018
Secured debt:
Series 2016-1, Class A $ 257,156
Series 2016-1, Class B 17,243
Series 2017-1, Class A 228,909
Series 2017-1, Class B   15,669
Total secured debt   518,977
 
Unsecured debt:
Revolving credit facility1  
Total unsecured debt  
Gross debt 518,977
Less: cash & cash equivalents (131,387 )
Less: restricted cash deposits held for the benefit of lenders   (8,611 )
Net debt   378,979
 
Equity:
Preferred stock
Common stock & OP units (60,033,453 shares @ $13.54/share as of 6/30/18)2   812,853
Total equity   812,853
Total enterprise value (“TEV”) $ 1,191,832
 
Pro forma adjustments to Net Debt and TEV3:
Net debt $ 378,979
Less: cash received – overallotment option   (36,482 )
Pro forma net debt 342,497
Total equity 812,853
Common stock – overallotment option (2,772,191 shares @ $13.54/share as of 6/30/18)   37,535
Pro forma TEV $ 1,192,885
 
Net Debt / TEV 31.8 %
Pro Forma Net Debt / Pro Forma TEV 28.7 %
 
Net Debt / Annualized EBITDAre 5.2 x
Pro Forma Net Debt / Annualized EBITDAre 4.7 x
 
Net Debt / Annualized Adjusted EBITDAre 4.4 x
Pro Forma Net Debt / Annualized Adjusted EBITDAre 3.9 x

1. Our revolving credit facility provides a maximum aggregate initial original principal amount of up to $300 million and includes an accordion feature to increase, subject to certain conditions, the maximum availability of the facility by up to $200 million.

2. Common equity & units as of June 30, 2018, based on 40,976,901 common shares outstanding (including unvested restricted share awards) and 19,056,552 OP units held by non-controlling interests.

3. Pro forma adjustments have been made to reflect the impact of the partial exercise of the underwriters’ overallotment option in the IPO. On July 24, 2018, the underwriters completed the exercise of this option and we issued 2,772,191 shares of common stock for proceeds of $36.5 million, net of underwriters’ discounts.

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TiVo Corporation Reports Second Quarter Financial Results

SAN JOSE, Calif.–()–TiVo Corporation (NASDAQ: TIVO) today reported financial results for the second quarter ended June 30, 2018.

“We delivered a solid second quarter and we continue to stay ahead of our internal plan, including optimizing our costs. Additionally, the CEO transition has gone smoothly and we continue to make progress in our strategic review and have narrowed our focus in terms of the strategic alternatives we are evaluating,” said Raghu Rau, Interim President and Chief Executive Officer. “The company has a strong foundation to deliver profitable growth and stockholder value and we remain focused on execution and meeting our customers’ needs.”

Mr. Rau added, “I am committed to remain as CEO as long as it takes to drive the strategic process to a logical, successful conclusion that maximizes stockholder value.”

UPDATE ON STRATEGIC ALTERNATIVES TO MAXIMIZE VALUE FOR SHAREHOLDERS

As announced in our Q4 2017 earnings release and its related earnings call, TiVo is exploring a range of strategic alternatives to maximize the value of the Company and best deliver value to shareholders. While this review remains in process, progress has been made and the Company’s focus has begun to narrow. An update on the process is as follows:

First, while always open to strategic acquisitions that can deliver stockholder value, TiVo does not believe, at this time, that utilizing capital for a significant acquisition would be the best way to deliver value for shareholders.

Second, the strategic review process has reaffirmed that TiVo has valuable assets and strong market positions in both the product and IP licensing businesses. TiVo remains committed to developing compelling and relevant solutions that can deliver customer value. The Company will continue to invest in offerings aligned with current and emerging market needs.

Third, the Company has learned that potential parties also recognize the strategic value of the product and IP businesses individually. It appears clear that there is a real opportunity in the marketplace for a well scaled, next generation video products business, with good growth potential that revolutionizes how we watch TV and effectively enables monetization of the experience. TiVo’s installed base of 22 million subscribers serves as a strategic asset as we bring a great brand and platform to power the next generation of entertainment experiences and advanced, targeted advertising solutions. Further, with one of the leading portfolios of intellectual property in the linear TV and OTT markets, TiVo also believes there are strategic opportunities for the IP business that will enable the business to continue growing profitably in both existing and adjacent markets.

In the meantime, TiVo continues to develop compelling and relevant solutions aligned with our current customer needs and emerging market opportunities. Additionally, in connection with TiVo’s continued focus on optimizing the business, the Company’s previously identified $10 million in additional current year cost improvements are almost all implemented. The Company now expects to produce annualized savings of $25 million by the end of 2018 from these actions.

BUSINESS OUTLOOK

TiVo’s management and board are still conducting an in-depth review of its businesses, cost structure and strategic options to maximize shareholder value. Due to the broad range of potential outcomes, the Company is not currently providing financial estimates for fiscal 2018.

CURRENT PERIOD FINANCIAL RESULTS

Informed by the strategic alternatives review process, TiVo is providing detail on the results of operations for its two business segments – Products and Intellectual Property Licensing (“IP Licensing”) – in the body of this earnings release and in its prepared remarks on today’s earnings call.

Additionally, as discussed in detail last quarter, the Company adopted Accounting Standards Update No. 2014-09, Revenue from Contracts with Customers, which superseded the previous revenue recognition requirements on January 1, 2018 using the modified retrospective transition approach. The Company’s results for 2017 are reported under the prior standard and results for 2018 are reported under the new standard. While there is no change in either the nature of our business operations or our cash flows, revenue recognition in 2018 is considerably different than in 2017. For instance, in the second quarter of 2018, TiVo recognized approximately $14.0 million less in revenue than it would have under the previous requirements.

 

SECOND QUARTER 2018 FINANCIAL HIGHLIGHTS

   
Quarterly Financial Information (In thousands)
Three Months Ended June 30,  
2018   2017 % Change
GAAP Consolidated Results
Total Revenues, net $ 172,860 $ 208,558 (17 )%
Total costs and expenses 181,623 199,815 (9 )%
Operating (loss) income (8,763 ) 8,743 (200 )%
Loss from continuing operations before income taxes (18,549 ) (863 ) 2,049 %
Loss from continuing operations, net of tax (22,868 ) (4,771 ) 379 %
 
GAAP Diluted weighted average shares outstanding 122,713 120,209
 
Total Revenues, net $ 172,860 $ 208,558 (17 )%
Legacy TiVo Solutions IP Licenses (8,384 ) (23,661 ) (65 )%
Hardware (3,306 ) (9,594 ) (66 )%
Other Products   (960 )   (1,640 ) (41 )%

Core Revenue (excludes revenue from Legacy TiVo Solutions IP Licenses, Hardware and Other Products)

$ 160,210   $ 173,663   (8 )%
 

Total Revenues, net and Core Revenue include $10.1 million and $16.3 million of revenue from out-of-license settlements in Q2 2018 and Q2 2017, respectively. Core Revenue decreased $4.2 million as a result of adopting the amended revenue recognition guidance on January 1, 2018. The reduction in Total costs and expenses is the result of the Company’s continuing cost reduction efforts.

 

(In thousands)

Three Months Ended June 30,  
2018 2017 % Change
Non-GAAP Consolidated Results
Adjusted EBITDA $ 51,909 $ 80,854 (36 )%
Non-GAAP Pre-tax Income 37,547 66,410 (43 )%
Cash Taxes 5,694 5,113 11 %
 
Non-GAAP Diluted Weighted Average Shares Outstanding 123,295 121,008
 

Adjusted EBITDA, Non-GAAP Pre-tax Income, Non-GAAP Diluted Weighted Average Shares Outstanding and Cash Taxes are defined below in the section entitled “Non-GAAP Financial Information.” Reconciliations between GAAP and Non-GAAP amounts are provided in the tables below. In accordance with the SEC’s interpretations on the use of non-GAAP financial measures, TiVo does not report net income or EPS on a non-GAAP basis. However, TiVo does provide the financial metrics, including Non-GAAP Pre-tax Income, Non-GAAP Diluted Weighted Average Shares Outstanding and Cash Taxes, that TiVo had used to calculate these financial measures on a Non-GAAP basis.

 
 

SEGMENT RESULTS AND OPERATING HIGHLIGHTS – PRODUCT

 
  (In thousands)  
Three Months Ended June 30,  
2018   2017 % Change
Platform Solutions $ 72,208 $ 82,971 (13 )%
Software and Services 19,619 19,752 (1 )%
Other 960   1,640   (41 )%
Total Product Revenue, net 92,787 104,363 (11 )%
Adjusted Operating Expenses 81,467   92,011   (11 )%
Adjusted EBITDA $ 11,320   $ 12,352   (8 )%
Adjusted EBITDA Margin 12.2 % 11.8 %
 
Total Product Revenue, net $ 92,787 $ 104,363 (11 )%
Hardware (3,306 ) (9,594 ) (66 )%
Other Products (960 ) (1,640 ) (41 )%
Core Product Revenue (excludes revenue from Hardware and Other Products) $ 88,521   $ 93,129   (5 )%
 

The $10.8 million decrease in Platform Solutions revenue was largely attributable to a $6.3 million decrease Hardware revenue due to a planned transition away from the hardware business and a $3.8 million decrease in revenue, primarily from two international MSO software customers, as a result of adopting the amended revenue recognition guidance on January 1, 2018. Hardware revenue is expected to continue to decline due to the planned transition away from the business and as MSO partners continue to shift to deploying the TiVo service on third-party hardware resulting in a decrease in the number of TiVo set-top boxes sold to MSO partners. The reduction in revenue from these two international MSO customers is expected to continue for the remainder of 2018.

The decrease in Adjusted Operating Expenses primarily relates to a $6.8 million decrease in the Cost of hardware revenues and benefits from cost savings initiatives.

The increase in Adjusted EBITDA Margin primarily relates to a shift in the Product business mix toward higher margin products as hardware becomes a smaller portion of the Product business as a result of the planned transition away from the hardware business and benefits from cost savings initiatives, partially offset by the effects of adopting the amended revenue recognition standard.

Product Segment Operating Highlights:

  • Approximately 22 million subscriber households around the world use TiVo’s advanced television experiences.
  • TDS Telecommunications, the seventh largest local exchange telephone company in the U.S., chose TiVo’s Next-Gen Platform, to bring innovative entertainment solutions to its customers.
  • RCN Telecom Services, Atlantic Broadband and Service Electric have begun deploying TiVo’s Next-Gen TiVo Experience 4.
  • TiVo Experience 4 won the award for “Most Innovative Design or User Interface” at Interactive TV Today’s 15th Annual Awards for Leadership in Interactive and Multiplatform Television.
  • K-Opticom will be the first Fiber-To-The-Home (FTTH) service provider to utilize TiVo’s G-Guide xD mobile application, available on iOS and Android, for the delivery of advanced search functions and enhanced user experiences in Japan.
  • Launched voice integration with Amazon’s virtual assistant, Alexa, to TiVo’s retail products.
  • Astro, the leading content and consumer company in Malaysia, selected TiVo for its video metadata enrichment services.
  • A pan European Service Provider selected TiVo Metadata to power their new OTT video service launching in multiple European countries.
  • CBS renewed its TiVo’s Video and Music Metadata agreement and expanded it to include Showtime properties.
  • Sirius XM Radio deployed TiVo’s Music Metadata across its entire installed base.
  • A well-known automotive manufacturer selected TiVo Music metadata to power the new media experience in its connected car lineup.
  • TiVo Personalized Content Discovery Conversation solution is now available in German, Italian and Portuguese.
  • A leading pharmaceutical company selected TiVo’s Audience Discovery (“TAD”) analytics to improve the audience reach and targeting of its advertising campaigns.
  • Deep Root, a media analytics company, chose viewership data from TAD, to improve targeting of advertising campaigns.
  • Influential, a social data technology company, selected TAD segments and analytics to target and measure the impact of social media advertising campaigns.
 

SEGMENT RESULTS AND OPERATING HIGHLIGHTS – IP LICENSING

 
  (In thousands)  
Three Months Ended June 30,  
2018   2017 % Change
US Pay TV Providers $ 49,217 $ 68,733 (28 )%
CE Manufacturers 8,927 11,974 (25 )%
New Media, International Pay TV Providers and Other 21,929   23,488   (7 )%
Total IP Licensing Revenue, net 80,073 104,195 (23 )%
Adjusted Operating Expenses 24,972   20,817   20 %
Adjusted EBITDA $ 55,101   $ 83,378   (34 )%
Adjusted EBITDA Margin 68.8 % 80.0 %
 
Total IP Licensing Revenue, net $ 80,073 $ 104,195 (23 )%
Legacy TiVo Solutions IP Licenses (8,384 ) (23,661 ) (65 )%
Core Intellectual Property Licensing Revenue (excludes revenue from Legacy TiVo Solutions IP Licenses) $ 71,689   $ 80,534   (11 )%
 

Intellectual Property Licensing revenue decreased 23% in the second quarter. The $19.5 million decline in revenue from US Pay TV Providers is primarily due to a $15.2 million decrease in revenue from TiVo Solutions agreements entered into prior to the TiVo Acquisition Date as a result of adopting the amended revenue recognition guidance on January 1, 2018 and contract expirations, and a $4.3 million decrease in revenue from catch-up payments intended to make us whole for the pre-license period of use. The decrease in revenue from CE Manufacturers was primarily attributable to a customer being out-of-license. We anticipate this customer will eventually execute a new license.

The increase in Adjusted Operating Expenses relates to a $5.6 million increase in patent litigation costs, which primarily relates to the ongoing Comcast litigation, partially offset by benefits from cost savings initiatives.

The decrease in Adjusted EBITDA Margin for the second quarter is primarily the result of a decrease in Intellectual Property Licensing revenue and a $5.6 million increase in patent litigation costs, partially offset by benefits from cost savings initiatives.

Intellectual Property Licensing Segment Operating Highlights:

  • Altice Portugal renewed its IP license with TiVo to deliver advanced entertainment products across its brands in Portugal.
  • Fnac Darty Group, a European retailer of entertainment and leisure products, consumer electronics and household appliances, signed a multi-year patent license agreement covering its consumer electronics brands.
  • CBS renewed its patent license agreement.
  • Strong International, a set-top box manufacturer in Europe, renewed its patent license agreement.

CAPITAL ALLOCATION

On August 7, 2018, TiVo’s Board of Directors declared a cash dividend of $0.18 per common share, to be paid on September 20, 2018 to stockholders of record as of the close of business on September 6, 2018.

CONFERENCE CALL INFORMATION

TiVo management will host a conference call today, August 8, 2018, at 2:00 p.m. PT/5:00 p.m. ET to discuss the financial and operational results. Investors and analysts interested in participating in the conference are welcome to call (866) 621-1214 (or international +1-706-643-4013) and reference conference ID 7187675. The conference call may also be accessed via live webcast in the Investor Relations section of TiVo’s website at http://www.tivo.com.

A replay of the audio webcast will be available on TiVo’s website shortly after the live call ends, and we currently plan for it to remain on TiVo’s website until the next quarterly earnings call. Additionally, a telephonic replay of the call may be accessible shortly after the live call ends through August 15, 2018 by dialing (855) 859-2056 (or international +1-404-537-3406) and entering conference ID 7187675.

NON-GAAP FINANCIAL INFORMATION

TiVo Corporation provides Non-GAAP information to assist investors in assessing its operations in the way that its management evaluates those operations. Non-GAAP Pre-Tax Income, Non-GAAP Cost of Licensing, Services and Software Revenues, Non-GAAP Cost of Hardware Revenues, Non-GAAP Research and Development Expenses, Non-GAAP Selling, General and Administrative Expenses, Non-GAAP Depreciation, Non-GAAP Total OpEx, Non-GAAP Total COGS and OpEx, Adjusted EBITDA and Non-GAAP Interest Expense are supplemental measures of the Company’s performance that are not required by, and are not determined in accordance with, GAAP. Non-GAAP financial information is not a substitute for any financial measure determined in accordance with GAAP.

Non-GAAP Pre-tax Income is defined as GAAP income (loss) from continuing operations before income taxes, as adjusted for the effects of items such as amortization of intangible assets, equity-based compensation, accretion of contingent consideration, amortization or write-off of note issuance costs and discounts on convertible debt and mark-to-market adjustments for interest rate swaps; as well as items which impact comparability that are required to be recorded under GAAP, but that the Company believes are not indicative of its core operating results such as restructuring and asset impairment charges, transaction, transition and integration costs, retention earn-outs payable to former shareholders of acquired businesses, earn-out settlements, CEO transition cash costs, remeasurement of contingent consideration, TiVo acquisition litigation, expenses in connection with the extinguishment or modification of debt, gain on settlement of acquired receivable, additional depreciation resulting from facility rationalization actions, other-than temporary impairment losses on strategic investments, gains on the sale of strategic investments and changes in franchise tax reserves.

Non-GAAP Cost of Licensing, Services and Software Revenues is defined as GAAP Cost of licensing, services and software revenues, excluding depreciation and amortization of intangible assets, excluding equity-based compensation and transaction, transition and integration expenses.

Non-GAAP Cost of Hardware Revenues is defined as GAAP Cost of hardware revenues, excluding depreciation and amortization of intangible assets, excluding transition and integration expenses.

Non-GAAP Research and Development Expenses is defined as GAAP research and development expenses excluding equity-based compensation, transition and integration expenses and retention earn-outs payable to former shareholders of acquired businesses.

Non-GAAP Selling, General and Administrative Expenses is defined as GAAP selling, general and administrative expenses excluding equity-based compensation, transaction, transition and integration expenses, retention earn-outs payable to former shareholders of acquired businesses, earn-out settlements, CEO transition cash costs, remeasurement of contingent consideration, gain on settlement of acquired receivable and changes in franchise tax reserves. Included in transition costs in the second quarter of 2018 was a $4.5 million loss associated with a legacy TiVo Solutions legal matter for which a settlement was agreed to in the third quarter of 2018.

Non-GAAP Depreciation is defined as GAAP depreciation expenses excluding the impact of additional depreciation resulting from changes in the estimated useful lives of assets involved in facility rationalization actions.

Non-GAAP Total OpEx is defined as the sum of GAAP research and development and selling, general and administrative expenses, depreciation and gain on sale of patents excluding equity-based compensation, transaction, transition and integration expenses, retention earn-outs payable to former shareholders of acquired businesses, earnout settlements, CEO transition cash costs, remeasurement of contingent consideration, gain on settlement of acquired receivable, additional depreciation resulting from facility rationalization actions and changes in franchise tax reserves.

Non-GAAP Total COGS and OpEx is defined as GAAP Total Operating costs and expenses, excluding amortization of intangible assets, restructuring and asset impairment charges, equity-based compensation, transaction, transition and integration expenses, retention earn-outs payable to former shareholders of acquired businesses, earnout settlements, CEO transition cash costs, remeasurement of contingent consideration, gain on settlement of acquired receivable, depreciation and changes in franchise tax reserves.

Adjusted EBITDA is defined as GAAP operating income (loss) excluding depreciation, amortization of intangible assets, restructuring and asset impairment charges, equity-based compensation, transaction, transition and integration costs, retention earn-outs payable to former shareholders of acquired businesses, earn-out settlements, CEO transition cash costs, remeasurement of contingent consideration, gain on settlement of acquired receivable and changes in franchise tax reserves.

Non-GAAP Interest Expense is defined as GAAP interest expense, excluding accretion of contingent consideration, amortization or write-off of issuance costs, discounts on convertible debt and interest on franchise tax reserves, plus the reclassification of the current period benefit (cost) of the interest rate swaps from gain (loss) on interest rate swaps.

Cash Taxes are defined as GAAP current income tax expense excluding changes in reserves for unrecognized tax benefits.

Non-GAAP Diluted Weighted Average Shares Outstanding is defined as GAAP diluted weighted average shares outstanding except for periods of a GAAP loss. In periods of a GAAP loss, GAAP diluted weighted average shares outstanding are adjusted to include dilutive common share equivalents outstanding that were excluded from GAAP diluted weighted average shares outstanding because the Company had a loss and therefore these shares would have been anti-dilutive.

The Company’s management evaluates and makes decisions about its business operations primarily based on Non-GAAP financial information. Management uses Non-GAAP financial measures as the basis for decision-making as they exclude items management does not consider to be “core costs” or “core proceeds”. For each Non-GAAP financial measure, the adjustment provides management with information about the Company’s underlying operating performance that enables a more meaningful comparison to its historical and projected financial performance in different reporting periods. For example, since the Company does not acquire businesses on a predictable cycle, management excludes the amortization of intangible assets, transaction, transition and integration costs, retention earn-outs payable to former shareholders of acquired businesses, earnout settlements, CEO transition cash costs, remeasurement of contingent consideration, TiVo Acquisition litigation, and gain on settlement of acquired receivables from its Non-GAAP financial measures in order to make more consistent and meaningful evaluations of the Company’s operating expenses as these items may be significantly impacted by the timing and magnitude of acquisitions. Management also excludes the effect of restructuring and asset impairment charges, expenses in connection with the extinguishment or modification of debt, gain on the settlement of acquired receivable, additional depreciation resulting from facility rationalization actions, other-than-temporary impairment losses on strategic investments, gains on the sale of strategic investments and changes in franchise tax reserves. Management excludes the impact of equity-based compensation to provide meaningful supplemental information that allows investors greater visibility to the underlying performance of our business operations, facilitates comparison of our results with other periods, and may facilitate comparison with the results of other companies in our industry, as well as to provide the Company’s management with an important tool for financial and operational decision-making and for evaluating the Company’s performance over different periods of time. Due to varying valuation techniques, reliance on subjective assumptions and the variety of award types and features that may be in use, we believe that providing Non-GAAP financial measures excluding equity-based compensation allows investors to make more meaningful comparisons between our operating results and those of other companies. Management excludes the accretion of contingent consideration, amortization or write-off of note issuance costs and discounts on convertible debt and mark-to-market adjustments for interest rate swaps when management evaluates the Company’s expenses. Management reclassifies the current period benefit (cost) of the interest rate swaps from gain (loss) on interest rate swaps to interest expense in order for Non-GAAP Interest Expense to reflect the effects of the interest rate swaps as these interest rate swaps were entered into to control the effective interest rate the Company pays on its debt.

Management uses these Non-GAAP financial measures to help it make decisions, including decisions that affect operating expenses and operating margin. Management believes that making Non-GAAP financial information available to investors, in addition to GAAP financial information, may facilitate more consistent comparisons between the Company’s performance over time with the performance of other companies in our industry, which may use similar financial measures to supplement their GAAP financial information.

Management recognizes that these Non-GAAP financial measures have limitations as analytical tools, including the fact that management must exercise judgment in determining which types of items to exclude from the Non-GAAP financial information. In addition, as other companies, including companies similar to TiVo Corporation, may calculate their Non-GAAP financial measures differently than the Company calculates its Non-GAAP financial measures, these Non-GAAP financial measures may have limited usefulness to investors when comparing financial performance among companies. Management believes, however, that providing Non-GAAP financial information, in addition to GAAP financial information, facilitates consistent comparison of the Company’s financial performance over time. The Company provides Non-GAAP financial information to the investment community, not as an alternative, but as an important supplement to GAAP financial information; to enable investors to evaluate the Company’s core operating performance in the same way that management does. Reconciliations for each Non-GAAP financial measure to its most directly comparable GAAP financial measure are provided in the tables below.

About TiVo Corporation

TiVo (NASDAQ: TIVO) is a global leader in entertainment technology and audience insights. From the interactive program guide to the DVR, TiVo delivers innovative products and licensable technologies that revolutionize how people find content across a changing media landscape. TiVo enables the world’s leading media and entertainment providers to deliver the ultimate entertainment experience. Explore the next generation of entertainment at tivo.com, forward.tivo.com or follow us on Twitter @tivo or @tivoforbusiness.

Forward Looking Statements

This release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These statements relate to, among other things, the Company’s annual run rate savings, future growth and success of the Company’s Product and IP Licensing businesses, future revenues to be recognized following adoption of the amended revenue recognition guidance, the timing of results and the Company’s exploration of strategic alternatives, as well as future business strategies, future product offerings and deployments, and technology and intellectual property licenses with various customers. These forward-looking statements are based on TiVo’s current expectations, estimates and projections about its business and industry, management’s beliefs and certain assumptions made by the company, all of which are subject to change. Forward-looking statements generally can be identified by the use of forward-looking terminology such as, “future”, “believe,” “expect,” “may,” “will,” “intend,” “estimate,” “continue,” or similar expressions or the negative of those terms or expressions. Such statements involve risks and uncertainties, which could cause actual results to vary materially from those expressed in or indicated by the forward-looking statements. Factors that may cause actual results to differ materially include delays, whether inside or outside the Company’s control, in the Company’s exploration of its strategic alternatives, delays in development, the failure to deliver competitive service offerings and lack of market acceptance of any offerings delivered, as well as the other potential factors described under “Risk Factors” included in TiVo’s Quarterly Report on Form 10-Q for the three months ended June 30, 2018 and Annual Report on Form 10-K for the year ended December 31, 2017 and other documents of TiVo Corporation on file with the Securities and Exchange Commission (available at www.sec.gov). TiVo cautions you not to place undue reliance on forward-looking statements, which reflect an analysis only and speak only as of the date hereof. TiVo assumes no obligation to update any forward-looking statements in order to reflect events or circumstances that may arise after the date of this release, except as required by law.

 
TIVO CORPORATION AND SUBSIDIARIES
CONDENSED 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
Revenues, net:
Licensing, services and software $ 169,554 $ 198,964 $ 355,712 $ 389,514
Hardware 3,306   9,594   6,985   24,808  
Total Revenues, net 172,860 208,558 362,697 414,322
Costs and expenses:
Cost of licensing, services and software revenues, excluding depreciation and amortization of intangible assets 42,583 39,281 85,798 81,587
Cost of hardware revenues, excluding depreciation and amortization of intangible assets 4,989 11,767 10,040 25,988
Research and development 43,411 46,592 91,841 95,514
Selling, general and administrative 42,957 45,741 94,039 99,690
Depreciation 5,773 5,382 10,914 10,854
Amortization of intangible assets 40,809 41,678 82,221 83,378
Restructuring and asset impairment charges 1,101   9,374   5,647   13,913  
Total costs and expenses 181,623   199,815   380,500   410,924  
Operating (loss) income (8,763 ) 8,743 (17,803 ) 3,398
Interest expense (12,171 ) (10,573 ) (23,805 ) (20,837 )
Interest income and other, net 544 2,823 2,110 2,760
Gain (loss) on interest rate swaps 1,841 (1,856 ) 6,152 (1,335 )
TiVo Acquisition litigation (12,906 )
Loss on debt extinguishment (108 )
Loss on debt modification       (929 )
Loss from continuing operations before income taxes (18,549 ) (863 ) (33,346 ) (29,957 )
Income tax expense 4,319   3,908   8,536   9,475  
Loss from continuing operations, net of tax (22,868 ) (4,771 ) (41,882 ) (39,432 )
Income from discontinued operations, net of tax 2,298     3,595    
Net loss $ (20,570 ) $ (4,771 ) $ (38,287 ) $ (39,432 )
 
Basic loss per share:
Continuing operations $ (0.19 ) $ (0.04 ) $ (0.34 ) $ (0.33 )
Discontinued operations 0.02     0.03    
Basic loss per share $ (0.17 ) $ (0.04 ) $ (0.31 ) $ (0.33 )
Weighted average shares used in computing basic per share amounts 122,713 120,209 122,399 119,515
 
Diluted loss per share:
Continuing operations $ (0.19 ) $ (0.04 ) $ (0.34 ) $ (0.33 )
Discontinued operations 0.02     0.03    

Diluted loss per share

$ (0.17 ) $ (0.04 ) $ (0.31 ) $ (0.33 )
Weighted average shares used in computing diluted per share amounts 122,713 120,209 122,399 119,515
 
Dividends declared per share $ 0.18 $ 0.18 $ 0.36 $ 0.36
 

See notes to the Condensed Consolidated Financial Statements in our Quarterly Report on Form 10-Q.

 
TIVO CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands)
 
 

    June 30,    

  December 31,
2018 2017
ASSETS (Unaudited)
Current assets:
Cash and cash equivalents $ 132,190 $ 128,965
Short-term marketable securities 165,118 140,866
Accounts receivable, net 190,167 180,768
Inventory 10,234 11,581
Prepaid expenses and other current assets 39,251   40,719  
Total current assets 536,960 502,899
Long-term marketable securities 57,981 82,711
Property and equipment, net 53,672 55,244
Intangible assets, net 561,092 643,924
Goodwill 1,813,314 1,813,227
Other long-term assets 57,646   65,673  
Total assets $ 3,080,665   $ 3,163,678  
 
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable and accrued expenses $ 99,780 $ 135,852
Unearned revenue 45,050 55,393
Current portion of long-term debt 7,000   7,000  
Total current liabilities 151,830 198,245
Taxes payable, less current portion 3,936 3,947
Unearned revenue, less current portion 53,966 58,283
Long-term debt, less current portion 980,516 976,095
Deferred tax liabilities, net 51,328 50,356
Other long-term liabilities 14,555   23,736  
Total liabilities 1,256,131 1,310,662
Stockholders’ equity:
Preferred stock
Common stock 125 123
Treasury stock (28,925 ) (24,740 )
Additional paid-in capital 3,257,093 3,273,022
Accumulated other comprehensive loss (4,233 ) (2,738 )
Accumulated deficit (1,399,526 ) (1,392,651 )
Total stockholders’ equity 1,824,534   1,853,016  
Total liabilities and stockholders’ equity $ 3,080,665   $ 3,163,678  
 

See notes to the Condensed Consolidated Financial Statements in our Quarterly Report on Form 10-Q.

 
TIVO CORPORATION AND SUBSIDIARIES
REVENUE DETAILS
(In thousands)
(Unaudited)
 
  Three Months Ended June 30,   Six Months Ended June 30,
2018   2017 2018   2017
Total Revenues, net $ 172,860 $ 208,558 $ 362,697 $ 414,322
Legacy TiVo Solutions IP Licenses (8,384 ) (23,661 ) (17,268 ) (47,545 )
Hardware (3,306 ) (9,594 ) (6,985 ) (24,808 )
Other Products (960 ) (1,640 ) (3,393 ) (3,231 )
Core Revenue (excludes revenue from Legacy TiVo Solutions IP Licenses, Hardware and Other Products) $ 160,210   $ 173,663   $ 335,051   $ 338,738  
 
   
Three Months Ended June 30, Six Months Ended June 30,
2018   2017 2018   2017
Product Revenue
Platform Solutions $ 72,208 $ 82,971 $ 168,148 $ 171,154
Software and Services 19,619 19,752 38,098 45,021
Other 960   1,640   3,393   3,231
Total Product Revenue, net 92,787 104,363 209,639 219,406
 
IP Licensing Revenue
US Pay TV Providers 49,217 68,733 99,132 132,077
CE Manufacturers 8,927 11,974 17,895 22,817
New Media, International Pay TV Providers and Other 21,929   23,488   36,031   40,022
Total IP Licensing Revenue, net 80,073 104,195 153,058 194,916
       
Total Revenues, net $ 172,860   $ 208,558   $ 362,697   $ 414,322
 
   
Three Months Ended June 30, Six Months Ended June 30,
2018   2017 2018   2017
Total Product Revenue, net $ 92,787 $ 104,363 $ 209,639 $ 219,406
Hardware (3,306 ) (9,594 ) (6,985 ) (24,808 )
Other Products (960 ) (1,640 ) (3,393 ) (3,231 )
Core Product Revenue (excludes revenue from Hardware and Other Products) $ 88,521   $ 93,129   $ 199,261   $ 191,367  
 
Total IP Licensing Revenue, net $ 80,073 $ 104,195 $ 153,058 $ 194,916
Legacy TiVo Solutions IP Licenses (8,384 ) (23,661 ) (17,268 ) (47,545 )
Core Intellectual Property Licensing Revenue (excludes revenue from Legacy TiVo Solutions IP Licenses) $ 71,689   $ 80,534   $ 135,790   $ 147,371  
 
 

TIVO CORPORATION AND SUBSIDIARIES

RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL INFORMATION
(In thousands)
(Unaudited)

  Three Months Ended June 30,   Six Months Ended June 30,  
  2018       2017     2018       2017  
GAAP loss before income taxes from continuing operations $ (18,549 ) $ (863 )

 

$ (33,346 ) $ (29,957 )
Amortization of intangible assets 40,809 41,678 82,221 83,378
Restructuring and asset impairment charges 1,101 9,374 5,647 13,913
Equity-based compensation 6,731 11,749 18,755 25,774
Transition and integration costs 7,041 5,108 9,451 12,307
Earnout amortization 536 959 1,494 1,917
CEO transition cash costs (1,600 ) (975 )
Remeasurement of contingent consideration 281 398 1,171 74
TiVo Acquisition litigation 12,906
Loss on debt extinguishment 108
Loss on debt modification 929
Gain on settlement of acquired receivable (2,537 ) (2,537 )
Accelerated depreciation 213 213
Gain on sale of strategic investments (3,143 ) (3,143 )
Accretion of contingent consideration 114 213 192 368
Amortization of note issuance costs 570 528 1,129 1,050
Amortization of convertible note discount 3,292 3,143 6,546 6,249
Mark-to-market loss (income) related to interest rate swaps   (2,779 )   (410 )   (8,473 )   (3,172 )
Non-GAAP Pre-tax Income $ 37,547   $ 66,410   $ 83,812   $ 120,377  
 

Three Months Ended June 30,

 

Six Months Ended June 30,

 

2018

 

 

 

2017

   

2018

 

 

2017

 
GAAP Diluted weighted average shares outstanding 122,713 120,209

122,399

119,515

Dilutive effect of equity-based compensation awards   582     799    

547

   

1,151

Non-GAAP Diluted Weighted Average Shares Outstanding   123,295     121,008    

122,946

   

120,666

 
Three Months Ended June 30, Six Months Ended June 30,
  2018     2017     2018     2017  
GAAP Cost of licensing, services and software revenues, excluding depreciation and amortization of intangible assets $ 42,583 $ 39,281 $ 85,798 $ 81,587
Equity-based compensation (1,001 ) (991 ) (2,110 ) (2,035 )
Transition and integration costs   (27 )   (174 )   (55 )   (273 )
Non-GAAP Cost of Licensing, Services and Software Revenues $ 41,555   $ 38,116   $ 83,633   $ 79,279  
 
Three Months Ended June 30, Six Months Ended June 30,
  2018     2017     2018     2017  
GAAP Cost of hardware revenues, excluding depreciation and amortization of intangible assets $ 4,989 $ 11,767 $ 10,040 $ 25,988
Transition and integration costs       338         (1,021 )
Non-GAAP Cost of Hardware Revenues $ 4,989   $ 12,105   $ 10,040   $ 24,967  
 
Three Months Ended June 30, Six Months Ended June 30,
  2018     2017     2018     2017  
GAAP Research and development expenses $ 43,411 $ 46,592 $ 91,841 $ 95,514
Equity-based compensation (3,364 ) (4,059 ) (6,946 ) (8,056 )
Transition and integration costs (704 ) (1,535 ) (1,420 ) (2,775 )
Earnout amortization   (103 )   (184 )   (287 )   (368 )
Non-GAAP Research and Development Expenses $ 39,240   $ 40,814   $ 83,188   $ 84,315  
 

Three Months Ended June 30,

Six Months Ended June 30,
  2018     2017     2018     2017  
GAAP Selling, general and administrative expenses $ 42,957 $ 45,741 $ 94,039 $ 99,690
Equity-based compensation (2,366 ) (6,699 ) (9,699 ) (15,683 )
Transition and integration costs (6,310 ) (3,737 ) (7,976 ) (8,238 )
Earnout amortization (433 ) (775 ) (1,207 ) (1,549 )
CEO transition cash costs 1,600 975
Remeasurement of contingent consideration (282 ) (398 ) (1,172 ) (74 )
Gain on settlement of acquired receivable       2,537         2,537  
Non-GAAP Selling, General and Administrative Expenses $ 35,166   $ 36,669   $ 74,960   $ 76,683  
 
Three Months Ended June 30, Six Months Ended June 30,
  2018     2017     2018     2017  
GAAP Total operating costs and expenses $ 181,623 $ 199,815 $ 380,500 $ 410,924
Depreciation (5,773 ) (5,382 ) (10,914 ) (10,854 )
Amortization of intangible assets (40,809 ) (41,678 ) (82,221 ) (83,378 )
Restructuring and asset impairment charges (1,101 ) (9,374 ) (5,647 ) (13,913 )
Equity-based compensation (6,731 ) (11,749 ) (18,755 ) (25,774 )
Transition and integration costs (7,041 ) (5,108 ) (9,451 ) (12,307 )
Earnout amortization (536 ) (959 ) (1,494 ) (1,917 )
CEO transition cash costs 1,600 975
Remeasurement of contingent consideration (281 ) (398 ) (1,171 ) (74 )
Gain on settlement of acquired receivable       2,537         2,537  
Non-GAAP Total COGS and OpEx $ 120,951   $ 127,704   $ 251,822   $ 265,244  
 
Three Months Ended June 30, Six Months Ended June 30,
  2018     2017     2018     2017  
GAAP Operating (loss) income $ (8,763 ) $ 8,743 $ (17,803 ) $ 3,398
Depreciation 5,773 5,382 10,914 10,854
Amortization of intangible assets 40,809 41,678 82,221 83,378
Restructuring and asset impairment charges 1,101 9,374 5,647 13,913
Equity-based compensation 6,731 11,749 18,755 25,774
Transition and integration costs 7,041 5,108 9,451 12,307
Earnout amortization 536 959 1,494 1,917
CEO transition cash costs (1,600 ) (975 )
Remeasurement of contingent consideration 281 398 1,171 74
Gain on settlement of acquired receivable       (2,537 )       (2,537 )
Adjusted EBITDA $ 51,909   $ 80,854   $ 110,875   $ 149,078  
 
Three Months Ended June 30, Six Months Ended June 30,
  2018     2017     2018     2017  
GAAP Interest expense $ (12,171 ) $ (10,573 ) $ (23,805 ) $ (20,837 )
Accretion of contingent consideration 114 213 192 368
Amortization of note issuance costs 569 528 1,128 1,050
Amortization of convertible note discount 3,292 3,143 6,546 6,249
Reclassify current period cost of interest rate swaps   (938 )   (2,266 )   (2,321 )   (4,508 )
Non-GAAP Interest Expense $ (9,134 ) $ (8,955 ) $ (18,260 ) $ (17,678 )
 

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SailPoint Announces Second Quarter 2018 Financial Results

AUSTIN, Texas–()–SailPoint Technologies Holdings, Inc. (NYSE: SAIL), the leader in enterprise identity governance, today announced financial results for the second quarter ended June 30, 2018.

“We are pleased to announce our financial results for Q2 2018, which showed strong momentum across the business with revenue increasing 39% year-over-year and profitability on a non-GAAP basis,” said Mark McClain, SailPoint’s CEO and Co-founder. “At 1,031 customers, we are excited to have crossed the 1,000 customer milestone. Our customers represent everything from the world’s largest companies to cloud-first mid-market enterprises.”

“Organizations are struggling to keep pace with the constantly evolving security and compliance landscape amid their digital transformation, which is why identity governance is so critical,” added McClain. “Regardless of where an enterprise is in their digital transformation, they need the ability to securely govern digital identities for all users, which includes both humans and non-human bots, all applications and all data, whether on premises or in the cloud. SailPoint is at the forefront of developing innovative ways of providing comprehensive identity governance to ensure companies can securely and confidently enable their workforce.”

Financial Highlights for Second Quarter 2018:

  • Revenue: Total revenue was $54.6 million, a 39% increase over Q2 2017. License revenue was $19.1 million, a 43% increase over Q2 2017. Subscription revenue was $25.0 million, a 53% increase over Q2 2017. Services and other revenue was $10.4 million, an 8% increase over Q2 2017.
  • Operating (Loss) Income: Loss from operations was $(1.8) million, compared to loss from operations of $(1.2) million in Q2 2017. Non-GAAP income from operations was $4.6 million, compared to $1.2 million in Q2 2017.
  • Net (Loss) Income: Net loss was $(5.6) million, compared to $(4.3) million in Q2 2017. Net loss available to common shareholders per basic and diluted share was $(0.07), compared to $(0.22) in Q2 2017. Non-GAAP net income was $2.5 million, compared to non-GAAP net loss of $(1.7) million in Q2 2017. Non-GAAP net income per diluted share was $0.03, compared to non-GAAP net loss per basic and diluted share of $(0.02) in Q2 2017.
  • Adjusted EBITDA: Adjusted EBITDA was $4.4 million, compared to $1.9 million in Q2 2017.
  • Balance Sheet and Cash Flow: As of June 30, 2018, cash and cash equivalents were $81.8 million. During the second quarter of 2018, the Company repaid $60.0 million of borrowings outstanding under its term loan facility to reduce the aggregate outstanding principal amount thereof to $10.0 million. During the three months ended June 30, 2018, the Company generated $11.3 million in cash from operations compared with $(0.9) million of cash used in operations from the prior year period. For the six months ended June 30, 2018, the Company generated $26.6 million in cash from operations, compared to $6.0 million of cash from operations in the prior year period.

The tables at the end of this press release include reconciliation of non-GAAP net income (loss) to GAAP net loss, non-GAAP income from operations to GAAP loss from operations, non-GAAP to GAAP weighted average shares outstanding and adjusted EBITDA to GAAP net loss for the three months and six months ended June 30, 2018 and 2017. An explanation of these measures is also included below under the heading “Non-GAAP Financial Measures.”

Financial Outlook:

For the third quarter of 2018, SailPoint expects:

  • Revenue in the range of $54.5 million to $55.5 million
  • Non-GAAP (loss) income from operations in the range of $(1.0) million to breakeven
  • Non-GAAP net loss per basic and diluted common share in the range of $(0.02) to $(0.01), based on estimated cash income tax payments of $0.6 million and 88 million basic and diluted common shares outstanding. Expectations of non-GAAP loss from operations and non-GAAP net loss per basic and diluted common share exclude stock-based compensation expense and amortization of acquired intangibles.

For the full year 2018, SailPoint now expects:

  • Revenue in the range of $233.0 million to $236.0 million
  • Non-GAAP income from operations in the range of $17.0 million to $19.0 million
  • Non-GAAP net income per diluted common share in the range of $0.12 to $0.14, based on estimated cash income tax payments of $2.0 million and 93 million diluted common shares outstanding. Expectations of non-GAAP income from operations and non-GAAP net income per diluted common share exclude stock-based compensation expense and amortization of acquired intangibles.

These statements regarding SailPoint’s expectations of its financial outlook are forward-looking and actual results may differ materially. Refer to “Forward-Looking Statements” below for information on the factors that could cause its actual results to differ materially from these forward-looking statements.

All of SailPoint’s forward-looking non-GAAP financial measures exclude estimates for stock-based compensation expense. SailPoint has not reconciled its expectations as to non-GAAP income from operations and non-GAAP net income (loss) per basic and diluted common shares to their most directly comparable GAAP measure due to the high variability and difficulty in making accurate forecasts and projections, particularly with respect to stock-based compensation expense. Stock-based compensation expense is affected by future hiring, turnover, and retention needs, as well as the future fair market value of our common stock, all of which are difficult to predict and subject to change. The actual amount of the excluded stock-based compensation expense will have a significant impact on SailPoint’s GAAP loss from operations and GAAP net loss per basic and diluted common share. Accordingly, reconciliations of our forward-looking non-GAAP income (loss) from operations and non-GAAP net income (loss) per basic and diluted common shares are not available without unreasonable effort.

Conference Call and Webcast:

SailPoint will host a conference call today, August 8, 2018, at 5:00 p.m. Eastern Time to discuss its second quarter 2018 financial results. The dial-in number will be 877-407-0792 or 201-689-8263. A live webcast of the conference call will be available on SailPoint’s website at https://investors.sailpoint.com.

Following the conference call, a replay will be available until midnight on August 22, 2018. The replay dial-in number will be 844-512-2921 or 412-317-6671, using the replay pin number: 13681147. An archived webcast of the call will also be available at https://investors.sailpoint.com.

Non-GAAP Financial Measures:

In addition to SailPoint’s financial information presented in accordance with generally accepted accounting principles in the United States (“GAAP”), SailPoint uses certain non-GAAP financial measures to clarify and enhance SailPoint’s understanding of past performance and future prospects. Generally, a non-GAAP financial measure is a numerical measure of a company’s operating performance, financial position or cash flow that includes or excludes amounts that are included or excluded from the most directly comparable measure calculated and presented in accordance with GAAP. SailPoint monitors the non-GAAP financial measures described below, and SailPoint’s management believes they are helpful to investors because they provide an additional tool to use in evaluating SailPoint’s financial and business trends and operating results. In addition, SailPoint’s management uses these non-GAAP measures to compare SailPoint’s performance to that of prior periods for trend analysis and for budgeting and planning purposes. In particular, SailPoint believes that non-GAAP income (loss) from operations, non-GAAP net income (loss), non-GAAP net income (loss) available to common shareholders per basic share and per diluted share, and adjusted EBITDA, are important measures for evaluating SailPoint’s performance because they facilitate comparisons of SailPoint’s core operating results from period to period by removing, where applicable, the impact of SailPoint’s capital structure (net interest income or expense from SailPoint’s outstanding debt, as well as amortization of debt issuance costs and expenses related to call protection on early payment of debt), asset base (depreciation and amortization), income taxes, purchase accounting adjustments, acquisition and sponsor related costs and stock-based compensation.

SailPoint’s non-GAAP financial measures may not provide information that is directly comparable to that provided by other companies in our industry because they may calculate non-GAAP financial results differently than we do. In addition, there are limitations in using non-GAAP financial measures because they are not prepared in accordance with GAAP and exclude expenses that may have a material impact on our reported financial results. The presentation of non-GAAP financial information is not meant to be considered in isolation or as a substitute for the directly comparable financial measures prepared in accordance with GAAP. SailPoint urges you to review the reconciliations of our non-GAAP financial measures to the comparable GAAP financial measures included below, and not to rely on any single financial measure to evaluate its business.

Non-GAAP income (loss) from operations. SailPoint believes that the use of non-GAAP income (loss) from operations is helpful to our investors to clarify and enhance their understanding of past performance and future prospects. Non-GAAP income (loss) from operations is calculated as loss from operations on a GAAP basis excluding (i) stock-based compensation expense and (ii) amortization of acquired intangibles.

Non-GAAP net income (loss) and non-GAAP net income (loss) available to common shareholders per basic and diluted share. SailPoint believes that the use of non-GAAP net income (loss) and non-GAAP net income (loss) available to common shareholders per basic and diluted share is helpful to our investors to clarify and enhance their understanding of past performance and future prospects. Non-GAAP net income (loss) is calculated as net income (loss) (a) excluding (i) stock-based compensation expense, (ii) amortization of acquired intangibles, (iii) amortization of debt issuance costs, and (iv) income tax expense (benefit) and (b) including cash income taxes paid. SailPoint defines non-GAAP net income (loss) available to common shareholders per basic and diluted share as non-GAAP net income (loss) divided by the non-GAAP weighted average outstanding common shares, which is calculated as if the conversion of our preferred stock, including related accumulated and unpaid dividend, occurred at the beginning of each respective period.

Adjusted EBITDA. Adjusted EBITDA is a non-GAAP financial measure that SailPoint calculates as net loss adjusted to exclude income taxes, net interest expense, depreciation and amortization, purchase accounting adjustments, acquisition and sponsor related costs and stock-based compensation expense.

The accompanying tables have more details on the reconciliations of non-GAAP financial measures to their nearest comparable GAAP measures.

Forward-Looking Statements:

This press release and statements made during the above referenced conference call may contain “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995, including regarding the Company’s growth rate and its expectations regarding future revenue, operating income or loss or earnings or loss per share. In some cases, you can identify forward-looking statements because they contain words such as “may,” “will,” “will be,” “will likely result,” “should,” “expects,” “plans,” “anticipates,” “could,” “would,” “foresees,” “intends,” “target,” “projects,” “contemplates,” “believes,” “estimates,” “predicts,” “potential” or “continue” or the negative of these words or other similar terms or expressions that concern our expectations, strategy, plans or intentions. These statements are not guarantees of future performance, but are based on management’s current expectations, assumptions and beliefs concerning future developments and their potential effect on us, which are inherently subject to uncertainties, risks and changes in circumstances that are difficult to predict. Our expectations expressed or implied in these forward-looking statements may not turn out to be correct. Our results could be materially different from our expectations because of various risks.

Important factors, some of which are beyond our control, that could cause actual results to differ materially from our historical results or those expressed or implied by these forward-looking statements include the following: our ability to attract and retain customers and our ability to deepen our relationships with existing customers; our expectations regarding our customer growth rate; our ability to maintain successful relationships with our channel partners and further develop strategic relationships; our ability to develop or acquire new solutions, improve our platform and solutions and increase the value of and benefits associated with our platform and solutions; our ability to compete successfully against current and future competitors; our plans to further invest in and grow our business, and our ability to effectively manage our growth and associated investments; our ability to adapt and respond to rapidly changing technology, evolving industry standards, changing regulations and changing customer needs; our ability to maintain and enhance our brand or reputation as an industry leader and innovator; our ability to hire, retain, train and motivate our senior management team and key employees; our ability to successfully enter new markets and manage our international expansion; adverse economic conditions in the United States, Europe or the global economy; significant changes in the contracting or fiscal policies of the public sector; actual or perceived failures by us to comply with privacy policy or legal or regulatory requirements; our ability to maintain third-party licensed software in or with our solutions; and our ability to raise additional capital or generate cash flows necessary to expand our operations and invest in new technologies. These and other important risk factors are described more fully in our reports and other documents filed with the Securities and Exchange Commission (“the SEC”) including (i) under “Part I, Item 1A. Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2017, which was filed with the SEC on March 19, 2018, and (ii) under “Part II, Item 1A. Risk Factors” in our Quarterly Report on Form 10-Q for the quarter ended March 31, 2018, which was filed with the SEC on May 9, 2018, and (iii) under “Part II, Item 1A. Risk Factors” in our Quarterly Report on Form 10-Q for the quarter ended June 30, 2018, which is expected to be filed shortly after the release of this press release on August 7, 2018, and could cause actual results to vary from expectations.

Any forward-looking statement speaks only as of the date as of which such statement is made, and, except as required by law, we undertake no obligation to update or revise publicly any forward-looking statements, whether because of new information, future events, or otherwise.

About SailPoint

SailPoint, the leader in enterprise identity governance, brings the Power of Identity to customers around the world. SailPoint’s open identity platform gives organizations the power to enter new markets, scale their workforces, embrace new technologies, innovate faster and compete on a global basis. As both an industry pioneer and market leader in identity governance, SailPoint delivers security, operational efficiency and compliance to enterprises with complex IT environments. SailPoint’s customers are among the world’s largest companies in a wide range of industries, including: 7 of the top 15 banks, 4 of the top 6 healthcare insurance and managed care providers, 9 of the top 15 property and casualty insurance providers, 5 of the top 15 pharmaceutical companies, and 11 of the largest 15 federal agencies.

More information on SailPoint is available at: www.sailpoint.com.

       

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

 
Three months ended Six months ended
June 30, 2018   June 30, 2017 June 30, 2018   June 30, 2017
(In thousands, except share and per share data)
(Unaudited)
Revenue
Licenses $ 19,128 $ 13,341 $ 36,115 $ 25,577
Subscription 25,051 16,324 48,056 31,276
Services and other   10,381   9,595   20,103   17,873
Total revenue 54,560 39,260 104,274 74,726
Cost of revenue
Licenses (1) 1,260 1,110 2,398 2,197
Subscription (1)(2) 4,919 3,938 9,577 7,513
Services and other (2)   7,197   5,647   14,171   11,120

Total cost of revenue

  13,376   10,695   26,146   20,830
Gross profit 41,184 28,565 78,128 53,896
Operating expenses
Research and development (1)(2) 10,115 7,966 19,877 14,893
General and administrative (1)(2) 7,743 3,442 15,400 6,474
Sales and marketing (1)(2)   25,163   18,340   48,978   33,513
Total operating expenses   43,021   29,748   84,255   54,880
Loss from operations (1,837 ) (1,183 ) (6,127 ) (984)
Other expense, net:
Interest expense, net (2,800 ) (2,696 ) (3,978 ) (5,353)
Other, net   (569 )   (30 )   (716 )   (94)
Total other expense, net   (3,369 )   (2,726 )   (4,694 )   (5,447)
Loss before income taxes (5,206 ) (3,909 ) (10,821 ) (6,431)
Income tax expense   (441 )   (395 )   (793 )   (156)
Net loss $ (5,647 ) $ (4,304 ) $ (11,614 ) $ (6,587)
Net loss available to common shareholders (3) $ (5,647 ) $ (10,724 ) $ (11,614 ) $ (19,177)
Net loss per common share
Basic and diluted $ (0.07 ) $ (0.22 ) $ (0.14 ) $ (0.40)
Weighted average shares outstanding
Basic and diluted   86,246,056   47,930,190   85,984,103   47,567,048
 
 

(1) Includes amortization of acquired intangibles as follows:

      Three months ended   Six months ended
June 30, 2018   June 30, 2017 June 30, 2018   June 30, 2017
(In thousands)
Cost of revenue – license $ 1,008 $ 1,008 $ 2,016 $ 2,016
Cost of revenue – subscription 96 96 192 192
Research and development 34 81 68 81
Sales and marketing   1,068   1,022   2,136   2,139
Total amortization of acquired intangibles $ 2,206 $ 2,207 $ 4,412 $ 4,428
 
 

(2) Includes stock-based compensation expense and related employer payroll tax expense as follows:

  Three months ended   Six months ended
June 30, 2018   June 30, 2017 June 30, 2018   June 30, 2017
(In thousands)
Cost of revenue – subscription $ 255 $ 9 $ 376 $ 18
Cost of revenue – services and other 354 20 729 38
Research and development 652 35 1,293 65
General and administrative 1,706 45 4,046 75
Sales and marketing   1,215   76   2,877   147
Total stock-based compensation expense $ 4,182 $ 185 $ 9,321 $ 343
 
 

(3) Net loss available to common shareholders is calculated by subtracting the accretion of undeclared and unpaid dividends on redeemable convertible preferred stock from net loss.

     

CONDENSED CONSOLIDATED BALANCE SHEETS

 
As of
June 30, 2018   December 31, 2017
(In thousands, except share data)
(Unaudited)
Assets
Current assets
Cash and cash equivalents $ 81,809 $ 116,049
Restricted cash 120 78
Accounts receivable 55,196 72,907
Prepayments and other current assets   9,784     10,013  
Total current assets 146,909 199,047
Property and equipment, net 3,595 3,018
Deferred tax asset – non-current 264 264
Other non-current assets 3,328 3,542
Goodwill 219,377 219,377
Intangible assets, net   76,773     81,185  
Total assets $ 450,246   $ 506,433  
Liabilities and stockholders’ equity
Current liabilities
Accounts payable $ 2,894 $ 2,231
Accrued expenses and other liabilities 14,106 22,636
Income taxes payable 1,423 1,688
Deferred revenue   81,322     73,671  
Total current liabilities 99,745 100,226
Long-term debt 9,640 68,329
Other long-term liabilities 51 27
Deferred revenue non-current   13,817     9,454  
Total liabilities 123,253 178,036
Commitments and contingencies
Stockholders’ equity
Common stock, $0.0001 par value 9 8
Preferred stock, $0.0001 par value
Additional paid-in capital 363,818 353,609
Accumulated deficit   (36,834 )   (25,220 )
Total stockholders’ equity   326,993     328,397  
Total liabilities and stockholders’ equity $ 450,246   $ 506,433  
 
     

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

 
Six months ended
June 30, 2018   June 30, 2017
(In thousands)
(Unaudited)
Operating activities
Net loss $ (11,614 ) $ (6,587 )
Adjustments to reconcile net loss to net cash provided by operating activities:
Depreciation and amortization expense 5,278 4,978
Amortization of loan origination fees 191 307
Loss on modification and partial extinguishment of debt 1,536
Gain on disposal of fixed assets (48 ) (5 )
Stock-based compensation expense 9,255 343
Changes in operating assets and liabilities:
Accounts receivable 17,711 1,283
Prepayments and other current assets 229 1,743
Other non-current assets 214 (1,570 )
Accounts payable 663 835
Accrued expenses and other liabilities (8,557 ) (2,731 )
Income taxes payable (264 ) (229 )
Deferred revenue   12,013     7,662  
Net cash provided by operating activities   26,607     6,029  
Investing activities
Purchase of property and equipment (1,405 ) (1,263 )
Proceeds from sale of property and equipment   8     109  
Net cash used in investing activities   (1,397 )   (1,154 )
Financing activities
Repayment of debt (60,000 )
Prepayment penalty and fees (300 )
Proceeds from borrowing 50,000
Dividend payments (50,387 )
Debt issuance costs (1,494 )
Repurchase of equity shares (1 ) (442 )
Exercise of stock options   893     136  
Net cash used in financing activities   (59,408 )   (2,187 )
(Decrease) increase in cash (34,198 ) 2,688
Cash, cash equivalents and restricted cash, beginning of period   116,127     18,272  
Cash, cash equivalents and restricted cash, end of period $ 81,929   $ 20,960  
 
       

RECONCILIATION OF NON-GAAP INCOME FROM OPERATIONS

 
Three months ended Six months ended
June 30, 2018   June 30, 2017 June 30, 2018   June 30, 2017
(In thousands)
Loss from operations $ (1,836 ) $ (1,183 ) $ (6,126 ) $ (984 )
Add back:
Stock-based compensation expense (1) 4,182 185 9,321 343
Amortization of acquired intangibles   2,206     2,207     4,412     4,428  
Non-GAAP income from operations $ 4,552   $ 1,209   $ 7,607   $ 3,787  

(1) Stock-based compensation expense includes related employer payroll tax expense.

 

RECONCILIATION OF NON-GAAP NET INCOME (LOSS)

       
Three months ended Six months ended
June 30, 2018   June 30, 2017 June 30, 2018   June 30, 2017
(In thousands)
Net loss on a GAAP basis $ (5,647 ) $ (4,304 ) $ (11,614 ) $ (6,587 )
Add back:
Stock-based compensation expense (1) 4,182 185 9,321 343
Amortization of acquired intangibles 2,206 2,207 4,412 4,428

Amortization of debt issuance costs (2)

1,619 155 1,727 307
Expense related to call protection on early payment of debt 300 300
GAAP income tax expense 441 395 793 156
Less:
Cash income taxes paid   629     301     723     374  
Non-GAAP net income (loss)   2,471   $ (1,663 )   3,916   $ (1,727 )
Non-GAAP net income (loss) per common share
Basic $ 0.03   $ (0.02 ) $ 0.05   $ (0.02 )
Diluted $ 0.03   $ (0.02 ) $ 0.04   $ (0.02 )
Non-GAAP weighted average number of common shares outstanding
Basic 86,246,056 66,677,462 85,984,103 69,991,396
Diluted 89,872,726 66,677,462 89,473,365 69,991,396
 

(1) Stock-based compensation expense includes employer related payroll tax expense.

(2) Includes $1.5 million of loss on the modification and partial extinguishment of debt for the three and six months ended June 30, 2018

       

RECONCILIATION OF NON-GAAP WEIGHTED-AVERAGE OUTSTANDING COMMON SHARES

 
Three months ended Six months ended
June 30, 2018   June 30, 2017 June 30, 2018   June 30, 2017
Weighted average shares used to compute net loss per share available to common shareholders, basic and diluted, on a GAAP basis 86,246,056 47,930,190 85,984,103 47,567,048
Add back:
Additional weighted average shares giving effect to conversion of preferred stock at the beginning of the period 18,747,272 22,424,348
Non-GAAP weighted average outstanding common shares
Basic 86,246,056 66,677,462 85,984,103 69,991,396
Effect of potentially dilutive securities 3,626,670 3,489,262
Diluted 89,872,726 66,677,462 89,473,365 69,991,396
       

RECONCILIATION OF ADJUSTED EBITDA

 
Three months ended Six months ended
June 30, 2018   June 30, 2017 June 30, 2018   June 30, 2017
(In thousands)
Net loss $ (5,647 ) $ (4,304 ) $ (11,614 ) $ (6,587 )
Stock-based compensation (1) 4,182 185 9,321 343
Amortization of acquired intangibles 2,206 2,207 4,412 4,428
Depreciation 445 295 866 550
Purchase price accounting adjustment (2) 19 55 32 110
Acquisition and sponsor related costs 328 656
Interest expense (3) 2,800 2,696 3,978 5,353
Income tax expense   441     395     793     156  
Adjusted EBITDA $ 4,446   $ 1,857   $ 7,788   $ 5,009  

(1) Stock-based compensation expense includes employer related payroll tax expense.

(2) Purchase accounting adjustment related to the fair value write down of deferred revenue from the acquisition of SailPoint Technologies, Inc. on September 8, 2014.

(3) Includes $1.5 million of loss on the modification and partial extinguishment of debt for the three and six months ended June 30, 2018.

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Glen Richards-Backed Healthia Limited to List on the ASX $26.8m Initial Public Offer Opens

BRISBANE, Australia–()–Healthia Limited (Healthia or the Company), is aiming to become one of Australia’s leading allied health companies offering podiatry, physiotherapy and related services, with the opening of a $26.8 million Initial Public Offer (IPO) to list on the Australian Securities Exchange.

Allied health refers to health professionals who are not doctors, dentists or nurses.

Healthia, which is the holding company that owns and operates 56 My FootDr podiatry clinics, orthotics laboratory iOrthotics and 50 per cent of allied health supplies business D.B.S. Medical intends to use the IPO proceeds to fund the acquisition of additional podiatry, physiotherapy and hand therapy businesses.

Following completion of the acquisitions, the group will operate 72 podiatry clinics under the My FootDr brand, 23 physiotherapy clinics under the Allsports Physiotherapy brand, seven hand therapy clinics under the Extend Rehabilitation brand, iOrthotics, and a 75 per cent stake in D.B.S. Medical. Healthia also intends to introduce podiatry services into physiotherapy clinics where these services do not already exist.

According to IBISWorld industry data, the Australian podiatry sector generated revenue of $900 million in 2017 and the physiotherapy sector $1.7 billion.

Healthia says funds raised and a listing on the ASX will help it complete acquisitions, give it access to capital markets, provide the benefit of a public profile as a listed entity, allow existing shareholders to realise some of the value in My FootDr podiatry clinics, and provide funds for more acquisitions.

Healthia believes that Australia’s highly fragmented allied health industry offers a commercial opportunity for an integrated provider to meet an increasing demand for physiotherapy and podiatry services as the population ages and becomes more health-conscious, and to help clinicians reduce administrative burdens within their practices.

Healthia chairman Glen Richards, who is also co-founder of the Greencross veterinary and pet care group, and a judge on Channel Ten’s Shark Tank program, said Healthia can become a leading allied health provider.

“The integration of these well-established podiatry and physiotherapy businesses, combined with the opportunity to acquire additional practices at attractive multiples and vertically integrate two aligned wholesale supply businesses, is a compelling commercial opportunity,” Dr Richards said.

“Through cross-referrals, improved management systems as well as an attractive clinician retention program, we have an opportunity to create a leading allied health provider group delivering high-quality services to the community.”

Healthia is offering about 26.8 million ordinary shares at $1 .00 per share under its Chairman’s List Offer, Broker Firm Offer and Institutional Offer. The Company is also offering an additional 7.5 million shares at $1.00 per share to eligible clinicians (Clinician Participation Offer) as part consideration for the clinicians’ health businesses.

The Company’s indicative market capitalisation is about A$63 million upon listing on the ASX.

Upon listing on the ASX, Healthia aims to deliver increased revenue and profits through long-term organic growth, further acquisitions of complementary allied health businesses, and centralised support initiatives.

The Company aims to use the vertically integrated businesses such as iOrthotics and D.B.S. Medical to drive buying synergies, optimise the operations of existing clinics, generate cost savings through scale and improve practice management.

In addition to long-term organic growth, Healthia will focus on the retention and incentivisation of its clinicians through the Clinician Retention Program (CRP) to ensure that the interests of clinicians and shareholders are aligned. Apart from a series of structured education and training initiatives, the CRP will provide clinicians with the opportunity to own a portion of the clinic that they work in via Clinic Class Shares (CCS).

Healthia’s IPO expects to start trading on the ASX on 11 September 2018.

The IPO is fully underwritten by Canaccord Genuity (Australia) Limited.

The offer of shares for issue by Healthia Limited is made under a prospectus lodged with the Australian Securities and Investments Commission (ASIC) on 31 July 2018. Copies of the prospectus are available on the IPO website at https://www.healthia.com.au/key-documents/

For further information about Healthia Limited, and the IPO, please refer to the prospectus. Potential investors should consider the prospectus in its entirety before deciding whether to buy shares.

About Healthia

Healthia Limited is an integrated group of health-based companies whose mission is to enrich the lives of people through world-class health services. The group operates an integrated portfolio of allied health businesses which include My FootDr, Allsports Physiotherapy, Extend Rehabilitation, iOrthotics and D.B.S. Medical Supplies.

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Technical Analysis Strategies for Beginners

Many investors analyze stocks based on their fundamentals – such as their revenue, valuation or industry trends – but fundamental factors aren’t always reflected in the market price. Technical analysis helps traders and investors navigate the gap between intrinsic value and market price by leveraging techniques like statistical analysis and behavioral economics. Most investors use both technical and fundamental analysis to make decisions.

Choose the Right Approach

There are two different ways to approach technical analysis: the top-down approach and the bottom-up approach. Often times, short-term traders will take a top-down approach and long-term investors will take a bottom-up approach.

  • Top-Down. The top-down approach involves screening for stocks that fit certain technical criteria. For example, a trader may be interested in stocks that broke out from their 50-day moving average as a buying opportunity.
  • Bottom-Up. The bottom-up approach involves analyzing a stock that appears fundamentally interesting for potential entry and exit points. For example, an investor may find an undervalued stock in a downtrend and use technical analysis to identify a specific entry point when the stock could be bottoming out. (See also: Bottom-Up and Top-Down Investing Explained.)

In addition to these considerations, different types of traders might prefer using different forms of technical analysis. Day traders might use simple trendlines and volume indicators to make decisions, while swing or position traders may prefer chart patterns and technical indicators. Traders developing automated algorithms may have entirely different requirements that use a combination of volume indicators and technical indicators to drive decision making.

How to Get Started

There are five core steps to getting started with technical analysis.

1. Identify a technical analysis strategy or develop a trading system. 

The first step is to identify a strategy or develop a trading system. For example, a novice trader may decide to follow a moving average crossover strategy, where he or she will track two moving averages (50-day and 200-day) on a particular stock price movement. For this strategy, if the short-term 50-day moving average goes above the long-term 200-day moving average, it indicates an upward price trend and generates a buy signal. The opposite is true for a sell signal. (For more, see: 4 Common Active Trading Strategies.)

Chart showing an example of a moving average crossover

2. Identify tradable securities that fit with the technical strategy.

Not all stocks or securities will fit with the above strategy, which is ideal for highly liquid and volatile stocks instead of illiquid or stable stocks. Different stocks or contracts may also require different parameter choices – in this case, different moving averages like a 15-day and 50-day moving average.

3. Find the right brokerage account for executing the trades.

Get the right trading account that supports the selected type of security (e.g., common stock, penny stock, futures, options, etc.). It should offer the required functionality for tracking and monitoring the selected technical indicators, while keeping costs low to avoid eating into profits. For the above strategy, a basic account with moving averages on candlestick charts would work.

4. Select an interface to track and monitor trades.

Traders may require different levels of functionality depending on their strategy. For example, day traders will require a margin account that provides access to Level II quotes and market maker visibility. But for our example above, a basic account may be preferable as a lower-cost option.

5. Identify any other applications that may be needed to implement the strategy. 

There may be other features that are needed to maximize performance. Some traders may require mobile alerts or access to trading on the go, while others may leverage automated trading systems to execute trades on their behalf. (For more, see: The Best Technical Analysis Trading Software.)

Tips and Risk Factors

Trading can be challenging, which means it’s important to do your homework beyond the above points. Some other key considerations include:

  • Understanding the rationale and underlying logic behind technical analysis.
  • Backtesting trading strategies to see how they would have performed in the past.
  • Practicing trading in a demo account before committing real capital.
  • Being aware of the limitations of technical analysis to avoid costly failures and surprises.
  • Being thoughtful and flexible about the scalability and future requirements.
  • Trying to evaluate the features of a trading account by requesting a free trial.
  • Starting small in the beginning and expanding as you gain experience.

The Bottom Line

Many investors leverage both fundamental and technical analysis when making investment decisions since technical analysis helps fill in the gaps of knowledge. By developing an understanding of technical analysis, traders and investors can improve their long-term risk-adjusted returns, but it’s important to understand and practice these techniques before committing real capital to avoid costly mistakes. (For additional reading, check out: Blending Technical and Fundamental Analysis.)

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Asia Markets: Asian markets mixed as drop in oil prices weighs on energy stocks

Asian stocks markets were mixed in early trading Thursday after muted moves in the U.S. and Europe overnight. The Nikkei started lower, hampered by a further uptick for the yen, but Chinese stocks advanced despite rising trade tensions.

As Japanese stocks lagged amid fresh U.S.-China trade concerns and a stronger yen, the dollar
USDJPY, -0.13%
 fell to session lows of ¥110.78 versus ¥110.95 in late New York trading. The Nikkei
NIK, -0.27%
  was off 0.3%, with the oil/coal-products sector leading the way lower, skidding 2.3% following the overnight slump in oil prices. Japan Petroleum
1662, -8.32%
  tumbled 8.5%. Japanese skincare giant Shiseido
4911, +6.56%
  rebounded strongly after selling off sharply Wednesday following its earnings report, in which it raised ita yearly guidance. A day after finishing down 4.4%, the stock was up 6.5% Thursday. Shiseido shares have soared 48% this year.

After starting with modest declines, Chinese stocks bounced back after Wednesday’s sizable pullback. Perhaps helping sentiment, inflation numbers came in higher than expected last month, a possible sign that demand is holding up. The Shanghai Composite
SHCOMP, +1.78%
  was up 0.8% and the Shenzhen Composite
399106, +2.67%
  jumped 1.6%. Consumer and cyclical stocks were the top performers, but oil names were sliding.

Hong Kong stocks also made up early losses. The Hang Seng
HSI, +0.93%
  was up 0.3%, on pace for its fourth straight gain. Oil stocks fell though, with PetroChina
0857, -0.66%
  and CNOOC
0883, -0.92%
  down more than 1%. Property stocks were also under pressure after major lending local banks announced plans to finally raise interest rates — perhaps signalling the end to a decade of low borrowing costs. Hang Lung Properties
0101, -1.10%
  and New World Development
0017, +0.00%
  were down more 1%.

South Korea’s Kospi
SEU, +0.01%
  slipped 0.1%, with Hyundai
005380, -0.78%
 down 1%. Stocks were down in Taiwan
Y9999, -0.28%
 , but up in Malaysia
FBMKLCI, +0.24%
 . Singapore’s market was closed for a holiday.

Australia’s ASX 200
XJO, +0.71%
  was up despite energy losses. Santos
STO, -0.30%
 , Oil Search
OSH, +0.16%
  and Woodside Petroleum
WPL, -0.16%
 were all down less than 1%. New Zealand’s NZX 50
NZ50GR, +0.89%
  rebounded 0.8% following underperformance the past few days as Ryman Healthcare,
RYM, +2.62%
  a retirement-village operator, jumped 4% to fresh record highs.


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New York Plans to Limit Uber and Lyft Drivers

New York moved to become the first city in the U.S. to cap ride-hailing services including Uber Technologies Inc. and Lyft Inc., freezing new vehicle licenses for one year while it studies the fallout from the booming industry.

The vote Wednesday by the New York City Council could cripple the growth of Uber and Lyft in their biggest U.S. market as both companies are heading toward eventual initial public offerings. The Silicon Valley companies’ businesses depend on recruiting as many drivers as they can to drive down fares…

https://www.wsj.com/articles/new-york-city-council-votes-to-cap-uber-and-lyft-1533759263?mod=rss_Technology

Unum Group to present at Keefe, Bruyette & Woods 2018 Insurance Conference, New York

CHATTANOOGA, Tenn.–()–Unum Group (NYSE: UNM) announced today that Rick McKenney, President and CEO, will be representing the company at the Keefe, Bruyette & Woods Insurance Conference, Wednesday, September 5, 2018, in New York City.

McKenney is scheduled to speak at 2:45 p.m. eastern and will discuss the company’s business strategy and future growth prospects. There will be a live audio webcast of the presentation available on the Investors section of the company’s website, www.investors.unum.com, on the News and Events page.

ABOUT UNUM GROUP

Unum Group is a leading provider of financial protection benefits in the United States and the United Kingdom. Its primary businesses are Unum US, Colonial Life, and Unum UK. Unum’s portfolio includes disability, life, accident and critical illness, dental and vision coverage, which help protect millions of working people and their families in the event of an illness or injury. Unum also provides stop-loss coverage to help self-insured employers protect against unanticipated medical costs. The company reported revenues of $11.3 billion in 2017 and provided $7 billion in benefits.

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