Category: Business

  • MIL-OSI: CPS Announces First Quarter 2025 Earnings

    Source: GlobeNewswire (MIL-OSI)

    • Revenues of $106.9 million compared to $91.7 million in the prior year period
    • Net income of $4.7 million, or $0.19 per diluted share
    • Total portfolio balance of $3.615 billion, highest in company history
    • New contract purchases of $451.2 million

    LAS VEGAS, NV, May 12, 2025 (GLOBE NEWSWIRE) — Consumer Portfolio Services, Inc. (Nasdaq: CPSS) (“CPS” or the “Company”) today announced earnings of $4.7 million, or $0.19 per diluted share, for its first quarter ended March 31, 2025. This compares to a net income of $4.6 million, or $0.19 per diluted share, in the first quarter of 2024.

    Revenues for the first quarter of 2025 were $106.9 million, an increase of $15.2 million, or 16.6%, compared to $91.7 million for the first quarter of 2024.  Total operating expenses for the first quarter of 2025 were $100.1 million compared to $85.2 million for the 2024 period.  Pretax income for the first quarter of 2025 was $6.8 million compared to pretax income of $6.6 million in the first quarter of 2024.

    During the first quarter of 2025, CPS purchased $451.2 million of new contracts compared to $457.8 million during the fourth quarter of 2024, and $346.3 million during the first quarter of 2024. The Company’s receivables totaled $3.615 billion as of March 31, 2025, an increase from $3.491 billion as of December 31, 2024, and an increase from $3.021 billion as of March 31, 2024.

    Annualized net charge-offs for the first quarter of 2025 were 7.54% of the average portfolio as compared to 7.84% for the first quarter of 2024. Delinquencies greater than 30 days (including repossession inventory) were 12.35% of the total portfolio as of March 31, 2025, compared to 12.39% as of March 31, 2024.

    “We started off the year by posting the highest amount in new loan originations for any first quarter in company history,” said Charles E. Bradley, Chief Executive Officer. “This positions us well for the remainder of the year, as we remain focused on driving the company forward.”  

    Conference Call

    CPS announced that it will hold a conference call on May 13, 2025 at 1:00 p.m. ET to discuss its first quarter 2025 operating results. 

    Those wishing to participate can pre-register for the conference call at the following link https://register-conf.media-server.com/register/BIa727447d5fdf49d4b7da9c96f3d668b7. Registered participants will receive an email containing conference call details for dial-in options. To avoid delays, we encourage participants to dial into the conference call fifteen minutes ahead of the schedule start time. A replay will be available beginning two hours after conclusion of the call for 12 months via the Company’s website at https://ir.consumerportfolio.com/investor-relations.

    About Consumer Portfolio Services, Inc.

    Consumer Portfolio Services, Inc. is an independent specialty finance company that provides indirect automobile financing to individuals with past credit problems or limited credit histories. We purchase retail installment sales contracts primarily from franchised automobile dealerships secured by late model used vehicles and, to a lesser extent, new vehicles. We fund these contract purchases on a long-term basis primarily through the securitization markets and service the contracts over their lives.

    Forward-looking statements in this news release include the Company’s recorded figures representing allowances for remaining expected lifetime credit losses, its estimates of fair value (most significantly for its receivables accounted for at fair value), its provision for credit losses, its entries offsetting the preceding, and figures derived from any of the preceding. In each case, such figures are forward-looking statements because they are dependent on the Company’s estimates of losses to be incurred in the future. The accuracy of such estimates may be adversely affected by various factors, which include the following: possible increased delinquencies; repossessions and losses on retail installment contracts; incorrect prepayment speed and/or discount rate assumptions; possible unavailability of qualified personnel, which could adversely affect the Company’s ability to service its portfolio; possible increases in the rate of consumer bankruptcy filings, which could adversely affect the Company’s rights to collect payments from its portfolio; other changes in government regulations affecting consumer credit; possible declines in the market price for used vehicles, which could adversely affect the Company’s realization upon repossessed vehicles; and economic conditions in geographic areas in which the Company’s business is concentrated. Any or all of such factors also may affect the Company’s future financial results, as to which there can be no assurance. Any implication that the results of the most recently completed quarter are indicative of future results is disclaimed, and the reader should draw no such inference. Factors such as those identified above in relation to losses to be incurred in the future may affect future performance.

    Investor Relations Contact

    Danny Bharwani, Chief Financial Officer

    949-753-6811

     
    Consumer Portfolio Services, Inc. and Subsidiaries
    Condensed Consolidated Statements of Operations
    (In thousands, except per share data)
    (Unaudited)
           
      Three months ended
      March 31,
        2025       2024  
    Revenues:      
    Interest income $ 101,933     $ 84,288  
    Mark to finance receivables measured at fair value   3,500       5,000  
    Other income   1,441       2,456  
        106,874       91,744  
    Expenses:      
    Employee costs   25,033       24,416  
    General and administrative   13,542       13,753  
    Interest   54,918       41,968  
    Provision for credit losses   (979 )     (1,635 )
    Other expenses   7,558       6,685  
        100,072       85,187  
    Income before income taxes   6,802       6,557  
    Income tax expense   2,108       1,967  
    Net income $ 4,694     $ 4,590  
           
    Earnings per share:      
    Basic $ 0.22     $ 0.22  
    Diluted $ 0.19     $ 0.19  
           
           
    Number of shares used in computing earnings per share:      
    Basic   21,444       21,143  
    Diluted   24,325       24,602  
                   
    Condensed Consolidated Balance Sheets
    (In thousands)
    (Unaudited)
           
           
      March 31,   December 31,
        2025       2024  
    Assets:      
    Cash and cash equivalents $ 29,841     $ 11,713  
    Restricted cash and equivalents   153,637       125,684  
    Finance receivables measured at fair value   3,449,106       3,313,767  
           
    Finance receivables   3,109       5,420  
    Allowance for finance credit losses   (249 )     (433 )
    Finance receivables, net   2,860       4,987  
           
           
    Deferred tax assets, net   826       1,010  
    Other assets   37,336       36,707  
      $ 3,673,606     $ 3,493,868  
           
    Liabilities and Shareholders’ Equity:      
    Accounts payable and accrued expenses $ 75,289     $ 70,151  
    Warehouse lines of credit   365,683       410,898  
    Residual interest financing   163,391       99,176  
    Securitization trust debt   2,743,269       2,594,384  
    Subordinated renewable notes   27,547       26,489  
        3,375,179       3,201,098  
           
    Shareholders’ equity   298,427       292,770  
      $ 3,673,606     $ 3,493,868  
                   
    Operating and Performance Data ($ in millions)        
         
        At and for the
        Three months ended
        March 31,
          2025       2024  
             
    Contracts purchased   $ 451.22     $ 346.30  
    Contracts securitized   $ 462.54     $ 300.61  
             
    Total portfolio balance (1)   $ 3,614.55     $ 3,021.19  
    Average portfolio balance (1)   $ 3,572.64     $ 2,993.82  
             
             
    Delinquencies (1)        
    31+ Days     9.75 %     9.98 %
    Repossession Inventory     2.60 %     2.41 %
    Total Delinquencies and Repo. Inventory     12.35 %     12.39 %
             
    Annualized Net Charge-offs as % of Average Portfolio (1)     7.54 %     7.84 %
             
    Recovery rates (1), (2)     27.7 %     33.3 %
                     
      For the
      Three months ended
      March 31,
      2025   2024
      $ (3)   % (4)   $ (3)   % (4)
    Interest income $ 101.93     11.4 %   $ 84.29     11.3 %
    Mark to finance receivables measured at fair value   3.50     0.4 %     5.00     0.7 %
    Other income   1.44     0.2 %     2.46     0.3 %
    Interest expense   (54.92 )   -6.1 %     (41.97 )   -5.6 %
    Net interest margin   51.96     5.8 %     49.78     6.7 %
    Provision for credit losses   0.98     0.1 %     1.64     0.2 %
    Risk adjusted margin   52.94     5.9 %     51.41     6.9 %
    Other operating expenses (5)   (46.13 )   -5.2 %     (44.85 )   -6.0 %
    Pre-tax income $ 6.80     0.8 %   $ 6.56     0.9 %
                               
    (1)  Excludes third party portfolios.
    (2)  Wholesale auction liquidation amounts (net of expenses) as a percentage of the account balance at the time of sale.
    (3)  Numbers may not add due to rounding.
    (4)  Annualized percentage of the average portfolio balance.  Percentages may not add due to rounding.  
    (5)  Total pre-tax expenses less provision for credit losses and interest expense.
                               

    The MIL Network

  • MIL-OSI: Resolute Holdings Reports First Quarter 2025 Results

    Source: GlobeNewswire (MIL-OSI)

    NEW YORK, May 12, 2025 (GLOBE NEWSWIRE) — Resolute Holdings Management, Inc. (“Resolute Holdings”) (Nasdaq: RHLD), an operating management company responsible for providing management services to CompoSecure Holdings, L.L.C. (“CompoSecure Holdings”), a wholly owned subsidiary of CompoSecure, Inc. (“CompoSecure”) (Nasdaq: CMPO), today reported financial results for its fiscal first quarter ending March 31, 2025. Resolute Holdings reported first quarter earnings per share attributable to common stockholders of ($0.39) and Non-GAAP Fee-Related Earnings per share of ($0.07).

    “The first quarter was foundational for Resolute Holdings, with the spin-off from CompoSecure completed in February. We experienced a higher than normal tax provision and post spin-off professional fees in the quarter but reiterate our expectation for limited profitability for the full year with approximately $3.0mm of quarterly management fee revenue. I am pleased with the team we have assembled and believe our unique combination of permanent capital and differentiated operating capabilities position us well for the future,” said Tom Knott, Resolute Holdings’ Chief Executive Officer.

    Dave Cote, Resolute Holdings’ Executive Chairman added “We are encouraged by the ongoing work to improve operations, drive organic growth, and build a high-performance culture at CompoSecure. In the first quarter, we also increased our efforts to evaluate potential acquisitions and anticipate those efforts to remain significant through 2025 and beyond. We are pleased with our start to the year and remain focused on supporting CompoSecure while rigorously evaluating potential acquisitions that meet our core investment criteria.”

    As a result of the spin-off from CompoSecure and execution of the Management Agreement with CompoSecure Holdings, Resolute Holdings is required to consolidate the financial results of CompoSecure Holdings in accordance with U.S. GAAP. This presentation of financial results does not represent the underlying economics or the positive attributes of Resolute Holdings’ standalone business model, which consist of recurring, long-duration management fees and a relatively fixed expense base. The results of the Resolute Holdings standalone business and associated Non-GAAP Fee-Related Earnings calculation are included below to provide a clear picture of the economic performance of the business directly attributable to shareholders of RHLD. This release includes such results presented in accordance with U.S. GAAP, as well as certain Non-GAAP measures, including Fee-Related Earnings. See “Use of Non-GAAP Financial Measures” below.

    Resolute Holdings Segment Financial Information (GAAP); Fee-Related Earnings and Fee-Related Earnings Per Share (Non-GAAP) ($ in thousands except per share figures)
        
        Three months
        ended
        March, 31 2025
    Management fees   $ 1,129  
    Selling, general and administrative expenses     3,926  
    Income from operations     (2,797 )
    Total other income (expense)     (1 )
    Income (loss) before income taxes     (2,798 )
    Income tax (expense)     (568 )
    Net income (loss)     (3,366 )
    Net income (loss) attributable to non-controlling interest      
    Net income (loss) attributable to common stockholders     (3,366 )
    Net income (loss) per share attributable to common stockholders – diluted   $ (0.39 )
           
    Adjustments to reconcile Fee-Related Earnings to net income (loss) attributable to common stockholders:      
    Add: Equity-based compensation at CompoSecure (1)     1,148  
    Add: Pro forma management fees from Jan 1, 2025 to Feb 27, 2025 (2)     2,046  
    Add: Spin-Off costs (3)     290  
    Net tax impact of adjustments (4)     (724 )
    Fee-Related Earnings     (606 )
    Fee-Related Earnings per share – diluted   $ (0.07 )
    (1) Equity-based compensation required to be reported by Resolute Holdings related to awards issued under the CompoSecure Equity Plan. Equity granted under the CompoSecure Equity Plan relates to CompoSecure Class A common stock and has no impact on Resolute Holdings’ common stock outstanding.
    (2) Incremental management fees as if the CompoSecure Management Agreement was executed on January 1, 2025.
    (3) One-time costs associated with the Spin-Off from CompoSecure.
    (4) Tax-effect of adjustments at a 31% effective tax rate. Only applied to those adjustments that would impact Resolute Holdings’ taxes. Equity-based compensation expense under the CompoSecure Equity Plan is expensed for tax purposes at CompoSecure and not Resolute Holdings.
     

    Exhibit – Structural Relationship & Non-GAAP Financial Summary

    About Resolute Holdings Management, Inc.

    Resolute Holdings (Nasdaq: RHLD) is an alternative asset management platform led by David Cote and Tom Knott that provides operating management services including the oversight of capital allocation strategy, operational practices, and M&A sourcing and execution at CompoSecure Holdings and other managed businesses in the future. Resolute Holdings brings a differentiated approach to long-term value creation through the systematic deployment of the Resolute Operating System, which will create value at both the underlying managed businesses and at Resolute Holdings. For additional information on Resolute Holdings, please refer to Resolute Holdings’ filings with the U.S. Securities and Exchange Commission or please visit www.resoluteholdings.com.

    Cautionary Note Concerning Forward-Looking Statements

    This press release contains forward-looking statements as defined by the Private Securities Litigation Reform Act of 1995. These statements are based on the beliefs and assumptions of management. Although Resolute Holdings believes that its plans, intentions, and expectations reflected in or suggested by these forward-looking statements are reasonable, Resolute Holdings cannot assure you that it will achieve or realize these plans, intentions, or expectations. Forward-looking statements are inherently subject to risks, uncertainties, and assumptions. Generally, statements that are not historical facts, including statements concerning Resolute Holdings’ expectations regarding personnel, future platform acquisitions, limited profitability for the year ending December 31, 2025, revenues from management fees, the deployment of the Resolute Operating System, market opportunities, possible or assumed future actions, business strategies, events, or results of operations, and other matters, are forward-looking statements. In some instances, these statements may be preceded by, followed by or include the words “believes,” “estimates,” “expects,” “projects,” “forecasts,” “may,” “will,” “should,” “seeks,” “plans,” “scheduled,” “anticipates” or “intends” or the negatives of these terms or variations of them or similar terminology. Forward-looking statements are not guarantees of performance. You should not put undue reliance on these statements which speak only as of the date hereof. You should understand that the following important factors, among others, could affect Resolute Holdings’ future results and could cause those results or other outcomes to differ materially from those expressed or implied in Resolute Holdings’ forward-looking statements: the timing and amount of the management fees payable to Resolute Holdings, including unexpected fluctuations therein, unexpected changes in costs, risks associated with the implementation of the Resolute Operating System, unexpected market and macroeconomic developments, demand for Resolute Holdings’ services, the ability of Resolute Holdings to grow and manage growth profitably, compete within its industry and attract and retain its key employees; the possibility that Resolute Holdings may be adversely impacted by other global economic, business, competitive and/or other factors, including but not limited to inflationary pressures, volatile interest rates, variable tariff policies or intensified disruptions in the global financial markets; the outcome of any legal proceedings that may be instituted against Resolute Holdings or others; future exchange and interest rates; and other risks and uncertainties, including those under “Risk Factors” in filings that have been made or will be made with the Securities and Exchange Commission. Resolute Holdings undertakes no obligations to update or revise publicly any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by law.

    Use of Non-GAAP Financial Measures

    This press release includes certain non-GAAP financial measures that are not prepared in accordance with accounting principles generally accepted in the United States (“GAAP”) and that may be different from non-GAAP financial measures used by other companies. Resolute Holdings believes Fee-Related Earnings and Fee-Related Earnings per share are useful to investors in evaluating Resolute Holdings’ financial performance. Resolute Holdings believes that these non-GAAP financial measures depict the performance of the business and underlying economics attributable to Resolute Holdings common stockholders. Fee-Related Earnings and Fee-Related Earnings per share should not be considered as measures of financial performance under U.S. GAAP, and the items excluded from Fee-Related Earnings and Fee-Related Earnings per share are significant components in understanding and assessing Resolute Holdings’ financial performance. Accordingly, these key business metrics have limitations as an analytical tool. They should not be considered as an alternative to net income, net income per share, or any other performance measures derived in accordance with U.S. GAAP and may be different from similarly titled non-GAAP measures used by other companies.

    For investor inquiries, please contact:

    Resolute Holdings
    (212) 256-8405
    info@resoluteholdings.com

     
    Consolidated Balance Sheets
    Resolute Holdings Management, Inc.
    ($ in thousands, except par value and share amounts)
                 
           March 31,       December 31, 
        2025   2024
        Unaudited      
    ASSETS            
    CURRENT ASSETS            
    Cash and cash equivalents   $ 71,017     $ 71,589  
    Accounts receivable     54,188       47,449  
    Inventories, net     47,501       44,833  
    Prepaid expenses and other current assets     3,450       2,696  
    Deferred tax asset     24       24  
    Total current assets     176,180       166,591  
                 
    Property and equipment, net     21,917       23,448  
    Right of use assets, net     10,238       5,404  
    Derivative asset – interest rate swap     1,996       2,749  
    Deposits and other assets     3,957       3,600  
    Total assets   $ 214,288     $ 201,792  
                 
    LIABILITIES AND STOCKHOLDERS’ EQUITY (DEFICIT)            
    CURRENT LIABILITIES            
    Accounts payable   $ 11,414     $ 5,691  
    Accrued expenses     16,196       20,062  
    Bonus payable     4,199       8,466  
    Commission payable     2,400       2,563  
    Current portion of long-term debt     12,500       11,250  
    Current portion of lease liabilities – operating leases     2,110       2,113  
    Total current liabilities     48,819       50,145  
                 
    Long-term debt, net of deferred financing costs     180,713       184,389  
    Lease liabilities, operating leases     8,762       3,888  
    Total liabilities     238,294       238,422  
                 
    Commitments and contingencies (Note 16)            
                 
    Preferred stock, $0.0001 par value; 100,000,000 shares authorized, 0 shares issued and outstanding            
    Common stock, $0.0001 par value; 1,000,000,000 shares authorized, 8,525,998 and 0 shares issued and outstanding as of March 31, 2025 and December 31, 2024, respectively.            
    Additional paid-in capital     14,569       1,544  
    Accumulated deficit     (5,700 )     (2,334 )
    Total stockholders’ equity (deficit)     8,869       (790 )
    Non-controlling interest     (32,875 )     (35,840 )
    Total equity (deficit)     (24,006 )     (36,630 )
    Total liabilities and stockholders’ equity (deficit)   $ 214,288     $ 201,792  
                     
    Consolidated Statements of Operations
    Resolute Holdings Management, Inc.
    ($ in thousands, except per share amounts)
                 
        Three months ended
        March 31, 
        2025   2024
    Net sales   $ 103,889     $ 104,010  
    Cost of sales     49,342       48,797  
    Gross profit     54,547       55,213  
    Operating expenses:            
    Selling, general and administrative expenses     28,926       22,770  
    Income from operations     25,621       32,443  
                 
    Other income (expense):            
    Change in fair value of derivative liability – convertible notes redemption make-whole provision           (297 )
    Interest income     1,077       1,104  
    Interest expense     (3,384 )     (6,537 )
    Amortization of deferred financing costs     (131 )     (327 )
    Total other expense, net     (2,438 )     (6,057 )
    Income (loss) before income taxes     23,183       26,386  
    Income tax (expense)     (568 )      
    Net income (loss)   $ 22,615     $ 26,386  
                 
    Net income (loss) attributable to non-controlling interest     25,981       26,386  
                 
    Net income (loss) attributable to common stockholders   $ (3,366 )   $  
                 
    Net income (loss) per share attributable to common stockholders – basic & diluted   $ (0.39 )   $  
                 
    Weighted average shares used to compute net income (loss) per share attributable to common stockholders – basic & diluted (in thousands)     8,526       8,526  
                 
    Consolidated Statements of Cash Flows
    Resolute Holdings Management, Inc.
    ($ in thousands)
     
        Three months ended March 31, 
           2025      2024
                 
    Cash flows from operating activities:            
    Net income (loss)   $ 22,615     $ 26,386  
    Adjustments to reconcile net income (loss) to net cash provided by operating activities            
    Depreciation and amortization     2,273       2,221  
    Equity-based compensation expense     6,046       4,167  
    Amortization of deferred financing costs     131       345  
    Non-cash operating lease expense     615       587  
    Change in fair value of derivative liability – convertible notes redemption make-whole provisions           297  
    Changes in assets and liabilities            
    Accounts receivable     (6,739 )     5,378  
    Inventories     (2,668 )     (2,657 )
    Prepaid expenses and other assets     (754 )     654  
    Accounts payable     5,723       (369 )
    Accrued expenses     (3,866 )     460  
    Lease liabilities     (578 )     (603 )
    Other liabilities     (4,430 )     (1,198 )
    Net cash provided by operating activities     18,368       35,668  
                 
    Cash flows from investing activities:            
    Purchase of property and equipment     (576 )     (1,613 )
    Capitalized software costs     (580 )      
    Net cash used in investing activities     (1,156 )     (1,613 )
                 
    Cash flows from financing activities:            
    Payment of term loan     (2,500 )     (4,688 )
    Distributions to CompoSecure Holdings members           (13,422 )
    Contribution by CompoSecure Holdings     11,869        
    Contribution to Resolute Holdings     (11,869 )      
    Payments for taxes related to net share settlement of CompoSecure equity awards     (15,284 )     (3,426 )
    Transfer to CompoSecure           (442 )
    Net cash used in financing activities     (17,784 )     (21,978 )
                 
    Net increase (decrease) in cash and cash equivalents     (572 )     12,077  
                 
    Cash and cash equivalents, beginning of period     71,589       38,191  
                 
    Cash and cash equivalents, end of period   $ 71,017     $ 50,268  
                 
    Supplementary disclosure of cash flow information:            
    Cash paid for interest expense   $ 3,299     $ 4,175  
    Supplemental disclosure of non-cash financing activities:            
    Consolidation of CompoSecure Holdings net assets (liabilities), excluding cash, from execution of CompoSecure Management Agreement   $ (98,508 )   $  
    Derivative asset – interest rate swap   $ (753 )   $ 487  
                     
    Segment Statements of Operations and Non-GAAP Reconciliations
    Resolute Holdings Management, Inc.
    ($ in thousands, except per share amounts)
     
          Three months ended
          March 31, 2025
          ($ in thousands except per share figures)
        Resolute   CompoSecure   Intercompany/      
        Holdings   Holdings   Eliminations   Consolidated
    Management fees   $ 1,129     $     $ (1,129 )   $  
    Product sales           103,889             103,889  
    Net sales     1,129       103,889       (1,129 )     103,889  
    Cost of sales           49,342             49,342  
    Gross profit     1,129       54,547       (1,129 )     54,547  
    Total selling, general and administrative expenses     3,926       27,939       (2,939 )     28,926  
    Income from operations     (2,797 )     26,608       1,810       25,621  
    Total other income (expense)     (1 )     (2,437 )           (2,438 )
    Income (loss) before income taxes     (2,798 )     24,171       1,810       23,183  
    Income tax (expense)     (568 )                 (568 )
    Net income (loss)     (3,366 )     24,171       1,810       22,615  
    Net income (loss) attributable to non-controlling interest           24,171       1,810       25,981  
    Net income (loss) attributable to common stockholders     (3,366 )                 (3,366 )
    Net income (loss) per share attributable to common stockholders – diluted   $ (0.39 )               $ (0.39 )
                             
    Adjustments to reconcile fee-related earnings to net income (loss) attributable to common stockholders:                        
    Add: Equity-based compensation at CompoSecure (1)     1,148                   1,148  
    Add: Pro forma management fees from Jan 1, 2025 to Feb 27, 2025 (2)     2,046                   2,046  
    Add: Spin-Off costs (3)     290                   290  
    Net tax impact of adjustments (4)     (724 )                 (724 )
    Fee-Related Earnings     (606 )                 (606 )
    Fee-Related Earnings per share – diluted   $ (0.07 )               $ (0.07 )
                             
    Weighted average shares used to compute net income (loss) per share attributable to common stockholders and Fee-Related Earnings per share – diluted (in thousands)     8,526                   8,526  
     
    (1) Equity-based compensation required to be reported by Resolute Holdings related to awards issued under the CompoSecure Equity Plan. Equity granted under the CompoSecure Equity Plan relates to CompoSecure Class A common stock and has no impact on Resolute Holdings’ common stock outstanding.
    (2) Incremental management fees as if the CompoSecure Management Agreement was executed on January 1, 2025.
    (3) One-time costs associated with the Spin-Off from CompoSecure.
    (4) Tax-effect of adjustments at a 31% effective tax rate. Only applied to those adjustments that would impact Resolute Holdings’ taxes. Equity-based compensation expense under the CompoSecure Equity Plan is expensed for tax purposes at CompoSecure and not Resolute Holdings.
     
    Additional Information
    Segment Balance Sheets
    Resolute Holdings Management, Inc.
    ($ in thousands, except per share amounts)
     
        March 31, 2025
        ($ in thousands)
        Resolute   CompoSecure   Intercompany/      
        Holdings   Holdings   Eliminations   Consolidated
    ASSETS                        
    CURRENT ASSETS                        
    Cash and cash equivalents   $ 8,847     $ 62,170     $     $ 71,017  
    Accounts receivable     1,129       54,188       (1,129 )     54,188  
    Inventories, net           47,501             47,501  
    Prepaid expenses and other current assets     632       2,818             3,450  
    Deferred tax asset     24                   24  
    Total current assets     10,632       166,677       (1,129 )     176,180  
                             
    Property and equipment, net           21,917             21,917  
    Right of use assets, net     1,110       9,128             10,238  
    Derivative asset – interest rate swap           1,996             1,996  
    Deposits and other assets           3,957             3,957  
    Total assets     11,742       203,675       (1,129 )     214,288  
                             
    LIABILITIES AND STOCKHOLDERS’ EQUITY (DEFICIT)                        
    CURRENT LIABILITIES                        
    Accounts payable     112       11,236       66       11,414  
    Accrued expenses     1,651       15,674       (1,129 )     16,196  
    Bonus payable           4,199             4,199  
    Commission payable           2,400             2,400  
    Current portion of long-term debt           12,500             12,500  
    Current portion of lease liabilities – operating leases     71       2,039             2,110  
    Total current liabilities     1,834       48,048       (1,063 )     48,819  
                             
    Long-term debt, net of deferred financing costs           180,713             180,713  
    Lease liabilities, operating leases     1,039       7,723             8,762  
    Total liabilities     2,873       236,484       (1,063 )     238,294  
                             
    Additional paid-in capital     14,569                   14,569  
    Accumulated deficit     (5,700 )                 (5,700 )
    Total stockholders’ equity (deficit)     8,869                   8,869  
    Non-controlling interest           (32,809 )     (66 )     (32,875 )
    Total equity (deficit)     8,869       (32,809 )     (66 )     (24,006 )
    Total liabilities and stockholders’ equity (deficit)   $ 11,742     $ 203,675     $ (1,129 )   $ 214,288  
                                     

    A photo accompanying this announcement is available at https://www.globenewswire.com/NewsRoom/AttachmentNg/da9510b4-d572-4307-90a4-25015169fd4d

    The MIL Network

  • MIL-OSI: HighPeak Energy, Inc. Announces First Quarter 2025 Financial and Operating Results

    Source: GlobeNewswire (MIL-OSI)

    FORT WORTH, Texas, May 12, 2025 (GLOBE NEWSWIRE) — HighPeak Energy, Inc. (“HighPeak” or the “Company”) (NASDAQ: HPK) today announced financial and operating results for the quarter ended March 31, 2025, provided an updated 2025 development outlook and increased production guidance.

    First Quarter 2025 Highlights

    • Sales volumes averaged approximately 53.1 thousand barrels of crude oil equivalent per day (“MBoe/d”), representing a 6% increase from the fourth quarter 2024.
    • Net income was $36.3 million, or $0.26 per diluted share and EBITDAX (a non-GAAP financial measure defined and reconciled below) was $197.3 million, or $1.40 per diluted share. First quarter 2025 adjusted net income (a non-GAAP financial measure defined and reconciled below) was $42.7 million, or $0.31 per diluted share.
    • Lease operating expenses averaged $6.61 per Boe, excluding workover expenses, representing a 3% decrease compared to the fourth quarter 2024.
    • Generated free cash flow (a non-GAAP financial measure defined and reconciled below) of $10.7 million, reduced long-term debt by $30 million and paid $0.04 per share in dividends.
    • Realized increased drilling and completion efficiency gains, which translated to drilling and completing four additional wells during the first quarter.

    Recent Events

    • Narrowed 2025 production guidance range and increased the midpoint.
    • On May 12, 2025, the Company’s Board of Directors declared a quarterly dividend of $0.04 per common share outstanding payable in June 2025.

    Statement from Jack Hightower, Chairman and CEO:

    In March, we discussed our four pillars of success for 2025 which include: 1) improving corporate efficiency, 2) maintaining capital discipline, 3) optimizing our capital structure, and 4) delivering shareholder value. I would like to take this opportunity to update our shareholders on where we stand and the progress we have made to date.

    Improving Corporate Efficiency
    HighPeak delivered another strong quarter of results, beating production guidance and consensus estimates, while also realizing higher levels of operating efficiencies in our development program. We drilled over 25% faster than our previous expectations, which translated to drilling and completing four additional wells during the first quarter. We are running smoother and more efficiently than ever before, while continuing to keep development costs in line with internal expectations.

    Maintaining Capital Discipline
    Due to the global economic uncertainty and its impact on oil prices, we have moderated our development program by laying down one rig for four months, May through August. Despite the pause, we remain on track to drill and complete the same number of wells in our 2025 guidance because of the gains made through operational efficiencies.

    As detailed on our March conference call, the majority of our 2025 infrastructure capex was first-quarter weighted. Factoring in drilling and completing four additional wells, we accomplished an outsized portion of our planned annual development activity during the first quarter. Going forward, we expect our quarterly capital expenditures to be materially lower and the total for the year to fall within our 2025 guided capex range. Although our operations are running much more efficiently, this is not the proper time to accelerate development activity from our original plan. Additionally, we have complete flexibility from a land and operations perspective to reduce the budget and leave a rig down for longer than the current plan if conditions warrant.

    Optimizing our Capital Structure
    We remain committed to optimizing our capital structure and remain poised to execute our plan once the market has stabilized. We are in a healthy financial position with no near-term debt maturities and are taking proactive steps to keep our balance sheet strong as we navigate this turbulent market.

    Shareholder Value
    Given the current global macro-economic backdrop, this is a time to remain nimble and prudent, which our high-quality asset base allows. As large owners of the Company, management is fully aligned with shareholders and has a long-term outlook on value creation. While markets may be volatile, it is important to remember the fundamental value of our asset base is still strong.

    First Quarter 2025 Operational Update

    HighPeak’s sales volumes during the first quarter of 2025 averaged 53.1 MBoe/d, a six percent increase over the fourth quarter 2024. First quarter sales volumes consisted of approximately 72% crude oil and 86% liquids.

    The Company averaged two drilling rigs and one frac crew during the first quarter, drilled 16 gross (16.0 net) horizontal wells and turned-in-line 13 gross (12.9 net) producing wells. On March 31, 2025, the Company had 28 gross (28.0 net) horizontal wells in various stages of drilling and completion.

    The Company updated its 2025 production guidance range to 48,000 – 50,500 Boe/d.

    HighPeak President, Michael Hollis, commented, “Our strong first quarter production is allowing us to narrow our guided range and increase the midpoint. This speaks to our strong well performance and the high quality of our long lived oily inventory. As seen in the last few commodity price cycles, HighPeak is realizing deflationary cost pressures on both the capex and opex fronts. With our increased operational efficiency, we are doing more with less and at a lower overall cost.”

    First Quarter 2025 Financial Results

    HighPeak reported net income of $36.3 million for the first quarter of 2025, or $0.26 per diluted share, and EBITDAX of $197.3 million, or $1.40 per diluted share. HighPeak reported adjusted net income of $42.7 million for the first quarter of 2025, or $0.31 per diluted share.

    First quarter average realized prices were $71.64 per Bbl of crude oil, $24.21 per Bbl of NGL and $2.34 per Mcf of natural gas, resulting in an overall realized price of $53.84 per Boe, or 75% of the weighted average of NYMEX crude oil prices, excluding the effects of derivatives. HighPeak’s cash costs for the first quarter were $11.94 per Boe, including lease operating expenses of $6.61 per Boe, workover expenses of $0.83 per Boe, production and ad valorem taxes of $3.17 per Boe and G&A expenses of $1.33 per Boe. As a result, the Company’s unhedged EBITDAX per Boe was $41.90 per Boe, or 78% of the overall realized price per Boe for the quarter, excluding the effects of derivatives.

    HighPeak’s first quarter 2025 capital expenditures to drill, complete, equip, provide facilities and for infrastructure were $179.8 million.

    Hedging

    Crude oil. As of March 31, 2025, HighPeak had the following outstanding crude oil derivative instruments and the weighted average crude oil prices and premiums payable per Bbl:

                          Swaps     Collars, Enhanced Collars
    & Deferred
    Premium Puts
     
    Settlement
    Month
      Settlement
    Year
      Type of
    Contract
      Bbls
    Per
    Day
      Index   Price per
    Bbl
        Floor or
    Strike
    Price per
    Bbl
        Ceiling
    Price per
    Bbl
        Deferred
    Premium
    Payable
    per Bbl
     
    Crude Oil:                                                  
    Apr – Jun   2025   Swap     5,500   WTI Cushing   $ 76.37     $     $     $  
    Apr – Jun   2025   Collar     7,989   WTI Cushing   $     $ 64.38     $ 88.55     $ 2.00  
    Apr – Jun   2025   Put     9,000   WTI Cushing   $     $ 65.78     $     $ 5.00  
    Jul – Sep   2025   Swap     3,000   WTI Cushing   $ 75.85     $     $     $  
    Jul – Sep   2025   Collar     7,000   WTI Cushing   $     $ 65.00     $ 90.08     $ 2.28  
    Jul – Sep   2025   Put     9,000   WTI Cushing   $     $ 65.78     $     $ 5.00  
    Oct – Dec   2025   Collar     5,000   WTI Cushing   $     $ 60.00     $ 72.80     $  
    Jan – Mar   2026   Collar     5,000   WTI Cushing   $     $ 60.00     $ 72.80     $  
     

    The Company’s crude oil derivative contracts detailed above are based on reported settlement prices on the New York Mercantile Exchange for West Texas Intermediate pricing.

    Natural gas. As of March 31, 2025, the Company had the following outstanding natural gas derivative instruments and the weighted average natural gas prices payable per MMBtu.

    Settlement Month   Settlement
    Year
      Type of
    Contract
      MMBtu
    Per Day
      Index   Price per
    MMBtu
     
    Natural Gas:                          
    Apr – Jun   2025   Swap     30,000   HH   $ 4.43  
    Jul – Sep   2025   Swap     30,000   HH   $ 4.43  
    Oct – Dec   2025   Swap     30,000   HH   $ 4.43  
    Jan – Mar   2026   Swap     19,667   HH   $ 4.43  
     

    HighPeak added the following natural gas swaps in April 2025.

    Settlement Month   Settlement
    Year
      Type of
    Contract
      MMBtu
    Per Day
      Index   Price per
    MMBtu
     
    Natural Gas:                          
    Jan – Mar   2026   Swap     10,333   HH   $ 4.30  
    Apr – Jun   2026   Swap     30,000   HH   $ 4.30  
    Jul – Sep   2026   Swap     30,000   HH   $ 4.30  
    Oct – Dec   2026   Swap     30,000   HH   $ 4.30  
    Jan – Mar   2027   Swap     19,667   HH   $ 4.30  
     

    Dividends

    During the first quarter of 2025, HighPeak’s Board of Directors approved a quarterly dividend of $0.04 per share, or $5.0 million in dividends paid to stockholders during the quarter. In addition, in May 2025, the Company’s Board of Directors declared a quarterly dividend of $0.04 per share, or approximately $5.0 million in dividends, to be paid on June 25, 2025, to stockholders of record on June 2, 2025. 

    Conference Call

    HighPeak will host a conference call and webcast on Tuesday, May 13, 2025, at 10:00 a.m. Central Time for investors and analysts to discuss its results for the first quarter of 2025. Conference call participants may register for the call here. Access to the live audio-only webcast and replay of the earnings release conference call may be found here. A live broadcast of the earnings conference call will also be available on the HighPeak Energy website at www.highpeakenergy.com under the “Investors” section of the website. A replay will also be available on the website following the call.

    When available, a copy of the Company’s earnings release, investor presentation and Quarterly Report on Form 10-Q may be found on its website at www.highpeakenergy.com.

    About HighPeak Energy, Inc.

    HighPeak Energy, Inc. is a publicly traded independent crude oil and natural gas company, headquartered in Fort Worth, Texas, focused on the acquisition, development, exploration and exploitation of unconventional crude oil and natural gas reserves in the Midland Basin in West Texas. For more information, please visit our website at www.highpeakenergy.com.

    Cautionary Note Regarding Forward-Looking Statements

    The information in this press release contains forward-looking statements that involve risks and uncertainties. When used in this document, the words “believes,” “plans,” “expects,” “anticipates,” “forecasts,” “intends,” “continue,” “may,” “will,” “could,” “should,” “future,” “potential,” “estimate” or the negative of such terms and similar expressions as they relate to HighPeak Energy, Inc. (“HighPeak Energy” or the “Company”) are intended to identify forward-looking statements, which are generally not historical in nature. The forward-looking statements are based on the Company’s current expectations, assumptions, estimates and projections about the Company and the industry in which the Company operates. Although the Company believes that the expectations and assumptions reflected in the forward-looking statements are reasonable as and when made, they involve risks and uncertainties that are difficult to predict and, in many cases, beyond the Company’s control. For example, the Company’s review of strategic alternatives may not result in a sale of the Company, a recommendation that a transaction occur or result in a completed transaction, and any transaction that occurs may not increase shareholder value, in each case as a result of such risks and uncertainties.

    These risks and uncertainties include, among other things, the results of the strategic review being undertaken by the Company’s Board and the interest of prospective counterparties, the Company’s ability to realize the results contemplated by its 2025 guidance, volatility of commodity prices, political instability or armed conflicts in crude or natural gas producing regions such as the ongoing war between Russia and Ukraine or Israel and Hamas, product supply and demand, the impact of a widespread outbreak of an illness, such as the coronavirus disease pandemic, on global and U.S. economic activity, competition, OPEC+ policy decisions, potential new trade policies, such as tariffs, could adversely affect the Company’s operations, business and profitability, inflationary pressures on costs of oilfield goods, services and personnel, the ability to obtain environmental and other permits and the timing thereof, other government regulation or action, the ability to obtain approvals from third parties and negotiate agreements with third parties on mutually acceptable terms, litigation, the costs and results of drilling and operations, availability of equipment, services, resources and personnel required to perform the Company’s drilling and operating activities, access to and availability of transportation, processing, fractionation, refining and storage facilities, HighPeak Energy’s ability to replace reserves, implement its business plans or complete its development activities as scheduled, access to and cost of capital, the financial strength of counterparties to any credit facility and derivative contracts entered into by HighPeak Energy, if any, and purchasers of HighPeak Energy’s oil, natural gas liquids and natural gas production, uncertainties about estimates of reserves, identification of drilling locations and the ability to add proved reserves in the future, the assumptions underlying forecasts, including forecasts of production, expenses, cash flow from sales of oil and gas and tax rates, quality of technical data, environmental and weather risks, including the possible impacts of climate change, cybersecurity risks and acts of war or terrorism. These and other risks are described in the Company’s Annual Report on Form 10-K, Quarterly Reports on Form 10-Q, and Current Reports on Form 8-K and other filings with the SEC. The Company undertakes no duty to publicly update these statements except as required by law.

    Reserve engineering is a process of estimating underground accumulations of hydrocarbons that cannot be measured in an exact way. The accuracy of any reserve estimate depends on the quality of available data, the interpretation of such data and price and cost assumptions made by reserve engineers. Reserves estimates included herein may not be indicative of the level of reserves or PV-10 value of oil and natural gas production in the future. In addition, the results of drilling, testing and production activities may justify revisions of estimates that were made previously. If significant, such revisions could impact HighPeak’s strategy and change the schedule of any further production and development drilling. Accordingly, reserve estimates may differ significantly from the quantities of oil and natural gas that are ultimately recovered.

    Use of Projections

    The financial, operational, industry and market projections, estimates and targets in this press release and in the Company’s guidance (including production, operating expenses and capital expenditures in future periods) are based on assumptions that are inherently subject to significant uncertainties and contingencies, many of which are beyond the Company’s control. The assumptions and estimates underlying the projected, expected or target results are inherently uncertain and are subject to a wide variety of significant business, economic, regulatory and competitive risks and uncertainties that could cause actual results to differ materially from those contained in the financial, operational, industry and market projections, estimates and targets, including assumptions, risks and uncertainties described in “Cautionary Note Regarding Forward-Looking Statements” above. These projections are speculative by their nature and, accordingly, are subject to significant risk of not being actually realized by the Company. Projected results of the Company for 2025 are particularly speculative and subject to change. Actual results may vary materially from the current projections, including for reasons beyond the Company’s control. The projections are based on current expectations and available information as of the date of this release. The Company undertakes no duty to publicly update these projections except as required by law.

    Drilling Locations

    The Company has estimated its drilling locations based on well spacing assumptions and upon the evaluation of its drilling results and those of other operators in its area, combined with its interpretation of available geologic and engineering data. The drilling locations actually drilled on the Company’s properties will depend on the availability of capital, regulatory approvals, commodity prices, costs, actual drilling results and other factors. Any drilling activities conducted on these identified locations may not be successful and may not result in additional proved reserves. Further, to the extent the drilling locations are associated with acreage that expires, the Company would lose its right to develop the related locations.

    HighPeak Energy, Inc.
    Unaudited Condensed Consolidated Balance Sheet Data
    (In thousands)
        March 31,
    2025
      December 31,
    2024
     
    Current assets:              
    Cash and cash equivalents   $ 51,619     $ 86,649    
    Accounts receivable     78,356       85,242    
    Inventory     8,706       10,952    
    Prepaid expenses     8,301       4,587    
    Derivative instruments     5,620       7,582    
    Total current assets     152,602       195,012    
    Crude oil and natural gas properties, using the successful efforts method of accounting:              
    Proved properties     4,140,881       3,959,545    
    Unproved properties     71,359       70,868    
    Accumulated depletion, depreciation and amortization     (1,293,949 )     (1,184,684 )  
    Total crude oil and natural gas properties, net     2,918,291       2,845,729    
    Other property and equipment, net     3,141       3,201    
    Other noncurrent assets     19,047       19,346    
    Total assets   $ 3,093,081     $ 3,063,288    
                   
    Current liabilities:              
    Current portion of long-term debt, net   $ 120,000     $ 120,000    
    Accounts payable – trade     66,473       74,011    
    Accrued capital expenditures     53,240       35,170    
    Revenues and royalties payable     27,993       26,838    
    Other accrued liabilities     22,065       22,196    
    Derivative instruments     8,275       5,380    
    Operating leases     821       719    
    Advances from joint interest owners           316    
    Total current liabilities     298,867       284,630    
    Noncurrent liabilities:              
    Long-term debt, net     902,844       928,384    
    Deferred income taxes     242,337       232,398    
    Asset retirement obligations     15,058       14,750    
    Operating leases     581       670    
    Commitments and contingencies              
                   
    Stockholders’ equity              
    Common stock     13       13    
    Additional paid-in capital     1,166,786       1,166,609    
    Retained earnings     466,595       435,834    
    Total stockholders’ equity     1,633,394       1,602,456    
    Total liabilities and stockholders’ equity   $ 3,093,081     $ 3,063,288    
     
    HighPeak Energy, Inc.
    Unaudited Condensed Consolidated Statements of Operations
    (in thousands)
        Quarter Ended March 31,
     
        2025   2024
     
    Operating revenues:            
    Crude oil sales   $ 246,424     $ 282,369    
    NGL and natural gas sales     11,024       5,395    
    Total operating revenues     257,448       287,764    
    Operating costs and expenses:            
    Crude oil and natural gas production     35,562       30,271    
    Production and ad valorem taxes     15,152       14,402    
    Exploration and abandonments     264       498    
    Depletion, depreciation and amortization     109,325       130,850    
    Accretion of discount     244       239    
    General and administrative     6,345       4,685    
    Stock-based compensation     177       3,798    
    Total operating costs and expenses     167,069       184,743    
    Other expense           1    
    Income from operations     90,379       103,020    
    Interest income     810       2,392    
    Interest expense     (36,988 )     (43,634 )  
    Loss on derivative instruments, net     (7,927 )     (53,043 )  
    Income before income taxes     46,274       8,735    
    Provision for income taxes     9,939       2,297    
    Net income   $ 36,335     $ 6,438    
                 
    Earnings per share:            
    Basic net income   $ 0.26     $ 0.05    
    Diluted net income   $ 0.26     $ 0.05    
                 
    Weighted average shares outstanding:            
    Basic     123,913       125,696    
    Diluted     127,213       129,641    
                 
    Dividends declared per share   $ 0.04     $ 0.04    
     
    HighPeak Energy, Inc.
    Unaudited Condensed Consolidated Statements of Cash Flows
    (in thousands)
        Quarter Ended March 31,
     
        2025
      2024
     
    CASH FLOWS FROM OPERATING ACTIVITIES:            
    Net income   $ 36,335     $ 6,438    
    Adjustments to reconcile net income to net cash provided by operations:            
    Provision for deferred income taxes     9,939       1,688    
    Loss on derivative instruments     7,927       53,043    
    Cash paid on settlement of derivative instruments     (3,071 )     (5,148 )  
    Amortization of debt issuance costs     2,034       2,053    
    Amortization of discounts on long-term debt     2,426       2,453    
    Stock-based compensation expense     177       3,798    
    Accretion expense     244       239    
    Depletion, depreciation and amortization     109,325       130,850    
    Exploration and abandonment expense     4       274    
    Changes in operating assets and liabilities:            
    Accounts receivable     6,886       (14,414 )  
    Prepaid expenses, inventory and other assets     (1,314 )     (4,722 )  
    Accounts payable, accrued liabilities and other current liabilities     (13,860 )     (5,113 )  
    Net cash provided by operating activities     157,052       171,439    
    CASH FLOWS FROM INVESTING ACTIVITIES:            
    Additions to crude oil and natural gas properties     (179,819 )     (147,698 )  
    Changes in working capital associated with crude oil and natural gas property additions     25,172       1,705    
    Acquisitions of crude oil and natural gas properties     (2,517 )     (2,171 )  
    Proceeds from sales of properties     570          
    Other property additions           (59 )  
    Net cash used in investing activities     (156,594 )     (148,223 )  
    CASH FLOWS FROM FINANCING ACTIVITIES:            
    Repayments under Term Loan Credit Agreement     (120,000 )     (30,000 )  
    Dividends paid     (4,957 )     (5,050 )  
    Dividend equivalents paid     (531 )     (530 )  
    Repurchased shares under buyback program           (8,764 )  
    Debt issuance costs           (7 )  
    Net cash used in financing activities     (35,488 )     (44,351 )  
    Net decrease in cash and cash equivalents     (35,030 )     (21,135 )  
    Cash and cash equivalents, beginning of period     86,649       194,515    
    Cash and cash equivalents, end of period   $ 51,619     $ 173,380    
     
    HighPeak Energy, Inc.
    Unaudited Summary Operating Highlights
        Quarter Ended March 31,  
        2025   2024  
    Average Daily Sales Volumes:              
    Crude oil (Bbls)     38,222       39,959    
    NGLs (Bbls)     7,724       5,147    
    Natural gas (Mcf)     43,096       27,733    
    Total (Boe)     53,128       49,729    
                   
    Average Realized Prices (excluding effects of derivatives):              
    Crude oil per Bbl   $ 71.64     $ 77.65    
    NGL per Bbl   $ 24.21     $ 24.94    
    Natural gas per Mcf   $ 2.34     $ 1.33    
    Total per Boe   $ 53.84     $ 63.59    
                   
    Margin Data ($ per Boe):              
    Average price, excluding effects of derivatives   $ 53.84     $ 63.59    
    Lease operating expenses     (6.61 )     (6.30 )  
    Expense workovers     (0.83 )     (0.39 )  
    Production and ad valorem taxes     (3.17 )     (3.18 )  
    General and administrative expenses     (1.33 )     (1.04 )  
        $ 41.90     $ 52.68    
     
    HighPeak Energy, Inc.
    Unaudited Earnings Per Share Details
        Quarter Ended March 31,  
        2025   2024  
    Net income as reported   $ 36,335     $ 6,438    
    Participating basic earnings     (3,542 )     (605 )  
    Basic earnings attributable to common shareholders     32,793       5,833    
    Reallocation of participating earnings     47       1    
    Diluted net income attributable to common shareholders   $ 32,840     $ 5,834    
                   
    Basic weighted average shares outstanding     123,913       125,696    
    Dilutive warrants and unvested stock options     1,146       1,786    
    Dilutive unvested restricted stock     2,154       2,159    
    Diluted weighted average shares outstanding     127,213       129,641    
                   
    Net income per share attributable to common shareholders:              
    Basic   $ 0.26     $ 0.05    
    Diluted   $ 0.26     $ 0.05    
     
    HighPeak Energy, Inc.
    Unaudited Reconciliation of Net Income to EBITDAX, Discretionary Cash Flow and Net Cash Provided by Operations
    (in thousands)
     
        Quarter Ended March 31,  
        2025   2024  
    Net income   $ 36,335     $ 6,438    
    Interest expense     36,988       43,634    
    Interest income     (810 )     (2,392 )  
    Income tax expense     9,939       2,297    
    Depletion, depreciation and amortization     109,325       130,850    
    Accretion of discount     244       239    
    Exploration and abandonment expense     264       498    
    Stock based compensation     177       3,798    
    Derivative related noncash activity     4,856       47,895    
    Other expense           1    
    EBITDAX     197,318       233,258    
    Cash interest expense     (32,528 )     (39,128 )  
    Other (a)     550       1,558    
    Discretionary cash flow     165,340       195,688    
    Changes in operating assets and liabilities     (8,288 )     (24,249 )  
    Net cash provided by operating activities   $ 157,052     $ 171,439    
    (a)     Includes interest income net of current tax expense, other expense and operating portion of exploration and abandonment expenses.
     
    HighPeak Energy, Inc.
    Unaudited Reconciliation of Net Cash Provided by Operations and Free Cash Flow
    (in thousands)
        Quarter Ended March 31,  
        2025   2024  
    Net cash provided by operating activities   $ 157,052     $ 171,439    
    Add back: net change in operating assets and liabilities     8,288       24,249    
    Operating cash flow before working capital changes     165,340       195,688    
    Additions to crude oil and natural gas properties     (179,819 )     (147,698 )  
    Changes in working capital associated with crude oil and natural gas property additions     25,172       1,705    
    Free cash flow   $ 10,693     $ 49,695    
     
    HighPeak Energy, Inc.
    Unaudited Reconciliation of Net Income to Adjusted Net Income
    (in thousands, except per share data)
        Quarter Ended
    March 31, 2025
     
        Amounts   Amounts per Diluted Share  
    Net income   $ 36,335     $ 0.26    
    Derivative loss, net     7,927       0.06    
    Stock-based compensation     177       0.00    
    Income tax adjustment for above items *     (1,741 )     (0.01 )  
                       
    Adjusted net income   $ 42,698     $ 0.31    
                   
    * Assuming 21% statutory tax rate              
     

    Investor Contact:

    Ryan Hightower
    Vice President, Business Development
    817.850.9204
    rhightower@highpeakenergy.com

    Source: HighPeak Energy, Inc.

    The MIL Network

  • MIL-OSI: MidCap Financial Investment Corporation Reports Financial Results for the Quarter Ended March 31, 2025

    Source: GlobeNewswire (MIL-OSI)

    Results for the Quarter Ended March 31, 2025 and Other Recent Highlights:

    • Net investment income per share for the quarter was $0.37
    • Net asset value per share as of the end of the quarter was $14.93, compared to $14.98 as of December 31, 2024, a decrease of 0.3%
    • New investment commitments made during the quarter totaled $376 million(1)
    • Gross fundings, excluding revolver fundings(2), totaled $357 million for the quarter
    • Net fundings, including revolvers(2), totaled $170 million for the quarter
    • Net leverage(3)was 1.31x as of March 31, 2025
    • Repurchased 476,656 shares of common stock at a weighted average price per share of $12.75, inclusive of commissions, for an aggregate cost of $6.1 million during the quarter
    • Completed Collateralized Loan Obligation (“CLO”) transaction, MFIC Bethesda CLO 2 LLC, a $529.6 million CLO secured by middle market loans in February 2025
    • On May 7, 2025, the Board of Directors (the “Board”) declared a dividend of $0.38 per share payable on June 26, 2025 to stockholders of record as of June 10, 2025(4)

    NEW YORK, May 12, 2025 (GLOBE NEWSWIRE) — MidCap Financial Investment Corporation (NASDAQ: MFIC) or the “Company,” today announced financial results for the quarter ended March 31, 2025. The Company’s net investment income was $0.37 per share for the quarter ended March 31, 2025, compared to $0.40 per share for the quarter ended December 31, 2024. The Company’s net asset value (“NAV”) was $14.93 per share as of March 31, 2025, compared to $14.98 as of December 31, 2024.

    On May 7, 2025, the Board declared a dividend of $0.38 per share payable on June 26, 2025 to stockholders of record as of June 10, 2025.

    Mr. Tanner Powell, the Company’s Chief Executive Officer, stated, “We reported solid first quarter results including a healthy level of earnings, a reduction in non-accruals, and strong portfolio growth. We continued to deploy the investment capacity generated from our recent mergers into assets originated by MidCap Financial, although this was partially offset by ongoing sales and repayments of non-directly originated assets acquired through the mergers. Additionally, we repurchased some stock below NAV during the quarter.” Mr. Powell continued, “Looking ahead, despite the uncertainty surrounding the duration and trajectory of current market volatility, we believe the current environment may present opportunities that MidCap Financial and MFIC are well-equipped to capitalize on.”

    ___________________
    (1) Commitments made for the direct origination portfolio.
    (2) During the quarter ended March 31, 2025, direct origination revolver fundings totaled $33 million, direct origination revolver repayments totaled $30 million.
    (3) The Company’s net leverage ratio is defined as debt outstanding plus payable for investments purchased, less receivable for investments sold, less cash and cash equivalents, less foreign currencies, divided by net assets.
    (4) There can be no assurances that the Board will continue to declare a base dividend of $0.38 per share.

    FINANCIAL HIGHLIGHTS

    ($ in billions, except per share data) March 31,
    2025
        December 31,
    2024
        September 30,
    2024
        June 30,
    2024
        March 31,
    2024
     
    Total assets $ 3.36     $ 3.19     $ 3.22     $ 2.55     $ 2.45  
    Investment portfolio (fair value) $ 3.19     $ 3.01     $ 3.03     $ 2.44     $ 2.35  
    Debt outstanding $ 1.94     $ 1.75     $ 1.77     $ 1.51     $ 1.41  
    Net assets $ 1.39     $ 1.40     $ 1.42     $ 1.00     $ 1.01  
    Net asset value per share $ 14.93     $ 14.98     $ 15.10     $ 15.38     $ 15.42  
                                           
    Debt-to-equity ratio   1.39 x       1.25 x       1.25 x       1.51 x       1.40 x  
    Net leverage ratio (1)   1.31 x       1.16 x       1.16 x       1.45 x       1.35 x  

    ___________________
    (1) The Company’s net leverage ratio is defined as debt outstanding plus payable for investments purchased, less receivable for investments sold, less cash and cash equivalents, less foreign currencies, divided by net assets.

    PORTFOLIO AND INVESTMENT ACTIVITY

        Three Months Ended March 31,  
    (in millions)*   2025     2024  
    Investments made in portfolio companies   $ 391.9     $ 152.8  
    Investments sold     (43.9      
    Net activity before repaid investments     348.0       152.8  
    Investments repaid     177.6       (136.9 )
    Net investment activity   $ 170.4     $ 15.9  
                     
    Portfolio companies, at beginning of period     233       152  
    Number of investments in new portfolio companies     20       7  
    Number of exited companies     (13 )     (5 )
    Portfolio companies at end of period     240       154  
                     
    Number of investments in existing portfolio companies     78       49  

    ___________________
    * Totals may not foot due to rounding.

    OPERATING RESULTS

        Three Months Ended March 31,  
    (in millions)*   2025     2024  
    Net investment income   $ 34.3     $ 28.5  
    Net realized and change in unrealized gains (losses)     (4.0 )     (3.1 )
    Net increase in net assets resulting from operations   $ 30.3     $ 25.5  
                     
    (per share)* (1)                
    Net investment income on per average share basis   $ 0.37     $ 0.44  
    Net realized and change in unrealized gain (loss) per share     (0.05 )     (0.05 )
    Earnings per share — basic   $ 0.32     $ 0.39  

    ___________________
    * Totals may not foot due to rounding.

    (1) Based on the weighted average number of shares outstanding for the period presented.

    SHARE REPURCHASE PROGRAM *

    During the three months ended March 31, 2025, the Company repurchased 476,656 shares at a weighted average price per share of $12.75, inclusive of commissions, for a total cost of $6.1 million. This represents a discount of approximately 14.72% of the average net asset value per share for the three months ended March 31, 2025.

    Since the inception of the share repurchase program and through May 12, 2025, the Company repurchased 16,069,776 shares at a weighted average price per share of $15.82, inclusive of commissions, for a total cost of $254.2 million, leaving a maximum of $20.8 million available for future purchases under the current Board authorization of $275 million.

    * Share figures have been adjusted for the 1-for-3 reverse stock split which was completed after market close on November 30, 2018.

    LIQUIDITY

    As of March 31, 2025, the Company’s outstanding debt obligations, excluding deferred financing cost and debt discount of $6.7 million, totaled $1.942 billion which was comprised of $125 million of Senior Unsecured Notes (the “2026 Notes”) which will mature on July 16, 2026, $80 million of Senior Unsecured Notes (the “2028 Notes”) which will mature on December 15, 2028, $232 million outstanding Class A-1 Notes in MFIC Bethesda CLO 1 LLC, $399 million outstanding secured debt in MFIC Bethesda CLO 2 LLC, and $1,106 million outstanding under the Company’s multi-currency revolving credit facility (the “Facility”). As of March 31, 2025, $6 million in standby letters of credit were issued through the Facility. The available remaining capacity under the Facility was $548 million as of March 31, 2025, which is subject to compliance with a borrowing base that applies different advance rates to different types of assets in the Company’s portfolio.

    CONFERENCE CALL / WEBCAST AT 8:30 AM EDT ON MAY 13, 2025

    The Company will host a conference call on Tuesday, May 13, 2025, at 8:30 a.m. Eastern Time. All interested parties are welcome to participate in the conference call by dialing (800) 225-9448 approximately 5-10 minutes prior to the call; international callers should dial (203) 518-9708. Participants should reference either MidCap Financial Investment Corporation Earnings or Conference ID: MFIC0513 when prompted. A simultaneous webcast of the conference call will be available to the public on a listen-only basis and can be accessed through the Shareholders section of the Company’s website under Events at www.midcapfinancialic.com. Following the call, you may access a replay of the event either telephonically or via audio webcast. The telephonic replay will be available approximately two hours after the live call and through June 3, 2025, by dialing (800) 727-1367; international callers should dial (402) 220-2669. A replay of the audio webcast will also be available later that same day. To access the audio webcast please visit the Shareholders section of the Company’s website under Events in the Shareholders section of our website at www.midcapfinancialic.com.

    SUPPLEMENTAL INFORMATION

    The Company provides a supplemental information package to offer more transparency into its financial results and make its reporting more informative and easier to follow. The supplemental package is available in the Shareholders section of the Company’s website under Presentations at www.midcapfinancialic.com.

    Our portfolio composition and weighted average yields as of March 31, 2025, December 31, 2024, September 30, 2024, June 30, 2024, and March 31, 2024 were as follows:

      March 31,
    2025
        December 31,
    2024
    September 30,
    2024
      June 30,
    2024
      March 31,
    2024
    Portfolio composition, at fair value:                            
    First lien secured debt   93%     92%     91%     90%     90%
    Second lien secured debt   0%     1%     1%     1%     1%
    Total secured debt   93%     93%     92%     91%     91%
    Unsecured debt   0%     0%     —%     —%     —%
    Structured products and other   1%     1%     2%     1%     1%
    Preferred equity   1%     1%     1%     1%     1%
    Common equity/interests and warrants   5%     5%     5%     7%     7%
    Weighted average yields, at amortized cost (1):                            
    First lien secured debt (2)   10.5%     10.8%     11.1%     11.9%     12.0%
    Second lien secured debt (2)   13.8%     14.4%     14.0%     14.1%     14.1%
    Total secured debt (2)   10.5%     10.8%     11.1%     11.9%     12.0%
    Unsecured debt portfolio (2)   9.5%     9.5%     9.5%     —%     —%
    Total debt portfolio (2)   10.5%     10.8%     11.1%     11.9%     12.0%
    Total portfolio (3)   9.4%     9.5%     9.6%     9.9%     10.0%
    Interest rate type, at fair value (4):                            
    Fixed rate amount $ 0.0 billion   $ 0.0 billion   $ 0.0 billion   $ 0.0 billion   $ 0.0 billion
    Floating rate amount $ 2.9 billion   $ 2.7 billion   $ 2.7 billion   $ 2.1 billion   $ 2.0 billion
    Fixed rate, as percentage of total   1%     1%     1%     0%     0%
    Floating rate, as percentage of total   99%     99%     99%     100%     100%
    Interest rate type, at amortized cost (4):                            
    Fixed rate amount $ 0.0 billion   $ 0.0 billion   $ 0.0 billion   $ 0.0 billion   $ 0.0 billion
    Floating rate amount $ 2.9 billion   $ 2.7 billion   $ 2.7 billion   $ 2.1 billion   $ 2.0 billion
    Fixed rate, as percentage of total   1%     1%     1%     0%     0%
    Floating rate, as percentage of total   99%     99%     99%     100%     100%

    (1)  An investor’s yield may be lower than the portfolio yield due to sales loads and other expenses.
    (2)  Exclusive of investments on non-accrual status.
    (3)  Inclusive of all income generating investments, non-income generating investments and investments on non-accrual status.
    (4)  The interest rate type information is calculated using the Company’s corporate debt portfolio and excludes aviation and investments on non-accrual status.

     
    MIDCAP FINANCIAL INVESTMENT CORPORATION
    CONSOLIDATED STATEMENTS OF ASSETS AND LIABILITIES
    (In thousands, except share and per share data)
     
        March 31, 2025     December 31, 2024  
        (Unaudited)          
    Assets                
    Investments at fair value:                
    Non-controlled/non-affiliated investments (cost — $2,855,490 and $2,700,957, respectively)   $ 2,756,760     $ 2,605,329  
    Non-controlled/affiliated investments (cost — $176,063 and $142,686, respectively)     113,290       84,334  
    Controlled investments (cost — $326,224 and $333,754, respectively)     318,571       324,753  
    Cash and cash equivalents     83,703       74,357  
    Foreign currencies (cost — $1,367 and $1,487, respectively)     1,330       1,429  
    Receivable for investments sold     32,151       57,195  
    Interest receivable     25,346       19,289  
    Dividends receivable     459       709  
    Deferred financing costs     22,267       23,555  
    Unrealized appreciation on foreign currency forward contracts     33        
    Prepaid expenses and other assets     1,789        
    Total Assets   $ 3,355,699     $ 3,190,950  
                     
    Liabilities                
    Debt   $ 1,935,242     $ 1,751,621  
    Payable for investments purchased     2,091       4,190  
    Management fees payable     6,061       6,247  
    Performance-based incentive fees payable     6,433       5,336  
    Interest payable     9,403       12,813  
    Accrued administrative services expense           60  
    Unrealized depreciation on foreign currency forward contracts            
    Other liabilities and accrued expenses     3,209       6,037  
    Total Liabilities   $ 1,962,439     $ 1,786,304  
    Commitments and contingencies (Note 9)                
    Net Assets   $ 1,393,260     $ 1,404,646  
                     
    Net Assets                
    Common stock, $0.001 par value (130,000,000 shares authorized; 93,303,622 and 93,780,278 shares issued and outstanding, respectively)   $ 94     $ 94  
    Capital in excess of par value     2,652,015       2,658,090  
    Accumulated under-distributed (over-distributed) earnings     (1,258,849 )     (1,253,538 )
    Net Assets   $ 1,393,260     $ 1,404,646  
                     
    Net Asset Value Per Share   $ 14.93     $ 14.98  
     
    MIDCAP FINANCIAL INVESTMENT CORPORATION
    CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited)
    (In thousands, except per share data)
     
        Three Months Ended March 31,  
        2025     2024  
    Investment Income                
    Non-controlled/non-affiliated investments:                
    Interest income (excluding Payment-in-kind (“PIK”) interest income)   $ 69,302     $ 59,996  
    Dividend income           12  
    PIK interest income     3,170       1,995  
    Other income     324       1,708  
    Non-controlled/affiliated investments:                
    Interest income (excluding PIK interest income)     1,229       299  
    Dividend income     240        
    PIK interest income     351       34  
    Other income            
    Controlled investments:                
    Interest income (excluding PIK interest income)     4,072       4,287  
    Dividend income            
    PIK interest income            
    Other income     10        
    Total Investment Income   $ 78,698     $ 68,331  
    Expenses                
    Management fees   $ 6,061     $ 4,386  
    Performance-based incentive fees     6,433       6,038  
    Interest and other debt expenses     30,464       26,179  
    Administrative services expense     1,016       1,223  
    Other general and administrative expenses     1,248       2,129  
    Total expenses     45,222       39,955  
    Management and performance-based incentive fees waived            
    Performance-based incentive fee offset            
    Expense reimbursements     (806 )     (168 )
    Net Expenses   $ 44,416     $ 39,787  
    Net Investment Income   $ 34,282     $ 28,544  
    Net Realized and Change in Unrealized Gains (Losses)                
    Net realized gains (losses):                
    Non-controlled/non-affiliated investments   $ 3,588     $ (7,470 )
    Non-controlled/affiliated investments     (188 )      
    Controlled investments            
    Foreign currency transactions     (313 )     (618 )
    Net realized gains (losses)     3,087       (8,088 )
    Net change in unrealized gains (losses):                
    Non-controlled/non-affiliated investments     (6,088 )     4,983  
    Non-controlled/affiliated investments     (1,509 )     (2,341 )
    Controlled investments     1,348       1,613  
    Foreign currency forward contracts     24        
    Foreign currency translations     (814 )     778  
    Net change in unrealized gains (losses)     (7,039 )     5,033  
    Net Realized and Change in Unrealized Gains (Losses)   $ (3,952 )   $ (3,055 )
    Net Increase (Decrease) in Net Assets Resulting from Operations   $ 30,330     $ 25,489  
    Earnings (Loss) Per Share — Basic   $ 0.32     $ 0.39  
                     

    Important Information

    Investors are advised to carefully consider the investment objective, risks, charges and expenses of the Company before investing. The prospectus dated April 12, 2023, which has been filed with the Securities and Exchange Commission (“SEC”), contains this and other information about the Company and should be read carefully before investing. An effective shelf registration statement relating to certain securities of the Company is on file with the SEC. Any offering may be made only by means of a prospectus and any accompanying prospectus supplement. Before you invest, you should read the base prospectus in that registration statement, the prospectus and any documents incorporated by reference therein, which the issuer has filed with the SEC, for more complete information about the Company and an offering. You may obtain these documents for free by visiting EDGAR on the SEC website at www.sec.gov.

    The information in the prospectus and in this announcement is not complete and may be changed. This communication shall not constitute an offer to sell or the solicitation of an offer to buy nor shall there be any sale of these securities in any state or other jurisdiction in which such offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of any such state or other jurisdiction.

    Past performance is not indicative of, or a guarantee of, future performance. The performance and certain other portfolio information quoted herein represents information as of dates noted herein. Nothing herein shall be relied upon as a representation as to the future performance or portfolio holdings of the Company. Investment return and principal value of an investment will fluctuate, and shares, when sold, may be worth more or less than their original cost. The Company’s performance is subject to change since the end of the period noted in this report and may be lower or higher than the performance data shown herein.

    About MidCap Financial Investment Corporation

    MidCap Financial Investment Corporation (NASDAQ: MFIC) is a closed-end, externally managed, diversified management investment company that has elected to be treated as a business development company (“BDC”) under the Investment Company Act of 1940 (the “1940 Act”). For tax purposes, the Company has elected to be treated as a regulated investment company (“RIC”) under Subchapter M of the Internal Revenue Code of 1986, as amended (the “Code”). The Company is externally managed by the Investment Adviser, an affiliate of Apollo Global Management, Inc. and its consolidated subsidiaries (“Apollo”), a high-growth global alternative asset manager. The Company’s investment objective is to generate current income and, to a lesser extent, long-term capital appreciation. The Company primarily invests in directly originated and privately negotiated first lien senior secured loans to privately held U.S. middle-market companies, which the Company generally defines as companies with less than $75 million in earnings before interest, taxes, depreciation and amortization, as may be adjusted for market disruptions, mergers and acquisitions-related charges and synergies, and other items. To a lesser extent, the Company may invest in other types of securities including, first lien unitranche, second lien senior secured, unsecured, subordinated, and mezzanine loans, and equities in both private and public middle market companies. For more information, please visit www.midcapfinancialic.com

    Forward-Looking Statements

    Some of the statements in this press release constitute forward-looking statements because they relate to future events, future performance or financial condition. The forward-looking statements may include statements as to: future operating results of MFIC and distribution projections; business prospects of MFIC, and the prospects of its portfolio companies, if applicable; and the impact of the investments that MFIC expects to make. In addition, words such as “anticipate,” “believe,” “expect,” “seek,” “plan,” “should,” “estimate,” “project” and “intend” indicate forward-looking statements, although not all forward-looking statements include these words. The forward-looking statements contained in this press release involve risks and uncertainties. Certain factors could cause actual results and conditions to differ materially from those projected, including the uncertainties associated with: future changes in laws or regulations (including the interpretation of these laws and regulations by regulatory authorities); changes in general economic conditions, including the impact of supply chain disruptions, tariffs and trade disputes with other countries, or changes in financial markets, and the risk of recession; changes in the interest rate environment and levels of general interest rates and the impact of inflation; the return on equity; the yield on investments; the ability to borrow to finance assets; new strategic initiatives; the ability to reposition the investment portfolio; the market outlook; future investment activity; and risks associated with changes in business conditions and the general economy. MFIC has based the forward-looking statements included in this press release on information available to it on the date hereof, and assumes no obligation to update any such forward-looking statements. Although MFIC undertakes no obligation to revise or update any forward-looking statements, whether as a result of new information, future events or otherwise, you are advised to consult any additional disclosures that they may make directly to you or through reports that MFIC in the future may file with the SEC, including annual reports on Form 10-K, quarterly reports on Form 10-Q and current reports on Form 8-K.

    Contact

    Elizabeth Besen
    Investor Relations Manager
    MidCap Financial Investment Corporation
    212.822.0625
    ebesen@apollo.com

    The MIL Network

  • MIL-OSI: Hallador Energy Company Reports First Quarter 2025 Financial and Operating Results

    Source: GlobeNewswire (MIL-OSI)

    – Q1 Total Revenue up 6% YoY to $117.8 Million –
    – Q1 Net Income up Materially YoY to $10.0 Million or $0.23 Earnings per Share –
    – Q1 Operating Cash Flow up ~2x YoY to $38.4 Million –
    – Q1 Adjusted EBITDA up ~3x YoY to $19.3 Million –

    TERRE HAUTE, Ind., May 12, 2025 (GLOBE NEWSWIRE) — Hallador Energy Company (Nasdaq: HNRG) (“Hallador” or the “Company”) today reported its financial results for the first quarter ended March 31, 2025.

    “We are pleased with our first quarter performance as we returned to top line growth and saw material improvements to our bottom line and cash flow generation, underscoring the strength of our strategic shift to a vertically integrated independent power producer (‘IPP’),” said Brent Bilsland, President and Chief Executive Officer. “January and February offered a strong backdrop as the combination of colder weather and higher pricing enabled us to benefit from increased dispatch volumes.”

    “We are making meaningful progress in our negotiations with a leading global data center developer for the long-term supply of capacity and energy from our facility. Our partner has demonstrated their commitment through significant investments, including securing land, transmission capacity and equipment, in addition to the previously announced exclusivity agreement with us that runs through early June 2025. Given the inherent complexity of these multi-party agreements, it is uncertain that we will finalize terms before the exclusivity expires. However, we remain confident that we will execute a strategic transaction that delivers long-term value for our shareholders.”

    Bilsland continued, “We continue to see rising demand for reliable power, particularly as grid volatility grows with the retirement of dispatchable generation. That demand, paired with supportive regulatory sentiment and Hallador’s ability to deliver dependable energy, positions us well for sustained growth. Our evaluation of dual-fuel capabilities and potential acquisitions of other dispatchable generation assets reflect our confidence in the long-term economics and viability of our platform. With a robust contracted sales book, strengthening fundamentals, and ongoing interest from high-demand end users, we believe we are well-positioned to materially strengthen our opportunities for growth and cash flow generation for many years to come.”

    First Quarter 2025 Highlights

    • Hallador returned to growth on both the top and bottom line.
      • Total revenue increased 6% year-over-year and 24% quarter-over-quarter to $117.8 million, driven by a strong increase in electric sales to $85.9 million. Electric sales are currently 73% of the Company’s revenue mix, underscoring Hallador’s commitment to emphasizing electric sales as an IPP.
      • Net income increased materially to $10.0 million, with adjusted EBITDA up ~3x year-over-year and 78% quarter-over-quarter to $19.3 million.
    • The Company generated $38.4 million in operating cash flow during the first quarter, which partially supported the repayment of debt and funding capex.
      • Total bank debt was reduced to $23.0 million at March 31, 2025, compared to $44.0 million at December 31, 2024, and $77.0 million at March 31, 2024.
      • Total liquidity was $69.0 million at March 31, 2025, compared to $37.8 million at December 31, 2024, and $39.5 million at March 31, 2024.
      • Capital expenditures in the first quarter were $11.7 million compared to $14.9 million in the year-ago period.
    • Hallador continues to focus on forward sales to secure its energy position.
      • At quarter-end, Hallador had total forward energy, capacity and coal sales to 3rd party customers of $1.1 billion through 2029.

    Financial Summary ($ in Millions and Unaudited)

        Q1 2024   Q4 2024   Q1 2025
    Electric Sales   $ 60.7     $ 69.7     $ 85.9  
    Coal Sales – 3rd Party   $ 49.6     $ 23.3     $ 30.2  
    Other Revenue   $ 1.3     $ 1.8     $ 1.7  
    Total Sales and Operating Revenue   $ 111.6     $ 94.8     $ 117.8  
    Net Income (Loss)   $ (1.7 )   $ (215.8 )   $ 10.0  
    Operating Cash Flow   $ 16.4     $ 32.5     $ 38.4  
    Adjusted EBITDA*   $ 6.8     $ 6.2     $ 19.3  
    ___________________________
    Non-GAAP financial measure, defined as EBITDA plus effects of certain subsidiary and equity method investment activity, less other amortization, plus certain operating activities including stock-based compensation, asset retirement obligations accretion, less gain on disposal or abandonment of assets, plus other reclassifications such as special non-recurring project expenses.

    Adjusted EBITDA should not be considered an alternative to net income, income from operations, cash flows from operating activities or any other measure of financial performance presented in accordance with GAAP. Our method of computing Adjusted EBITDA may not be the same method used to compute similar measures reported by other companies.

    Management believes the non-GAAP financial measure, Adjusted EBITDA, is an important measure in analyzing our liquidity and is a key component of certain material covenants contained within our Credit Agreement, specifically the minimum quarterly EBITDA. Noncompliance with the covenants could result in our lenders requiring the Company to immediately repay all amounts borrowed. If we cannot satisfy these financial covenants, we would be prohibited under our Credit Agreement from engaging in certain activities, such as incurring additional indebtedness, making certain payments, and acquiring and disposing of assets. Consequently, Adjusted EBITDA is critical to the assessment of our liquidity. The required amount of Adjusted EBITDA is a variable based on our debt outstanding and/or required debt payments at the time of the quarterly calculation based on a rolling prior 12-month period.

    Reconciliation of the non-GAAP financial measure, Adjusted EBITDA, to Income (Loss) before Income taxes, the most comparable GAAP measure, is as follows (in thousands) for the three months ended March 31, 2025 and 2024, respectively.

    Reconciliation of GAAP “Income (Loss) before Income Taxes” to non-GAAP “Adjusted EBITDA”
    (In $ Thousands and Unaudited)
     
        Three Months Ended
        March 31, 
        2025   2024
    NET INCOME (LOSS)   $ 9,979     $ (1,696 )
    Interest expense     3,723       3,937  
    Income tax expense (benefit)           (610 )
    Depreciation, depletion and amortization     14,977       15,443  
    EBITDA     28,679       17,074  
    Other operating revenue           7  
    Stock-based compensation     1,084       666  
    Asset retirement obligations accretion     427       399  
    Other amortization (1)     (11,334 )     (12,401 )
    (Gain) loss on disposal or abandonment of assets, net     (21 )     (24 )
    Loss on extinguishment of debt           853  
    Equity method investment (loss)     236       249  
    Other reclassifications     239        
    Adjusted EBITDA   $ 19,310     $ 6,823  
     
    (1) Other amortization relates to the non-cash amortization of the Hoosier PPA entered into in connection with the acquisition of the Merom Power Plant in 2022.


    Solid Forward Sales Position – Segment Basis, Before Intercompany Eliminations (unaudited):

        2025   2026   2027   2028   2029   Total
    Power                                                
    Energy                                                
    Contracted MWh (in millions)     3.04       3.36       1.78       1.09       0.27       9.54  
    Average contracted price per MWh   $ 37.20     $ 44.43     $ 54.66     $ 52.94     $ 51.33          
    Contracted revenue (in millions)   $ 113.09     $ 149.28     $ 97.29     $ 57.70     $ 13.86     $ 431.22  
                                                     
    Capacity                                                
    Average daily contracted capacity MW     784       733       623       454       100          
    Average contracted capacity price per MWd   $ 211     $ 230     $ 226     $ 225     $ 230          
    Contracted capacity revenue (in millions)   $ 45.45     $ 61.54     $ 51.40     $ 37.33     $ 3.47     $ 199.19  
                                                     
    Total Energy & Capacity Revenue                                                
                                                     
    Contracted Power revenue (in millions)   $ 158.54     $ 210.82     $ 148.69     $ 95.03     $ 17.33     $ 630.41  
                                                     
    Coal                                                
    Priced tons – 3rd party (in millions)     2.21       2.50       2.50       0.50             7.71  
    Avg price per ton – 3rd party   $ 50.95     $ 55.49     $ 56.74     $ 59.00     $          
    Contracted coal revenue – 3rd party (in millions)   $ 112.60     $ 138.73     $ 141.85     $ 29.50     $     $ 422.68  
                                                     
    TOTAL CONTRACTED REVENUE (IN MILLIONS) – CONSOLIDATED   $ 271.14     $ 349.55     $ 290.54     $ 124.53     $ 17.33     $ 1,053.09  
                                                     
    Priced tons – Intercompany (in millions)     1.82       2.30       2.30       2.30             8.72  
    Avg price per ton – Intercompany   $ 51.00     $ 51.00     $ 51.00     $ 51.00     $          
    Contracted coal revenue – Intercompany (in millions)   $ 92.82     $ 117.30     $ 117.30     $ 117.30     $     $ 444.72  
                                                     
    TOTAL CONTRACTED REVENUE (IN MILLIONS) – SEGMENT   $ 363.96     $ 466.85     $ 407.84     $ 241.83     $ 17.33     $ 1,497.81  


    Forward-Looking Statements

    This release contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended (the “Securities Act), and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act). Statements that are not strictly historical statements constitute forward-looking statements and may often, but not always, be identified by the use of such words such as “expects,” “believes,” “intends,” “anticipates,” “plans,” “estimates,” “guidance,” “target,” “potential,” “possible,” or “probable” or statements that certain actions, events or results “may,” “will,” “should,” or “could” be taken, occur or be achieved. Forward-looking statements include, without limitation, those relating to our ability to execute definitive agreements with respect to the non-binding term sheet with a leading global data center developer, to execute a strategic transaction that delivers long-term value for our shareholders or to strengthen opportunities for growth and cash flow generation. Forward-looking statements are based on current expectations and assumptions and analyses made by Hallador and its management in light of experience and perception of historical trends, current conditions and expected future developments, as well as other factors appropriate under the circumstances that involve various risks and uncertainties that could cause actual results to differ materially from those reflected in the statements. These risks include, but are not limited to, those set forth in Hallador’s annual report on Form 10-K for the year ended December 31, 2024, and other Securities and Exchange Commission filings. Hallador undertakes no obligation to revise or update publicly any forward-looking statements except as required by law.

    Conference Call and Webcast

    Hallador management will host a conference call today, May 12, 2025, at 5:00 p.m. Eastern time to discuss its financial and operational results, followed by a question-and-answer period.

    Date: Monday, May 12, 2025
    Time: 5:00 p.m. Eastern time
    Dial-in registration link: here
    Live webcast registration link: here

    The conference call will also be broadcast live and available for replay in the investor relations section of the Company’s website at www.halladorenergy.com.

    About Hallador Energy Company

    Hallador Energy Company (Nasdaq: HNRG) is a vertically-integrated Independent Power Producer (IPP) based in Terre Haute, Indiana. The Company has two core businesses: Hallador Power Company, LLC, which produces electricity and capacity at its one-Gigawatt (GW) Merom Generating Station, and Sunrise Coal, LLC, which produces and supplies fuel to the Merom Generating Station and other companies. To learn more about Hallador, visit the Company’s website at http://www.halladorenergy.com/.

    Company Contact

    Marjorie Hargrave
    Chief Financial Officer
    MHargrave@halladorenergy.com

    Investor Relations Contact

    Sean Mansouri, CFA
    Elevate IR
    (720) 330-2829
    HNRG@elevate-ir.com

    Hallador Energy Company
    Condensed Consolidated Balance Sheets
    (in thousands, except per share data)
    (unaudited)
     
        March 31,   December 31,
        2025   2024
    ASSETS            
    Current assets:            
    Cash and cash equivalents   $ 6,891     $ 7,232  
    Restricted cash     9,316       4,921  
    Accounts receivable     12,582       15,438  
    Inventory     36,318       36,685  
    Parts and supplies     40,137       39,104  
    Prepaid expenses     1,808       1,478  
    Total current assets     107,052       104,858  
    Property, plant and equipment:            
    Land and mineral rights     70,307       70,307  
    Buildings and equipment     435,329       429,857  
    Mine development     94,725       92,458  
    Finance lease right-of-use assets     13,034       13,034  
    Total property, plant and equipment     613,395       605,656  
    Less – accumulated depreciation, depletion and amortization     (360,624 )     (347,952 )
    Total property, plant and equipment, net     252,771       257,704  
    Equity method investments     2,370       2,607  
    Other assets     3,904       3,951  
    Total assets   $ 366,097     $ 369,120  
                 
    LIABILITIES AND STOCKHOLDERS’ EQUITY            
    Current liabilities:            
    Current portion of bank debt, net   $ 16,965     $ 4,095  
    Accounts payable and accrued liabilities     45,652       44,298  
    Current portion of lease financing     7,067       6,912  
    Contract liabilities – current     107,368       97,598  
    Total current liabilities     177,052       152,903  
    Long-term liabilities:            
    Bank debt, net     4,000       37,394  
    Long-term lease financing     6,921       8,749  
    Asset retirement obligations     15,386       14,957  
    Contract liabilities – long-term     42,539       49,121  
    Other     4,851       1,711  
    Total long-term liabilities     73,697       111,932  
    Total liabilities     250,749       264,835  
    Commitments and contingencies (Note 16)            
    Stockholders’ equity:            
    Preferred stock, $.10 par value, 10,000 shares authorized; none issued            
    Common stock, $.01 par value, 100,000 shares authorized; 42,978 and 42,621 issued and outstanding, as of March 31, 2025 and December 31, 2024, respectively     430       426  
    Additional paid-in capital     190,378       189,298  
    Retained earnings (deficit)     (75,460 )     (85,439 )
    Total stockholders’ equity     115,348       104,285  
    Total liabilities and stockholders’ equity   $ 366,097     $ 369,120  
    Hallador Energy Company
    Condensed Consolidated Statements of Operations
    (in thousands, except per share data)
    (unaudited)
     
        Three Months Ended March 31,
        2025   2024
    SALES AND OPERATING REVENUES:            
    Electric sales   $ 85,943     $ 60,681  
    Coal sales     30,185       49,630  
    Other revenues     1,659       1,263  
    Total sales and operating revenues     117,787       111,574  
    EXPENSES:            
    Fuel     15,210       8,059  
    Other operating and maintenance costs     28,389       37,262  
    Cost of purchased power     6,840       1,926  
    Utilities     4,152       4,594  
    Labor     27,029       35,168  
    Depreciation, depletion and amortization     14,977       15,443  
    Asset retirement obligations accretion     427       399  
    Exploration costs     21       70  
    General and administrative     6,825       5,944  
    Gain on disposal or abandonment of assets, net     (21 )     (24 )
    Total operating expenses     103,849       108,841  
                 
    INCOME FROM OPERATIONS     13,938       2,733  
                 
    Interest expense (1)     (3,723 )     (3,937 )
    Loss on extinguishment of debt           (853 )
    Equity method investment (loss)     (236 )     (249 )
    NET INCOME (LOSS) BEFORE INCOME TAXES     9,979       (2,306 )
                 
    INCOME TAX EXPENSE (BENEFIT):            
    Current            
    Deferred           (610 )
    Total income tax expense (benefit)           (610 )
                 
    NET INCOME (LOSS)   $ 9,979     $ (1,696 )
                 
    NET INCOME (LOSS) PER SHARE:            
    Basic   $ 0.23     $ (0.05 )
    Diluted   $ 0.23     $ (0.05 )
                 
    WEIGHTED AVERAGE SHARES OUTSTANDING            
    Basic     42,619       34,816  
    Diluted     43,462       34,816  
    Hallador Energy Company
    Condensed Consolidated Statements of Cash Flows
    (in thousands)
    (unaudited)
     
        Three Months Ended March 31,
        2025   2024
    CASH FLOWS FROM OPERATING ACTIVITIES:            
    Net income (loss)   $ 9,979     $ (1,696 )
    Adjustments to reconcile net income (loss) to net cash provided by operating activities:            
    Deferred income tax (benefit)           (610 )
    Equity method investment loss     236       249  
    Depreciation, depletion and amortization     14,977       15,443  
    Loss on extinguishment of debt           853  
    Gain on disposal or abandonment of assets, net     (21 )     (24 )
    Amortization of debt issuance costs     497       404  
    Asset retirement obligations accretion     427       399  
    Cash paid on asset retirement obligation reclamation     (156 )     (639 )
    Stock-based compensation     1,084       666  
    Amortization of contract liabilities     (35,669 )     (24,529 )
    Accretion on contract liabilities     1,560        
    Change in current assets and liabilities:            
    Accounts receivable     2,856       5,709  
    Inventory     367       (6,613 )
    Parts and supplies     (1,033 )     (1,483 )
    Prepaid expenses     (330 )     (37 )
    Accounts payable and accrued liabilities     3,124       (8,015 )
    Contract liabilities     37,297       35,355  
    Other     3,224       937  
    Net cash provided by operating activities   $ 38,419     $ 16,369  
    Hallador Energy Company
    Condensed Consolidated Statements of Cash Flows
    (in thousands)
    (continued)
    (unaudited)
     
        Three Months Ended March 31,
        2025   2024
    CASH FLOWS FROM INVESTING ACTIVITIES:            
    Capital expenditures   $ (11,693 )   $ (14,874 )
    Proceeds from sale of equipment     21       24  
    Net cash used in investing activities     (11,672 )     (14,850 )
                 
    CASH FLOWS FROM FINANCING ACTIVITIES:            
    Payments on bank debt     (33,000 )     (26,500 )
    Borrowings of bank debt     12,000       12,000  
    Payments on lease financing     (1,693 )     (1,238 )
    Proceeds from sale and leaseback arrangement           1,927  
    Issuance of related party notes payable           5,000  
    Debt issuance costs           (38 )
    ATM offering           6,580  
    Taxes paid on vesting of RSUs           (1 )
    Net cash used in financing activities     (22,693 )     (2,270 )
    Increase (decrease) in cash, cash equivalents, and restricted cash     4,054       (751 )
    Cash, cash equivalents, and restricted cash, beginning of period     12,153       7,123  
    Cash, cash equivalents, and restricted cash, end of period   $ 16,207     $ 6,372  
                 
    CASH, CASH EQUIVALENTS, AND RESTRICTED CASH:            
    Cash and cash equivalents   $ 6,891     $ 1,635  
    Restricted cash     9,316       4,737  
        $ 16,207     $ 6,372  
                 
    SUPPLEMENTAL CASH FLOW INFORMATION:            
    Cash paid for interest   $ 1,830     $ 3,083  
                 
    SUPPLEMENTAL NON-CASH FLOW INFORMATION:            
    Change in capital expenditures included in accounts payable and prepaid expense   $ (1,649 )   $ (5,290 )
    Stock issued on redemption of convertible notes and interest   $     $ 9,721  

    The MIL Network

  • MIL-OSI: Phunware Reports First Quarter 2025 Financial Results

    Source: GlobeNewswire (MIL-OSI)

    New Customer Launches Drive 40% Revenue Growth for Software Subscriptions and Services

    Strong Balance Sheet of $109.7 Million Powering R&D Activities in AI-Driven Customer Platform and Corporate Initiatives

    AUSTIN, Texas, May 12, 2025 (GLOBE NEWSWIRE) — Phunware, Inc. (“Phunware” or the “Company”) (NASDAQ: PHUN), a leader in enterprise cloud solutions for mobile applications, today reported financial results for the first quarter ended March 31, 2025.

    Financial Highlights

    • Software subscriptions and services revenue increased 40% to $0.6 million in Q1 2025, as compared to Q1 2024.
    • Q1 2025 software and subscription bookings totaled $0.4 million.
    • Net loss was $3.7 million for the three months ended March 31, 2025, as compared to $2.3 million in the previous year period.
      • Primary driver for net loss increase was $1.2 million one-time legal expenses related to the Wild Basin litigation bench trial that concluded in Q1 2025; a decision is expected in Q3 2025.
    • Net loss per share improved to ($0.18) per share in Q1 2025, as compared to ($0.33) per share in Q1 2024.
    • Net cash used in operations decreased to $3.3 million for the three months ended March 31, 2025, compared to $5.5 million for the previous year period.
    • Cash and cash equivalents as of March 31, 2025, was $109.7 million.

    Recent Business Highlights

    • During Q1 2025, added three (3) new customers in the hospitality vertical. Momentum carried into Q2, with a new $0.5 million booking for a multi-location health care facility.
    • Appointed Quyen Du to the Board of Directors, a 25-year corporate strategy and development executive with Fortune 500 consumer brands.
      • Her appointment satisfies Nasdaq Stock Market LLC (“Nasdaq”) continued listing requirements for audit committee service.
    • Attended investor and industry conferences including the 37th Annual ROTH Conference and upcoming 2025 Hospitality Industry Technology Exposition and Conference (HITEC®) June 16–19 in Indianapolis, Indiana.

    Management Commentary

    “The first quarter of 2025 was underscored by new customers and bookings and continued focus on our AI-related initiatives,” said interim CEO Stephen Chen. “First quarter revenues of $0.7 million and gross margin of 52% were driven by a 40% increase in Mobile software subscriptions and services with delivered customer projects. With an existing hospitality customer, we launched an integrated conference solution including dynamic wayfinding, mobile engagement messaging, events scheduling, and content management. With a well-known resort and entertainment venue customer, we launched our hospitality industry solution application to enhance guest experiences.”

    “Software bookings for the first quarter were $0.4 million and we continue to accelerate our pipeline while simultaneously shortening the sales cycle. With three new customers in the hospitality vertical during the first quarter, and a $0.5 million multi-location health care facility booking in the second quarter, we believe customer momentum continues to accelerate.”

    “We were honored to appoint Quyen Du to our Board of Directors in February. Ms. Du brings 25 years’ experience in strategy and corporate development as an executive at Fortune 500 consumer brands. She has an impressive record of guiding strategic growth and will add tremendous expertise to our Board for Phunware investments, M&A and new business development strategies. We are happy to announce that Ms. Du was elected to three-year term at our most recent stockholders’ meeting.”

    “While we’ve seen some softness in the ad market, we are focused on new opportunities in that market and investing in marketing and research and development in generative and agentic AI initiatives, among others. We remain committed to reinforcing our core business units, identifying high-impact investment and M&A opportunities, driving operational excellence, and aligning our cost structure for long-term scalability. We are also committed to enhancing our team with experienced sales, marketing, and technology professionals to amplify market visibility and accelerate customer acquisition.”

    “Looking ahead, we are developing additional features and functionalities for our existing products, including AI-related features such as AI Personal Concierge for hospitality customers and their guests and Intelligent Reporting for large real property owners. We expect to launch the initial AI Personal Concierge product in mid-2025. With our leadership position in mobile app development, combined with compelling new technology improvements and AI integration, we are executing on our strategic vision to deliver our solutions globally. I look forward to additional announcements and milestones in the months ahead,” concluded Chen.

    Note about Non-GAAP Financial Measures

    A non-GAAP financial measure is a numerical measure of a company’s performance, financial position, or cash flows that either excludes or includes amounts that are not normally excluded or included in the most directly comparable measure calculated and presented in accordance with accounting principles generally accepted in the United States of America, or GAAP. Non-GAAP measures are not in accordance with, nor are they a substitute for, GAAP measures. Other companies may use different non-GAAP measures and presentation of results.

    In addition to financial results presented in accordance with GAAP, this press release presents adjusted EBITDA, which is a non-GAAP measure. Adjusted EBITDA is determined by taking net loss and adding interest expense (income), income tax expense, depreciation, and further adjusted for non-cash impairment, valuation adjustments and stock-based compensation expense. The company believes that this non-GAAP measure, viewed in addition to and not in lieu of net loss, provides additional information to investors by providing a more focused measure of operating results. This metric is an integral part of the Company’s internal reporting to evaluate its operations and the performance of senior management. A reconciliation of adjusted EBITDA to net loss, the most comparable GAAP measure, is available in the accompanying financial tables below. The non-GAAP measure presented herein may not be comparable to similarly titled measures presented by other companies.

           
    US-GAAP NET LOSS TO ADJUSTED EBITDA RECONCILIATION
    (Unaudited)
           
        Three Months Ended March 31,  
    (in thousands)   2025     2024  
    Net loss   $ (3,723 )   $ (2,292 )
    Add back: Depreciation     4       4  
    Add back: Interest expense     9       108  
    Less: Interest income     (1,119 )     (140 )
    EBITDA     (4,829 )     (2,320 )
    Add back: Stock-based compensation     86       630  
    Less: Gain on extinguishment of debt           (535 )
    Adjusted EBITDA   $ (4,743 )   $ (2,225 )
                     

    About Phunware

    Phunware, Inc. (NASDAQ: PHUN) is an enterprise software company specializing in mobile app solutions with integrated intelligent capabilities. We provide businesses with the tools to create, implement, and manage custom mobile applications, analytics, digital advertising, and location-based services. Phunware is transforming mobile engagement by delivering scalable, personalized, and data-driven mobile app experiences.

    Phunware’s mission is to achieve unparalleled connectivity and monetization through the widespread adoption of Phunware mobile technologies, leveraging brands, consumers, partners, digital asset holders, and market participants. Phunware is poised to expand its software products and services audience through a new Generative AI platform which is in development, utilize and monetize its patents and other intellectual property, and renewed focus on development of a digital asset ecosystem for existing holders and new market participants.

    For more information on Phunware, please visit www.phunware.com. To better understand and leverage generative AI and Phunware’s mobile app technologies, visit ai.phunware.com.

    Safe Harbor / Forward-Looking Statements

    This press release includes forward-looking statements. All statements other than statements of historical facts contained in this press release, including statements regarding our future results of operations and financial position, business strategy and plans, and our objectives for future operations, are forward-looking statements. The words “anticipate,” “believe,” “continue,” “could,” “estimate,” “expect,” “intend,” “may,” “might,” “plan,” “possible,” “potential,” “predict,” “project,” “should,” “will,” and similar expressions are intended to identify forward-looking statements. For example, Phunware is using forward-looking statements when it discusses the adoption and impact of emerging technologies and their use across mobile engagement platforms. The forward-looking statements contained in this press release are based on our current expectations and beliefs concerning future developments and their potential effects on us. These forward-looking statements involve risks, uncertainties, and other assumptions that may cause actual results to differ materially from those expressed or implied. These risks and uncertainties include, but are not limited to, those factors described under the heading “Risk Factors” in our filings with the SEC. We undertake no obligation to update any forward-looking statements.

    By their nature, forward-looking statements involve risks and uncertainties. We caution you that forward-looking statements are not guarantees of future performance and that our actual results may differ materially from those expressed or implied by these forward-looking statements.

    Investor Relations Contact:
    Chris Tyson, Executive Vice President
    MZ Group – MZ North America
    949-491-8235
    PHUN@mzgroup.us
    www.mzgroup.us

    Phunware Media Contact:
    Joe McGurk, Managing Director
    917-259-6895
    PHUN@mzgroup.us

               
    Phunware, Inc.
    Consolidated Balance Sheets
    (In thousands, except share and per share data)
               
      March 31,     December 31,  
      2025     2024  
    Assets: (Unaudited)        
    Current assets:          
    Cash and cash equivalents $ 109,719     $ 112,974  
    Accounts receivable, net of allowance for credit losses of $264 and $166 as of March 31, 2025 and December 31, 2024, respectively   697       276  
    Digital currencies   82       103  
    Prepaid expenses and other current assets   588       406  
    Total current assets   111,086       113,759  
    Non-current assets:          
    Property and equipment, net   20       24  
    Right-of-use asset   770       840  
    Other assets   158       158  
    Total non-current assets   948       1,022  
    Total assets $ 112,034     $ 114,781  
               
    Liabilities and stockholders’ equity          
    Current liabilities:          
    Accounts payable $ 4,073     $ 3,754  
    Accrued expenses   492       148  
    Deferred revenue   1,124       1,034  
    Lease liability   320       313  
    PhunCoin subscription payable   1,202       1,202  
    Total current liabilities   7,211       6,451  
    Deferred revenue   660       528  
    Lease liability   537       619  
    Total noncurrent liabilities   1,197       1,147  
    Total liabilities   8,408       7,598  
    Commitments and contingencies (See Note 7)          
    Stockholders’ equity          
    Common stock, $0.0001 par value, 1,000,000,000 shares authorized; 20,180,875 shares issued and 20,170,745 share outstanding as of March 31, 2025 and 20,166,665 shares issued and 20,156,535 shares outstanding as of December 31, 2024   2       2  
    Treasury Stock   (502 )     (502 )
    Additional paid-in capital   421,169       421,003  
    Accumulated deficit   (317,043 )     (313,320 )
    Total stockholders’ equity   103,626       107,183  
    Total liabilities and stockholders’ equity $ 112,034     $ 114,781  
                   
    Phunware, Inc.
    Consolidated Statements of Operations and Comprehensive Loss
    (In thousands, except share and per share information)
         
      Three Months Ended  
      March 31,  
      2025     2024  
               
    Net revenues $ 688     $ 921  
    Cost of revenues   329       397  
    Gross profit   359       524  
    Operating expenses:          
    Sales and marketing   896       443  
    General and administrative   3,464       2,471  
    Research and development   813       484  
    Total operating expenses   5,173       3,398  
    Operating loss   (4,814 )     (2,874 )
    Other income (expense):          
    Interest expense   (9 )     (108 )
    Interest income   1,119       140  
    Gain on extinguishment of debt         535  
    Other (expense) income, net   (19 )     15  
    Total other income   1,091       582  
    Loss before taxes   (3,723 )     (2,292 )
    Income tax expense          
    Net loss   (3,723 )     (2,292 )
    Net loss per share, basic and diluted $ (0.18 )   $ (0.33 )
    Weighted-average shares used to compute net loss per share, basic & diluted   20,169,640       6,864,226  
                   
    Phunware, Inc.
    Consolidated Statements of Cash Flows
    (In thousands)
         
      Three Months Ended  
      March 31,  
      2025     2024  
    Operating activities          
    Net loss $ (3,723 )   $ (2,292 )
    Adjustments to reconcile net loss to net cash used in operating activities:          
    Gain on extinguishment of debt         (535 )
    Stock-based compensation   86       630  
    Other adjustments   132       329  
    Changes in operating assets and liabilities:          
    Accounts receivable   (444 )     (82 )
    Prepaid expenses and other assets   (182 )     (11 )
    Accounts payable and accrued expenses   663       (2,893 )
    Lease liability payments   (89 )     (185 )
    Deferred revenue   222       (286 )
    Net cash used in operating activities from continued operations   (3,335 )     (5,325 )
    Net cash used in operating activities from discontinued operations         (205 )
    Net cash used in operating activities   (3,335 )     (5,530 )
    Investing activities          
    Net cash provided by (used in) investing activities          
    Financing activities          
    Proceeds from sales of common stock, net of issuance costs   80       23,204  
    Net cash provided by financing activities   80       23,204  
               
    Effect of exchange rate on cash         (41 )
    Net (decrease) increase in cash and cash equivalents   (3,255 )     17,633  
    Cash and cash equivalents at the beginning of the period   112,974       3,934  
    Cash and cash equivalents at the end of the period $ 109,719     $ 21,567  
               
               
    Supplemental disclosure of cash flow information          
    Interest paid $ 9     $ 4  
    Income taxes paid $     $ 26  
    Supplemental disclosures of non-cash financing activities:          
    Issuance of common stock upon conversion of the 2022 Promissory Note $     $ 4,505  
    Issuance of common stock for payment of bonuses and consulting fees $     $ 35  
                   

    The MIL Network

  • MIL-OSI: Rapid7 Announces First Quarter 2025 Financial Results

    Source: GlobeNewswire (MIL-OSI)

    • Annualized recurring revenue (“ARR”) of $837 million, an increase of 4% year-over-year
    • Total revenue of $210 million, up 3% year-over-year; Product subscriptions revenue of $204 million, up 4% year-over-year
    • GAAP operating loss of $0.1 million; Non-GAAP operating income of $32 million
    • Net cash provided by operating activities of $30 million; Free cash flow of $25 million

    BOSTON, May 12, 2025 (GLOBE NEWSWIRE) — Rapid7, Inc. (Nasdaq: RPD), a leader in extended risk and threat detection, today announced its financial results for the first quarter 2025.

    “We had a slower start to 2025 than anticipated however we have a clear strategy and strong conviction in our long-term opportunity,” said Corey Thomas, Chairman and CEO of Rapid7. “Against a more uncertain macroeconomic environment, we are executing with increased focus and urgency—investing behind our leadership in MDR, accelerating Exposure Command adoption, and sharpening our go-to-market engine. We believe these steps position us for improved ARR in the second half of the year and beyond. At the same time, we remain committed to operational discipline and delivering strong free cash flow in 2025.”

    First Quarter 2025 Financial Results and Other Metrics

      As of March 31,
      2025
      2024
      % Change
      (dollars in thousands)
    ARR $ 837,220     $ 807,196     4 %
    Number of customers   11,685       11,462     2 %
    ARR per customer $ 71.6     $ 70.4     2 %
      Three Months Ended March 31,
      2025   2024   % Change
      (in thousands, except per share data)
    Product subscriptions revenue $ 203,935     $ 196,918     4 %
    Professional services revenue   6,318       8,183     (23 %)
    Total revenue $ 210,253     $ 205,101     3 %
               
    North America revenue $ 157,945     $ 157,340     %
    Rest of world revenue   52,308       47,761     10 %
    Total revenue $ 210,253     $ 205,101     3 %
               
    GAAP gross profit $ 150,773     $ 144,107      
    GAAP gross margin   72 %     70 %    
    Non-GAAP gross profit $ 157,460     $ 151,112      
    Non-GAAP gross margin   75 %     74 %    
               
    GAAP (loss) income from operations $ (101 )   $ 9,716      
    GAAP operating margin   %     5 %    
    Non-GAAP income from operations $ 32,353     $ 40,285      
    Non-GAAP operating margin   15 %     20 %    
               
    GAAP net income $ 2,105     $ 1,406      
    GAAP net income per share, basic $ 0.03       0.02      
    GAAP net income per share, diluted $ 0.03     $ 0.02      
    Non-GAAP net income $ 35,578     $ 39,388      
    Non-GAAP net income per share:          
    Basic $ 0.56     $ 0.64      
    Diluted $ 0.49     $ 0.55      
               
    Adjusted EBITDA $ 38,898     $ 46,619      
               
    Net cash provided by operating activities $ 29,757     $ 31,070      
    Free cash flow $ 24,677     $ 27,534      
                       

    For additional details on the reconciliation of non-GAAP measures and certain other business metrics to their nearest comparable GAAP measures, please refer to the accompanying financial data tables included in this press release. The prior year period reflects an immaterial correction. Refer to Note 16, Immaterial Correction of an Error, in the notes to our unaudited condensed consolidated financial statements for further information.

    Recent Business Highlights

    • In April, Rapid7 launched unified threat-informed remediation for its Command Platform, delivering effective remediation at scale via proactive exposure remediation and AI-assisted automated detection and response. In addition to these enhancements to the Command Platform, Rapid7 also launched Breach Protection Warranty, offering MTC (Managed Thread Complete) Ultimate customers up to $1,000,000 in coverage embedded directly into the service.
    • In April, Rapid7 launched Managed Detection & Response (MDR) for Enterprise, a fully managed and customizable detection and response service designed to meet the unique demands of complex, distributed enterprise environments.
    • In April, Rapid7 introduced Intelligence Hub within its Command Platform, an integrated threat intelligence solution designed to provide security teams with meaningful context and actionable insights for accelerated detection and response.
    • In March, Rapid7 announced the appointment of three new members to its Board of Directors: Wael Mohamed, Mike Burns, and Kevin Galligan. These strategic appointments reinforce the company’s commitment to scaling the business, enhancing operational efficiency, and driving long-term shareholder returns.
    • In March, Rapid7 announced plans for expansion in India, including the opening of a global capacity center, which will serve as a Security Operations Center (SOC) and innovation hub to house technology, security operations, customer support, and IT teams.

    Second Quarter and Full Year 2025 Guidance

    Rapid7 anticipates ARR, revenue, non-GAAP income from operations, non-GAAP net income per share and free cash flow to be in the following ranges:

      Second Quarter 2025   Full-Year 2025
      (in millions, except per share data)
    ARR         $850 to $880
    Year-over-year growth         1% to 5%
    Revenue $211 to $213   $853 to $863
    Year-over-year growth 1% to 2%   1% to 2%
    Non-GAAP income from operations $30 to $32   $125 to $135
    Non-GAAP net income per share $0.43 to $0.46   $1.78 to $1.91
    Weighted average shares outstanding 75.3   76.7
    Free cash flow         $125 to $135
                   

    The guidance provided above is forward-looking in nature. Actual results may differ materially. See the cautionary note regarding “Forward-Looking Statements” below. Guidance for the second quarter 2025 does not include any potential impact of foreign exchange gains or losses. The guidance provided above is based on a number of assumptions, estimates and expectations as of the date of this press release and, while presented with numerical specificity, this guidance is inherently subject to significant business, economic and competitive uncertainties and contingencies, many of which are beyond Rapid7’s control and are based upon specific assumptions with respect to future business decisions or economic conditions, some of which may change. Rapid7 undertakes no obligation to update guidance after this date.

    Non-GAAP guidance excludes estimates for stock-based compensation expense, amortization of acquired intangible assets, amortization of debt issuance costs, and certain other items such as acquisition-related expenses, impairment of long-lived assets, restructuring expense, induced conversion expense, change in the fair value of derivative assets, litigation-related expenses and discrete tax items. Rapid7 has provided a reconciliation of each non-GAAP guidance measure to the most comparable GAAP measures in the financial statement tables included in this press release. The reconciliation does not reflect any items that are unknown at this time, including, but not limited to, non-ordinary course litigation-related expenses, which we are not able to predict without unreasonable effort due to their inherent uncertainty.

    Conference Call and Webcast Information

    Rapid7 will host a conference call today, May 12, 2025, to discuss its results at 4:30 p.m. Eastern Time. The call will be accessible by telephone at 888-330-2384 (domestic) or +1 240-789-2701 (international) with the event code 8484206. The call will also be available live via webcast on Rapid7’s website at https://investors.rapid7.com. A webcast replay of the conference call will be available at https://investors.rapid7.com.

    About Rapid7

    Rapid7 (Nasdaq: RPD) is on a mission to create a safer digital world by making cybersecurity simpler and more accessible. We empower security professionals to manage a modern attack surface through our best-in-class technology, leading-edge research, and broad, strategic expertise. Rapid7’s comprehensive security solutions help more than 11,000 global customers unite cloud risk management and threat detection to reduce attack surfaces and eliminate threats with speed and precision. For more information, visit our website, check out our blog, or follow us on LinkedIn or Twitter.

    Non-GAAP Financial Measures and Other Metrics

    To supplement our consolidated financial statements, which are prepared and presented in accordance with generally accepted accounting principles in the United States (“GAAP”), we provide investors with certain non-GAAP financial measures and other metrics, which we believe are helpful to our investors. We use these non-GAAP financial measures and other metrics for financial and operational decision-making purposes and as a means to evaluate period-to-period comparisons. We also use certain non-GAAP financial measures as performance measures under our executive bonus plan. We believe that these non-GAAP financial measures and other metrics provide useful information about our operating results, enhance the overall understanding of past financial performance and future prospects and allow for greater transparency with respect to metrics used by our management in its financial and operational decision-making.

    While our non-GAAP financial measures are an important tool for financial and operational decision-making and for evaluating our own operating results over different periods of time, you should review the reconciliation of our non-GAAP financial measures to the comparable GAAP financial measures included below, and not rely on any single financial measure to evaluate our business.

    Non-GAAP Financial Measures

    We disclose the following non-GAAP financial measures: non-GAAP gross profit, non-GAAP income from operations, non-GAAP net income, non-GAAP net income per share, adjusted EBITDA and free cash flow. We also disclose non-GAAP gross margin and non-GAAP operating margin derived from these financial measures.

    We define non-GAAP gross profit, non-GAAP income from operations, non-GAAP net income and non-GAAP net income per share as the respective GAAP balances excluding the effect of stock-based compensation expense, amortization of acquired intangible assets, amortization of debt issuance costs and certain other items such as acquisition-related expenses, impairment of long-lived assets, change in the fair value of derivative assets, restructuring expense, induced conversion expense and discrete tax items. Non-GAAP net income per basic and diluted share is calculated as non-GAAP net income divided by the weighted average shares used to compute net income per share, with the number of weighted average shares decreased, when applicable, to reflect the anti-dilutive impact of the capped call transactions entered into in connection with our convertible senior notes.

    We believe these non-GAAP financial measures are useful to investors in assessing our operating performance due to the following factors:

    Stock-based compensation expense. We exclude stock-based compensation expense because of varying available valuation methodologies, subjective assumptions and the variety of equity instruments that can impact our non-cash expense. We believe that providing non-GAAP financial measures that exclude stock-based compensation expense allows for more meaningful comparisons between our operating results from period to period.

    Amortization of acquired intangible assets. We believe that excluding the impact of amortization of acquired intangible assets allows for more meaningful comparisons between operating results from period to period as the intangible assets are valued at the time of acquisition and are amortized over several years after the acquisition.

    Amortization of debt issuance costs. The expense for the amortization of debt issuance costs related to our convertible senior notes and our former revolving credit facility is a non-cash item, and we believe the exclusion of this interest expense provides a more useful comparison of our operational performance in different periods.

    Induced conversion expense. In conjunction with the third quarter of 2023 partial repurchase of our 2.25% convertible senior notes due 2025, we incurred a non-cash induced conversion expense of $53.9 million. We exclude induced conversion expense because this amount is not indicative of the performance of or trends in our business, and neither is comparable to the prior period nor predictive of future results.

    Litigation-related expenses. We exclude non-ordinary course litigation expense because we do not consider legal costs and settlement fees incurred in litigation and litigation-related matters of non-ordinary course lawsuits and other disputes to be indicative of our core operating performance. We do not adjust for ordinary course legal expenses, including legal costs and settlement fees resulting from maintaining and enforcing our intellectual property portfolio and license agreements.

    Acquisition-related expenses. We exclude acquisition-related expenses, including accretion expense associated with contingent consideration, as costs that are unrelated to the current operations and are neither comparable to the prior period nor predictive of future results.

    Change in fair value of derivative assets. The expense for the change in fair value of derivative assets related to our 2023 capped calls settlement is a non-cash item and we believe the exclusion of this other income (expense) provides a more useful comparison of our operational performance in different periods.

    Impairment of long-lived assets. Impairment of long-lived assets consists of impairment charges allocated to the carrying amount of certain operating right-of-use assets and the associated leasehold improvements when the carrying amounts exceed their respective fair values and we believe the exclusion of the impairment charges provides a more useful comparison of our operational performance in different periods.

    Restructuring expense. We exclude non-ordinary course restructuring expenses related to our restructuring plan, that was completed during fiscal year 2024, because we do not believe these charges are indicative of our core operating performance and we believe the exclusion of the restructuring expenses provides a more useful comparison of our performance in different periods.

    Discrete tax items. We exclude certain discrete tax items such as income tax expenses or benefits that are not related to ongoing business operations in the current year and adjustments to uncertain tax position reserves as these charges are not indicative of our ongoing operating results, and they are not considered when we are forecasting our future results.

    Anti-dilutive impact of capped call transaction. Our capped call transactions are intended to offset potential dilution from the conversion features in our convertible senior notes. Although we cannot reflect the anti-dilutive impact of the capped call transactions under GAAP, we do reflect the anti-dilutive impact of the capped call transactions in non-GAAP net income (loss) per diluted share, when applicable, to provide investors with useful information in evaluating our financial performance on a per share basis.

    Adjusted EBITDA. Adjusted EBITDA is a non-GAAP measure that we define as net income (loss) before (1) interest income, (2) interest expense, (3) other (income) expense, net, (4) provision for (benefit from) income taxes, (5) depreciation expense, (6) amortization of intangible assets, (7) stock-based compensation expense, (8) acquisition-related expenses, and (9) restructuring expense. We believe that the use of adjusted EBITDA is useful to investors and other users of our financial statements in evaluating our operating performance because it provides them with an additional tool to compare business performance across companies and across periods.

    Free Cash Flow. Free cash flow is a non-GAAP measure that we define as cash provided by operating activities less purchases of property and equipment and capitalization of internal-use software costs. We consider free cash flow to be a liquidity measure that provides useful information to management and investors about the amount of cash generated by the business after necessary capital expenditures.

    Our non-GAAP financial measures may not provide information that is directly comparable to that provided by other companies in our industry, as other companies in our industry may calculate non-GAAP financial results differently, particularly related to non-recurring, unusual items. In addition, there are limitations in using non-GAAP financial measures because the non-GAAP financial measures are not prepared in accordance with GAAP, may be different from non-GAAP financial measures used by other companies and exclude expenses that may have a material impact upon our reported financial results. Further, stock-based compensation expense has been and will continue to be for the foreseeable future a significant recurring expense in our business and an important part of the compensation provided to our employees.

    Other Metrics

    ARR. ARR is defined as the annual value of all recurring revenue related to contracts in place at the end of the period. ARR should be viewed independently of revenue and deferred revenue as ARR is an operating metric and is not intended to be combined with or replace these items. ARR is not a forecast of future revenue, which can be impacted by contract start and end dates and renewal rates, and does not include revenue reported as professional services revenue in our consolidated statement of operations.

    Number of Customers. We define a customer as any entity that has an active Rapid7 recurring revenue contract as of the specified measurement date, excluding InsightOps and Logentries only customers with a contract value of less than $2,400 per year.

    ARR per Customer. We define ARR per customer as ARR divided by the number of customers at the end of the period.

    Cautionary Language Concerning Forward-Looking Statements

    This press release includes forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements include, but are not limited to, the statements regarding our financial guidance for the second quarter and full-year 2025, and the assumptions underlying such guidance. Our use of the words “anticipate,” “believe,” “estimate,” “expect,” “intend,” “may,” “will” and similar expressions are intended to identify forward-looking statements. The events described in our forward-looking statements are subject to a number of risks and uncertainties, assumptions and other factors that could cause actual results and the timing of certain events to differ materially from future results expressed or implied by the forward-looking statements. Risks that could cause or contribute to such differences include, but are not limited to, growing macroeconomic uncertainty, unstable market and economic conditions, fluctuations in our quarterly results, our ability to successfully grow our sales of our cloud-based solutions, including through the shift to a consolidated platform sales approach, effectiveness of our restructuring plan that was completed during fiscal year 2024, failure to meet our publicly announced guidance or other expectations about our business, our ability to sustain our revenue growth rate, the ability of our products and professional services to correctly detect vulnerabilities, renewal of our customer’s subscriptions, competition in the markets in which we operate, market growth, our ability to innovate and manage our growth, our sales cycles, our ability to integrate acquired companies, exposure to greater than anticipated tax liabilities, and our ability to operate in compliance with applicable laws as well as other risks and uncertainties that could affect our business and results described in our filings with the Securities and Exchange Commission (the “SEC”), including our most recent Annual Report on Form 10-K filed with the SEC on February 28, 2025, particularly in the section entitled “Item 1.A Risk Factors,” and in the subsequent reports that we file with the SEC. Moreover, we operate in a very competitive and rapidly changing environment. New risks emerge from time to time. It is not possible for our management to predict all risks, nor can we assess the impact of all factors on our business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those expressed in any forward-looking statements we may make. Except as required by law, we undertake no obligation to update any forward-looking statements to reflect events or circumstances after the date of such statements. You should, therefore, not rely on these forward-looking statements as representing our views as of any date subsequent to the date of this press release.

    Investor contact:

    Elizabeth Chwalk
    Vice President, Investor Relations
    investors@rapid7.com
    (617) 865-4277

    Press contact:

    Alice Randall
    Director, Global Corporate Communications
    press@rapid7.com
    (214) 693-4727

     
    RAPID7, INC.
    Consolidated Balance Sheets (Unaudited)
    (in thousands)
             
        March 31, 2025   December 31, 2024
    Assets        
    Current assets:        
    Cash and cash equivalents   $ 291,462     $ 334,686  
    Short-term investments     202,011       187,025  
    Accounts receivable, net     140,541       168,242  
    Deferred contract acquisition and fulfillment costs, current portion     50,667       52,134  
    Prepaid expenses and other current assets     47,964       44,024  
    Total current assets     732,645       786,111  
    Long-term investments     99,136       37,274  
    Property and equipment, net     31,659       32,245  
    Operating lease right-of-use assets     46,404       48,877  
    Deferred contract acquisition and fulfillment costs, non-current portion     69,843       73,672  
    Goodwill     575,268       575,268  
    Intangible assets, net     79,763       85,719  
    Other assets     10,092       12,868  
    Total assets   $ 1,644,810     $ 1,652,034  
    Liabilities and Stockholders’ Equity        
    Current liabilities:        
    Accounts payable   $ 12,318     $ 18,908  
    Accrued expenses and other current liabilities     69,458       88,802  
    Convertible senior notes, current portion, net     45,967       45,895  
    Operating lease liabilities, current portion     13,614       15,493  
    Deferred revenue, current portion     447,798       461,118  
    Total current liabilities     589,155       630,216  
    Convertible senior notes, non-current portion, net     889,303       888,356  
    Operating lease liabilities, non-current portion     65,484       68,430  
    Deferred revenue, non-current portion     27,524       27,078  
    Other long-term liabilities     20,622       20,243  
    Total liabilities     1,592,088       1,634,323  
    Stockholders’ equity:        
    Common stock   $ 642     $ 635  
    Treasury stock     (4,765 )     (4,765 )
    Additional paid-in-capital     1,042,355       1,011,080  
    Accumulated other comprehensive (loss) income     419       (1,205 )
    Accumulated deficit     (985,929 )     (988,034 )
    Total stockholders’ equity     52,722       17,711  
    Total liabilities and stockholders’ equity   $ 1,644,810     $ 1,652,034  
                     

    Note: Certain prior periods reflect immaterial corrections. Refer to Note 16, Immaterial Correction of an Error, in the notes to our Consolidated Financial Statements for further information.

     
    RAPID7, INC.
    Consolidated Statements of Operations (Unaudited)
    (in thousands, except share and per share data)
       
      Three Months Ended March 31,
      2025   2024
    Revenue:      
    Product subscriptions $ 203,935     $ 196,918  
    Professional services   6,318       8,183  
    Total revenue   210,253       205,101  
    Cost of revenue:      
    Product subscriptions   54,368       54,734  
    Professional services   5,112       6,260  
    Total cost of revenue   59,480       60,994  
    Total gross profit   150,773       144,107  
    Operating expenses:      
    Research and development   47,888       41,368  
    Sales and marketing   79,400       73,095  
    General and administrative   23,586       19,928  
    Total operating expenses   150,874       134,391  
    (Loss) income from operations   (101 )     9,716  
    Other income (expense), net:      
    Interest income   5,758       4,720  
    Interest expense   (2,654 )     (2,670 )
    Other income (expense), net   1,802       (1,435 )
    Income before income taxes   4,805       10,331  
    Provision for income taxes   2,700       8,925  
    Net income $ 2,105     $ 1,406  
    Net income per share, basic $ 0.03     $ 0.02  
    Net income per share, diluted (1) $ 0.03     $ 0.02  
    Weighted-average common shares outstanding, basic   63,835,945       61,907,808  
    Weighted-average common shares outstanding, diluted   64,224,415       74,021,704  
                   

    (1) We use the if-converted method to compute diluted earnings per share with respect to our convertible senior notes. There was no add-back of interest expense or additional dilutive shares related to the convertible senior notes where the effect was anti-dilutive. On an if-converted basis, for the three months ended March 31, 2025 and 2024, the 2025, 2027 and 2029 Notes were anti-dilutive.

    Note: Certain prior periods reflect immaterial corrections. Refer to Note 16, Immaterial Correction of an Error, in the notes to our Consolidated Financial Statements for further information.

     
    RAPID7, INC.
    Consolidated Statements of Cash Flows (Unaudited)
    (in thousands)
       
      Three Months Ended March 31,
      2025   2024
    Cash flows from operating activities:      
    Net income $ 2,105     $ 1,406  
    Adjustments to reconcile net income to net cash provided by operating activities:      
    Depreciation and amortization   11,665       11,348  
    Amortization of debt issuance costs   1,019       1,053  
    Stock-based compensation expense   27,151       25,745  
    Deferred income taxes         1,840  
    Other   (1,153 )     (203 )
    Changes in assets and liabilities:      
    Accounts receivable   27,668       39,529  
    Deferred contract acquisition and fulfillment costs   5,295       (679 )
    Prepaid expenses and other assets   (1,995 )     (1,223 )
    Accounts payable   (6,555 )     (4,190 )
    Accrued expenses   (20,325 )     (24,890 )
    Deferred revenue   (12,874 )     (21,186 )
    Other liabilities   (2,244 )     2,520  
    Net cash provided by operating activities   29,757       31,070  
    Cash flows from investing activities:      
    Purchases of property and equipment   (1,361 )     (620 )
    Capitalization of internal-use software   (3,719 )     (2,916 )
    Purchases of investments   (144,461 )     (93,158 )
    Sales and maturities of investments   69,000       55,000  
    Other investing activities   1,328        
    Net cash used in investing activities   (79,213 )     (41,694 )
    Cash flows from financing activities:      
    Taxes paid related to net share settlement of equity awards   (1,303 )     (1,764 )
    Proceeds from employee stock purchase plan   4,446       5,046  
    Proceeds from stock option exercises   1,589       1,080  
    Net cash provided by financing activities   4,732       4,362  
    Effect of exchange rate changes on cash ,cash equivalents and restricted cash   1,334       (1,493 )
    Net decrease in cash, cash equivalents and restricted cash   (43,390 )     (7,755 )
    Cash, cash equivalents and restricted cash, beginning of period $ 342,101     $ 214,130  
    Cash, cash equivalents and restricted cash, end of period $ 298,711     $ 206,375  
    Supplemental cash flow information:      
    Cash paid for interest on convertible senior notes   1,571       2,698  
    Cash paid for income taxes, net of refunds   992       2,352  
    Reconciliation of cash, cash equivalents and restricted cash:      
    Cash and cash equivalents $ 291,462     $ 198,716  
    Restricted cash included in prepaid expenses and other current assets and other assets   7,249       7,659  
    Total cash, cash equivalents and restricted cash $ 298,711     $ 206,375  
                   

    Note: Certain prior periods reflect immaterial corrections. Refer to Note 16, Immaterial Correction of an Error, in the notes to our Consolidated Financial Statements for further information.

     
    RAPID7, INC.
    GAAP to Non-GAAP Reconciliation (Unaudited)
    (in thousands, except share and per share data)
       
      Three Months Ended March 31,
      2025   2024
    GAAP gross profit $ 150,773     $ 144,107  
    Add: Stock-based compensation expense1   2,264       2,671  
    Add: Amortization of acquired intangible assets2   4,423       4,317  
    Non-GAAP gross profit $ 157,460     $ 151,095  
    Non-GAAP gross margin   74.9 %     73.7 %
           
    GAAP gross profit – Product subscriptions $ 149,567     $ 142,184  
    Add: Stock-based compensation expense   1,731       2,298  
    Add: Amortization of acquired intangible assets   4,423       4,317  
    Non-GAAP gross profit – Product subscriptions $ 155,721     $ 148,799  
    Non-GAAP gross margin – Product subscriptions   76.4 %     75.6 %
           
    GAAP gross profit – Professional services $ 1,206     $ 1,923  
    Add: Stock-based compensation expense   533       373  
    Non-GAAP gross profit – Professional services $ 1,739     $ 2,296  
    Non-GAAP gross margin – Professional services   27.5 %     28.1 %
           
    GAAP (loss) income from operations $ (101 )   $ 9,716  
    Add: Stock-based compensation expense1   27,151       25,745  
    Add: Amortization of acquired intangible assets2   5,120       5,014  
    Add: Acquisition-related expenses3   183        
    Add: Restructuring expense         (190 )
    Non-GAAP income from operations $ 32,353     $ 40,285  
           
    GAAP net income $ 2,105     $ 1,406  
    Add: Stock-based compensation expense1   27,151       25,745  
    Add: Amortization of acquired intangible assets2   5,120       5,014  
    Add: Amortization of debt issuance costs   1,019       1,053  
    Add: Acquisition-related expenses3   183        
    Add: Restructuring expense4         (190 )
    Add: Discrete tax items5         6,360  
    Non-GAAP net income $ 35,578     $ 39,388  
    Add: Interest expense of convertible senior notes6   1,571       1,571  
    Numerator for non-GAAP earnings per share, diluted calculation $ 37,149     $ 40,959  
           
    Weighted average shares used in GAAP earnings per share calculation, basic   63,835,945       61,907,808  
    Dilutive effect of convertible senior notes6   11,183,611       11,183,611  
           
    Dilutive effect of employee equity incentive plans7   388,471       930,195  
    Weighted average shares used in non-GAAP earnings per share calculation, diluted   75,408,027       74,021,614  
           
    Non-GAAP net income per share:      
    Basic $ 0.56     $ 0.64  
    Diluted $ 0.49     $ 0.55  
           
    Includes stock-based compensation expense as follows:      
    Cost of revenue $ 2,264     $ 2,671  
    Research and development   10,386       7,944  
    Sales and marketing   7,241       7,137  
    General and administrative   7,260       7,993  
           
    Includes amortization of acquired intangible assets as follows:      
    Cost of revenue $ 4,423     $ 4,317  
    Sales and marketing   652       652  
    General and administrative   45       45  
           
    Includes acquisition-related expenses as follows:      
    General and administrative $ 183     $  
           
    For the three months ended March 31, 2024 restructuring expense was included within general and administrative expense in our consolidated statements of operations.
           
    Includes discrete tax items as follows:
    Provision for income taxes $     $ 6,360  
           
    We use the if-converted method to compute diluted earnings per share with respect to our convertible senior notes. There was no add-back of interest expense or additional dilutive shares related to the convertible senior notes where the effect was anti-dilutive.
           
    We use the treasury method to compute the dilutive effect of employee equity incentive plan awards.
           

    Note: Certain prior periods reflect immaterial corrections. Refer to Note 16, Immaterial Correction of an Error, in the notes to our Consolidated Financial Statements for further information.

     
    RAPID7, INC.
    Reconciliation of Net Income (Loss) to Adjusted EBITDA (Unaudited)
    (in thousands)
       
      Three Months Ended March 31,
      2025   2024
    GAAP net income $ 2,105     $ 1,406  
    Interest income   (5,758 )     (4,720 )
    Interest expense   2,654       2,670  
    Other (income) expense, net   (1,802 )     1,435  
    Provision for (benefit from) income taxes   2,700       8,925  
    Depreciation expense   2,791       2,908  
    Amortization of intangible assets   8,874       8,440  
    Stock-based compensation expense   27,151       25,745  
    Acquisition-related expenses   183        
    Restructuring expense         (190 )
    Adjusted EBITDA $ 38,898     $ 46,619  
                   

    Note: Certain prior period reflect immaterial corrections. Refer to Note 16, Immaterial Correction of an Error, in the notes to our Consolidated Financial Statements for further information.

     
    RAPID7, INC.
    Reconciliation of Net Cash Provided by Operating Activities to Free Cash Flow (Unaudited)
    (in thousands)
       
      Three Months Ended March 31,
      2025   2024
    Net cash provided by operating activities $ 29,757     $ 31,070  
    Less: Purchases of property and equipment   (1,361 )     (620 )
    Less: Capitalized internal-use software costs   (3,719 )     (2,916 )
    Free cash flow $ 24,677     $ 27,534  
                   
     
    Second Quarter and Full-Year 2025 Guidance
    GAAP to Non-GAAP Reconciliation
    (in millions, except per share data)
           
      Second Quarter 2025   Full-Year 2025
    Reconciliation of GAAP income from operations to non-GAAP income from operations:              
    Anticipated GAAP loss from operations $ (2 ) to $     $ (11 ) to $ (1 )
    Add: Anticipated stock-based compensation expense   27   to   27       116   to   116  
    Add: Anticipated amortization of acquired intangible assets   5   to   5       20   to   20  
    Anticipated non-GAAP income from operations $ 30   to $ 32     $ 125   to $ 135  
                   
    Reconciliation of GAAP net income to non-GAAP net income:              
    Anticipated GAAP net loss $ (2 ) to $     $ (9 ) to $ 1  
    Add: Anticipated stock-based compensation expense   27   to   27       116   to   116  
    Add: Anticipated amortization of acquired intangible assets   5   to   5       20   to   20  
    Add: Anticipated amortization of debt issuance costs   1   to   1       4   to   4  
    Anticipated non-GAAP net income $ 31   to $ 33     $ 131   to $ 141  
    Add: Anticipated interest expense on convertible senior notes   1.4   to   1.4       5.6   to   5.6  
    Numerator for non-GAAP earnings per share calculation $ 32.4   to $ 34.4     $ 136.6   to $ 146.6  
                   
    Anticipated GAAP net (loss) income per share1 $ (0.03 )   $     $ (0.14 )   $ 0.02  
    Anticipated non-GAAP net income per share, diluted $ 0.43     $ 0.46     $ 1.78     $ 1.91  
                   
    Weighted average shares used in earnings per share calculation, diluted 75.3   76.7
                   
    The anticipated GAAP net loss per share is calculated using basic weighted average shares for periods in which the Company anticipated a GAAP net loss. The anticipated GAAP net income per share is calculated using GAAP diluted weighted average shares for periods in which the Company anticipated GAAP net income.
     

    The reconciliation does not reflect any items that are unknown at this time, including, but not limited to, non-ordinary course litigation-related expenses, which we are not able to predict without unreasonable effort due to their inherent uncertainty. As a result, the estimates shown for Anticipated GAAP loss from operations, Anticipated GAAP net loss and Anticipated GAAP net loss per share are expected to change.

       
      Full-Year 2025
    Reconciliation of net cash provided by operating activities to free cash flow:      
    Anticipated net cash provided by operating activities $ 146   to $ 156  
    Less: Anticipated purchases of property and equipment   (7 ) to   (7 )
    Less: Anticipated capitalized internal-use software costs   (14 ) to   (14 )
    Anticipated free cash flow $ 125     $ 135  
                   

    The MIL Network

  • MIL-OSI: Lantronix Appoints Sailesh Chittipeddi to Its Board of Directors

    Source: GlobeNewswire (MIL-OSI)

    IRVINE, Calif., May 12, 2025 (GLOBE NEWSWIRE) — Lantronix Inc. (NASDAQ: LTRX), a global leader of compute and connectivity for IoT solutions enabling Edge AI Intelligence, today announced that Sailesh Chittipeddi, Ph.D., has joined the Lantronix Board of Directors as an independent director, effective May 6, 2025. Following the appointment of Chittipeddi, the Lantronix Board of Directors will be comprised of five directors, four of whom are independent under applicable listing standards of the Nasdaq Stock Market.

    “We are very pleased to welcome Dr. Chittipeddi to the Lantronix Board of Directors,” said Hoshi Printer, chairman of the Board at Lantronix. “Dr. Chittipeddi is a respected subject expert in Industrial, IoT and Infrastructure businesses. He also has an extensive background in leading operations, procurement and supply chains globally.”

    Dr. Chittipeddi is currently a Venture Partner at Novo Tellus Capital Partners, a Singapore-based private equity firm, and a Board Member at Tessolve, which is headquartered in India. Most recently, he was executive vice president of Global Operations at Renesas Electronics, where he oversaw internal and external manufacturing and associated functions, including supply chain, procurement and related development.

    “Lantronix will benefit greatly from Dr. Chittipeddi’s extensive technology and broad industry expertise, including his service on boards of several global companies where he helped drive successful results,” added Saleel Awsare, CEO and president of Lantronix. “With his expertise in manufacturing, procurement, logistics and global supply chain strategy, Dr. Chittipeddi adds a valuable perspective as we navigate complex geopolitical and associated supply chain environment challenges.”

    At Renesas, Dr. Chittipeddi also served as executive vice president of its Industrial, IoT and Infrastructure Business Unit. In this capacity, he nearly doubled the revenue to more than $7 billion USD. This business unit included the microcontroller, power and analog-mixed signal businesses of former IDT, ISL and DLG acquisition companies. He joined Renesas in 2019 following its acquisition of IDT. In this capacity, he also served as the president of Renesas Electronics America as well as the CEO of its acquired IDT Division.

    Before his tenures at Renesas and IDT, Dr. Chittipeddi held numerous senior positions at other leading technology companies, including Conexant Systems, where he served as the CEO and president, as well as AT&T Bell Labs, Lucent Technologies and Agere Systems. He has also served on global public and private boards, including Sequans Communications, Tessolve (India), Avalanche Technologies (India), Steradian (India), Blu Wireless Technology (U.K.) and Peraso (Canada).

    Dr. Chittipeddi holds an MBA from the University of Texas at Austin and a Ph.D. in Physics from The Ohio State University. He holds 83 U.S. semiconductor process, package and design patents and has published more than 40 technical articles.

    About Lantronix

    Lantronix Inc. is a global leader of compute and connectivity IoT solutions that target high-growth markets, including Smart Cities, Enterprise and Transportation. Lantronix’s products and services empower companies to succeed in the growing IoT markets by delivering customizable solutions that enable AI Edge Intelligence. Lantronix’s advanced solutions include Intelligent Substations infrastructure, Infotainment systems and Video Surveillance, supplemented with advanced Out-of-Band Management (OOB) for Cloud and Edge Computing.

    For more information, visit the Lantronix website.

    ©2025 Lantronix, Inc. All rights reserved. Lantronix is a registered trademark. Other trademarks and trade names are those of their respective owners.

    Lantronix Media Contact:
    Gail Kathryn Miller
    Corporate Marketing &
    Communications Manager
    media@lantronix.com

    Lantronix Analyst and Investor Contact:
    investors@lantronix.com

    A photo accompanying this announcement is available at https://www.globenewswire.com/NewsRoom/AttachmentNg/d04b3fa2-b8d8-4656-adad-c8d4eb6267c4

    The MIL Network

  • MIL-OSI: OptimizeRx Reports First Quarter 2025 Financial Results and Updates Fiscal Year 2025 Guidance

    Source: GlobeNewswire (MIL-OSI)

    • Q1 revenue of $21.9 million, increasing 11% year-over-year
    • Q1 gross profit increased 9% year-over-year to $13.3 million
    • Increases full year 2025 guidance to a revenue range between $101 million and $106 million and adjusted EBITDA range between $13 million and $15 million

    WALTHAM, Mass., May 12, 2025 (GLOBE NEWSWIRE) — OptimizeRx Corp. (the “Company”) (Nasdaq: OPRX), a leading provider of healthcare technology solutions helping life sciences companies reach and engage healthcare professionals (HCPs) and patients, today reported results for the three months ended March 31, 2025. Quarterly comparisons are to the same year-ago period.

    Financial Highlights

    • Revenue in the first quarter of 2025 increased 11% to $21.9 million, as compared to $19.7 million in the same year ago period
    • Gross profit in the first quarter of 2025 increased 9% year-over-year to $13.3 million, from $12.2 million during the first quarter of 2024
    • GAAP net loss totaled $(2.2) million or $(0.12) per basic and diluted share in the first quarter of 2025, as compared to $(6.9) million or $(0.38) per basic and diluted share during the first quarter of 2024
    • Non-GAAP net income in the first quarter totaled $1.5 million or $0.08 per diluted share, as compared to Non-GAAP net loss of $(2.0) million or $(0.11) per diluted share during the first quarter of 2024 (see *Non-GAAP Measures below)
    • Adjusted EBITDA for the first quarter of 2025 increased to $1.5 million compared to $(0.3) million in the same year ago period (see *Non-GAAP Measures below)
    • Cash, cash equivalents and short-term investments totaled $16.6 million as of March 31, 2025, as compared to $13.4 million as of December 31, 2024

    Stephen L. Silvestro, OptimizeRx CEO commented, “I’m encouraged by our year-to-date performance, which has exceeded both consensus estimates and our internal expectations. The momentum we saw at the end of 2024 has carried into 2025, with year-to-date contracted revenue up more than 20% compared to the same period last year—positioning us well for a strong second half of the year. I believe this performance clearly reflects the results of our focus on operational excellence, our commitment to delighting customers, and our efforts to deepen relationships with valued business partners, all of which are driving meaningful shareholder value.

    “At the same time, we’ve already converted over 5% of our expected 2025 sales into subscription-based revenue streams. I believe this transition, combined with our improving operating leverage, puts us on a strong path toward achieving Rule of 40 performance in the coming years.

    “Given our strong performance and positive outlook, I’m pleased to announce that we are raising our full-year guidance. We now expect the revenue range to be between $101 million and $106 million, and adjusted EBITDA to be between $13 million and $15 million.”

      Rolling Twelve Months Ended March 31,
    Key Performance Indicators (KPIs)**  2025     2024 
      (in thousands, except percentages)
    Average revenue per top 20 pharmaceutical manufacturer $ 2,960     $ 2,592  
    Percent of total revenue attributable to top 20 pharmaceutical manufacturers   63 %     66 %
    Net revenue retention   114 %     116 %
    Revenue per average full-time employee $ 710     $ 641  

    2025 Financial Outlook

    The Company is increasing its 2025 guidance and expects revenue to be between $101 million and $106 million with Adjusted EBITDA to be between $13 million and $15 million.

    Conference Call

    Individual Meeting Invitation

    In an effort to increase relations with institutional investors, OptimizeRx management has dedicated time to hosting individual meetings with portfolio managers and analysts. If you are interested in scheduling a meeting with OptimizeRx management, please contact: adsilva@optimizerx.com or shalper@lifesciadvisors.com.

    *Non-GAAP Measures

    In addition to the financial measures prepared in accordance with generally accepted accounting principles (GAAP), this earnings release also contains non-GAAP financial measures. The reasons why we believe these measures provide useful information to investors and, for historical periods, a reconciliation of these measures to the most directly comparable GAAP measures are included in the supplemental tables that follow.

    Although the Company provides guidance for Adjusted EBITDA, a non-GAAP financial measure, it is not able to provide guidance to the most directly comparable GAAP measure. Reconciliations for forward-looking figures would require unreasonable effort at this time because of the uncertainty and variability of the nature and amount of certain components of various necessary GAAP components, including, for example, those related to compensation, acquisition expenses, other income, amortization or others that may arise during the year, and the Company’s management believes such reconciliations would imply a degree of precision that would be confusing or misleading to investors. For the same reasons, the Company is unable to address the probable significance of the unavailable information.

    **Definition of Key Performance Indicators

    Top 20 pharmaceutical manufacturers: We have updated the definition of “top 20 pharmaceutical manufacturers” in our key performance indicators to be based upon Fierce Pharma’s most updated list of “The top 20 pharma companies by 2024 revenue”. We previously used “The top 20 pharma companies by 2023 revenue”. As a result of this change, prior periods have been restated for comparative purposes.

    Net revenue retention: Net revenue retention is a comparison of revenue generated from all clients in the previous period to total revenue generated from the same clients in the following year (i.e., excludes new client relationships for the most recent year).

    Revenue per average full-time employee: We define revenue per average full-time employee (FTE) as total revenue over the last 12 months (LTM) divided by the average number of employees over the LTM, which is calculated by taking our total number of FTEs at the end of the prior year period by our total FTE headcount at the end of the most recent period.

    About OptimizeRx

    OptimizeRx is a leading healthcare technology company that’s redefining how life science brands connect with patients and healthcare providers. Our platform combines innovative AI-driven tools like the Dynamic Audience Activation Platform (DAAP) and Micro-Neighborhood Targeting (MNT) to deliver timely, relevant, and hyper-local engagement. By bridging the gap between HCP and DTC strategies, we empower brands to create synchronized marketing solutions that drive faster treatment decisions and improved patient outcomes.

    Our commitment to privacy-safe, patient-centric technology ensures that every interaction is designed to make a meaningful impact, delivering life-changing therapies to the right patients at the right time. Headquartered in Waltham, Massachusetts, OptimizeRx partners with some of the world’s leading pharmaceutical and life sciences companies to transform the healthcare landscape and create a healthier future for all.

    For more information, follow the Company on Twitter, LinkedIn or visit www.optimizerx.com.  

    Important Cautions Regarding Forward-Looking Statements

    This press release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Words such as “anticipates”, “believes”, “estimates”, “expects”, “forecasts”, “intends”, “plans”, “projects”, “targets”, “designed”, “could”, “may”, “should”, “will” or other similar words and expressions are intended to identify these forward-looking statements. All statements that reflect the Company’s expectations, assumptions, projections, beliefs or opinions about the future, other than statements of historical fact, are forward-looking statements, including, without limitation, statements relating to the Company’s future performance, expected revenues, expected Adjusted EBITDA, plans to grow shareholder value creation, plans to continue the Company’s growth and transformation, plans to position the Company to become a “Rule of 40” company, plans for forging stronger relationships with valued business partners, and other statements relating to future performance, plans, and expectations. These forward-looking statements are based on the Company’s current expectations and involve assumptions regarding the Company’s business, the economy, and other future conditions that may never materialize or may prove to be incorrect. Forward-looking statements are inherently subject to risks and uncertainties, some of which cannot be predicted, or quantified. Actual results and the timing of events could differ materially from those anticipated in such forward-looking statements as a result of various risks and uncertainties including, but not limited to, the effect of government regulation, seasonal trends, dependence on a concentrated group of customers, cybersecurity incidents that could disrupt operations, the ability to keep pace with growing and evolving technology, the ability to maintain contracts with electronic prescription platforms and electronic health records networks, competition, and other factors discussed in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2024, its subsequent Quarterly Reports on Form 10-Q, and in other filings the Company has made and may make with the Securities and Exchange Commission in the future. One should not place undue reliance on these forward-looking statements, which speak only as of the date on which they were made. The Company undertakes no obligation to update such statements to reflect events that occur or circumstances that exist after the date on which they were made, except as may be required by law.

    OptimizeRx Contact
    Andy D’Silva, SVP Corporate Finance
    adsilva@optimizerx.com

    Investor Relations Contact
    Steven Halper
    LifeSci Advisors, LLC
    shalper@lifesciadvisors.com

    OPTIMIZERX CORPORATION
    CONDENSED CONSOLIDATED BALANCE SHEETS
    (in thousands, except share and per share data)

      March 31,
    2025
      December 31,
    2024
    ASSETS (unaudited)    
    Current assets      
    Cash and cash equivalents $ 16,573     $ 13,380  
    Accounts receivable, net of allowance for credit losses of $335 at March 31, 2025 and December 31, 2024   32,720       38,212  
    Taxes receivable   113        
    Prepaid expenses and other   2,305       2,379  
    Total current assets   51,711       53,971  
    Property and equipment, net   150       150  
    Other assets      
    Goodwill   70,869       70,869  
    Patent rights, net   5,349       5,517  
    Technology assets, net   7,931       8,180  
    Tradename and customer relationships, net   31,226       31,819  
    Operating lease right of use assets   303       366  
    Security deposits and other assets   229       296  
    Total other assets   115,907       117,047  
    TOTAL ASSETS $ 167,768     $ 171,168  
           
    LIABILITIES AND STOCKHOLDERS’ EQUITY      
    Current liabilities      
    Current portion of long-term debt $ 3,300     $ 2,000  
    Accounts payable   3,381       2,156  
    Accrued expenses   9,277       8,486  
    Revenue share payable   1,743       5,053  
    Taxes payable         318  
    Current portion of lease liabilities   139       168  
    Deferred revenue   511       473  
    Total current liabilities   18,351       18,654  
    Non-current liabilities      
    Long-term debt, net   29,190       30,816  
    Lease liabilities, net of current portion   171       209  
    Deferred tax liabilities, net   3,786       4,491  
    Total liabilities   51,498       54,170  
           
    Stockholders’ equity      
    Preferred stock, $0.001 par value, 10,000,000 shares authorized, none issued and outstanding at March 31, 2025 or December 31, 2024          
    Common stock, $0.001 par value, 166,666,667 shares authorized, 20,234,186 and 20,194,697 shares issued at March 31, 2025 and December 31, 2024, respectively   20       20  
    Treasury stock, $0.001 par value, (1,741,397) shares held at March 31, 2025 and December 31, 2024   (2 )     (2 )
    Additional paid-in-capital   202,819       201,348  
    Accumulated deficit   (86,567 )     (84,368 )
    Total stockholders’ equity   116,270       116,998  
    TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY $ 167,768     $ 171,168  
     

    OPTIMIZERX CORPORATION
    CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
    (in thousands, except share and per share data, unaudited)

      For the Three Months Ended
    March 31,
       2025     2024 
           
    Net revenue $ 21,928     $ 19,690  
    Cost of revenues, exclusive of depreciation and amortization presented separately below   8,584       7,486  
    Gross profit   13,344       12,204  
           
    Operating expenses      
    General and administrative expenses   14,364       16,166  
    Depreciation and amortization   1,094       1,067  
    Total operating expenses   15,458       17,233  
    Loss from operations   (2,114 )     (5,029 )
    Other income (expense)      
    Interest expense   (1,297 )     (1,546 )
    Other income   39        
    Interest income   88       20  
    Total other expense, net   (1,170 )     (1,526 )
    Loss before provision for income taxes   (3,284 )     (6,555 )
    Income tax benefit (expense)   1,085       (344 )
    Net loss $ (2,199 )   $ (6,899 )
    Weighted average number of shares outstanding – basic   18,470,808       18,170,108  
    Weighted average number of shares outstanding – diluted   18,470,808       18,170,108  
    Loss per share – basic $ (0.12 )   $ (0.38 )
    Loss per share – diluted $ (0.12 )   $ (0.38 )
     

    OPTIMIZERX CORPORATION
    CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
    (in thousands, unaudited)

      For the Three Months Ended
    March 31,
      2025   2024
    CASH FLOWS FROM OPERATING ACTIVITIES:      
    Net loss $ (2,199 )   $ (6,899 )
    Adjustments to reconcile net loss to net cash provided by operating activities:      
    Depreciation and amortization   1,094       1,067  
    Stock-based compensation   1,558       3,024  
    Bad debt reserve         132  
    Amortization of debt issuance costs   174       182  
    Changes in:      
    Accounts receivable   5,492       6,373  
    Prepaid expenses and other assets   74       800  
    Accounts payable   1,225       (562 )
    Revenue share payable   (3,310 )     (2,692 )
    Accrued expenses and other liabilities   854       (362 )
    Taxes receivable and payable   (431 )     323  
    Deferred tax liabilities   (705 )      
    Deferred revenue   38       732  
    NET CASH PROVIDED BY OPERATING ACTIVITIES   3,864       2,118  
           
    CASH FLOWS USED IN INVESTING ACTIVITIES:      
    Purchase of property and equipment   (27 )     (32 )
    Capitalized software development costs   (57 )     (121 )
    NET CASH USED IN INVESTING ACTIVITIES   (84 )     (153 )
           
    CASH FLOWS USED IN FINANCING ACTIVITIES:      
    Cash paid for employee withholding taxes related to the vesting of restricted stock units   (87 )     (140 )
    Repayment of long-term debt   (500 )     (500 )
    NET CASH USED IN FINANCING ACTIVITIES   (587 )     (640 )
    NET INCREASE IN CASH AND CASH EQUIVALENTS   3,193       1,325  
    CASH AND CASH EQUIVALENTS – BEGINNING OF PERIOD   13,380       13,852  
    CASH AND CASH EQUIVALENTS – END OF PERIOD $ 16,573     $ 15,177  
           
    SUPPLEMENTAL CASH FLOW INFORMATION:      
    Cash paid for interest $ 1,121     $ 1,350  
    Cash paid for income taxes $     $ 21  

    OPTIMIZERX CORPORATION
    RECONCILIATION of GAAP to NON-GAAP FINANCIAL MEASURES
    (in thousands, except share and per share data, unaudited)

    This earnings release includes certain financial measures not derived in accordance with generally accepted accounting principles (GAAP). These non-GAAP financial measures are measures of performance not defined by accounting principles generally accepted in the United States and should be considered in addition to, not in lieu of, GAAP reported measures. Additionally, these non-GAAP measures may not be comparable to similarly titled measures reported by other companies. However, management believes that presenting certain non-GAAP financial measures provides additional information to facilitate comparison of the Company’s historical operating results and trends in its underlying operating results and provides transparency on how the Company evaluates its business. Management uses these non-GAAP financial measures in making financial, operating and planning decisions and in evaluating the Company’s performance. Management believes that financial information excluding certain items that are not considered to reflect the Company’s ongoing operating results, such as those listed below, improves the comparability of year-to-year results. Consequently, management believes that investors may be able to better understand the Company’s operating results excluding these items. Non-GAAP financial measures may reflect adjustments for items such as asset impairment charges, amortization, stock-based compensation, acquisition expenses, severance, shareholder activist related fees, CEO search fees, other income, as well as other items that management believes are not related to the Company’s ongoing performance.

      Three Months Ended March 31,
       2025     2024 
    Net loss $         (2,199 )   $         (6,899 )
    Depreciation and amortization           1,094               1,067  
    Stock-based compensation           1,558               3,024  
    Severance expenses           275               419  
    Shareholder activist related fees           451               —  
    CEO search fees           225               —  
    Other income           (39 )             —  
    Amortization of debt issuance costs           174               182  
    Acquisition expenses           —               243  
    Non-GAAP net income (loss) $         1,539     $         (1,964 )
           
    Non-GAAP net income (loss) per share      
    Diluted $         0.08     $         (0.11 )
    Weighted average shares outstanding:      
    Diluted   18,579,012       18,170,108  
      Three Months Ended March 31,
      2025   2024
    Net loss $ (2,199 )   $ (6,899 )
    Depreciation and amortization   1,094       1,067  
    Income tax (benefit) expense   (1,085 )     344  
    Stock-based compensation   1,558       3,024  
    Severance expenses   275       419  
    Acquisition expenses         243  
    Shareholder activist related fees   451        
    CEO search fees   225        
    Other income   (39 )      
    Interest expense, net   1,209       1,526  
    Adjusted EBITDA $ 1,489     $ (276 )

    The MIL Network

  • MIL-OSI: Amplify Energy Announces First Quarter 2025 Results, Beta Development Update and Updated Full-Year 2025 Guidance

    Source: GlobeNewswire (MIL-OSI)

    HOUSTON, May 12, 2025 (GLOBE NEWSWIRE) — Amplify Energy Corp. (NYSE: AMPY) (“Amplify,” the “Company,” “us,” or “our”) announced today its operating and financial results for the first quarter of 2025 and updated full-year 2025 guidance for the Company.

    Beta Development Program Update

    • Amplify initiated a development drilling program in the prolific Beta oilfield in 2024 to demonstrate the significant upside potential of the asset and generate strong incremental cash flows for the Company, with results to date proving out the viability and long-term potential of the program
    • Completed the C54 well in mid-April 2025
      • Drilled well utilizing lessons learned from 2024 program including the implementation of a managed pressure drilling system
      • IP20 was approximately 800 Bopd, which has been the strongest initial well performance in the program
      • With the C54 online, the three wells completed in the D-Sand (our primary target formation) are all projected to have greater than 90% IRR at $60/bbl oil prices
    • Completed the C48 well in mid-February 2025 as the first C-Sand completion
      • Initially planned as a D-Sand completion, but due to drilling complications elected to complete the shallower C-Sand
      • Current production rate of approximately 100 BOPD
      • Well exhibits lower oil gravities and reservoir pressures than the D-Sand completions
      • Future injection support in the area to increase reservoir pressure and deliverability is expected to prove the C-Sand as a viable future target zone
    • With the recent completions of the C48 and C54, the field now has four new development wells online, which, after offsetting the asset’s base decline, have increased Beta production by approximately 35% since early 2024
    • Based on Beta development success, at year-end 2024 Amplify had 25 SEC Proved Undeveloped (“PUD”) locations (21 D-Sand locations) with approximately $144 million in PV-10 value1
      • D-Sand completions to date are significantly outperforming the type curve utilized in SEC PUD value/reserves indicating material upside above the current valuation estimate
      • Substantial future development remains at Beta beyond the current SEC PUD locations which are based on conservative volumetric and recovery factor assumptions

    First Quarter Highlights

    • During the first quarter of 2025, the Company:
      • Achieved average total production of 17.9 MBoepd
      • Generated net cash provided by operating activities of $25.5 million and a net loss of $5.9 million
      • Delivered Adjusted EBITDA of $19.4 million and Adjusted Net Income of $3.8 million
      • Generated $6.3 million in net proceeds from the sale of undeveloped Haynesville acreage in East Texas
        • In May 2025, sold additional Haynesville interests generating $1.5 million in proceeds
      • Generated $0.9 million of Adjusted EBITDA at Magnify Energy Services, Amplify’s wholly owned subsidiary (“Magnify”)
      • As of March 31, 2025, Amplify had $125.0 million outstanding under the revolving credit facility
        • Net debt to Last Twelve Months (“LTM”) Adjusted EBITDA of 1.3x2

    (1)   2024 Year End reserves are evaluated at flat pricing: (NYMEX WTI, HH) – $65.00, $4.00

    (2)   Net debt as of March 31, 2025, consisting of $125 MM outstanding under its revolving credit facility with ~$0 MM of cash and cash equivalents, and LTM Adjusted EBITDA as of the first quarter of 2025.

    Martyn Willsher, Amplify’s President and Chief Executive Officer, commented, “Amplify’s strong first quarter operating and financial results continue to demonstrate the significant value derived from the Company’s portfolio of assets. At Beta, we brought online two wells this year, which strengthen our conviction about the prolific untapped value that remains in the reservoir. In East Texas and the Eagle Ford, we anticipate our non-operated development projects will begin producing in the second quarter, with improved natural gas prices driving strong economics for our East Texas wells. Also, in East Texas, we recently monetized a portion of our undeveloped acreage with Haynesville rights in two separate transactions for net proceeds of $7.8 million dollars, while retaining an interest in over 30 gross locations to realize upside value in future periods.”

    Mr. Willsher continued, “In light of recent market volatility and a material reduction in oil prices, we conducted a comprehensive review of our remaining uncommitted 2025 capital budget and have elected to temporarily defer three development projects at Beta resulting in capital savings of approximately $15 million in 2025. While our Beta development projects have strong economics at current oil prices, we have flexibility on the timing of these projects and are committed to maintaining strong free cash flow and a healthy balance sheet for our investors. Our diversified portfolio of mature, low-decline assets and robust hedge book protect our cash flow profile during commodity downturns, allowing us the flexibility to scale up or down investments in either oil or gas projects depending on market conditions.”

    Mr. Willsher concluded, “Going forward, Amplify intends to focus on prudent management of its existing asset base to maximize free cash flow and is conducting a thorough review of additional operating and overhead cost-saving opportunities. The Company will also continue to evaluate portfolio optimization opportunities, which could enable us to accelerate Beta development.”

    Key Financial Results

    During the first quarter of 2025, the Company reported a net loss of approximately $5.9 million. The net loss was primarily attributable to a non-cash unrealized loss on commodity derivatives during the period partially offset by a gain on the sale of East Texas properties. Excluding the impact of the non-cash unrealized loss on commodity derivatives, the East Texas divestiture, and additional other one-time impacts, Amplify generated Adjusted Net Income of $3.8 million in the first quarter of 2025.

    First quarter 2025 Adjusted EBITDA was $19.4 million, a decrease of approximately $2.4 million from the prior quarter. The decrease was primarily due to higher lease operating expense and general and administrative expense that are typically higher in the first quarter offset by stronger gas price realizations compared to the prior quarter.

    Free cash flow was negative $7.2 million for the first quarter, which was in-line with expectations, due to planned capital investments.

         
         
         
      First Quarter Fourth Quarter
    $ in millions  2025   2024 
    Net income (loss) ($5.9 ) ($7.4 )
    Net cash provided by operating activities $25.5   $12.5  
    Average daily production (MBoe/d) 17.9   18.5  
    Total revenues excluding hedges $72.1   $69.0  
    Adjusted EBITDA (a non-GAAP financial measure) $19.4   $21.8  
    Adjusted net income (loss), (a non-GAAP financial measure) $3.8   $5.1  
    Total capital $23.1   $15.3  
    Free Cash Flow (a non-GAAP financial measure) ($7.2 ) $2.9  
         

    Revolving Credit Facility and Liquidity Update

    As of March 31, 2025, Amplify had total debt of $125 million under its revolving credit facility. Net debt to LTM Adjusted EBITDA was 1.3x (net debt as of March 31, 2025). The borrowing base is redetermined on a semi-annual basis with the next redetermination expected in the second quarter of 2025.

    Corporate Production and Pricing

    During the first quarter of 2025, average daily production was approximately 17.9 Mboepd, a decrease of 0.6 Mboepd from the prior quarter. The decrease in production was driven by natural gas and NGL volumes affected by a gas imbalance adjustment in East Texas and adverse weather in Oklahoma, causing widespread power outages. These temporary production issues were factored into the production guidance previously presented for 2025.

    The Company’s product mix for the quarter was 46% crude oil, 16% NGLs, and 38% natural gas.

        Three Months   Three Months
        Ended   Ended
        March 31, 2025   December 31, 2024
             
    Production volumes – MBOE:      
      Bairoil 280     293  
      Beta 315     308  
      Oklahoma 393     436  
      East Texas / North Louisiana 570     609  
      Eagle Ford (Non-op) 49     60  
      Total – MBoe 1,607     1,706  
      Total – MBoe/d 17.9     18.5  
      % – Liquids 62 %   62 %
             

    Total oil, natural gas and NGL revenues for the first quarter of 2025 were approximately $70.3 million, before the impact of derivatives. The Company realized a net gain on commodity derivatives of $0.5 million during the first quarter. Oil, natural gas and NGL revenues, net of realized hedges, decreased $0.4 million for the first quarter compared to the prior quarter.

    The following table sets forth information regarding average realized sales prices for the periods indicated:

      Crude Oil ($/Bbl) NGLs ($/Bbl) Natural Gas ($/Mcf)
      Three Months
    Ended
    March 31,
    2025
      Three Months
    Ended
    December 31,
    2024
      Three Months
    Ended
    March 31,
    2025
      Three Months
    Ended
    December 31,
    2024
      Three Months
    Ended
    March 31,
    2025
      Three Months
    Ended
    December 31,
    2024
                           
    Average sales price exclusive of realized derivatives and certain deductions from revenue $ 67.82   $ 66.82   $ 25.24     $ 23.46     $ 3.87   $ 2.52  
    Realized derivatives   0.49     1.43                 0.04     0.76  
                           
    Average sales price with realized derivatives exclusive of certain deductions from revenue $ 68.31   $ 68.25   $ 25.24     $ 23.46     $ 3.91   $ 3.28  
    Certain deductions from revenue           (1.78 )     (1.37 )     0.02     (0.01 )
                           
    Average sales price inclusive of realized derivatives and certain deductions from revenue $ 68.31   $ 68.25   $ 23.46     $ 22.09     $ 3.93   $ 3.27  
                           

    Costs and Expenses

    Lease operating expenses in the first quarter of 2025 were approximately $37.4 million, or $23.28 per Boe, a $2.3 million increase compared to the prior quarter and in-line with internal projections. Lease operating expenses are expected to decrease in the second half of 2025 after cost savings projects are completed in Bairoil, and fewer expense workovers are conducted later in the year. Lease operating expenses do not reflect $0.9 million of income generated by Magnify in the first quarter.

    Severance and ad valorem taxes in the first quarter were approximately $4.4 million, a decrease of $1.0 million compared to $5.4 million in the prior quarter. Lower production taxes were primarily due to lower production and a one-time benefit from reversing a prior accrual for waste emissions charges. Severance and ad valorem taxes as a percentage of revenue were approximately 6.2% in the first quarter. The Company anticipates that taxes as a percentage of revenue will remain within its previously announced guidance range for 2025.

    Amplify incurred $4.3 million, or $2.67 per Boe, of gathering, processing and transportation expenses in the first quarter, compared to $4.5 million, or $2.62 per Boe, in the prior quarter.

    Cash G&A expenses in the first quarter were $7.3 million, down 7% compared to the first quarter of 2024, and in-line with expectations. The Company anticipates that quarterly cash G&A expenses will be significantly lower throughout the remainder of the year primarily due to annual year-end processes that impact various cost drivers in the first quarter. The Company expects costs to be in line with our previously announced guidance range.

    Depreciation, depletion and amortization expense in the first quarter totaled $8.5 million, or $5.29 per Boe, compared to $8.4 million, or $4.93 per Boe, in the prior quarter.

    Net interest expense was $3.5 million in the first quarter, a decrease of $0.2 million compared to $3.7 million in the prior quarter.

    Amplify recorded minimal current income tax expense for the first quarter of 2025.

    Capital Investment Update

    Cash capital investment during the first quarter of 2025 was approximately $23.1 million. During the first quarter, the Company’s capital allocation was approximately 55% for development drilling, recompletions and facility projects at Beta, and approximately 30% for non-operated development projects in East Texas and the Eagle Ford, with the remainder distributed across the Company’s other assets.

    The following table details Amplify’s capital invested during the first quarter of 2025:

      First Quarter
      2025 Capital
      ($ MM)
    Bairoil $ 1.3
    Beta $ 12.7
    Oklahoma $ 1.4
    East Texas / North Louisiana $ 3.4
    Eagle Ford (Non-op) $ 3.9
    Magnify Energy Services $ 0.3
    Total Capital Invested $ 23.1
       

    2025 Operations & Development Plan

    Amplify has adjusted its 2025 operations and development plan for the current lower commodity price environment. The Company is electing to reduce discretionary development capital at Beta for the second half of 2025, while our previously committed non-operated projects in East Texas and the Eagle Ford are expected to be completed and brought online in the second quarter.

    Amplify’s current plan is to complete three wells at Beta in 2025, including the C48 and C54 wells, which were brought online in mid-February and mid-April, respectively. Amplify intends to drill and complete its next Beta well in the third quarter, which will be a D-Sand completion drilled in the same fault block as the recently completed C54 and the C59, which was completed in October 2024 and is still producing greater than 500 bopd. With the exceptional economics at Beta, Amplify will consider adding back development wells later this year should commodity prices improve.

    Other capital at Beta for 2025 includes $8 million to upgrade a two-mile pipeline that ships all produced fluid from platform Eureka to platform Elly, facility upgrades and capital workovers. Additional information regarding the Beta development plan can be found in the Company’s investor presentation under the investor relations section of the website.

    In East Texas, we are participating in the completion of four non-operated development projects, which we expect to be online in late second quarter. Operators in the area are taking advantage of strong natural gas prices and favorable economics, and the Company anticipates more activity in this area. For the Company’s operated assets, the team is focused on prudent management of the field, such as optimizing field compression, artificial lift enhancement, and equipment insourcing, which is expected to improve the production profile and lower lease operating costs.

    Also in East Texas, as previously announced, Amplify sold 90% of its interest in certain units with Haynesville rights in Harrison County, Texas, in addition to 11 gross operated wells, and purchased a 10% interest in adjacent acreage, generating $6.3 million in net proceeds from the sale. This transaction also established an area of mutual interest (“AMI”) with the counterparty covering 10,000 gross acres. We estimate the AMI has more than 30 potential gross drilling locations.

    In May 2025, Amplify completed a separate transaction, which monetized 90% of its interests in three additional units with Haynesville rights in Panola and Shelby Counties, finalizing a separate AMI consisting of seven total units. Amplify also retained a 10% working interest with the ability to participate in any well drilled within the boundary of the AMI. Upon closing the transaction, Amplify generated approximately $1.5 million in proceeds.

    From November 2024 to present, Amplify has generated proceeds of $9.2 million related to Haynesville acreage transactions, while retaining a 10% working interest in two newly created AMIs in the Haynesville play of East Texas.

    In the Eagle Ford, we are participating in 14 gross (0.7 net) new development wells and two gross (0.4 net) recompletion projects. These non-operated wells, with highly accretive forecasted returns, have been completed and are scheduled to come online in early May. The Company is also evaluating additional development opportunities recently offered by our partners in fields where we have interests.

    Updated Full-Year 2025 Guidance

    Based on recent reductions to crude oil prices, Amplify has decided to modify its capital plans in order to maintain positive free cash flow in 2025. As a result of these modifications, we are providing updated guidance. The following guidance is subject to the cautionary statements and limitations described under the “Forward-Looking Statements” caption at the end of this press release. Amplify’s updated 2025 guidance is based on its current expectations regarding capital investment and full-year 2025 commodity prices for crude oil of $61.75/Bbl (WTI) and natural gas of $3.60/MMBtu (Henry Hub), and on the assumption that market demand and prices for oil and natural gas will continue at levels that allow for economic production of these products. Additionally, the Company expects to invest approximately 95% of its capital in the first three quarters of the year primarily in connection with the Beta development program and for non-operated development projects in East Texas and the Eagle Ford.

    A summary of the guidance is presented below:

      March 5, 2025
      March 7, 2025
      Previous Guidance   Updated Guidance
                   
      FY 2025E   FY 2025E
                   
      Low   High   Low   High
                   
    Net Average Daily Production              
    Oil (MBbls/d) 8.5 9.4   8.3 8.9
    NGL (MBbls/d) 3.0 3.3   3.0 3.3
    Natural Gas (MMcf/d) 45.0 51.0   45.0 50.0
    Total (MBoe/d) 19.0 21.0   19.0 20.5
                   
    Commodity Price Differential / Realizations (Unhedged)              
    Oil Differential ($ / Bbl) ($3.25) ($4.25)   ($3.25) ($4.25)
    NGL Realized Price (% of WTI NYMEX) 27% 31%   27% 31%
    Natural Gas Realized Price (% of Henry Hub) 85% 92%   85% 92%
                   
    Other Revenue              
    Magnify Energy Services ($ MM) $4 $6   $4 $6
    Other ($ MM) $2 $3   $2 $3
    Total ($ MM) $6 $9   $6 $9
                   
    Gathering, Processing and Transportation Costs              
    Oil ($ / Bbl) $0.65 $0.85   $0.65 $0.85
    NGL ($ / Bbl) $2.75 $4.00   $2.75 $4.00
    Natural Gas ($ / Mcf) $0.55 $0.75   $0.55 $0.75
    Total ($ / Boe) $2.25 $2.85   $2.25 $2.85
                   
    Average Costs              
    Lease Operating ($ / Boe) $18.50 $20.50   $18.50 $20.50
    Taxes (% of Revenue) (1) 6.0% 7.0%   6.0% 7.0%
    Cash General and Administrative ($ / Boe) (2)(3) $3.40 $3.90   $3.40 $3.90
                   
    Adjusted EBITDA ($ MM) (2)(3) $100 $120   $80 $110
    Cash Interest Expense ($ MM) $12 $18   $12 $18
    Capital Investment ($ MM) $70 $80   $55 $70
    Free Cash Flow ($ MM) (2)(3) $10 $30   $10 $20
                   

    (1) Includes production, ad valorem and franchise taxes
    (2) Refer to “Use of Non-GAAP Financial Measures” for Amplify’s definition and use of cash G&A, Adjusted EBITDA and free cash flow, non-GAAP measures (cash income taxes, which are not included in free cash flow, are expected to range between $0 – $1 million for the year)
    (3) Amplify believes that a quantitative reconciliation of such forward-looking information to the most comparable financial measure calculated and presented in accordance with GAAP cannot be made available without unreasonable efforts. A reconciliation of these non-GAAP financial measures would require Amplify to predict the timing and likelihood of future transactions and other items that are difficult to accurately predict. Neither of these forward-looking measures, nor their probable significance, can be quantified with a reasonable degree of accuracy. Accordingly, a reconciliation of the most directly comparable forward-looking GAAP measures is not provided.

    Hedging

    Amplify maintains a robust hedge book to support its cash flow profile and provide downside protection in weak commodity environments. Recently, the Company added to its hedge position, further protecting future cash flows.

    Amplify executed crude oil swaps covering the first half of 2026 at a weighted average price of $62.55 per barrel and the first half of 2027 with a weighted average price of $61.93 per barrel. The Company also added natural gas swaps covering 2026 at a weighted average price of $4.12 per MMBtu, collars for the first quarter of 2026 with a weighted average floor of $4.50 per MMBtu and a weighted average ceiling of $5.73 and natural gas collars for 2027 with a weighted average floor of $3.57 per MMBtu and a weighted average ceiling of $4.58 per MMBtu.

    The following table reflects the hedged volumes under Amplify’s commodity derivative contracts and the average fixed floor and ceiling prices at which production is hedged for April 2025 through December 2027, as of May 12, 2025:

      2025   2026   2027
               
    Natural Gas Swaps:          
    Average Monthly Volume (MMBtu)   560,000     515,000     137,500
    Weighted Average Fixed Price ($) $ 3.75   $ 3.80   $ 4.01
               
    Natural Gas Collars:          
    Two-way collars          
    Average Monthly Volume (MMBtu)   500,000     517,500     437,500
    Weighted Average Ceiling Price ($) $ 3.90   $ 4.11   $ 4.21
    Weighted Average Floor Price ($) $ 3.50   $ 3.58   $ 3.56
               
    Oil Swaps:          
    Average Monthly Volume (Bbls)   141,444     125,500     30,667
    Weighted Average Fixed Price ($) $ 70.61   $ 66.40   $ 61.93
               
    Oil Collars:          
    Two-way collars          
    Average Monthly Volume (Bbls)   45,333        
    Weighted Average Ceiling Price ($) $ 80.20        
    Weighted Average Floor Price ($) $ 70.00        
               

    Amplify has posted an updated investor presentation containing additional hedging information on its website, www.amplifyenergy.com, under the Investor Relations section.

    Quarterly Report on Form 10-Q

    Amplify’s financial statements and related footnotes will be available in its Quarterly Report on Form 10-Q for the quarter ended March 31, 2025, which Amplify expects to file with the SEC on May 12, 2025.

    About Amplify Energy

    Amplify Energy Corp. is an independent oil and natural gas company engaged in the acquisition, development, exploitation and production of oil and natural gas properties. Amplify’s operations are focused in Oklahoma, the Rockies (Bairoil), federal waters offshore Southern California (Beta), East Texas / North Louisiana, and the Eagle Ford (Non-op). For more information, visit www.amplifyenergy.com.

    Conference Call

    Amplify will host an investor teleconference tomorrow at 10 a.m. Central Time to discuss these operating and financial results. Interested parties may join the call by dialing (888) 999-3182 at least 15 minutes before the call begins and providing the Conference ID: AEC1Q25. A telephonic replay will be available for fourteen days following the call by dialing (800) 654-1563 and providing the Access Code: 52458798. A transcript and a recorded replay of the call will also be available on our website after the call.

    Forward-Looking Statements

    This press release includes “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. All statements, other than statements of historical fact, included in this press release that address activities, events or developments that the Company expects, believes or anticipates will or may occur in the future are forward-looking statements. Terminology such as “may,” “will,” “would,” “should,” “expect,” “plan,” “project,” “intend,” “anticipate,” “believe,” “estimate,” “predict,” “potential,” “pursue,” “target,” “outlook,” “continue,” the negative of such terms or other comparable terminology are intended to identify forward-looking statements. These statements include, but are not limited to, statements about the Company’s expectations of plans, goals, strategies (including measures to implement strategies), objectives and anticipated results with respect thereto. These statements address activities, events or developments that we expect or anticipate will or may occur in the future, including things such as projections of results of operations, plans for growth, goals, future capital expenditures, competitive strengths, references to future intentions and other such references. These forward-looking statements involve risks and uncertainties and other factors that could cause the Company’s actual results or financial condition to differ materially from those expressed or implied by forward-looking statements. These include risks and uncertainties relating to, among other things: the Company’s evaluation and implementation of strategic alternatives; risks related to the redetermination of the borrowing base under the Company’s revolving credit facility; the Company’s ability to satisfy debt obligations; the Company’s need to make accretive acquisitions or substantial capital expenditures to maintain its declining asset base, including the existence of unanticipated liabilities or problems relating to acquired or divested business or properties; volatility in the prices for oil, natural gas and NGLs; the Company’s ability to access funds on acceptable terms, if at all, because of the terms and conditions governing the Company’s indebtedness, including financial covenants; general political and economic conditions, globally and in the jurisdictions in which we operate, including the Russian invasion of Ukraine, and ongoing conflicts in the Middle East, trade wars and the potential destabilizing effect such conflicts may pose for the global oil and natural gas markets; expectations regarding general economic conditions, including inflation; and the impact of local, state and federal governmental regulations, including those related to climate change and hydraulic fracturing, and potential changes in these regulations. Please read the Company’s filings with the SEC, including “Risk Factors” in the Company’s Annual Report on Form 10-K, and if applicable, the Company’s Quarterly Reports on Form 10-Q and Current Reports on Form 8-K, which are available on the Company’s Investor Relations website at https://www.amplifyenergy.com/investor-relations/sec-filings/default.aspx or on the SEC’s website at http://www.sec.gov, for a discussion of risks and uncertainties that could cause actual results to differ from those in such forward-looking statements. You are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date of this press release. All forward-looking statements in this press release are qualified in their entirety by these cautionary statements. Except as required by law, the Company undertakes no obligation and does not intend to update or revise any forward-looking statements, whether as a result of new information, future results or otherwise.

    Use of Non-GAAP Financial Measures

    This press release and accompanying schedules include the non-GAAP financial measures of Adjusted EBITDA, Adjusted Net Income (Loss), free cash flow, net debt, PV-10 and cash G&A. The accompanying schedules provide a reconciliation of these non-GAAP financial measures to their most directly comparable financial measures calculated and presented in accordance with GAAP. Amplify’s non-GAAP financial measures should not be considered as alternatives to GAAP measures such as net income, operating income, net cash flows provided by operating activities, standardized measure of discounted future net cash flows, or any other measure of financial performance calculated and presented in accordance with GAAP. Amplify’s non-GAAP financial measures may not be comparable to similarly titled measures of other companies because they may not calculate such measures in the same manner as Amplify does.

    Adjusted EBITDA. Amplify defines Adjusted EBITDA as net income (loss) plus Interest expense, net; Income tax expense (benefit); DD&A; Accretion of AROs; Loss or (gain) on commodity derivative instruments; Cash settlements received or (paid) on expired commodity derivative instruments; Amortization of gain associated with terminated commodity derivatives; Losses or (gains) on sale of properties; Share-based compensation expenses; Exploration costs; Acquisition and divestiture related costs; Loss on settlement of AROs; Bad debt expense; and Pipeline incident loss. Adjusted EBITDA is commonly used as a supplemental financial measure by management and external users of Amplify’s financial statements, such as investors, research analysts and rating agencies, to assess: (1) its operating performance as compared to other companies in Amplify’s industry without regard to financing methods, capital structures or historical cost basis; (2) the ability of its assets to generate cash sufficient to pay interest and support Amplify’s indebtedness; and (3) the viability of projects and the overall rates of return on alternative investment opportunities. Since Adjusted EBITDA excludes some, but not all, items that affect net income or loss and because these measures may vary among other companies, the Adjusted EBITDA data presented in this press release may not be comparable to similarly titled measures of other companies. The GAAP measures most directly comparable to Adjusted EBITDA are net income and net cash provided by operating activities.

    Adjusted Net Income (Loss). Amplify defines Adjusted Net Income (Loss) as net income (loss) adjusted for unrealized loss (gain) on commodity derivative instruments, acquisition and divestiture-related expenses, unusual and infrequent items, and the income tax expense or benefit of these adjustments using our federal statutory tax rate. Adjusted Net Income (Loss) excludes the impact of unusual and infrequent items affecting earnings that vary widely and unpredictably. This measure is not meant to disassociate these items from management’s performance but rather is intended to provide helpful information to investors interested in comparing our performance between periods. Adjusted Net Income (Loss) is not considered to be an alternative to net income (loss) reported in accordance with GAAP.

    Free cash flow. Amplify defines free cash flow as Adjusted EBITDA, less cash interest expense and capital expenditures. Free cash flow is an important non-GAAP financial measure for Amplify’s investors since it serves as an indicator of the Company’s success in providing a cash return on investment. The GAAP measures most directly comparable to free cash flow are net income and net cash provided by operating activities.

    Net debt. Amplify defines net debt as the total principal amount drawn on the revolving credit facility less cash and cash equivalents. The Company uses net debt as a measure of financial position and believes this measure provides useful additional information to investors to evaluate the Company’s capital structure and financial leverage.

    PV-10. PV-10 is a non-GAAP financial measure that represents the present value of estimated future cash inflows from proved oil and natural gas reserves that are calculated using the unweighted arithmetic average first-day-of-the-month prices for the prior 12 months, less future development and operating costs, discounted at 10% per annum to reflect the timing of future cash flows. The most directly comparable GAAP measure to PV-10 is standardized measure. PV-10 differs from standardized measure in its treatment of estimated future income taxes, which are excluded from PV-10. Amplify believes the presentation of PV-10 provides useful information because it is widely used by investors in evaluating oil and natural gas companies without regard to specific income tax characteristics of such entities. PV-10 is not intended to represent the current market value of our estimated proved reserves. PV-10 should not be considered in isolation or as a substitute for the standardized measure as defined under GAAP. As GAAP does not prescribe a comparable GAAP measure for PV-10 of reserves adjusted for pricing sensitives, it is not practicable for us to reconcile PV-10 to a standardized measure or any other GAAP measure.

    Cash G&A. Amplify defines cash G&A as general and administrative expense, less share-based compensation expense; acquisition and divestiture costs; bad debt expense; and severance payments. Cash G&A is an important non-GAAP financial measure for Amplify’s investors since it allows for analysis of G&A spend without regard to share-based compensation and other non-recurring expenses which can vary substantially from company to company. The GAAP measures most directly comparable to cash G&A is total G&A expenses.

    Contacts

    Jim Frew — Senior Vice President and Chief Financial Officer
    (832) 219-9044
    jim.frew@amplifyenergy.com

    Michael Jordan — Director, Finance and Treasurer
    (832) 219-9051
    michael.jordan@amplifyenergy.com

    Selected Operating and Financial Data (Tables)

    Amplify Energy Corp.      
    Selected Financial Data – Unaudited      
    Statements of Operations Data      
             
        Three Months   Three Months
        Ended   Ended
    (Amounts in $000s, except per share data) March 31, 2025   December 31, 2024
             
    Revenues:      
      Oil and natural gas sales $ 70,341     $ 67,189  
      Other revenues   1,709       1,832  
      Total revenues   72,050       69,021  
             
    Costs and Expenses:      
      Lease operating expense   37,417       35,100  
      Pipeline incident loss   396       2,405  
      Gathering, processing and transportation   4,286       4,468  
      Exploration   6       10  
      Taxes other than income   4,384       5,356  
      Depreciation, depletion and amortization   8,494       8,418  
      General and administrative expense   10,815       9,486  
      Accretion of asset retirement obligations   2,183       2,156  
      Realized (gain) loss on commodity derivatives   (503 )     (4,052 )
      Unrealized (gain) loss on commodity derivatives   14,820       13,357  
      (Gain) loss on sale of properties   (6,251 )     (1,367 )
      Other, net   (3 )     334  
      Total costs and expenses   76,044       75,671  
             
    Operating Income (loss)   (3,994 )     (6,650 )
             
    Other Income (Expense):      
      Interest expense, net   (3,519 )     (3,684 )
      Other income (expense)   115       (113 )
      Total other income (expense)   (3,404 )     (3,797 )
             
      Income (loss) before reorganization items, net and income taxes   (7,398 )     (10,447 )
             
    Income tax benefit (expense) – current   (1 )     2,132  
    Income tax benefit (expense) – deferred   1,538       886  
             
      Net income (loss) $ (5,861 )   $ (7,429 )
             
    Earnings per share:      
      Basic and diluted earnings (loss) per share $ (0.15 )   $ (0.19 )
             
    Selected Financial Data – Unaudited      
    Operating Statistics      
               
          Three Months   Three Months
          Ended   Ended
    (Amounts in $000s, except per unit data) March 31, 2025   December 31, 2024
               
    Oil and natural gas revenue:      
      Oil Sales $ 49,982   $ 50,817
      NGL Sales   6,157     6,602
      Natural Gas Sales   14,202     9,770
      Total oil and natural gas sales – Unhedged $ 70,341   $ 67,189
               
    Production volumes:      
      Oil Sales – MBbls   737     760
      NGL Sales – MBbls   263     299
      Natural Gas Sales – MMcf   3,647     3,883
      Total – MBoe   1,607     1,706
      Total – MBoe/d   17.9     18.5
               
    Average sales price (excluding commodity derivatives):      
      Oil – per Bbl $ 67.82   $ 66.82
      NGL – per Bbl $ 23.46   $ 22.09
      Natural gas – per Mcf $ 3.89   $ 2.52
      Total – per Boe $ 43.76   $ 39.37
               
    Average unit costs per Boe:      
      Lease operating expense $ 23.28   $ 20.57
      Gathering, processing and transportation $ 2.67   $ 2.62
      Taxes other than income $ 2.73   $ 3.14
      General and administrative expense $ 6.73   $ 5.56
      Realized gain/(loss) on commodity derivatives $ 0.31   $ 2.38
      Depletion, depreciation, and amortization $ 5.29   $ 4.93
               
    Selected Financial Data – Unaudited      
    Asset Operating Statistics      
             
        Three Months   Three Months
        Ended   Ended
        March 31, 2025   December 31, 2024
             
    Production volumes – MBOE:      
      Bairoil   280       293  
      Beta   315       308  
      Oklahoma   393       436  
      East Texas / North Louisiana   570       609  
      Eagle Ford (Non-op)   49       60  
      Total – MBoe   1,607       1,706  
      Total – MBoe/d   17.9       18.5  
      % – Liquids   62 %     62 %
             
    Lease operating expense – $M:      
      Bairoil $ 13,732     $ 11,800  
      Beta   13,305       12,113  
      Oklahoma   3,856       3,948  
      East Texas / North Louisiana   4,981       5,887  
      Eagle Ford (Non-op)   1,542       1,351  
      Total Lease operating expense: $ 37,416     $ 35,099  
             
    Capital expenditures – $M:      
      Bairoil $ 1,322     $ 190  
      Beta   12,733       10,001  
      Oklahoma   1,445       168  
      East Texas / North Louisiana   3,449       2,758  
      Eagle Ford (Non-op)   3,905       2,125  
      Magnify Energy Services   263       82  
      Total Capital expenditures: $ 23,117     $ 15,324  
             
    Selected Financial Data – Unaudited              
    Balance Sheet Data              
                       
    (Amounts in $000s) March 31, 2025
      December 31, 2024
                       
    Assets              
      Cash and Cash Equivalents $     $  
      Accounts Receivable   35,893       39,713  
      Other Current Assets   24,296       32,064  
        Total Current Assets $ 60,189     $ 71,777  
                       
      Net Oil and Gas Properties $ 400,770     $ 386,218  
      Other Long-Term Assets   292,680       289,081  
        Total Assets $ 753,639     $ 747,076  
                       
    Liabilities              
      Accounts Payable $ 19,863     $ 13,231  
      Accrued Liabilities   40,343       43,413  
      Other Current Liabilities   18,658       11,494  
        Total Current Liabilities $ 78,864     $ 68,138  
                       
      Long-Term Debt $ 125,000     $ 127,000  
      Asset Retirement Obligation   131,158       129,700  
      Other Long-Term Liabilities   15,680       13,326  
        Total Liabilities $ 350,702     $ 338,164  
                       
    Shareholders’ Equity              
      Common Stock & APIC $ 440,266     $ 440,380  
      Accumulated Earnings (Deficit)   (37,329 )     (31,468 )
        Total Shareholders’ Equity $ 402,937     $ 408,912  
                       
    Selected Financial Data – Unaudited      
    Statements of Cash Flows Data      
           
      Three Months   Three Months
      Ended   Ended
    (Amounts in $000s) March 31, 2025   December 31, 2024
           
           
    Net cash provided by (used in) operating activities $ 25,501     $ 12,455  
    Net cash provided by (used in) investing activities   (21,497 )     (19,379 )
    Net cash provided by (used in) financing activities   (4,004 )     6,924  
           
    Selected Operating and Financial Data (Tables)      
    Reconciliation of Unaudited GAAP Financial Measures to Non-GAAP Financial Measures    
    Adjusted EBITDA and Free Cash Flow      
             
        Three Months   Three Months
        Ended   Ended
    (Amounts in $000s) March 31, 2025   December 31, 2024
             
    Reconciliation of Adjusted EBITDA to Net Cash Provided from Operating Activities:    
      Net cash provided by operating activities $ 25,501     $ 12,455  
      Changes in working capital   (5,372 )     4,770  
      Interest expense, net   3,519       3,684  
      Amortization of gain associated with terminated commodity derivatives   159       159  
      Amortization and write-off of deferred financing fees   (315 )     (315 )
      Exploration costs   6       10  
      Acquisition and divestiture related costs   1,629       1,424  
      Plugging and abandonment cost   171       754  
      Current income tax expense (benefit)   1       (2,132 )
      Pipeline incident loss   396       2,405  
      (Gain) loss on sale of properties   (6,251 )     (1,367 )
    Adjusted EBITDA: $ 19,444     $ 21,847  
             
    Reconciliation of Free Cash Flow to Net Cash Provided from Operating Activities:    
    Adjusted EBITDA: $ 19,444     $ 21,847  
      Less: Cash interest expense   3,545       3,598  
      Less: Capital expenditures   23,117       15,324  
    Free Cash Flow: $ (7,218 )   $ 2,925  
             
    Selected Operating and Financial Data (Tables)      
    Reconciliation of Unaudited GAAP Financial Measures to Non-GAAP Financial Measures    
    Adjusted EBITDA and Free Cash Flow      
             
        Three Months   Three Months
        Ended   Ended
    (Amounts in $000s) March 31, 2025   December 31, 2024
             
    Reconciliation of Adjusted EBITDA to Net Income (Loss):      
      Net income (loss) $ (5,861 )   $ (7,429 )
      Interest expense, net   3,519       3,684  
      Income tax expense (benefit) – current   1       (2,132 )
      Income tax expense (benefit) – deferred   (1,538 )     (886 )
      Depreciation, depletion and amortization   8,494       8,418  
      Accretion of asset retirement obligations   2,183       2,156  
      (Gains) losses on commodity derivatives   14,317       9,305  
      Cash settlements received (paid) on expired commodity derivative instruments   503       4,052  
      Amortization of gain associated with terminated commodity derivatives   159       159  
      Acquisition and divestiture related costs   1,629       1,424  
      Share-based compensation expense   1,890       1,686  
      (Gain) loss on sale of properties   (6,251 )     (1,367 )
      Exploration costs   6       10  
      Loss on settlement of AROs   (3 )     334  
      Bad debt expense         28  
      Pipeline incident loss   396       2,405  
    Adjusted EBITDA: $ 19,444     $ 21,847  
             
      Reconciliation of Free Cash Flow to Net Income (Loss):      
      Adjusted EBITDA: $ 19,444     $ 21,847  
      Less: Cash interest expense   3,545       3,598  
      Less: Capital expenditures   23,117       15,324  
      Free Cash Flow: $ (7,218 )   $ 2,925  
             
    Selected Operating and Financial Data (Tables)      
    Reconciliation of Unaudited GAAP Financial Measures to Non-GAAP Financial Measures    
    Net Income (Loss) to Adjusted Net Income (Loss)      
               
          Three Months   Three Months
          Ended   Ended
    (Amounts in $000s, except per share data) March 31, 2025   December 31, 2024
               
    Reconciliation of Adjusted Net Income (Loss):      
      Net income (loss) $ (5,861 )   $ (7,429 )
      Unrealized (gain) loss on commodity derivatives   14,820       13,357  
      Acquisition and divestiture related costs   1,629       1,424  
      Non-recurring costs:      
        Income tax expense (benefit) – deferred   (1,538 )     (886 )
        Gain on sale of properties   (6,251 )     (1,367 )
      Tax effect of adjustments   971       (12 )
        Adjusted net income (loss) $ 3,770     $ 5,087  
               
    Selected Operating and Financial Data (Tables)          
    Reconciliation of Unaudited GAAP Financial Measures to Non-GAAP Financial Measures      
    Cash General and Administrative Expenses          
               
      Three Months   Three Months
      Ended   Ended
    (Amounts in $000s) March 31, 2025   December 31, 2024
               
    General and administrative expense $ 10,815   $ 9,486
    Less: Share-based compensation expense   1,890     1,686
    Less: Acquisition and divestiture costs   1,629     1,424
    Less: Bad debt expense       28
    Less: Severance payments      
    Total Cash General and Administrative Expense $ 7,296   $ 6,348
               

    The MIL Network

  • MIL-OSI: GigaCloud Technology Inc Announces First Quarter Ended March 31, 2025 Financial Results

    Source: GlobeNewswire (MIL-OSI)

    EL MONTE, Calif., May 12, 2025 (GLOBE NEWSWIRE) — GigaCloud Technology Inc (Nasdaq: GCT) (“GigaCloud” or the “Company”), a pioneer of global end-to-end B2B technology solutions for large parcel merchandise, today announced financial results for the first quarter ended March 31, 2025, including sustained revenue and GMV growth over the comparable prior year period.

    First Quarter 2025 Financial Highlights

    • Total revenues of $271.9 million, increased 8.3% year-over-year.
    • Gross profit of $63.7 million, decreased 4.2% year-over-year.
      Gross margin was 23.4%, compared to 26.5% in the first quarter of 2024.
    • Net income of $27.1 million, in line with $27.2 million reported in the prior-year period.
      Net income margin was 10.0%, compared to 10.8% in the first quarter of 2024.
      Diluted EPS increased 3.0% year-over-year to $0.68.
    • Adjusted EBITDA1 of $33.2 million, decreased 3.8% year-over-year.
      Adjusted EPS – diluted2 of $0.83, decreased 1.2% year-over-year.
    • Cash and cash equivalents, Restricted Cash, and Investments totaled $287.5 million as of March 31, 2025, a 5.1% decrease from December 31, 2024.

    Operational Highlights

    • GigaCloud Marketplace GMV3 increased 56.1% year-over-year to $1,416.7 million for the 12 months ended March 31, 2025.
    • 3P seller GigaCloud Marketplace GMV4 increased 49.9% year-over-year to $734.3 million for the 12 months ended March 31, 2025. 3P seller GigaCloud Marketplace GMV represented 51.8% of total GigaCloud Marketplace GMV for the 12 months ended March 31, 2025.
    • Active 3P sellers5 increased 33.4% year-over-year to 1,154 for the 12 months ended March 31, 2025.
    • Active buyers6 increased 81.4% year-over-year to 9,966 for the 12 months ended March 31, 2025.
    • Spend per active buyer7 was $142,156 for the 12 months ended March 31, 2025.

    “Despite persistent industry headwinds, we continue to grow and see the strength of the GigaCloud Marketplace come through—buyers and sellers continue to lean in during times of volatility and challenge. That is a testament to the efficiency and value created by our Supplier Fulfilled Retailing (SFR) model,” said Larry Wu, Founder, Chairman, and Chief Executive Officer. “We are building GigaCloud to thrive for the long-term by empowering our partners to do business smarter in an increasingly complex global market. While we are actively managing near-term macro uncertainty, the positive long-term fundamentals reinforce our confidence in delivering lasting value.”

    “In September 2024, our Board of Directors approved a share repurchase program of $46 million, and subsequently increased the total authorized amount to $62 million in March 2025. As of today, we have repurchased approximately 3.7 million shares for $61.8 million—close to 150% of the gross proceeds raised in our IPO—at a weighted average price well above our IPO offering price. We remain positioned to deploy additional capital through future repurchase authorizations, balancing capital returns and growth investments to drive future shareholder value creation,” said Erica Wei, Chief Financial Officer.

    Business Outlook

    The Company expects its total revenues to be between $275 million and $305 million in the second quarter of 2025. This forecast reflects the Company’s current and preliminary views on the market and operational conditions, which are subject to change and cannot be predicted with reasonable accuracy as of the date hereof.

    Share Repurchase Program

    In September 2024, the Company’s Board of Directors (the “Board”) approved a $46 million share repurchase program, which was increased by $16 million to $62 million on March 28, 2025. Following quarter-end, on May 8, 2025, the Board approved an additional $16 million, bringing the total authorization to $78 million. The program runs through August 28, 2025. As of May 12, 2025, the Company has repurchased approximately 3.7 million of its Class A ordinary shares for $61.8 million.

    Under the share repurchase program, the Company may purchase its ordinary shares through various means, including open market transactions, privately negotiated transactions, block trades, any combination thereof or other legally permissible means. The Company may effect repurchase transactions in compliance with Rule 10b5-1 and Rule 10b-18 of the Securities Exchange Act of 1934, as amended. The number of shares repurchased and the timing of repurchases will depend on a number of factors, including, but not limited to, price, trading volume and general market conditions, along with the Company’s working capital requirements, general business conditions and other factors.

    Conference Call

    The Company will host a conference call to discuss its financial results at 6:30 pm U.S. Eastern Time on May 12, 2025. Participants who wish to join the call should pre-register here at https://s1.c-conf.com/diamondpass/10046996-fh4na1.html. Upon registration, participants will receive the dial-in number and a unique PIN, which can be used to join the conference call. If participants register and forget their PIN or lose their registration confirmation email, they may re-register to receive a new PIN. All participants are encouraged to dial in 15 minutes prior to the start time.

    A live and archived webcast of the conference call will be accessible on the Company’s investor relations website at: https://investors.gigacloudtech.com/.

    About GigaCloud Technology Inc

    GigaCloud Technology Inc is a pioneer of global end-to-end B2B technology solutions for large parcel merchandise. The Company’s B2B ecommerce platform, which it refers to as the “GigaCloud Marketplace,” integrates everything from discovery, payments and logistics tools into one easy-to-use platform. The Company’s global marketplace seamlessly connects manufacturers, primarily in Asia, with resellers, primarily in the U.S., Asia and Europe, to execute cross-border transactions with confidence, speed and efficiency. The Company offers a truly comprehensive solution that transports products from the manufacturer’s warehouse to the end customer’s doorstep, all at one fixed price. The Company first launched its marketplace in January 2019 by focusing on the global furniture market and has since expanded into additional categories such as home appliances and fitness equipment. For more information, please visit the Company’s website: https://investors.gigacloudtech.com/.

    Non-GAAP Financial Measures

    The Company uses certain non-GAAP financial measures, including Adjusted EBITDA and Adjusted EPS – diluted, to understand and evaluate its core operating performance. Adjusted EBITDA is net income excluding interest, income taxes and depreciation, further adjusted to exclude share-based compensation expense. Adjusted EPS – diluted is a financial measure defined as our Adjusted EBITDA divided by our diluted weighted-average shares outstanding, respectively. Management uses Adjusted EBITDA and Adjusted EPS – diluted as measures of operating performance, for planning purposes, to allocate resources to enhance the financial performance of our business, to evaluate the effectiveness of our business strategies and in communications with our Board of Directors and investors concerning our financial performance. Non-GAAP financial measures, which may differ from similarly titled measures used by other companies, are presented to enhance investors’ overall understanding of our financial performance and should not be considered a substitute for, or superior to, the financial information prepared and presented in accordance with U.S. GAAP.

    For more information on the non-GAAP financial measures, please see the tables captioned “Unaudited Reconciliation of Adjusted EBITDA” and “Unaudited Reconciliation of Adjusted EPS – diluted” set forth at the end of this press release.

    Forward-Looking Statements

    This press release contains “forward-looking statements”. Forward-looking statements reflect our current view about future events. These forward-looking statements involve known and unknown risks and uncertainties and are based on the Company’s current expectations and projections about future events that the Company believes may affect its financial condition, results of operations, business strategy and financial needs. Investors can identify these forward-looking statements by words or phrases such as “may,” “will,” “could,” “expect,” “anticipate,” “aim,” “estimate,” “intend,” “plan,” “believe,” “is/are likely to,” “propose,” “potential,” “continue” or similar expressions. The Company undertakes no obligation to update or revise publicly any forward-looking statements to reflect subsequent occurring events or circumstances, or changes in its expectations, except as may be required by law. Although the Company believes that the expectations expressed in these forward-looking statements are reasonable, it cannot assure you that such expectations will turn out to be correct, and the Company cautions investors that actual results may differ materially from the anticipated results and encourages investors to review other factors that may affect its future results in the Company’s registration statement and other filings with the SEC.

    For investor and media inquiries, please contact:

    GigaCloud Technology Inc

    Investor Relations

    Email: ir@gigacloudtech.com

    PondelWilkinson, Inc.

    Laurie Berman (Investors) – lberman@pondel.com

    George Medici (Media) – gmedici@pondel.com

     
    GigaCloud Technology Inc
    UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS
    (In thousands except for share data and per share data)
     
        March 31,
    2025
      December 31,
    2024
    ASSETS        
    Current assets        
    Cash and cash equivalents   $ 251,711   $ 259,759
    Restricted cash     697     685
    Investments     35,101     42,674
    Accounts receivable, net     67,000     57,313
    Inventories     204,854     172,489
    Prepayments and other current assets     19,842     14,672
    Total current assets     579,205     547,592
    Non-current assets        
    Operating lease right-of-use assets     438,692     451,930
    Property and equipment, net     32,688     29,498
    Intangible assets, net     5,893     6,198
    Goodwill     12,586     12,586
    Deferred tax assets     11,366     10,026
    Other non-current assets     10,607     12,645
    Total non-current assets     511,832     522,883
    Total assets   $ 1,091,037   $ 1,070,475
     
    GigaCloud Technology Inc
    UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS (continued)
    (In thousands)
     
      March 31,
    2025
      December 31,
    2024
    LIABILITIES AND SHAREHOLDERS’ EQUITY      
    Current liabilities      
    Accounts payable $ 87,814     $ 78,163  
    Contract liabilities   5,665       4,486  
    Current operating lease liabilities   90,823       88,521  
    Income tax payable   20,001       13,615  
    Accrued expenses and other current liabilities   87,510       79,594  
    Total current liabilities   291,813       264,379  
    Non-current liabilities      
    Operating lease liabilities, non-current   380,842       395,235  
    Deferred tax liabilities   759       941  
    Finance lease obligations, non-current   241       382  
    Non-current income tax payable   4,485       4,321  
    Total non-current liabilities   386,327       400,879  
    Total liabilities $ 678,140     $ 665,258  
    Commitments and contingencies $     $  
    Shareholders’ equity        
    Treasury shares, at cost (2,008,984 and 609,390 shares held as of March 31, 2025 and December 31, 2024, respectively)   $ (34,550 )   $ (11,816 )
    Class A ordinary shares $0.05 par value, 50,673,268 shares authorized, 32,881,519 and 32,878,735 shares issued as of March 31, 2025 and December 31, 2024, respectively, 30,872,535 and 32,269,345 shares outstanding as of March 31, 2025 and December 31, 2024, respectively)     1,643       1,643  
    Class B ordinary shares ($0.05 par value, 9,326,732 shares authorized as of March 31, 2025 and December 31, 2024, 8,076,732 shares issued and outstanding as of March 31, 2025 and December 31, 2024)     403       403  
    Additional paid-in capital     121,490       120,262  
    Accumulated other comprehensive loss     (2,096 )     (4,136 )
    Retained earnings     326,007       298,861  
    Total shareholders’ equity     412,897       405,217  
    Total liabilities and shareholders’ equity   $ 1,091,037     $ 1,070,475  
     
    GigaCloud Technology Inc
    UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
    (In thousands except for share data and per share data)
     
      Three Months Ended
    March 31,
        2025       2024  
    Revenues      
    Service revenues $ 94,068     $ 76,623  
    Product revenues   177,838       174,454  
    Total revenues   271,906       251,077  
    Cost of revenues      
    Services   79,156       62,700  
    Products   129,024       121,829  
    Total cost of revenues   208,180       184,529  
    Gross profit   63,726       66,548  
    Operating expenses      
    Selling and marketing expenses   18,558       14,580  
    General and administrative expenses   14,340       15,389  
    Research and development expenses   2,493       1,756  
    Losses on disposal of property and equipment   12       6  
    Total operating expenses   35,403       31,731  
    Operating income   28,323       34,817  
    Interest expense   (23 )     (81 )
    Interest income   2,621       1,609  
    Foreign currency exchange gains (losses), net   792       (2,709 )
    Government grants   213       6  
    Others, net   579       (322 )
    Income before income taxes   32,505       33,320  
    Income tax expense   (5,359 )     (6,125 )
    Net income $ 27,146     $ 27,195  
    Net income attributable to ordinary shareholders   27,146       27,195  
    Foreign currency translation adjustment, net of income taxes of nil   411       (112 )
    Net unrealized loss on available-for-sale investments   (6 )      
    Intra-entity foreign currency transactions gain   1,636        
    Release of foreign currency translation reserve related to liquidation of subsidiaries   (1 )      
    Total other comprehensive income (loss)   2,040       (112 )
    Comprehensive Income $ 29,186     $ 27,083  
    Net income per ordinary share      
    —Basic $ 0.68     $ 0.67  
    —Diluted $ 0.68     $ 0.66  
    Weighted average number of ordinary shares outstanding used in computing net income per ordinary share      
    —Basic   40,020,265       40,788,658  
    —Diluted   40,138,522       40,950,170  
     
    GigaCloud Technology Inc
    UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
    (In thousands)
     
      Three Months Ended March 31,
        2025       2024  
    Cash flows from operating activities:      
    Net income $ 27,146     $ 27,195  
    Adjustments to reconcile net income to net cash provided by operating activities:      
    Depreciation and amortization   2,049       2,081  
    Share-based compensation   1,227       275  
    Operating lease   1,125       8,806  
    Changes in accounts receivables, net   (9,011 )     (632 )
    Changes in inventories   (30,845 )     (56,047 )
    Changes in prepayments and other assets   (3,217 )     (2,364 )
    Changes in accounts payable, accrued expenses and other current liabilities   14,551       27,886  
    Changes in contract liabilities   1,096       2,045  
    Changes in income tax payable   6,418       6,552  
    Changes in deferred income taxes   (1,511 )     (2,034 )
    Other operating activities   405       1,546  
    Net cash provided by operating activities   9,433       15,309  
    Cash flows from investing activities:      
    Purchases of property and equipment   (2,395 )     (3,993 )
    Disposals of property and equipment   34       1,525  
    Purchases of investments   (25,000 )     (10,000 )
    Sales and maturities of investments   31,986        
    Net cash provided by (used in) investing activities   4,625       (12,468 )
    Cash flows from financing activities:      
    Repayment of finance lease obligations   (34 )     (595 )
    Repurchases of ordinary shares   (22,734 )      
    Net cash used in financing activities   (22,768 )     (595 )
    Effect of foreign currency exchange rate changes on cash, cash equivalents and restricted cash   674       (306 )
    Net increase (decrease) in cash, cash equivalents and restricted cash   (8,036 )     1,940  
    Cash, cash equivalents and restricted cash at the beginning of the period   260,444       184,168  
    Cash, cash equivalents and restricted cash at the end of the period $ 252,408     $ 186,108  
    Supplemental disclosure of cash flow information      
    Cash paid for interest expense   23       81  
    Cash paid for income taxes   552       1,596  
     
    GigaCloud Technology Inc
    UNAUDITED RECONCILIATION OF ADJUSTED EBITDA
    (In thousands, except for per share data)
     
      Three Months Ended
    March 31,
        2025       2024  
      (In thousands)
    Net Income $ 27,146     $ 27,195  
    Add: Income tax expense   5,359       6,125  
    Add: Interest expense   23       81  
    Less: Interest income   (2,621 )     (1,609 )
    Add: Depreciation and amortization   2,049       2,081  
    Add: Share-based compensation expenses   1,227       275  
    Add: Non-recurring items(1)         349  
    Adjusted EBITDA $ 33,183     $ 34,497  

    ________________________
    (1) During the three months ended March 31, 2024, one of our fulfillment centers in Japan experienced a fire. As a result of the fire, we recognized losses of $1.8 million. Based on the provisions of our insurance policy, we have determined that partial recovery of the incurred losses is probable as of March 31, 2024 and therefore recorded an insurance recovery of $1.5 million. We do not believe such losses to be recurring or frequent in nature.

    UNAUDITED RECONCILIATION OF ADJUSTED EPS – DILUTED

      Three Months Ended
    March 31,
        2025       2024  
    Net income per ordinary share – diluted $ 0.68     $ 0.66  
    Adjustments, per ordinary share:      
    Add: Income tax expense   0.13       0.15  
    Add: Interest expense          
    Less: Interest income   (0.07 )     (0.04 )
    Add: Depreciation and amortization   0.05       0.05  
    Add: Share-based compensation expenses   0.04       0.01  
    Add: Non-recurring items(1)         0.01  
    Adjusted EPS – diluted $ 0.83     $ 0.84  
           
    Weighted average number of ordinary shares outstanding – diluted   40,138,522       40,950,170  

    ________________________
    (1) During the three months ended March 31, 2024, one of our fulfillment centers in Japan experienced a fire. As a result of the fire, we recognized losses of $1.8 million. Based on the provisions of our insurance policy, we have determined that partial recovery of the incurred losses is probable as of March 31, 2024 and therefore recorded an insurance recovery of $1.5 million. We do not believe such losses to be recurring or frequent in nature.

    ________________________
    1 Adjusted EBITDA is a non-GAAP financial measure. For more information on the non-GAAP financial measure, please see the section of “Non-GAAP Financial Measure” and the table captioned “Unaudited Reconciliation of Adjusted EBITDA” set forth at the end of this press release.

    2 Adjusted EPS – diluted is a non-GAAP financial measure. For more information on the non-GAAP financial measure, please see the section of “Non-GAAP Financial Measure” and the table captioned “Unaudited Reconciliation of Adjusted EPS – diluted” set forth at the end of this press release.

    3 GigaCloud Marketplace GMV means the total gross merchandise value of transactions ordered through our GigaCloud Marketplace including GigaCloud 3P and GigaCloud 1P, before any deductions of value added tax, goods and services tax, shipping charges paid by buyers to sellers and any refunds.

    4 3P seller GigaCloud Marketplace GMV means the total gross merchandise value of transactions sold through our GigaCloud Marketplace by 3P sellers, before any deductions of value added tax, goods and services tax, shipping charges paid by buyers to sellers and any refunds.

    5 Active 3P sellers means sellers who have sold a product in GigaCloud Marketplace within the last 12-month period, irrespective of cancellations or returns.

    6 Active buyers means buyers who have purchased a product in the GigaCloud Marketplace within the last 12-month period, irrespective of cancellations or returns.

    7 Spend per active buyer is calculated by dividing the total GigaCloud Marketplace GMV within the last 12-month period by the number of active buyers as of such date.

    The MIL Network

  • MIL-OSI: PennantPark Floating Rate Capital Ltd. Announces Financial Results for the Second Quarter Ended March 31, 2025

    Source: GlobeNewswire (MIL-OSI)

    MIAMI, May 12, 2025 (GLOBE NEWSWIRE) — PennantPark Floating Rate Capital Ltd. (NYSE: PFLT) announced today its financial results for the second quarter ended March 31, 2025.

    HIGHLIGHTS
    Quarter ended March 31, 2025 (Unaudited)
    ($ in millions, except per share amounts)
             
               
    Assets and Liabilities:          
    Investment portfolio (1)       $ 2,344.1  
    Net assets       $ 1,067.1  
    GAAP net asset value per share       $ 11.07  
    Quarterly change in GAAP net asset value per share         (2.4 )%
    Adjusted net asset value per share (2)       $ 11.07  
    Quarterly change in adjusted net asset value per share (2)         (2.4 )%
               
    Credit Facility       $ 273.8  
    2036 Asset-Backed Debt       $ 284.4  
    2036-R Asset-Backed Debt       $ 265.3  
    2026 Notes       $ 184.2  
    2037 Asset-Backed Debt       $ 358.1  
    Regulatory debt to equity       1.29x  
    Weighted average yield on debt investments at quarter-end         10.5 %
               
    Operating Results:          
    Net investment income       $ 25.0  
    Net investment income per share (GAAP)       $ 0.28  
    Core net investment income per share (3)       $ 0.28  
    Distributions declared per share       $ 0.31  
               
    Portfolio Activity:          
    Purchases of investments       $ 293.3  
    Sales and repayments of investments       $ 122.4  
               
    PSSL Portfolio data:          
    PSSL investment portfolio       $ 1,060.2  
    Purchases of investments       $ 60.0  
    Sales and repayments of investments       $ 36.8  

    (1)    Includes investments in PennantPark Senior Secured Loan Fund I LLC, or PSSL, an unconsolidated joint venture, totaling $297.3 million, at fair value.

    (2)    This is a non-GAAP financial measure. The Company believes that this number provides useful information to investors and management because it reflects the Company’s financial performance excluding the impact of the unrealized amounts on the Credit Facility. The presentation of this additional information is not meant to be considered in isolation or as a substitute for financial results prepared in accordance with GAAP.

    (3)    Core net investment income (“Core NII”) is a non-GAAP financial measure. The Company believes that Core NII provides useful information to investors and management because it reflects the Company’s financial performance excluding one-time or non-recurring investment income and expenses. The presentation of this additional information is not meant to be considered in isolation or as a substitute for financial results prepared in accordance with GAAP. For the quarter ended March 31, 2025, Core NII excluded: i) $0.4m of credit facility amendment costs and ii) $0.1m of incentive fee expense offset.

    CONFERENCE CALL AT 9:00 A.M. ET ON May 13, 2025

    PennantPark Floating Rate Capital Ltd. (“we”, “our”, “us”, or the “Company”) will also host a conference call at 9:00 a.m. (Eastern Time) on Tuesday May 13, 2025 to discuss its financial results. All interested parties are welcome to participate. You can access the conference call by dialing toll-free (888) 394-8218 approximately 5-10 minutes prior to the call. International callers should dial (929) 477-0402. All callers should reference conference ID #6661250 or PennantPark Floating Rate Capital Ltd. An archived replay will also be available on a webcast link located on the Quarterly Earnings page in the Investor section of PennantPark’s website.

    PORTFOLIO AND INVESTMENT ACTIVITY

    “We are pleased that we significantly increased our financial strength during the quarter. A lower cost credit facility, a new low cost long term securitization, new low cost securitization at our PSSL JV and additional equity capital at PFLT have positioned us well to take advantage of the upcoming attractive vintage of new loans,” said Art Penn, Chairman and CEO. “Additionally, we are pleased that our senior secured loan portfolio, with among the lowest portfolio company leverage and most meaningful covenants in the industry, is positioned defensively and continues to perform well.”

    As of March 31, 2025, our portfolio totaled $2,344.1 million, and consisted of $2,100.2 million of first lien secured debt (including $237.7 million in PSSL), $4.4 million of subordinated debt and $239.5 million of preferred and common equity (including $59.6 million in PSSL). Our debt portfolio consisted of approximately 100% variable-rate investments. As of March 31, 2025, we had four portfolio companies on non-accrual, representing 2.2% and 1.2% of our overall portfolio on a cost and fair value basis, respectively. As of March 31, 2025, the portfolio had net unrealized depreciation of $61.2 million. Our overall portfolio consisted of 159 companies with an average investment size of $14.7 million and had a weighted average yield on debt investments of 10.5%.

    As of September 30, 2024, our portfolio totaled $1,983.5 million and consisted of $1,746.7 million of first lien secured debt (including $237.7 million in PSSL), $2.7 million of second lien secured debt and subordinated debt and $234.1 million of preferred and common equity (including $56.5 million in PSSL). Our debt portfolio consisted of approximately 100% variable-rate investments. As of September 30, 2024, we had two portfolio companies on non-accrual, representing 0.4% and 0.2% of our overall portfolio on a cost and fair value basis, respectively. As of September 30, 2024, the portfolio had net unrealized depreciation of $11.4 million. Our overall portfolio consisted of 158 companies with an average investment size of $12.6 million, and a weighted average yield on debt investments of 11.5%.

    For the three months ended March 31, 2025, we invested $293.3 million in three new and 54 existing portfolio companies at a weighted average yield on debt investments of 9.9%. Sales and repayments of investments for the same period totaled $122.4 million including $52.9 million of sales to PSSL. For the six months ended March 31, 2025, we invested $900.2 million in 14 new and 96 existing portfolio companies with a weighted average yield on debt investments of 10.2%. Sales and repayments of investments for the same period totaled $523.7 million, including $240.6 million of sales to PSSL.

    For the three months ended March 31, 2024, we invested $338.3 million in 11 new and 48 existing portfolio companies at a weighted average yield on debt investments of 11.6%. For the three months ended March 31, 2024, sales and repayments of investments totaled $144.8 million, including $77.2 million of sales to PSSL. For the six months ended March 31, 2024, we invested $640.9 million in 24 new and 64 existing portfolio companies at a weighted average yield on debt investments of 11.8%. For the six months ended March 31, 2024, sales and repayments of investments totaled $248.7 million, including $139.9 million of sales to PSSL.

    PennantPark Senior Secured Loan Fund I LLC

    As of March 31, 2025, PSSL’s portfolio totaled $1,060.2 million, consisted of 118 companies with an average investment size of $9.0 million and had a weighted average yield on debt investments of 10.5%. As of September 30, 2024, PSSL’s portfolio totaled $913.3 million, consisted of 109 companies with an average investment size of $8.4 million and had a weighted average yield on debt investments of 11.4%.

    For the three months ended March 31, 2025, PSSL invested $60.0 million (including $52.9 million purchase from the Company) in four new and five existing portfolio companies with a weighted average yield on debt investments of 9.8%. PSSL’s sales and repayments of investments for the same period totaled $36.8 million. For the six months ended March 31, 2025, PSSL invested $284.9 million (including $240.6 million purchased from the Company) in 21 new and 12 existing portfolio companies with a weighted average yield on debt investments of 10.2%. PSSL’s sales and repayments of investments for the same period totaled $123.4 million.

    For the three months ended March 31, 2024, PSSL invested $80.1 million (including $77.2 million purchased from the Company) in six new and four existing portfolio companies at a weighted average yield on debt investments of 11.6%. Sales and repayments of investments for the three months ended March 31, 2024 totaled $49.5 million. For the six months ended March 31, 2024, PSSL invested $155.9 million (including $139.9 million purchased from the Company) in 10 new and 11 existing portfolio companies at a weighted average yield on debt investments of 11.9%. Sales and repayments of investments for the six months ended March 31, 2024 totaled $77.2 million.

    RESULTS OF OPERATIONS

    Set forth below are the results of operations for the three and six months ended March 31, 2025 and 2024.

    Investment Income

    For the three and six months ended March 31, 2025 investment income was $61.9 million and $128.9 million, respectively, which was attributable to $56.2 million and $117.2 million from first lien secured debt and $5.7 million and $11.7 million from other investments, respectively. For the three and six months ended March 31, 2024, investment income was $44.4 million and $82.3 million, respectively, which was attributable to $39.0 million and $72.2 million from first lien secured debt and $5.4 million and $10.1 million from other investments, respectively. The increase in investment income for the three and six months ended March 31, 2025, was primarily due to the increase in the size of the debt portfolio.

    Expenses

    For the three and six months ended March 31, 2025, expenses totaled $36.9 million and $74.0 million, respectively and were comprised of: $22.5 million and $44.9 million of debt related interest and expenses, $5.6 million and $10.9 million of base management fees, $6.3 million and $13.8 million of performance-based incentive fees, $1.9 million and $3.6 million of general and administrative expenses, $0.2 million and $0.5 million of taxes and $0.4 million and $0.4 million in Credit Facility amendment costs. For the three and six months ended March 31, 2024, expenses totaled $25.3 million and $43.8 million, respectively and were comprised of: $14.7 million and $23.6 million of debt related interest and expenses, $3.4 million and $6.4 million of base management fees, $4.8 million and $9.6 million of performance-based incentive fees, $1.8 million and $3.5 million of general and administrative expenses and $0.5 million and $0.7 million of taxes. The increase in expenses for the three and six months ended March 31, 2025, was primarily due to the increase in interest expense from increased borrowings and an increase in base management fees and incentive fee as a result of the increase in our investment portfolio.

    Net Investment Income

    For the three and six months ended March 31, 2025 net investment income totaled $25.0 million or $0.28 per share, and $55.0 million or $0.64 per share, respectively. For the three and six months ended March 31, 2024, net investment income totaled $19.1 million or $0.31 per share, and $38.5 million or $0.64 per share, respectively. The increase in net investment income for the three and six months ended March 31, 2025, was primarily due to an increase in investment income partially offset by an increase in expenses.

    Net Realized Gains or Losses

    For the three and six months ended March 31, 2025 net realized gains (losses) totaled $(3.5) million and $23.1 million, respectively. For the three and six months ended March 31, 2024, net realized gains (losses) totaled $4.0 million and $0.9 million, respectively. The change in net realized gains (losses) was primarily due to changes in the market conditions of our investments and the values at which they were realized.

    Unrealized Appreciation or Depreciation on Investments and Debt

    For the three and six months ended March 31, 2025 we reported net change in unrealized appreciation (depreciation) on investments of $(20.8) million and $(49.7) million, respectively. For the three and six months ended March 31, 2024, we reported net change in unrealized appreciation (depreciation) on investments of $7.7 million and $13.9 million, respectively. As of March 31, 2025 and September 30, 2024, our net unrealized appreciation (depreciation) on investments totaled $(61.2) million and $(11.4) million, respectively. The net change in unrealized appreciation (depreciation) on our investments was primarily due to the operating performance of the portfolio companies within our portfolio, changes in the capital market conditions of our investments and realization of investments.

    For the three and six months ended March 31, 2025, our Credit Facility had a net change in unrealized appreciation (depreciation) of less than $0.1 million and $0.1 million, respectively. For the three and six months ended March 31, 2024, our Credit Facility had a net change in unrealized appreciation (depreciation) of less than $0.1 million and ($0.1) million, respectively. As of March 31, 2025 and September 30, 2024, the net unrealized appreciation (depreciation) on the Credit Facility totaled approximately $0.1 million and zero, respectively. The net change in net unrealized (appreciation) or depreciation was primarily due to changes in the capital markets.

    Net Change in Net Assets Resulting from Operations

    For the three and six months ended March 31, 2025, net increase (decrease) in net assets resulting from operations totaled $1.2 million or $0.01 per share and $29.6 million or $0.34 per share, respectively. For the three and six months ended March 31, 2024, net increase (decrease) in net assets resulting from operations totaled $31.1 million or $0.51 per share and $53.6 million, or $0.89 per share, respectively. The net increase or (decrease) from operations for the three and six months ended March 31, 2025, was primarily due to operating performance of our portfolio and changes in capital market conditions of our investments along with change in size and cost yield of our debt portfolio and costs of financing.

    LIQUIDITY AND CAPITAL RESOURCES

    Our liquidity and capital resources are derived primarily from cash flows from operations, including income earned, proceeds from investment sales and repayments, and proceeds of securities offerings and debt financings. Our primary use of funds from operations includes investments in portfolio companies and payments of fees and other operating expenses we incur. We have used, and expect to continue to use, our debt capital, proceeds from our portfolio and proceeds from public and private offerings of securities to finance our investment objectives and operations.

    In February 2025 the Company, through the 2037 Securitization Issuer, completed a $474.6 million term debt securitization of which we retained $85.1 million of subordinated notes and $28.5 million of BBB-(sf) Class D Notes of the debt securitization. The weighted average credit spread is 1.59%. This 2037 Asset-Backed Debt is scheduled to mature on April 20, 2037.

    For the six months ended March 31, 2025 and 2024, the annualized weighted average cost of debt, inclusive of the fee on the undrawn commitment on the Credit Facility, amendment costs and debt issuance costs, was 6.8% and 7.1%, respectively. As of March 31, 2025 and September 30, 2024, we had $462.1 million and $192.1 million of unused borrowing capacity under the Credit Facility, respectively, subject to leverage and borrowing base restrictions.

    As of March 31, 2025 and September 30, 2024, we had cash equivalents of $111.4 million and $112.1 million, respectively, available for investing and general corporate purposes. We believe our liquidity and capital resources are sufficient to take advantage of market opportunities.

    During the three and six months ended March 31, 2025 we issued 11,562,000 shares and 18,838,000 shares of our common stock through the 2024 ATM Program, respectively at an average price of $11.34 per share and $11.35 per share raising $131.0 million and $213.2 million of net proceeds after commissions to the Sales Agents and inclusive of proceeds from the Investment Adviser to ensure that all shares were sold at or above NAV, respectively. During the three and six months ended March 31, 2024, we issued 4,493,436 shares of common stock through the 2022 ATM Program at an average price of $11.35 per share, raising $51.0 million of net proceeds after commissions to the Sales Agents and inclusive of proceeds from the Investment Adviser to ensure that all shares were sold at or above NAV, respectively.

    For the six months ended March 31, 2025, our operating activities used cash of $350.8 million and our financing activities provided cash of $350.1 million. Our operating activities used cash primarily due to our investment activities and our financing activities provided cash primarily due to borrowings under our Credit Facility, proceeds from the 2037 Asset-Backed debt and proceeds from the public offerings under our 2024 ATM Program.

    For the six months ended March 31, 2024, our operating activities used cash of $354.5 million and our financing activities provided cash of $379.2 million. Our operating activities used cash primarily due to our investment activities and our financing activities provided cash primarily due to borrowings under the Credit Facility and proceeds from the 2036 Asset-Backed debt partially offset by the repayment of the 2023 Notes.

    DISTRIBUTIONS

    During the three and six months ended March 31, 2025 we declared distributions of $0.3075 and $0.615 per share for total distributions of $27.7 million and $52.9 million, respectively. During the three and six months ended March 31, 2024, we declared distributions of $0.3075 and $0.615 per share for total distributions of $18.8 million and $36.9 million, respectively. We monitor available net investment income to determine if a return of capital for tax purposes may occur for the fiscal year. To the extent our taxable earnings fall below the total amount of our distributions for any given fiscal year, stockholders will be notified of the portion of those distributions deemed to be a tax return of capital. Tax characteristics of all distributions will be reported to stockholders subject to information reporting on Form 1099-DIV after the end of each calendar year and in our periodic reports filed with the SEC.

    RECENT DEVELOPMENTS

    In April 2025, PennantPark Floating Rate Capital Ltd. amended its credit facility agreement led by Truist Bank. As part of the amendment, the Company pricing decreased to SOFR plus 200 basis points from SOFR plus 225 basis points, the reinvestment period was extended one year to August 2028, the maturity date was extended one year to August 2030, and the maximum first lien advance rate was increased to 72.5% from 70.0%. As part of this amendment, commitments decreased from $736 million to $718 million.

    In April 2025, PSSL through its wholly-owned and consolidated subsidiary, PennantPark CLO 12, LLC closed a four year reinvestment period, twelve-year final maturity $301 million debt securitization in the form of a collateralized loan obligation. The debt in this securitization is structured in the following manner: (i) $30.0 million of Class A-1 Loans, which bear interest at three-month SOFR plus 1.45%, (ii) $141.0 million of Class A-1 Notes,which bear interest at three-month SOFR plus 1.45%, (iii) $12.0 million of Class A-2 Notes, which bear interest at a three-month SOFR plus 1.60%, (iv) $21.0 million of Class B notes, which bears interest at three-month SOFR plus 1.85%, (v) $24.0 million of Class C notes, which bears interest at three-month SOFR plus 2.30%, (vi) $18.0 million Class D notes, which bears interest at three-month SOFR plus 3.30%, (vii) $55.0 million of Sub notes. The weighted average credit spread is 1.71%. PSSL will continue to retain all of the subordinated notes through a consolidated subsidiary. The reinvestment period for the term debt securitization ends in April 2029 and the debt is scheduled to mature in April 2037. The term debt securitization is expected to be approximately 100% funded at close. The proceeds from the debt will be used to repay a portion of PSSL’s $325 million secured credit facility.

    AVAILABLE INFORMATION

    The Company makes available on its website its Quarterly Report on Form 10-Q filed with the SEC, and stockholders may find such report on its website at www.pennantpark.com.

    PENNANTPARK FLOATING RATE CAPITAL LTD. AND SUBSIDIARIES
    CONSOLIDATED STATEMENTS OF ASSETS AND LIABILITIES
    (in thousands, except per share data)
     
       
        March 31, 2025     September 30, 2024  
        (unaudited)        
    Assets            
    Investments at fair value            
    Non-controlled, non-affiliated investments (amortized cost— $2,043,844 and $1,622,669, respectively)   $ 2,046,762     $ 1,632,269  
    Controlled, affiliated investments (amortized cost— $361,375 and $372,271, respectively)     297,290       351,235  
    Total investments (amortized cost— $2,405,219 and $1,994,940, respectively)     2,344,052       1,983,504  
    Cash and cash equivalents (cost— $111,368 and $112,046, respectively)     111,358       112,050  
    Interest receivable     11,094       12,167  
    Receivables from investments sold     2,048        
    Distributions receivable     946       635  
    Due from affiliate     82       291  
    Prepaid expenses and other assets     2,268       198  
    Total assets     2,471,848       2,108,845  
    Liabilities            
    Credit Facility payable, at fair value (cost— $273,855 and $443,855, respectively)     273,790       443,880  
    2026 Notes payable, net (par—$185,000)     184,220       183,832  
    2036 Asset-Backed Debt, net (par—$287,000)     284,357       284,086  
    2036-R Asset-Backed Debt, net (par-$266,000)     265,300       265,235  
    2037 Asset-Backed Debt, net (par— $361,000)     358,083        
    Payable for investments purchased           20,363  
    Interest payable on debt     15,202       14,645  
    Distributions payable     9,627       7,834  
    Base management fee payable     5,604       4,588  
    Incentive fee payable     6,258       3,189  
    Accounts payable and accrued expenses     1,664       2,187  
    Deferred tax liability     612       1,712  
    Total liabilities     1,404,717       1,231,551  
    Net assets            
    Common stock, 96,417,896 and 77,579,896 shares issued and outstanding, respectively Par value $0.001 per share and 200,000,000 shares authorized     96       78  
    Paid-in capital in excess of par value     1,189,888       976,744  
    Accumulated deficit     (122,853 )     (99,528 )
    Total net assets   $ 1,067,131     $ 877,294  
    Total liabilities and net assets   $ 2,471,848     $ 2,108,845  
    Net asset value per share   $ 11.07     $ 11.31  
    PENNANTPARK FLOATING RATE CAPITAL LTD. AND SUBSIDIARIES
    CONSOLIDATED STATEMENTS OF OPERATIONS
    (in thousands, except per share data)
    (Unaudited)
     
       
        Three Months Ended
    March 31,
        Six months Ended
    March 31,
     
        2025     2024     2025     2024  
    Investment income:                        
    From non-controlled, non-affiliated investments:                        
    Interest   $ 49,215     $ 30,470     $ 96,678     $ 54,238  
    Dividend     369       577       946       1,085  
    Other income     634       1,268       2,114       3,031  
    From controlled, affiliated investments:                        
    Interest     7,345       8,320       20,153       16,754  
    Dividend     4,375       3,719       8,750       7,219  
    Other income                 306        
    Total investment income     61,938       44,354       128,947       82,327  
    Expenses:                        
    Interest and expenses on debt     22,529       14,688       44,890       23,630  
    Performance-based incentive fee     6,258       4,767       13,750       9,630  
    Base management fee     5,604       3,424       10,868       6,375  
    General and administrative expenses     1,200       1,255       2,400       2,243  
    Administrative services expenses     650       585       1,150       1,211  
    Expenses before amendment costs and provision for taxes     36,241       24,719       73,058       43,089  
    Provision for taxes on net investment income     225       547       450       701  
    Credit Facility amendment costs     442             442        
    Total expenses     36,908       25,266       73,950       43,790  
    Net investment income     25,030       19,088       54,997       38,537  
    Realized and unrealized gain (loss) on investments and debt:                        
    Net realized gain (loss) on:                        
    Non-controlled, non-affiliated investments     (795 )     4,010       386       921  
    Non-controlled and controlled, affiliated investments     (2,682 )           22,811        
    Provision for taxes on realized gain (loss) on investments     (21 )           (94 )      
    Net realized gain (loss) on investments     (3,498 )     4,010       23,103       921  
    Net change in unrealized appreciation (depreciation) on:                        
    Non-controlled, non-affiliated investments     (9,630 )     3,278       (6,688 )     8,506  
    Controlled and non-controlled, affiliated investments     (11,146 )     4,466       (43,050 )     5,408  
    Provision for taxes on unrealized appreciation (depreciation) on investments     468       230       1,100       230  
    Debt appreciation (depreciation)     1       39       91       (23 )
    Net change in unrealized appreciation (depreciation) on investments and debt     (20,307 )     8,013       (48,547 )     14,121  
    Net realized and unrealized gain (loss) from investments and debt     (23,805 )     12,023       (25,444 )     15,042  
    Net increase (decrease) in net assets resulting from operations   $ 1,225     $ 31,111     $ 29,553     $ 53,579  
    Net increase (decrease) in net assets resulting from operations per common share   $ 0.01     $ 0.51     $ 0.34     $ 0.89  
    Net investment income per common share   $ 0.28     $ 0.31     $ 0.64     $ 0.64  

    ABOUT PENNANTPARK FLOATING RATE CAPITAL LTD.

    PennantPark Floating Rate Capital Ltd. is a business development company which primarily invests in U.S. middle-market companies in the form of floating rate senior secured loans, including first lien secured debt, second lien secured debt and subordinated debt. From time to time, the Company may also invest in equity investments. PennantPark Floating Rate Capital Ltd. is managed by PennantPark Investment Advisers, LLC.

    ABOUT PENNANTPARK INVESTMENT ADVISERS, LLC

    PennantPark Investment Advisers, LLC is a leading middle-market credit platform, managing approximately $10 billion of investable capital, including potential leverage. Since its inception in 2007, PennantPark Investment Advisers, LLC has provided investors access to middle-market credit by offering private equity firms and their portfolio companies as well as other middle-market borrowers a comprehensive range of creative and flexible financing solutions. PennantPark Investment Advisers, LLC is headquartered in Miami and has offices in New York, Chicago, Houston, Los Angeles, and Amsterdam.

    FORWARD-LOOKING STATEMENTS AND OTHER

    This press release may contain “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. You should understand that under Section 27A(b)(2)(B) of the Securities Act of 1933, as amended, and Section 21E(b)(2)(B) of the Securities Exchange Act of 1934, as amended, or the Exchange Act, the “safe harbor” provisions of the Private Securities Litigation Reform Act of 1995 do not apply to forward-looking statements made in periodic reports we file under the Exchange Act. All statements other than statements of historical facts included in this press release are forward-looking statements and are not guarantees of future performance or results, and involve a number of risks and uncertainties. Actual results may differ materially from those in the forward-looking statements as a result of a number of factors, including those described from time to time in filings with the Securities and Exchange Commission. PennantPark Floating Rate Capital Ltd. undertakes no duty to update any forward-looking statement made herein. You should not place undue influence on such forward-looking statements as such statements speak only as of the date on which they are made.

    We may use words such as “anticipates,” “believes,” “expects,” “intends,” “seeks,” “plans,” “estimates” and similar expressions to identify forward-looking statements. Such statements are based on currently available operating, financial and competitive information and are subject to various risks and uncertainties that could cause actual results to differ materially from our historical experience and our present expectations.

    The information contained herein is based on current tax laws, which may change in the future. The Company cannot be held responsible for any direct or incidental loss resulting from applying any of the information provided in this publication or from any other source mentioned. The information provided in this material does not constitute any specific legal, tax or accounting advice. Please consult with qualified professionals for this type of advice.

    CONTACT: Richard T. Allorto, Jr.
      PennantPark Floating Rate Capital Ltd.
      (212) 905-1000
      www.pennantpark.com

    The MIL Network

  • MIL-OSI: Middlefield Banc Corp. Announces 2025 Second-Quarter Cash Dividend Payment

    Source: GlobeNewswire (MIL-OSI)

    MIDDLEFIELD, Ohio, May 12, 2025 (GLOBE NEWSWIRE) — Middlefield Banc Corp. (NASDAQ: MBCN) today announced that its Board of Directors declared a quarterly cash dividend of $0.21 per common share. The 2025 second-quarter dividend is payable on June 13, 2025, to shareholders of record on May 30, 2025.

    About Middlefield Banc Corp.
    Middlefield Banc Corp., headquartered in Middlefield, Ohio, is the Bank holding Company of The Middlefield Banking Company, with total assets of $1.89 billion at March 31, 2025. The Bank operates 21 full-service banking centers and an LPL Financial® brokerage office serving Ada, Beachwood, Bellefontaine, Chardon, Cortland, Dublin, Garrettsville, Kenton, Mantua, Marysville, Middlefield, Newbury, Orwell, Plain City, Powell, Solon, Sunbury, Twinsburg, and Westerville. The Bank also operates a Loan Production Office in Mentor, Ohio.

    Additional information is available at www.middlefieldbank.bank

    This press release of Middlefield Banc Corp. and the reports Middlefield Banc Corp. files with the Securities and Exchange Commission often contain “forward-looking statements” relating to present or future trends or factors affecting the banking industry and, specifically, the financial operations, markets and products of Middlefield Banc Corp. These forward-looking statements involve certain risks and uncertainties. There are a number of important factors that could cause Middlefield Banc Corp.’s future results to differ materially from historical performance or projected performance. These factors include, but are not limited to: (1) a significant increase in competitive pressures among financial institutions; (2) changes in the interest rate environment that may reduce interest margins; (3) changes in prepayment speeds, charge-offs and loan loss provisions; (4) less favorable than expected general economic conditions; (5) legislative or regulatory changes that may adversely affect businesses in which Middlefield Banc Corp. is engaged; (6) technological issues which may adversely affect Middlefield Banc Corp.’s financial operations or customers; (7) changes in the securities markets; or (8) risk factors mentioned in the reports and registration statements Middlefield Banc Corp. files with the Securities and Exchange Commission. Middlefield Banc Corp. undertakes no obligation to release revisions to these forward-looking statements or to reflect events or circumstances after the date of this press release.

    Company Contact: Investor and Media Contact:
    Ron Zimmerly
    President and Chief Executive Officer Middlefield Banc Corp.
    (419) 673-1217
    RZimmerly@middlefieldbank.com
    Andrew M. Berger
    Managing Director
    SM Berger & Company, Inc.
    (216) 464-6400
    andrew@smberger.com

    The MIL Network

  • MIL-OSI: Runway Growth Finance Corp. Reports First Quarter 2025 Financial Results

    Source: GlobeNewswire (MIL-OSI)

    Delivered Total and Net Investment Income of $35.4 million and $15.6 million, Respectively

    Investment Portfolio of $1.0 billion

    Conference Call Today, Monday, May 12, 2025 at 5:00 p.m. ET

    MENLO PARK, Calif., May 12, 2025 (GLOBE NEWSWIRE) — Runway Growth Finance Corp. (Nasdaq: RWAY) (“Runway Growth” or the “Company”), a leading provider of flexible capital solutions to late- and growth-stage companies seeking an alternative to raising equity, today announced its financial results for the first quarter ended March 31, 2025.

    First Quarter 2025 Highlights

    • Total investment income of $35.4 million
    • Net investment income of $15.6 million, or $0.42 per share
    • Net asset value of $503.3 million, or $13.48 per share
    • Dollar-weighted annualized yield on debt investments of 15.44%
    • Three investments completed in existing portfolio companies, representing $50.7 million in funded investments
    • Aggregate proceeds of $71.9 million in principal prepayments and $3.7 million from scheduled amortization
    • Aggregate proceeds of $38.1 million in equity sale proceeds, resulting in net realized gains of $7.4 million
    • Total net realized gains on investments of $6.1 million

    Second Quarter 2025 Distributions

    • Declared second quarter 2025 regular dividend of $0.33 per share
    • Declared second quarter 2025 supplemental dividend of $0.02 per share

    “In the first quarter of 2025, Runway Growth advanced its platform strategy, enhancing origination channels as we seek to maximize our portfolio,” said David Spreng, Founder and CEO of Runway Growth. “For the first quarter, we delivered net investment income of $15.6 million, comfortably covered our quarterly distributions, and executed on three investments in existing portfolio companies. As officially part of the broader BC Partners platform, we believe we have ample liquidity to move both opportunistically and selectively when the right investments arise. Looking ahead, we are well positioned to optimize our portfolio while maintaining credit-first underwriting practices as we deliver strong returns for our shareholders.”

    First Quarter 2025 Operating Results

    Total investment income for the quarter ended March 31, 2025 was $35.4 million, compared to $40.0 million for the quarter ended March 31, 2024.

    Net investment income for the quarter ended March 31, 2025 was $15.6 million, or $0.42 per share, compared to $18.7 million, or $0.46 per share, for the quarter ended March 31, 2024.

    The Company’s dollar-weighted annualized yield on average debt investments for the quarter ended March 31, 2025 was 15.4%. The Company calculates the yield on dollar-weighted debt investments for any period measured as (1) total investment-related income during the period divided by (2) the daily average of the fair value of debt investments, including investments on non-accrual status, outstanding during the period.

    Total operating expenses for the quarter ended March 31, 2025 were $19.8 million, compared to $21.3 million for the quarter ended March 31, 2024.

    Net realized gain on investments was $6.1 million for the quarter ended March 31, 2025, compared to no net realized gains or losses for the quarter ended March 31, 2024.

    For the quarter ended March 31, 2025, net change in unrealized loss on investments was $19.8 million, compared to a net change in unrealized loss on investments of $6.6 million for the comparable prior year period.

    Portfolio and Investment Activity

    As of March 31, 2025, Runway Growth’s investment portfolio had an aggregate fair value of $1.0 billion in 52 companies, comprising $946.4 million in term loans, 97.9% of which are senior secured loans, and $57.8 million in warrants and other equity-related investments.

    During the first quarter of 2025, Runway Growth funded three investments in existing portfolio companies, representing $15.3 million in funded loans, which is net of refinances of $35.0 million and upfront loan origination fees of $0.4 million.

    Total portfolio investment activity for the three months ended March 31, 2025 and 2024 was as follows:

         
      Three Months Ended March 31,  
         
      2025     2024  
    Beginning investment portfolio $ 1,076,840     $ 1,067,009  
    Purchases of investments   15,320       24,642  
    PIK interest   3,260       4,176  
    Sales and prepayments of investments   (74,978 )     (34,449 )
    Scheduled repayments of investments   (3,665 )     (413 )
    Sales and maturities of U.S. Treasury Bills         (42,029 )
    Amortization of fixed income premiums or accretion of discounts   1,189       4,013  
    Net realized gain (loss) on investments   6,057        
    Net change in unrealized gain (loss) on investments   (19,790 )     (6,617 )
    Ending investment portfolio $ 1,004,233     $ 1,016,332  
                   

    Net Asset Value

    As of March 31, 2025, net asset value per share was $13.48, compared to $13.36 as of March 31, 2024. Total net assets at the end of the first quarter of 2025 was $503.3 million, down 4.9% from $529.5 million as of March 31, 2024.

    For the quarter ended March 31, 2025, our net increase in net assets resulting from operations was $1.9 million, or $0.05 per share, compared to a net increase in net assets resulting from operations of $12.0 million, or $0.30 per share, for the quarter ended March 31, 2024.

    Liquidity and Capital Resources

    As of March 31, 2025, the Company had approximately $315.4 million in available liquidity, including unrestricted cash and cash equivalents of $18.4 million and $297.0 million in available borrowing capacity under the Company’s credit facility, subject to existing terms, advance rates and regulatory and covenant requirements.

    The Company ended the quarter with a core leverage ratio of approximately 99%, compared to 108% for the quarter ended December 31, 2024.

    Distributions

    On May 7, 2025, the Company’s board of directors (the “Board of Directors”) declared a regular quarterly distribution of $0.33 per share and a supplemental distribution of $0.02 per share for stockholders of record as of May 19, 2025, each payable on June 3, 2025.

    Recent Developments

    The Company evaluated events subsequent to March 31, 2025 through May 12, 2025, the date the consolidated financial statements were issued. There have been no subsequent events that occurred during such period that would require recognition or disclosure, except as disclosed below.

    Borrowings

    On April 7, 2025, the Company entered into the Master Note Purchase Agreement, dated April 7, 2025 (the “Note Purchase Agreement”), governing the issuance of 7.51% Series 2025A Senior Notes due April 7, 2028 (the “Series 2025A Notes”), in aggregate principal amount of $107.0 million, to institutional investors in a private placement.

    The Series 2025A Notes have a fixed interest rate of 7.51% per year. The Company used the net proceeds from the offering of the Series 2025A Notes to repay outstanding indebtedness, make investments in accordance with the Company’s investment objective and investment strategy, and for other general corporate purposes of the Company.

    The Series 2025A Notes will mature on April 7, 2028 unless redeemed, purchased or prepaid prior to such date by the Company in accordance with the terms of the Note Purchase Agreement. Interest on the Series 2025A Notes will be due semiannually on April 7 and October 7 of each year, beginning on October 7, 2025. In addition, the Company is obligated to offer to repay the Series 2025A Notes at par (plus accrued and unpaid interest to, but not including, the date of prepayment) if certain change in control events occur. Subject to the terms of the Note Purchase Agreement, so long as no Default or Event of Default (each as defined in the Note Purchase Agreement) shall then exist, at any time on or after October 7, 2027, the Company may, at its option, prepay all or any part of the 2025A Notes at 100% of the principal amount so prepaid, together with, in each case, accrued interest to the prepayment date.

    The Note Purchase Agreement contains customary terms and conditions for senior notes issued in a private placement, including, without limitation, affirmative and negative covenants related to information reporting, maintenance of the Company’s status as a business development company within the meaning of the Investment Company Act of 1940, as amended, and a regulated investment company under the Internal Revenue Code of 1986, as amended, minimum shareholders’ equity, minimum asset coverage ratio and maximum secured debt ratio. The Note Purchase Agreement also contains customary events of default with customary cure and notice periods.

    Recent Portfolio Activity

    From April 1, 2025 through May 12, 2025, the Company completed $40.0 million of additional debt commitments, of which $27.0 million was funded upon closing.

    Share Repurchase Program

    On May 7, 2025, the Board of Directors approved a repurchase program (the “New Repurchase Program”) under which the Company may repurchase up to $25.0 million of its outstanding common stock. Under the New Repurchase Program, purchases may be made at management’s discretion from time to time in open-market transactions, in accordance with all applicable securities laws and regulations. If not renewed, the New Repurchase Program will terminate upon the earlier of (i) May 7, 2026 or (ii) the repurchase of $25.0 million of the Company’s outstanding shares of common stock.

    Conference Call

    Runway Growth will hold a conference call to discuss its first quarter ended March 31, 2025 financial results at 2:00 p.m. PT (5:00 p.m. ET) on Monday, May 12, 2025. To participate in the conference call or webcast, participants should register online at the Runway Investor Relations website. The earnings call can also be accessed through the following links:

    A live webcast will be available in the investor section of the Company’s website, and will be archived for 90 days following the call.

    About Runway Growth Finance Corp.

    Runway Growth is a growing specialty finance company focused on providing flexible capital solutions to late- and growth-stage companies seeking an alternative to raising equity. Runway Growth is a closed-end investment fund that has elected to be regulated as a business development company under the Investment Company Act of 1940, as amended. Runway Growth is externally managed by Runway Growth Capital LLC, an established registered investment advisor that was formed in 2015 and led by industry veteran David Spreng. For more information, please visit www.runwaygrowth.com.

    Forward-Looking Statements

    Statements included herein may constitute “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. Statements other than statements of historical facts included in this press release may constitute forward-looking statements and are not guarantees of future performance, condition or results and involve a number of risks and uncertainties. Actual results may differ materially from those in the forward-looking statements as a result of a number of factors, including those described from time to time in Runway Growth’s filings with the Securities and Exchange Commission. Runway Growth undertakes no duty to update any forward-looking statement made herein. All forward-looking statements speak only as of the date of this press release.

    Important Disclosures

    Strategies described involve special risks that should be evaluated carefully before a decision is made to invest. Not all of the risks and other significant aspects of these strategies are discussed herein.  Please see a more detailed discussion of these risk factors and other related risks in the Company’s most recent annual report on Form 10-K in the section entitled “Risk Factors”, and in the Company’s quarterly report on Form 10-Q for the quarter ended March 31, 2025, which may be obtained on the Company’s website, www.runwaygrowth.com, or the SEC’s website, www.sec.gov

    IR Contacts:

    Taylor Donahue, Prosek Partners, tdonahue@prosek.com 

    Thomas B. Raterman, Chief Financial Officer and Chief Operating Officer, tr@runwaygrowth.com 

    RUNWAY GROWTH FINANCE CORP.
    Consolidated Statements of Assets and Liabilities
    (In thousands, except share and per share data)
     
      March 31, 2025   December 31, 2024  
        (Unaudited)      
    Assets            
    Investments at fair value:            
    Non-control/non-affiliate investments at fair value (cost of $1,039,965 and $1,038,135, respectively) $ 997,359   $ 1,005,328  
    Affiliate investments at fair value (cost of $4,551 and $59,198, respectively)       64,572  
    Control investments at fair value (cost of $6,550 and $6,550, respectively)   6,874     6,940  
    Total investments at fair value (cost of $1,051,066 and $1,103,883, respectively)   1,004,233     1,076,840  
    Cash and cash equivalents   18,356     5,751  
    Interest and fees receivable   8,730     8,141  
    Other assets   1,577     623  
    Total assets   1,032,896     1,091,355  
    Liabilities            
    Debt:            
    Credit facility   253,000     311,000  
    2026 Notes   95,000     95,000  
    2027 Notes   152,250     152,250  
    Unamortized deferred financing costs   (8,043 )   (5,918 )
    Total debt, less unamortized deferred financing costs   492,207     552,332  
    Distributions payable   13,445      
    Incentive fees payable   14,045     14,106  
    Interest payable   7,656     7,743  
    Accrued expenses and other liabilities   2,253     2,305  
    Total liabilities   529,606     576,486  
    Net assets            
    Common stock, par value   373     373  
    Additional paid-in capital   557,992     557,992  
    Accumulated undistributed (overdistributed) earnings   (55,075 )   (43,496 )
    Total net assets $ 503,290   $ 514,869  
                 
    Shares of common stock outstanding ($0.01 par value, 100,000,000 shares authorized)   37,347,428     37,347,428  
    Net asset value per share $ 13.48   $ 13.79  
    RUNWAY GROWTH FINANCE CORP.
    Consolidated Statements of Operations
    (Unaudited)
    (In thousands, except share and per share data)
     
       
      Three Months Ended March 31,  
      2025   2024  
    Investment income            
    From non-control/non-affiliate investments:            
    Interest income $ 30,109   $ 34,455  
    Payment-in-kind interest income   3,651     4,207  
    Dividend income   318      
    Fee income   229     620  
    From affiliate investments:            
    Interest income   646     599  
    Fee income   256      
    Other income   189     128  
    Total investment income   35,398     40,009  
    Operating expenses            
    Management fees   4,009     3,952  
    Incentive fees   3,929     4,668  
    Interest and other debt financing expenses   10,287     10,860  
    Professional fees   454     662  
    Administration agreement expenses   625     564  
    Insurance expense   155     208  
    Tax expense   110     2  
    Other expenses   230     429  
    Total operating expenses   19,799     21,345  
    Net investment income   15,599     18,664  
    Net realized and net change in unrealized gain (loss) on investments            
    Net realized gain (loss) on non-control/non-affiliate investments   (2,886 )    
    Net realized gain (loss) on affiliate investments   8,943      
    Net realized gain (loss) on investments   6,057      
    Net change in unrealized gain (loss) on non-control/non-affiliate investments   (9,799 )   (5,065 )
    Net change in unrealized gain (loss) on affiliate investments   (9,925 )   (1,552 )
    Net change in unrealized gain (loss) on control investments   (66 )    
    Net change in unrealized gain (loss) on investments   (19,790 )   (6,617 )
    Net realized and unrealized gain (loss) on investments   (13,733 )   (6,617 )
    Net increase (decrease) in net assets resulting from operations $ 1,866   $ 12,047  
    Net investment income per common share (basic and diluted) $ 0.42   $ 0.46  
    Net increase (decrease) in net assets resulting from operations per common share (basic and diluted) $ 0.05   $ 0.30  
    Weighted average shares outstanding (basic and diluted)   37,347,428     40,392,255  

    The MIL Network

  • MIL-OSI: Rigetti Computing Reports First Quarter 2025 Financial Results

    Source: GlobeNewswire (MIL-OSI)

    BERKELEY, Calif., May 12, 2025 (GLOBE NEWSWIRE) — Rigetti Computing, Inc. (Nasdaq: RGTI) (“Rigetti” or the “Company”), a pioneer in full-stack quantum-classical computing, today announced its financial results for the first quarter ended March 31, 2025.

    First Quarter 2025 and Recent Financial Highlights

    • Total revenues for the three months ended March 31, 2025 were $1.5 million
    • Total operating expenses for the three months ended March 31, 2025 were $22.1 million
    • Operating loss for the three months ended March 31, 2025 was $21.6 million
    • Net income for the three months ended March 31, 2025 was $42.6 million
    • Net income for the three months ended March 31, 2025 includes $62.1 million of non-cash gains from the change in fair value of derivative warrant and earn-out liabilities
    • As of March 31, 2025 cash, cash equivalents and available-for-sale investments totaled $209.1 million
    • As of April 30, 2025, following the previously announced closing of the share purchase by Quanta Computer, Inc., cash, cash equivalents and available-for-sale investments totaled $237.7 million

    “Rigetti is proud to be awarded important government-funded projects in the U.S. and U.K. to advance our technology, which demonstrates our continued leadership in superconducting quantum computing,” says Rigetti CEO Dr. Subodh Kulkarni. “We also are making great strides in developing innovative approaches to scaling to higher qubit count systems, which is possible due to our open and modular system architecture, in-house full-stack expertise, and world-class partners.”

    Recent Business Developments

    Rigetti Selected to Participate in DARPA’s Quantum Benchmarking Initiative
    Rigetti will advance to Stage A, a 6-month performance period focused on the Company’s utility-scale quantum computer concept worth up to $1 million upon completion of program milestones. Rigetti’s proposed concept to design and build a Utility-Scale Quantum Computer (USQC) combines the Company’s proprietary multi-chip architecture with scalable quantum error correction (QEC) codes. Rigetti’s long-time partner and leader in QEC technology, Riverlane, will be collaborating on this project and bringing their expertise to help refine the proposed USQC concept and validate the underlying technology.

    Rigetti Granted AFOSR Award to Further Develop Breakthrough Chip Fabrication Technology
    Rigetti will lead a $5.48 million consortium to further develop its breakthrough chip fabrication technology, Alternating-Bias Assisted Annealing (ABAA). Rigetti will collaborate with Iowa State University, the Royal Melbourne Institute of Technology, the University of Connecticut, and Lawrence Livermore National Laboratory* to develop a detailed understanding of how ABAA impacts the chip on a microscopic level — which aims to shed light on defects in superconducting qubits and open new avenues for understanding and mitigating them.

    *Funded separately though Laboratory for Physical Sciences, University of Maryland

    Rigetti Awarded Three Innovate UK Quantum Mission Pilot Awards to Advance Superconducting Quantum Computing
    Rigetti will lead a £3.5 million consortium to advance quantum error correction capabilities on superconducting quantum computers. In collaboration with Riverlane and the National Quantum Computing Centre (NQCC) Superconducting Circuits Team, the consortium will conduct ambitious QEC tests that advance state-of-the-art metrics and demonstrate real-time QEC capabilities — a requirement for universal, fault-tolerant quantum computing.

    As part of the project, Rigetti will also upgrade its existing NQCC quantum computer. The upgrades will include:

    • Deploying a larger 36-qubit quantum processing unit (QPU), updating from the current 24-qubit QPU
    • Integrating Rigetti’s latest generation control system, enabling improved qubit control and a fully programmable, low-latency interface with Riverlane’s QEC Stack

    Rigetti was also awarded two additional Quantum Missions pilot competition projects:

    • Collaboration with SEEQC to integrate its digital chip-based technology with Rigetti’s 9-qubit Novera™ QPU hosted at the NQCC with the goal of identifying and understanding the key system components needed for scalable QEC.
    • Collaboration with TreQ, Qruise, Q-CTRL, and Oxford Ionics aims to create an open-architecture quantum computing testbed and deliver an open specification for quantum workflows, creating a common interface between quantum software and hardware.

    Rigetti Closes Investment by Quanta Computer
    On April 29, 2025, Rigetti closed its previously announced investment by Quanta Computer Inc. related to our strategic collaboration agreement. In connection with the closing, Quanta purchased approximately $35 million of shares of Rigetti common stock at approximately $11.59 per share.

    Recent Technical Updates

    Controlling a Superconducting Qubit Using Optical Signals
    Rigetti’s joint paper with Harvard University, Massachusetts Institute of Technology, and University of Chicago, “Coherent control of a superconducting qubit using light,” has been published in Nature Physics.

    Fault-tolerant quantum computing will likely require 10,000 to a million physical qubits. Scaling these systems is challenging because they require bulky microwave components with high thermal loads that can quickly overwhelm the cooling power of a dilution refrigerator. Optical signals have a considerably smaller footprint and negligible thermal conductivity.

    The team successfully demonstrated the integration of a hybrid microwave-optical quantum transducer with a Rigetti-fabricated superconducting qubit. This hybrid set-up enables optical control of the qubit, removing the need for coax lines and provides a promising approach to scaling to higher qubit count systems.

    New Quantum Algorithm Boosts Classical Optimizers
    Rigetti leveraged its new quantum optimization algorithm, quantum preconditioning, to address a power energy grid problem. Using a public dataset representing South Carolina’s energy grid, the problem was to compute the maximum power exchange section, a metric that informs on the health and the power delivery capability of the energy network. Using Rigetti’s 84-qubit Ankaa-3 system, quantum preconditioning was used to boost best-in-class classical optimizers. A relative advantage against the classical baseline was achieved along with a high solution accuracy, highlighting the potential for quantum preconditioning to achieve quantum utility for solving practical optimization problems.

    Conference Call and Webcast
    Rigetti will host a conference call later today, May 12, 2025, at 5:00 pm ET, or 2:00 pm PT, to discuss its first quarter 2025 financial results.

    You can listen to a live audio webcast of the conference call at https://edge.media-server.com/mmc/p/5w8qggnn/ or the “Events & Presentations” section of the Company’s Investor Relations website at https://investors.rigetti.com/. A replay of the conference call will be available at the same locations following the conclusion of the call for one year.

    To participate in the live call, you must register using the following link: https://register-conf.media-server.com/register/BIa01e2c81dc8f4031b25c1ce89653b15e. Once registered, you will receive dial-in numbers and a unique PIN number. When you dial in, you will input your PIN and be routed into the call. If you register and forget your PIN, or lose the registration confirmation email, simply re-register to receive a new PIN.

    About Rigetti
    Rigetti is a pioneer in full-stack quantum computing. The Company has operated quantum computers over the cloud since 2017 and serves global enterprise, government, and research clients through its Rigetti Quantum Cloud Services platform. In 2021, Rigetti began selling on-premises quantum computing systems with qubit counts between 24 and 84 qubits, supporting national laboratories and quantum computing centers. Rigetti’s 9-qubit Novera QPU was introduced in 2023 supporting a broader R&D community with a high-performance, on-premises QPU designed to plug into a customer’s existing cryogenic and control systems. The Company’s proprietary quantum-classical infrastructure provides high-performance integration with public and private clouds for practical quantum computing. Rigetti has developed the industry’s first multi-chip quantum processor for scalable quantum computing systems. The Company designs and manufactures its chips in-house at Fab-1, the industry’s first dedicated and integrated quantum device manufacturing facility. Learn more at https://www.rigetti.com/.

    Contacts
    Rigetti Computing Investor Contact:
    IR@Rigetti.com

    Rigetti Computing Media Contact:
    press@rigetti.com

    Cautionary Language Concerning Forward-Looking Statements
    Certain statements in this communication may be considered “forward-looking statements” within the meaning of the federal securities laws, including statements with respect to the Company’s future success and performance, including expectations with respect to timing of the development and commercialization of superconducting quantum computing; expectations regarding the advantages and impact of the government-funded projects on the Company’s operations, technology roadmap, milestones, and the Company’s position in the industry; statements to the development of innovative approaches to scaling to higher qubit count systems and the impact of our open and modular system architecture, in-house full-stack expertise, and world-class partners; expectations for work under the AFOSR Award to shed light on defects in superconducting qubits and open new avenues for understanding and mitigating them; and expectations for the Quantum Missions pilot competition projects to: (a) lead to identifying and understanding key system components needed for scalable QEC, and (b) create an open-architecture quantum computing testbed and deliver an open specification for quantum workflows, creating a common interface between quantum software and hardware. These forward-looking statements are based upon estimates and assumptions that, while considered reasonable by the Company and its management, are inherently uncertain. Factors that may cause actual results to differ materially from current expectations include, but are not limited to: the Company’s ability to achieve milestones, technological advancements, including with respect to its technology roadmap; the ability of the Company to obtain government contracts successfully and in a timely manner and the availability of government funding; the potential of quantum computing; the success of the Company’s partnerships and collaborations, including the strategic collaboration with Quanta; the Company’s ability to accelerate its development of multiple generations of quantum processors; the outcome of any legal proceedings that may be instituted against the Company or others; the ability to maintain relationships with customers and suppliers and attract and retain management and key employees; costs related to operating as a public company; changes in applicable laws or regulations; the possibility that the Company may be adversely affected by other economic, business, or competitive factors; the Company’s estimates of expenses and profitability; the evolution of the markets in which the Company competes; the ability of the Company to implement its strategic initiatives and expansion plans; the expected use of proceeds from the Company’s past and future financings or other capital; the sufficiency of the Company’s cash resources; unfavorable conditions in the Company’s industry, the global economy or global supply chain, including rising inflation and interest rates, deteriorating international trade relations, political turmoil, natural catastrophes, warfare and terrorist attacks; and other risks and uncertainties set forth in the section entitled “Risk Factors” and “Cautionary Note Regarding Forward-Looking Statements” in the Company’s Annual Report on Form 10-K for the year ended December 31, 2024 and Quarterly Report on Form 10-Q for the quarter ended March 31, 2025 and other documents filed by the Company from time to time with the SEC. These filings identify and address other important risks and uncertainties that could cause actual events and results to differ materially from those contained in the forward-looking statements. Forward-looking statements speak only as of the date they are made. Readers are cautioned not to put undue reliance on forward-looking statements, and the Company assumes no obligation and does not intend to update or revise these forward-looking statements other than as required by applicable law. The Company does not give any assurance that it will achieve its expectations.

     
    RIGETTI COMPUTING, INC.
    CONDENSED CONSOLIDATED BALANCE SHEETS
    (in thousands, except number of shares and par value)
    (unaudited)
                 
        March 31,   December 31,
        2025   2024
    Assets            
    Current assets:            
    Cash and cash equivalents   $ 37,162     $ 67,674  
    Available-for-sale investments – short-term     171,966       124,420  
    Accounts receivable     1,068       2,427  
    Prepaid expenses     2,124       3,156  
    Other current assets     2,041       9,081  
    Total current assets     214,361       206,758  
    Available-for-sale investments – long-term           25,068  
    Property and equipment, net     46,100       44,643  
    Operating lease right-of-use assets     7,609       7,993  
    Other assets     1,068       325  
    Total assets   $ 269,138     $ 284,787  
                 
    Liabilities and Stockholders’ Equity            
    Current liabilities:            
    Accounts payable   $ 3,401     $ 1,590  
    Accrued expenses and other current liabilities     5,665       8,005  
    Current portion of deferred revenue     147       113  
    Current portion of operating lease liabilities     2,179       2,159  
    Total current liabilities     11,392       11,867  
    Deferred revenue, less current portion     698       698  
    Operating lease liabilities, less current portion     6,230       6,641  
    Derivative warrant liabilities     39,576       93,095  
    Earn-out liabilities     4,114       45,897  
    Total liabilities     62,010       158,198  
    Commitments and contingencies            
    Stockholders’ equity:            
    Preferred stock, par value $0.0001 per share, 10,000,000 shares authorized, none outstanding            
    Common stock, par value $0.0001 per share, 1,000,000,000 shares authorized, 286,974,947 shares issued and outstanding at March 31, 2025 and 283,546,871 shares issued and outstanding at December 31, 2024     29       29  
    Additional paid-in capital     719,315       681,202  
    Accumulated other comprehensive (loss) income     (88 )     105  
    Accumulated deficit     (512,128 )     (554,747 )
    Total stockholders’ equity     207,128       126,589  
    Total liabilities and stockholders’ equity   $ 269,138     $ 284,787  
                     
     
    RIGETTI COMPUTING, INC.
    CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
    (in thousands, except per share data)
    (unaudited)
         
        Three months ended March 31,
        2025 2024
    Revenue   $ 1,472     $ 3,052  
    Cost of revenue     1,030       1,552  
    Total gross profit     442       1,500  
    Operating expenses:            
    Research and development     15,455       11,471  
    Selling, general and administrative     6,619       6,614  
    Total operating expenses     22,074       18,085  
    Loss from operations     (21,632 )     (16,585 )
    Other income (expense), net            
    Interest expense           (1,107 )
    Interest income     2,152       1,123  
    Change in fair value of derivative warrant liabilities     53,262       (2,583 )
    Change in fair value of earn-out liabilities     8,837       (1,621 )
    Total other income (expense), net     64,251       (4,188 )
    Net income (loss) before provision for income taxes     42,619       (20,773 )
    Provision for income taxes            
    Net income (loss)   $ 42,619     $ (20,773 )
    Net income (loss) available to common stockholders used in diluted earnings per share   $ 38,256     $ (20,773 )
    Net income (loss) per share attributable to common stockholders – basic   $ 0.15     $ (0.14 )
    Net income (loss) per share attributable to common stockholders – diluted   $ 0.13     $ (0.14 )
    Weighted average shares used to compute net income (loss) per share attributable to common stockholders – basic     284,698       151,855  
    Weighted average shares used to compute net income (loss) per share attributable to common stockholders – diluted     301,595       151,855  
                     
     
    RIGETTI COMPUTING INC.
    CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
    (in thousands)
    (unaudited)
         
        Three months ended March 31,
        2025   2024
    Cash flows from operating activities:            
    Net income (loss)   $ 42,619     $ (20,773 )
    Adjustments to reconcile net income (loss) to net cash used in operating activities:            
    Depreciation and amortization     1,829       1,787  
    Stock-based compensation     4,174       2,991  
    Change in fair value of earn-out liabilities     (8,837 )     1,621  
    Change in fair value of derivative warrant liabilities     (53,262 )     2,583  
    Accretion of available-for-sale securities     (1,423 )     (855 )
    Amortization of debt issuance costs, commitment fees and accretion of final payment fees           298  
    Non-cash lease expense     384       391  
    Changes in operating assets and liabilities:            
    Accounts receivable     1,359       323  
    Prepaid expenses, other current assets and other assets     1,379       435  
    Deferred revenue     34       (214 )
    Accounts payable     747       334  
    Accrued expenses and operating lease liabilities     (2,654 )     (2,060 )
    Net cash used in operating activities     (13,651 )     (13,139 )
    Cash flows from investing activities:            
    Purchases of property and equipment     (2,547 )     (5,493 )
    Purchases of available-for-sale securities     (44,062 )     (27,287 )
    Maturities of available-for-sale securities     23,000       39,000  
    Net cash (used in) provided by investing activities     (23,609 )     6,220  
    Cash flows from financing activities:            
    Payments of principal of notes payable           (3,045 )
    Proceeds from sale of common stock through Common Stock Purchase Agreement           12,838  
    Proceeds from sale of common stock through At-The-Market (ATM) Offering           11,031  
    Payments of offering costs     (73 )     (174 )
    Net proceeds from tax withholdings on sell-to-cover equity award transactions     6,272        
    Proceeds from issuance of common stock upon exercise of stock options     327       60  
    Proceeds from issuance of common stock upon exercise of warrants     409        
    Net cash provided by financing activities     6,935       20,710  
    Effects of exchange rate changes on cash and cash equivalents     (187 )     (85 )
    Net (decrease) increase in cash and cash equivalents     (30,512 )     13,706  
    Cash and cash equivalents – beginning of period     67,674       21,392  
    Cash and cash equivalents – end of period   $ 37,162     $ 35,098  
    Supplemental disclosures of other cash flow information:            
    Cash paid for interest   $     $ 811  
    Non-cash investing and financing activities:            
    Capitalization of deferred costs to equity upon share issuance           52  
    Purchases of property and equipment recorded in accounts payable     1,408       1,115  
    Purchases of property and equipment recorded in accrued expenses     74        
    Reclassification of earn-out liabilities to additional paid-in capital for vesting of Promote Sponsor Vesting Shares     32,946        
    Reclassification of derivative liabilities to additional paid-in capital due to exercise of Public Warrants     257        
    Purchases of deferred offering costs in accounts payable     122       273  
    Unrealized losses on short term investments     (8 )     (18 )
                     

    The MIL Network

  • MIL-OSI: PennantPark Investment Corporation Announces Financial Results for the Quarter Ended March 31, 2025

    Source: GlobeNewswire (MIL-OSI)

    MIAMI, May 12, 2025 (GLOBE NEWSWIRE) — PennantPark Investment Corporation (NYSE: PNNT) announced today its financial results for the second quarter ended March 31, 2025.

    HIGHLIGHTS       
    Quarter ended March 31, 2025 (unaudited)
    ($ in millions, except per share amounts)                           

    Assets and Liabilities:    
    Investment portfolio (1) $ 1,213.6  
    Net assets $ 488.1  
    GAAP net asset value per share $ 7.48  
    Quarterly change in GAAP net asset value per share   (1.2 )%
    Adjusted net asset value per share (2) $ 7.48  
    Quarterly change in adjusted net asset value per share (2)   (1.2 )%
         
    Credit Facility $ 311.4  
    2026 Notes $ 149.0  
    2026-2 Notes $ 163.5  
    Regulatory debt to equity 1.29x  
    Weighted average yield on debt investments   12.0 %
         
    Operating Results:    
    Net investment income $ 11.4  
    Net investment income per share $ 0.18  
    Core net investment income per share (3) $ 0.18  
    Distributions declared per share $ 0.24  
         
    Portfolio Activity:    
    Purchases of investments * $ 176.8  
    Sales and repayments of investments * $ 263.1  
         
    PSLF Portfolio data:    
    PSLF investment portfolio $ 1,392.9  
    Purchases of investments $ 169.9  
    Sales and repayments of investments $ 48.3  
           

    * excludes U.S. Government Securities

    1. Includes investments in PennantPark Senior Loan Fund, LLC (“PSLF”), an unconsolidated joint venture, totaling $217.7 million, at fair value.
    2. This is a non-GAAP financial measure. The Company believes that this number provides useful information to investors and management because it reflects the Company’s financial performance excluding the impact of unrealized gain on the Company’s multi-currency, senior secured revolving credit facility with Truist Bank, as amended, the “Credit Facility.” The presentation of this additional information is not meant to be considered in isolation or as a substitute for financial results prepared in accordance with GAAP.
    3. Core net investment income (“Core NII”) is a non-GAAP financial measure. The Company believes that Core NII provides useful information to investors and management because it reflects the Company’s financial performance excluding one-time or non-recurring investment income and expenses. The presentation of this additional information is not meant to be considered in isolation or as a substitute for financial results prepared in accordance with GAAP. For the quarter ended March 31, 2025, Core NII excluded: i) $0.3 million of credit facility amendment cost, and ii) $0.1 million of incentive fee expense offset.

    CONFERENCE CALL AT 12:00 P.M. EST ON MAY 13, 2025

    PennantPark Investment Corporation (“we,” “our,” “us” or the “Company”) will also host a conference call at 12:00 p.m. (Eastern Time) on Tuesday, May 13, 2025 to discuss its financial results. All interested parties are welcome to participate. You can access the conference call by dialing toll-free (888) 394-8218 approximately 5-10 minutes prior to the call. International callers should dial (646) 828-8193. All callers should reference conference ID #1509093 or PennantPark Investment Corporation. An archived replay will also be available on a webcast link located on the Quarterly Earnings page in the Investor section of PennantPark’s website.

    PORTFOLIO AND INVESTMENT ACTIVITY 

    “We are pleased that our secured loan portfolio, with among the lowest portfolio company leverage and most meaningful covenants in the industry, is positioned defensively and continues to perform well,” said Art Penn, Chairman and CEO. “Additionally, our dividend stream is supported by substantial spillover income as we look to rotate equity investments over time.”

    As of March 31, 2025, our portfolio totaled $1,213.6 million and consisted of $503.0 million or 41% of first lien secured debt, $124.6 million or 10% of U.S. Government Securities, $17.9 million or 2% of second lien secured debt, $216.8 million or 18% of subordinated debt (including $140.3 million or 12% in PSLF) and $351.3 million or 29% of preferred and common equity (including $77.4 million or 6% in PSLF). Our interest bearing debt portfolio consisted of 91% variable-rate investments and 9% fixed-rate investments. As of March 31, 2025, we had three portfolio companies on non-accrual, representing 1.6% and 0.4% percent of our overall portfolio on a cost and fair value basis, respectively. Overall, the portfolio had net unrealized appreciation of $40.7 million as of March 31, 2025. Our overall portfolio consisted of 158 companies with an average investment size of $6.9 million (excluding U.S. Government Securities), had a weighted average yield on interest bearing debt investments of 12.0%.

    As of September 30, 2024, our portfolio totaled $1,328.1 million and consisted of $667.9 million or 50% of first lien secured debt, $99.6 million or 8% of U.S. Government Securities, $67.2 million or 5% of second lien secured debt, $181.7 million or 14% of subordinated debt (including $115.9 million or 9% in PSLF) and $311.7 million or 23% of preferred and common equity (including $67.9 million or 5% in PSLF). Our interest bearing debt portfolio consisted of 94% variable-rate investments and 6% fixed-rate investments. As of September 30, 2024, we had two portfolio companies on non-accrual, representing 4.1% and 2.3% of our overall portfolio on a cost and fair value basis, respectively. Overall, the portfolio had net unrealized appreciation of $11.2 million as of September 30, 2024. Our overall portfolio consisted of 152 companies with an average investment size of $8.1 million (excluding U.S. Government Securities), had a weighted average yield on interest bearing debt investments of 12.3%.

    For the three months ended March 31, 2025, we invested $176.8 million in three new and 52 existing portfolio companies with a weighted average yield on debt investments of 10.7% (excluding U.S. Government Securities). For the three months ended March 31, 2025, sales and repayments of investments totaled $263.1 million (including $154.4 million was sold to PSLF) which excludes U.S. Government Securities. For the six months ended March 31, 2025, we invested $472.5 million in 15 new and 96 existing portfolio companies with a weighted average yield on debt investments of 10.6% (excluding U.S. Government Securities). For the six months ended March 31, 2025, sales and repayments of investments totaled $616.8 million (including $441.0 million was sold to PSLF) which excludes U.S. Government Securities.

    For the three months ended March 31, 2024, we invested $188.5 million in six new and 43 existing portfolio companies with a weighted average yield on debt investments of 11.7% (excluding U.S. Government Securities). For the three months ended March 31, 2024, sales and repayments of investments totaled $176.2 million (including $103.1 million was sold to PSLF) which excludes U.S. Government Securities. For the six months ended March 31, 2024, we invested $419.6 million in 18 new and 60 existing portfolio companies with a weighted average yield on debt investments of 11.8% (excluding U.S. Government Securities). For the six months ended March 31, 2024, sales and repayments of investments totaled $247.2 million (including $154.0 million was sold to PSLF) which excludes U.S. Government Securities.
      
    PennantPark Senior Loan Fund, LLC

    As of March 31, 2025, PSLF’s portfolio totaled $1,392.9 million, consisted of 119 companies with an average investment size of $11.7 million and had a weighted average yield interest bearing debt investments of 10.4%.

    As of September 30, 2024, PSLF’s portfolio totaled $1,031.2 million, consisted of 102 companies with an average investment size of $10.1 million and had a weighted average yield interest bearing debt investments of 11.3%.

    For the three months ended March 31, 2025, PSLF invested $169.9 million (including $154.4 million were purchased from the Company) in eight new and 14 existing portfolio companies at weighted average yield interest bearing debt investments of 10.1%. PSLF’s sales and repayments of investments for the same period totaled $48.3 million. For the six months ended March 31, 2025, PSLF invested $523.7 million (including $441.0 million were purchased from the Company) in 23 new and 57 existing portfolio companies at weighted average yield interest bearing debt investments of 10.4%. PSLF’s sales and repayments of investments for the same period totaled $157.4 million.

    For the three months ended March 31, 2024, PSLF invested $113.2 million (including $103.1 million were purchased from the Company) in 11 new and five existing portfolio companies at weighted average yield on interest bearing debt investments of 11.8%. PSLF’s sales and repayments of investments for the same period totaled $49.7 million. For the six months ended March 31, 2024, PSLF invested $194.2 million (including $154.0 million were purchased from the Company) in 16 new and 11 existing portfolio companies at weighted average yield on interest bearing debt investments of 12.2%. PSLF’s sales and repayments of investments for the same period totaled $78.9 million.

    RESULTS OF OPERATIONS

    Set forth below are the results of operations for the three and six months ended March 31, 2025 and 2024.

    Investment Income

    For the three and six months ended March 31, 2025, investment income was $30.7 million and $64.9 million, respectively, which was attributable to $22.1 million and $47.3 million from first lien secured debt, $1.0 million and $3.0 million from second lien secured debt, $1.1 million and $2.2 million from subordinated debt and $6.5 million and $12.4 million from other investments, respectively. For the three and six months ended March 31, 2024, investment income was $36.0 million and $70.3 million, respectively, which was attributable to $27.8 million and $52.9 million from first lien secured debt, $2.8 million and $5.4 million from second lien secured debt, $0.1 million and $1.4 million from subordinated debt and $5.3 million and $10.6 million from preferred and common equity, respectively. The decrease in investment income for three and six months ended March 31, 2025, was primarily due to a decrease in our total portfolio size and a decrease in our weighted average yield on debt investments.

    Expenses

    For the three and six months ended March 31, 2025, expenses totaled $19.2 million and $40.4 million, respectively, and were comprised of $10.6 million and $22.4 million of debt related interest and expenses, $4.0 million and $8.3 million of base management fees, $2.4 million and $5.2 million of incentive fees, $1.6 million and $3.3 million of general and administrative expenses and $0.6 million and $1.3 million of provision for excise taxes, respectively. For the three and six months ended March 31, 2024, expenses totaled $21.7 million and $40.4 million, respectively, and were comprised of; $11.9 million and $21.4 million of debt-related interest and expenses, $4.1 million and $8.1 million of base management fees, $3.0 million and $6.3 million of incentive fees, $1.9 million and $3.3 million of general and administrative expenses and $0.8 million and $1.2 million of provision for excise taxes, respectively. The decrease in expenses for the three months ended March 31, 2025, was primarily due to decreases in interest and expenses on debt and incentive fees. Total expenses were flat for the six months ended March 31, 2025.

    Net Investment Income

    For the three and six months ended March 31, 2025, net investment income totaled $11.4 million and $24.4 million, or $0.18 per share and $0.37 per share, respectively. For the three and six months ended March 31, 2024, net investment income totaled $14.3 million and $29.9 million, or $0.22 per share and $0.46 per share, respectively. The decrease in net investment income was primarily due to a decrease in investment income and partially offset by a decrease in expenses.

    Net Realized Gains or Losses

    For the three and six months ended March 31, 2025, net realized gains (losses) totaled $(27.7) million and $(30.3) million, respectively. For the three and six months ended March 31, 2024, net realized gains (losses) totaled $(31.0) million and $(29.2) million, respectively. The change in realized gains (losses) was primarily due to changes in the market conditions of our investments and the values at which they were realized.

    Unrealized Appreciation or Depreciation on Investments and Debt

    For the three and six months ended March 31, 2025, we reported net change in unrealized appreciation (depreciation) on investments of $27.1 million and $29.5 million, respectively. For the three and six months ended March 31, 2024, we reported net change in unrealized appreciation (depreciation) on investments of $33.2 million and $28.3 million, respectively. As of March 31, 2025 and September 30, 2024, our net unrealized appreciation (depreciation) on investments totaled $40.7 million and $11.2 million, respectively. The net change in unrealized depreciation on our investments was primarily due to changes in the capital market conditions of our investments and the values at which they were realized.

    For the three and six months ended March 31, 2025, the Truist Credit Facility had a net change in unrealized appreciation (depreciation) of $(1.4) million and $1.9 million, respectively. For the three and six months ended March 31, 2024, the Truist Credit Facility had a net change in unrealized appreciation (depreciation) of $0.5 million and $(1.6) million, respectively. As of March 31, 2025 and September 30, 2024, the net unrealized appreciation (depreciation) on the Truist Credit Facility totaled $3.0 million and $1.1 million, respectively. The net change in unrealized depreciation compared to the same periods in the prior period was primarily due to changes in the capital markets.

    Net Change in Net Assets Resulting from Operations

    For the three and six months ended March 31, 2025, net increase (decrease) in net assets resulting from operations totaled $9.5 million and $25.5 million or $0.14 per share and $0.39 per share, respectively. For the three and six months ended March 31, 2024, net increase (decrease) in net assets resulting from operations totaled $16.1 million and $26.7 million or $0.25 per share and $0.41 per share, respectively. The change in net assets from operations for the six months ended March 31, 2025 was primarily due to a change in the net realized and unrealized depreciation in the portfolio primarily driven by changes in market conditions and decrease in net investment income.

    LIQUIDITY AND CAPITAL RESOURCES

    Our liquidity and capital resources are derived primarily from cash flows from operations, including income earned, proceeds from investment sales and repayments and proceeds of securities offerings and debt financings. Our primary use of funds from operations includes investments in portfolio companies and payments of interest expense, fees and other operating expenses we incur. We have used, and expect to continue to use, our debt capital, proceeds from the rotation of our portfolio and proceeds from public and private offerings of securities to finance our investment objectives and operations.

    As of March 31, 2025 and September 30, 2024, we had $314.5 million and $461.5 million, respectively, in outstanding borrowings under the Truist Credit Facility. The Truist Credit Facility had a weighted average interest rate of 6.7% and 7.2%, respectively, exclusive of the fee on undrawn commitment.  As of March 31, 2025 and September 30, 2024, we had $185.5 million and $13.5 million of unused borrowing capacity under the Truist Credit Facility, respectively, subject to leverage and borrowing base restrictions.

    As of March 31, 2025 and September 30, 2024, we had cash and cash equivalents of $32.6 million and $49.9 million, respectively, available for investing and general corporate purposes. We believe our liquidity and capital resources are sufficient to allows us to effectively operate our business.

    For the six months ended March 31, 2025, our operating activities provided cash of $161.1 million and our financing activities used cash of $178.3 million. Our operating activities provided cash primarily due to our investment activities and our financing activities used cash primarily for repayments of our credit facility and distributions paid to stockholders.

    For the six months ended March 31, 2024, our operating activities used cash of $150.9 million and our financing activities provided cash of $147.5 million. Our operating activities used cash primarily due to our investment activities and our financing activities provided cash primarily from borrowings under the Truist Credit Facility.

    DISTRIBUTIONS

    During the three and six months ended March 31, 2025, we declared distributions of $0.24 and $0.48 per share, for total distributions of $15.7 million and $31.3 million, respectively. During the three and six months ended March 31, 2024, we declared distributions of $0.21 and $0.42 per share, for total distributions of $13.7 million and $27.4 million, respectively. We monitor available net investment income to determine if a return of capital for tax purposes may occur for the fiscal year. To the extent our taxable earnings fall below the total amount of our distributions for any given fiscal year, stockholders will be notified of the portion of those distributions deemed to be a tax return of capital. Tax characteristics of all distributions will be reported to stockholders subject to information reporting on Form 1099-DIV after the end of each calendar year and in our periodic reports filed with the SEC.

    AVAILABLE INFORMATION

    The Company makes available on its website its Quarterly Report on Form 10-Q filed with the SEC and stockholders may find the report on our website at www.pennantpark.com.

    PENNANTPARK INVESTMENT CORPORATION AND SUBSIDIARIES
    CONSOLIDATED STATEMENTS OF ASSETS AND LIABILITIES
    (In thousands, except share data)
     
      March 31, 2025     September 30, 2024  
      (unaudited)        
    Assets          
    Investments at fair value          
    Non-controlled, non-affiliated investments (amortized cost—$716,505 and $916,168, respectively) $ 723,808     $ 910,323  
    Non-controlled, affiliated investments (amortized cost—$58,068 and $56,734, respectively)   11,050       33,423  
    Controlled, affiliated investments (amortized cost—$398,359 and $343,970, respectively)   478,752       384,304  
    Total investments (amortized cost—$1,172,932 and $1,316,872, respectively)   1,213,610       1,328,050  
    Cash and cash equivalents (cost—$32,568 and $49,833, respectively)   32,587       49,861  
    Interest receivable   5,322       5,261  
    Distribution receivable   6,040       5,417  
    Due from affiliates   35       228  
    Prepaid expenses and other assets   185       269  
    Total assets   1,257,779       1,389,086  
    Liabilities          
    Truist Credit Facility payable, at fair value (cost—$314,456 and $461,456, respectively)   311,412       460,361  
    2026 Notes payable, net (par— $150,000)   149,022       148,571  
    2026 Notes-2 payable, net (par— $165,000)   163,506       163,080  
    Payable for investment purchased   124,609       100,096  
    Interest payable on debt   6,349       6,406  
    Distributions payable   5,224       5,224  
    Base management fee payable   4,017       4,297  
    Accounts payable and accrued expenses   3,108       4,053  
    Incentive fee payable   2,425       3,057  
    Due to affiliate   1       33  
    Total liabilities   769,673       895,178  
    Commitments and contingencies          
    Net assets          
    Common stock, 65,296,094 and 65,296,094 shares issued and outstanding, respectively              
    Par value $0.001 per share and 200,000,000 shares authorized   65       65  
    Paid-in capital in excess of par value   743,968       743,968  
    Accumulated deficit   (255,927 )     (250,125 )
    Total net assets $ 488,106     $ 493,908  
    Total liabilities and net assets $ 1,257,779     $ 1,389,086  
    Net asset value per share $ 7.48     $ 7.56  
                   
    PENNANTPARK INVESTMENT CORPORATION AND SUBSIDIARIES
    CONSOLIDATED STATEMENTS OF OPERATIONS
    (In thousands, except share data)
    (Unaudited)
     
      Three Months Ended March 31,     Six Months Ended March 31,  
      2025     2024     2025     2024  
    Investment income:                      
    From non-controlled, non-affiliated investments:                      
    Interest $ 14,987     $ 22,904     $ 33,753     $ 43,972  
    Payment-in-kind   1,564       187       2,985       189  
    Dividend income   499       623       1,006       1,315  
    Other income   120       778       702       2,203  
    From non-controlled, affiliated investments:                      
    Payment-in-kind                     347  
    From controlled, affiliated investments:                      
    Interest   7,887       5,941       15,142       11,422  
    Payment-in-kind         857       823       1,489  
    Dividend income   5,579       4,689       10,430       9,378  
    Other income   27             27        
    Total investment income   30,663       35,979       64,868       70,315  
    Expenses:                      
    Interest and expenses on debt   10,318       11,868       22,058       21,424  
    Base management fee   4,017       4,137       8,285       8,141  
    Incentive fee   2,425       3,018       5,180       6,339  
    General and administrative expenses   1,150       1,379       2,400       2,593  
    Administrative services expenses   450       550       950       739  
    Expenses before amendment costs, debt issuance costs and provision for taxes   18,360       20,952       38,873       39,236  
    Provision for taxes on net investment income   550       775       1,250       1,168  
    Credit facility amendment and debt issuance costs   324             324        
    Net expenses   19,234       21,727       40,447       40,404  
    Net investment income   11,429       14,252       24,421       29,911  
    Realized and unrealized gain (loss) on investments and debt:                      
    Net realized gain (loss) on investments and debt:                      
    Non-controlled, non-affiliated investments   (27,714 )     (1,434 )     (30,274 )     1,146  
    Non-controlled and controlled, affiliated investments         (29,419 )           (30,169 )
    Provision for taxes on realized gain on investments   (49 )     (177 )     (49 )     (177 )
    Net realized gain (loss) on investments and debt   (27,763 )     (31,030 )     (30,323 )     (29,200 )
    Net change in unrealized appreciation (depreciation) on:                      
    Non-controlled, non-affiliated investments   17,918       (1,528 )     13,141       (13,798 )
    Non-controlled and controlled, affiliated investments   9,214       34,751       16,352       42,075  
    Provision for taxes on unrealized appreciation (depreciation) on investments   37       (830 )           (680 )
    Debt appreciation (depreciation)   (1,379 )     470       1,949       (1,570 )
    Net change in unrealized appreciation (depreciation) on investments and debt   25,790       32,863       31,442       26,027  
    Net realized and unrealized gain (loss) from investments and debt   (1,973 )     1,833       1,119       (3,173 )
    Net increase (decrease) in net assets resulting from operations $ 9,456     $ 16,085     $ 25,540     $ 26,738  
    Net increase (decrease) in net assets resulting from operations per common share $ 0.14     $ 0.25     $ 0.39     $ 0.41  
    Net investment income per common share $ 0.18     $ 0.22     $ 0.37     $ 0.46  
                                   

    ABOUT PENNANTPARK INVESTMENT CORPORATION

    PennantPark Investment Corporation, or the Company, is a business development company that invests primarily in U.S. middle-market companies in the form of first lien secured debt, second lien secured debt, subordinated debt and equity investments. PennantPark Investment Corporation is managed by PennantPark Investment Advisers, LLC.

    ABOUT PENNANTPARK INVESTMENT ADVISERS, LLC

    PennantPark Investment Advisers, LLC is a leading middle market credit platform, managing approximately $10 billion of investable capital, including available leverage. Since its inception in 2007, PennantPark Investment Advisers, LLC has provided investors access to middle market credit by offering private equity firms and their portfolio companies as well as other middle-market borrowers a comprehensive range of creative and flexible financing solutions. PennantPark Investment Advisers, LLC is headquartered in Miami and has offices in New York, Chicago, Houston, Los Angeles, and Amsterdam.

    FORWARD-LOOKING STATEMENTS

    This press release may contain “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. You should understand that under Section 27A(b)(2)(B) of the Securities Act of 1933, as amended, and Section 21E(b)(2)(B) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), the “safe harbor” provisions of the Private Securities Litigation Reform Act of 1995 do not apply to forward-looking statements made in periodic reports PennantPark Investment Corporation files under the Exchange Act. All statements other than statements of historical facts included in this press release are forward-looking statements and are not guarantees of future performance or results and involve a number of risks and uncertainties. Actual results may differ materially from those in the forward-looking statements as a result of a number of factors, including those described from time to time in filings with the SEC. PennantPark Investment Corporation undertakes no duty to update any forward-looking statement made herein. You should not place undue influence on such forward-looking statements as such statements speak only as of the date on which they are made.

    We may use words such as “anticipates,” “believes,” “expects,” “intends,” “seeks,” “plans,” “estimates” and similar expressions to identify forward-looking statements. Such statements are based on currently available operating, financial and competitive information and are subject to various risks and uncertainties that could cause actual results to differ materially from our historical experience and our present expectations.

    The information contained herein is based on current tax laws, which may change in the future. The Company cannot be held responsible for any direct or incidental loss resulting from applying any of the information provided in this publication or from any other source mentioned. The information provided in this material does not constitute any specific legal, tax or accounting advice. Please consult with qualified professionals for this type of advice.

    Contact: Richard T. Allorto, Jr.
      PennantPark Investment Corporation
      (212) 905-1000
      www.pennantpark.com

    The MIL Network

  • MIL-OSI: Exodus Reports First Quarter 2025 Results

    Source: GlobeNewswire (MIL-OSI)

    OMAHA, Neb., May 12, 2025 (GLOBE NEWSWIRE) — Exodus Movement, Inc. (NYSE American: EXOD) (“Exodus”), a leading self-custodial cryptocurrency platform, today announced its unaudited results for the first quarter ended March 31, 2025.

    First Quarter 2025 Financial Highlights (Unaudited)

           
    In USD millions, except percentages Q1 2025 Q1 2024  % Change
                       
    Revenue $ 36.0   $ 29.1     24 %
                       
    Technology, development and user support   14.9     10.7     39 %
                       
    General and administrative   14.3     8.0     79 %
                       
    Loss (gain) on digital assets, net   28.8     (56.8 )   (151 %)
                       
    Net (loss) income   (12.9 )   54.8     (124 %)
                       

    “Exodus continues to offer innovative solutions that capitalize on the growing market for digital assets,” said JP Richardson, CEO and co-founder of Exodus. “Meanwhile, our focus on self-custody remains a difference-maker.”

    First Quarter Operational and Other Financial Highlights

    • Exchange provider processed volume – $2.18 billion in Q1 2025, down 7% from Q4 2024. Bitcoin, Tether (TRX Network), Solana, Tether (ETH Network), ETH, and XRP were the top assets traded in Q1 2025, at 16%, 11%, 11%, 9%, 8%, and 8% of volume, respectively.
    • Exodus monthly active users – 1.6 million at end of Q1 2025, down 30% from 2.3 million as of December 31, 2024.
    • Exodus quarterly funded users – 1.8 million at end of Q1 2025, down 5% from 1.9 million as of December 31, 2024.
    • Digital assets, cash, and cash equivalents – $238.0 million, including 2,011 units of Bitcoin valued at $166.0 million, 2,693 units of Ether valued at $4.9 million, and $62.8 million in cash and cash equivalents, USD Coin (USDC), and Treasury bills as of March 31, 2025.
    • Full-time equivalent team members – approximately 210 as of March 31 2025, unchanged from the prior quarter.
    • Customer response time – average response time of less than 60 minutes in Q1.

    “Q1 saw our highest first quarter revenue and second best revenue quarter on record.” said James Gernetzke, CFO of Exodus. “With an abundance of opportunities at our doorstep, Exodus is well-positioned to expand within our industry and beyond, well into the future.”

    Q1 2025 Webcast 

    Exodus will host a webcast of its preliminary first quarter 2025 fiscal results beginning at 4:30PM (Eastern Time) on May 12, 2025. To access the webcast, please use this link. It will also be carried on the Company’s website exodus.com/investors. Supplementary materials will also be made available prior to the webcast on the “Investor Relations” portion of the Company website, and a replay of the video webcast will be available following the live event for at least 90 days thereafter.

    Investor Contact
    investors@exodus.com

    Disclosure Information

    Exodus may use its website and the following social media outlets as distribution channels of material nonpublic information about the Company. Financial and other important information regarding the Company is routinely accessible through and posted on the following: websites exodus.com/investors and exodus.com/blog, and social media: X (@exodus and JP Richardson’s feed @jprichardson), Facebook, LinkedIn, and YouTube.

    Forward-Looking Statements

    This press release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. All statements, other than statements of historical facts, may be forward-looking statements. Forward-looking statements are based on our beliefs and assumptions and on information currently available to us as of the date hereof. In some cases, you can identify forward-looking statements by the following words: “will,” “expect,” “would,” “should,” “intend,” “believe,” “expect,” “likely,” “believes,” “views”, “estimates”, or other comparable terminology. Forward-looking statements in this document include, but are not limited to, our preliminary financial information, including digital asset holdings, exchange provider processed volumes and our fiscal quarter end results, management statements regarding management’s confidence in our products, services, business trajectory and plans, expectations regarding demand for our products; and our ability to deliver higher transaction volumes. Such forward-looking statements involve a number of risks, uncertainties and other important factors that could cause our actual results to differ materially from those expressed or implied by our forward-looking statements. Such factors include those set forth in “Item 1. Business” and “Item 1A. Risk Factors” of Form 10-K filed with the Securities and Exchange Commission (the “SEC”) on March 6, 2025, as well as in our other reports filed with the SEC from time to time. All forward-looking statements are expressly qualified in their entirety by such cautionary statements. Readers are cautioned not to place undue reliance on such forward-looking statements. Except as required by law, we undertake no obligation to update or revise any forward-looking statements that have been made to reflect events or circumstances that arise after the date made or to reflect the occurrence of unanticipated events.

    The MIL Network

  • MIL-OSI USA: Congressman Nick Langworthy Releases Statement Supporting House Energy and Commerce Committee’s Budget Reconciliation Legislation

    Source: US Congressman Nick Langworthy (NY-23)

    WASHINGTON, D.C. – Today,Congressman Nick Langworthy (NY-23) released the following statement regarding the House Energy and Commerce Committee’s reconciliation bill text. This legislation will be marked up tomorrow, May 13 at 2:00 pm. 

     

    “After five months of tough negotiations and in-depth discussions with key stakeholders, the House Energy and Commerce Committee has delivered a bold reconciliation bill that achieves our top priorities: protecting Medicaid for those who genuinely need it, advancing American energy independence, and ending the hemorrhaging of taxpayer dollars through waste, fraud, and abuse.

     

    “From day one, I made it clear that I would fight relentlessly to protect rural hospitals and safeguard access to care—and as the only Republican from New York serving on the Energy and Commerce Committee, I was proud to help lead that charge alongside my colleagues and the White House.

     

    “This bill strengthens the social safety net while restoring fiscal responsibility. Its passage marks a critical step toward delivering on a pro-growth, pro-taxpayer agenda that puts America’s working and middle class first.

     

    “Let’s be clear: if we do nothing, the system goes broke. Medicaid and other essential programs will collapse under the weight of wasteful spending, fraud, and abuse. For too long, these programs have operated with little accountability—broken systems with no safeguards for taxpayers. That’s unacceptable. We have a duty to protect both the people who depend on these services and the taxpayers who fund them.

     

    “That’s why this legislation includes commonsense work requirements for able-bodied adults without dependents—just as President Bill Clinton enacted in the 1990s. It was one of the most popular and effective policies of his presidency, helping lift millions out of poverty and into the workforce. We are building on that bipartisan legacy to ensure assistance is tied to opportunity, not lifelong dependency.

     

    “We are also removing illegal aliens from the Medicaid rolls. American taxpayers should never be forced to subsidize healthcare for those who have broken our immigration laws. These benefits are meant for American citizens and lawful residents—not for those who enter the country illegally and exploit the system. This reform is about restoring fairness, accountability, and the rule of law.

     

    “Unfortunately, powerful Democrats like Chuck Schumer are already resorting to lies, fear-mongering, and deception to protect the failed status quo. They’d rather mislead the public than admit that change is urgently needed. But we know the truth—and the American people are demanding action.

     

    “While Democrats and their special interest allies cling to bloated bureaucracy and broken programs, we are delivering real solutions, restoring integrity to our institutions, and honoring the clear mandate voters gave us to put America back on the right track.”

    MIL OSI USA News

  • MIL-OSI Europe: EIB Global and Kenya-based Family Bank team up in €100 million financing deal for country’s women and young entrepreneurs

    Source: European Investment Bank

    EIB

    • The financing targets expanding credit access to women owned/led businesses and youth entrepreneurs in Kenya
    • EIB Global will advance €50 million, which Family Bank will match
    • Part of EU’s Global Gateway strategy to promote trade, manufacturing, agriculture, climate action and services, which are key priorities in Kenya

    The European Investment Bank’s development arm (EIB Global) and Kenya-based Family Bank are mobilising €100 million (14.7 billion Kenyan shillings) in financing for businesses, with a focus on women-owned/led enterprises and youth entrepreneurs in the country. EIB Global is providing a €50 million credit line to Family Bank, which will match the sum in an agreement to expand loans for Kenyan small and medium-sized enterprises (SMEs) and Mid-Caps.

    The financing accord, announced during the second edition of the European Union-Kenya business forum in Nairobi, seeks to bolster the working capital and investments of Kenyan SMEs and Mid-Caps active mainly in the trade and agriculture sectors. At least 50% of the financing will target businesses owned or run by women while a further minimum of 30% will be extended to youth entrepreneurs. 

    “SMEs represent over 80% of our customer base. As a result of our growth efforts, our market revenue from this segment continues to increase, further underscoring the sector’s strong growth potential,” said Family Bank Chief Executive Officer Nancy Njau. “This partnership not only supports our 2025–2029 strategy to scale SME lending and deepen market segmentation but also enables us to better address the specific needs of SMEs across various value chains for sustainable growth and long-term value.”

    In addition to the credit line, EIB Global will provide Family Bank with technical assistance to enhance its gender strategy and product offering. This includes a potential certification under a 2018 initiative called 2X Challenge launched by development and multilateral finance institutions to invest in women worldwide.

    “We recognise that beyond access to financing and investment opportunities, small businesses, especially those led by women, also need education, information and networking opportunities with like-minded enterprises,” said Njau. “This partnership enables us to offer that holistic support.”

    The agreement is part of the EU’s Global Gateway strategy to promote trade, manufacturing, agriculture, climate action and services, which are key priorities in Kenya. It also feeds into a European initiative called Investing in Young Businesses in Africa (IYBA) that operates across Africa with the goal of creating sustainable jobs and expanding business opportunities. The EIB currently chairs the IYBA.

     “The financing partnership we now have with Family Bank will inject much-needed capital into Kenya’s private sector to support businesses and create employment,” said EIB Vice-President Thomas Ostros. “Investing in women and youth entrepreneurs is not only the right thing to do but also the smart thing to do. It holds much promise to bring growth and prosperity to the Kenyan economy. This is a cause that is very important to us.”

    The agreement signed between EIB Global and Family Bank represents the fourth time that the banks are partnering

    “European Fund for Sustainable Development Fund Plus (#EFSD+) is a testament to our commitment to fostering sustainable economic growth by empowering small and medium-sized enterprises (SMEs) in partner countries,” said European Commission Director for International Partnerships – Africa, Hans Stausboll. “Through this strategic partnership with the European Investment Bank, we’re unlocking vital financial resources for SMEs in Kenya, via Family Bank. This collaboration not only fuels female-led entrepreneurship and innovation but also spurs climate smart and sustainable value chains across the Kenyan landscape. More in general, it contributes to Global Gateway strategy in Kenya across various economic sub-sectors including manufacturing, services, trade and competitiveness.”

    Background Information

    About EIB Global

    The European Investment Bank (ElB) is the long-term lending institution of the European Union, owned by its Member States. It finances investments that contribute to EU policy objectives.  

    EIB Global is the EIB Group’s specialised arm devoted to increasing the impact of international partnerships and development finance, and a key partner of Global Gateway. EIB Global aims to support €100 billion of investment by the end of 2027 — around one-third of the overall target of this EU initiative. Within Team Europe, EIB Global fosters strong, focused partnerships alongside fellow development finance institutions and civil society. EIB Global brings the EIB Group closer to people, companies and institutions through offices across the world. High-quality, up-to-date photos of the organisation’s headquarters for media use are available here. 

    About Global Gateway

    The Global Gateway strategy is the EU’s positive offer to reduce the worldwide investment disparity and boost smart, clean and secure connections in digital, energy and transport sectors, and to strengthen health, education and research systems. In a Team Europe approach that brings together the European Union, EU Member States, and European development finance institutions, together we aim to mobilise up to €300 billion in public and private investments from 2021 to 2027, creating essential links rather than dependencies, and closing the global investment gap.

    The EU-Africa Global Gateway investment package consists of 150 billion in investments to help accelerate Africa’s digital and green transition as well as support sustainable jobs growth and stronger health systems. More information on the investment package as well as country specific flagships can be found here.

    About Family Bank:

    Family Bank is a financial institution that prides itself in growing a strong retail customer base, with a strong focus on SME banking, anchored on the positive transformation of people’s lives in Africa. Family Bank is the eighth-largest bank in Kenya, in terms of branch network with 95 branches across 32 counties. The Bank has over 1.2 million customers, 6,000 bank agents and 75,000 merchants across the country with total assets of KES.168.5 billion and a deposit base of KES 126.4 billion as of 31st December 2024.

    A pioneer in digital banking innovation, Family Bank was the first in Kenya to introduce paperless banking through smart card technology, mobile banking, and PesaPap. It also made history as the first bank in Africa to launch the mVisa service, reinforcing its commitment to seamless and accessible financial solutions.

    In 2024, Family Bank was recognized for its commitment to excellence, winning the Excellence in Customer Responsiveness award at the Innovation & Excellence Awards East Africa. The Bank was also voted the third-best overall bank and the best tier-two bank for the fifth consecutive year in the Kenya Bankers Association Customer Satisfaction and Digital Banking Experience Survey. Additionally, Family Bank emerged as the winner of the 2024 Banking on Women Awards and received the prestigious Service Excellence Award in the CX Social Impact & Sustainability category from the Institute of Customer Experience.

    Previously, in 2021, Family Bank’s highly successful Corporate Bond Campaign, which achieved a 147.3% subscription rate, raising KES 4.42 billion through public placement, earned the Financial Communication Campaign of the Year and Overall Public Relations Campaign of the Year at the Public Relations Society of Kenya Annual Awards for Excellence.

    Other notable accolades include Best-Performing Young Bankers in Africa at the 2023 Battle of the Banks Africa Competition and Best in Internal Customer Experience at the 2023 Service Excellence Awards. In 2022, Family Bank was named Bank of the Year for high-impact agricultural lending to SMEs by Aceli Africa. The Bank also received the Best SME Bank in Kenya award at the 2017 Banker Africa East Africa Awards, a prestigious initiative recognizing excellence in African financial institutions. Additionally, Family Bank was honored with the Think Business Fastest Growing Bank Award for three consecutive years (2013-2015) and was the 1st Runner-Up for Best Bank in Microfinance at the Think Business Awards in 2013 and 2014.

    MIL OSI Europe News

  • MIL-OSI USA: Cassidy, Kaine Introduce Legislation Improving Retirement Savings for Working Americans

    US Senate News:

    Source: United States Senator for Virginia Tim Kaine
    WASHINGTON, D.C. – Today, U.S. Senator Bill Cassidy (R-LA), chair of the Senate Health, Education, Labor, and Pensions (HELP) Committee, and Senator Tim Kaine (D-VA), a member of the Senate HELP Committee, reintroduced the Helping Young Americans Save for Retirement Act. The legislation would help more Americans aged 18 to 20 years old access employer-sponsored retirement plans by removing barriers that discourage companies from offering these benefits to younger employees.    
    “Americans who don’t attend college and immediately enter the workforce should be given every chance to save for retirement,” said Cassidy. “This legislation empowers American workers, giving them more opportunities to plan for a secure retirement.”  
    “Contributing to a retirement plan early on sets people up for financial security in the future,” said Kaine. “I’m proud to introduce this bipartisan bill that would ensure younger workers have access to their employer-sponsored retirement benefits when they are starting out in their careers.”
    Specifically, the bill would lower the participation age of Employee Retirement Income Security Act of 1974 (ERISA)-covered defined contribution (DC) plans to 18 years old under certain circumstances, providing access to retirement savings plans for eligible workers in this age range who currently don’t have access to their employers’ plans. Covered plans would still be able to set a minimum age threshold up to 18 years old.  
    This legislation also removes costly provisions that would otherwise make covering younger workers expensive. Specifically, the bill delays ERISA provisions that require businesses to undergo mandatory audits if they allow employees under the age of 21 to start contributing to their pension. The legislation also exempts 18 to 20-year-old employees from testing related to retirement funds that would otherwise increase the cost of administering retirement plans for these employees.  
    The Helping Young Americans Save for Retirement Act is supported by BPC Action, Edward Jones, the American Benefits Council, LPL, Insured Retirement Institute, the National Rural Electric Cooperative Association, TIAA, and Transamerica.
    “The Helping Young Americans Save for Retirement Act will expand the opportunity for more younger workers to start saving earlier for retirement by allowing them to participate in their employer-sponsored workplace plans,” said Paul Richman, Chief Government and Political Affairs Officer at the Insured Retirement Institute. This measure will not only help younger workers get into the habit of contributing to their retirement savings, but it will also provide additional years for their savings to grow to ensure a more secure financial future.”
    Full text of the bill is available here.

    MIL OSI USA News

  • MIL-OSI: Mountain America Credit Union Earns Top 10 National Workplace Honor for Second Year in a Row

    Source: GlobeNewswire (MIL-OSI)

    SANDY, Utah, May 12, 2025 (GLOBE NEWSWIRE) — Mountain America Credit Union has once again earned national acclaim ranking No. 9 out of 1,526 organizations in USA Today Top Workplaces 2025. The announcement marks the second consecutive year Mountain America has secured a coveted spot in the top 10, underscoring the organization’s commitment to fostering a workplace where people thrive.

    A Media Snippet accompanying this announcement is available in this link.

    As the only credit union to break into the Top 100, Mountain America stands out not just in the financial sector, but across industries nationwide. The recognition follows a rigorous, independent evaluation based on team member feedback from the Energage Workplace Survey & Pulse. The survey measures 15 culture drivers critical to organizational success, including alignment, connection, and engagement.

    “Our people are the heart of everything we do,” said Sterling Nielsen, president and chief executive officer at Mountain America. “Being named a top workplace again reaffirms that we’re not just building careers—we’re building a purpose-driven culture where individuals feel seen, supported and empowered.”

    This year’s Top Workplaces rankings reflect input from over two million employees from more than 1,500 companies across the country. Mountain America’s team members cited strong leadership, growth opportunities, and a values-centered mission as standout attributes of the credit union’s culture.

    “We believe this recognition acknowledges our efforts to tightly link our mission to provide members exceptional member experiences by hiring and developing the best people,” said Trent Savage, chief human resources officer. “Our values link our employees to the members we serve and ensure we provide a great place to work where employees are empowered to both support the members and to develop/grow their careers with us.”

    The Top Workplaces program is one of the most prestigious employer recognition programs in the United States, placing a spotlight on organizations that truly put people first.

    Mountain America’s continued recognition speaks to its enduring mission of helping members define and achieve their financial dreams while also nurturing an internal community rooted in trust, compassion and excellence.

    To learn more about Mountain America, visit macu.com/newsroom.

    About Mountain America Credit Union
    With more than 1 million members and $20 billion in assets, Mountain America Credit Union helps its members define and achieve their financial dreams. Mountain America provides consumers and businesses with a variety of convenient, flexible products and services, as well as sound, timely advice. Members enjoy access to secure, cutting-edge mobile banking technology, over 100 branches across multiple states, and more than 50,000 surcharge-free ATMs. Mountain America—guiding you forward. Learn more at macu.com.

    The MIL Network

  • MIL-OSI Global: Trump’s bid to end birthright citizenship heads to the Supreme Court

    Source: The Conversation – USA – By Jean Lantz Reisz, Clinical Associate Professor of Law, Co-Director, USC Immigration Clinic, University of Southern California

    President Donald Trump’s executive order on birthright citizenship resurrects a dissenting argument in an 1898 case that went before the Supreme Court. iStock/Getty Images Plus

    For more than 150 years, people who were born within U.S. territory automatically received citizenship – regardless of their parents’ immigration status.

    President Donald Trump’s January 2025 executive order on birthright citizenship – stating that children born in the U.S. to parents who are not in the country legally, or who are not permanent residents, cannot receive citizenship – threatens to upend this precedent.

    The Supreme Court is set to hear arguments on the case on May 14, 2025.

    This comes after federal judges in three cases that took place in Maryland, Massachusetts and Washington banned Trump’s order from going into effect, determining that the president cannot change or limit the Constitution by executive order.

    The Trump administration has argued that courts previously did not interpret the 14th Amendment’s citizenship clause correctly. But the administration’s argument in its emergency appeal to the Supreme Court is different. The administration is asking the Supreme Court to narrow the federal judges’ bans on implementing the order so their rulings apply only to the noncitizen plaintiffs named in those specific cases. If the Supreme Court justices agree, that could mean Trump’s executive order could apply to all of the other noncitizens not named in the cases at hand.

    The president has broad powers when enforcing immigration laws and has the most discretion to use this authority when immigration is a national security issue.

    At the same time, as an immigration law scholar, I understand that the president’s immigration power is limited by federal laws and the Constitution. American citizenship is a right that is spelled out in the Constitution – and the Constitution does not give the president the power to change how someone gets citizenship in the country.

    Washington state Attorney General Nick Brown speaks to the media after a federal judge blocked President Donald Trump’s executive order on birthright citizenship on Feb. 6, 2025.
    Jason Redmond/AFP via Getty Images

    What the Constitution says about birthright citizenship

    Ratified in 1868, the 14th Amendment citizenship clause states, “All persons born or naturalized in the United States, and subject to the jurisdiction thereof, are citizens of the United States. …”

    There are currently two exceptions to who can receive birthright citizenship: children of war enemies who are occupying the U.S. and children of noncitizens working as foreign diplomats in the U.S.

    Trump’s executive order states there is now a third exception – the child of a mother who is living in the country without legal authorization, or has a temporary visa, if the father is also not a lawful permanent resident or U.S. citizen.

    Since Trump’s Jan. 20 executive order, multiple states, cities, immigration rights organizations and private individuals, including pregnant mothers, have sued Trump. They have also sued the government agencies he instructed to deny citizenship to children born in the U.S. to noncitizens.

    If the president’s executive order were to fully take effect, hundreds of thousands of babies born in the U.S. would be living in the country illegally. They could be deported by the U.S. government and would potentially be stateless, meaning without citizenship in any country.

    If these babies stayed in the U.S., they would also be denied basic rights and privileges given to U.S. citizens, such as government-provided health care insurance and legal identification documents.

    Once these children became adolescents and then adults, they could not receive federal financial aid for education, may not be eligible to legally work and could not vote.

    This would create a vast and indefinitely growing population of noncitizens who are born and raised in the U.S. but do not have the legal right to stay there.

    What led to the 14th Amendment

    In 1868, the required 28 of the then 37 U.S. states ratified the 14th Amendment. This ensured that certain states did not deny citizenship to freed former slaves, who were of African descent and forcibly sent to the U.S., as well as their children.

    About 30 years later, a U.S.-born man of Chinese descent named Wong Kim Ark was returning home to San Francisco after visiting his parents in China. U.S. authorities would not let him leave a steamship docked in the San Francisco harbor and enter the U.S.

    Government officials prevented his entry under the Chinese Exclusion Act of 1882, a discriminatory law that barred Chinese nationals from entering the U.S. and becoming naturalized citizens, among other restrictions.

    Wong argued that he was a U.S. citizen at birth and not barred by the exclusion laws.

    The Supreme Court, albeit not unanimously, decided in 1898 that Wong was a citizen, since he was born in a U.S. territory.

    The Supreme Court noted that the framers of the 14th Amendment relied on the British legal principle of “jus soli,” a Latin term meaning right of soil, to give automatic citizenship to anyone born on U.S. soil. Under jus soli, any person born within the kingdom of the British king was a citizen of that kingdom.

    U.S. courts and lawmakers have similarly interpreted the 14th Amendment to automatically give citizenship to all children born in the U.S., even if their parents are immigrants.

    In 1952, Congress passed the Immigration and Nationality Act, which incorporated language from the 14th Amendment into immigration law. This included the phrase that “any person born in the United States, and subject to the jurisdiction thereof” is a “citizen of the United States at birth.”

    The 1952 statute did not exclude children born to immigrants living in the U.S. without legal authorization or immigrants with a temporary visa.

    In 1995, the Office of Legal Counsel for the Department of Justice evaluated proposed federal legislation that would deny birthright citizenship to certain children, based on their parents’ immigration status. The Department of Justice determined the legislation would be “unquestionably unconstitutional” and it did not become law.

    Less than 10 years later, the Supreme Court recognized in 2004 that accused Taliban fighter Yasser Hamdi had certain rights as a U.S. citizen. Hamdi was born in Louisiana to Saudi Arabian parents who had temporary visas.

    Wong Kim Ark was born in the U.S. but denied reentry in 1895 in a case that went to the Supreme Court.
    National Archives/Interim Archives/Getty Images

    Trump’s 14th Amendment claims

    Whether Trump’s executive order ultimately survives depends on how the Supreme Court interprets the phrase “subject to the jurisdiction thereof” in the 14th Amendment.

    The Trump administration argues that this phrase was never meant to include the children of immigrants who were living in the U.S. without legal authorization or with temporary visas. The administration also says the phrase “subject to the jurisdiction thereof” means more than just being born in U.S. territory. It means having undivided sovereign allegiance to the U.S. government.

    The Trump administration argues that U.S.-born children of noncitizens owe allegiance to a different country.

    This is an old argument, based on the dissenting opinion in the Wong Kim Ark case in 1898. The Supreme Court already rejected this argument in that case.

    The courts are following historical precedent

    Three federal judges in the cases before the Supreme Court all determined in 2025 that Trump’s executive order is likely unconstitutional.

    The Washington judge, for example, said in February that the administration was rehashing a century-old losing argument.

    The appellate courts have also denied the government’s requests to change the preliminary injunctions.

    For over a century, the federal government has recognized that nearly every child born in the U.S., regardless of who their parents are, automatically becomes a U.S. citizen.

    Now, the Supreme Court will decide whether there is merit to the Trump administration’s technical argument that the federal judges’ block on its executive order should apply to plaintiffs in the three cases – an option that could permit the executive order to apply to all other noncitizens, even if it is unconstitutional.

    Whether the executive order itself is constitutional would be a question left for a later date. However, that date may come after the executive order causes irreversible damage to U.S. citizens.

    Jean Lantz Reisz does not work for, consult, own shares in or receive funding from any company or organization that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.

    ref. Trump’s bid to end birthright citizenship heads to the Supreme Court – https://theconversation.com/trumps-bid-to-end-birthright-citizenship-heads-to-the-supreme-court-248819

    MIL OSI – Global Reports

  • MIL-OSI USA: Alumni Honored at Inaugural CLAS Awards Ceremony

    Source: US State of Connecticut

    The College of Liberal Arts and Sciences recently celebrated the achievements of six outstanding alumni during its inaugural CLAS Alumni Awards Ceremony.  

    The event brought together faculty, staff, alumni, and family members to honor graduates whose careers reflect the excellence and impact of a liberal arts and sciences education. 

    “Our alumni are among UConn’s greatest ambassadors, and we take immense pride in their accomplishments,” said UConn President Radenka Maric. “These awards in CLAS and across the University reflect the transformative power of a UConn education and the positive impact Huskies make in Connecticut and around the world.” 

    “The launch of our alumni awards program reflects our enduring commitment to celebrating the lifelong impact of a liberal arts education,” said CLAS dean Ofer Harel. 

    With more than 130,000 alumni, CLAS is UConn’s largest and most academically diverse college. The new awards program was created to recognize alumni who exemplify the College’s core values of community, creativity, dedication, diversity, empowerment, and integrity. 

    “These individuals reflect the depth, diversity, and impact of a CLAS education in their work and their lives,” Harel said in his opening remarks. “The awards were established to celebrate individual achievement, but also the power of a liberal arts and sciences education to open doors, fuel ambition, and inspire change.”  

    The winners were honored on April 30 at the Alumni House in Storrs. Their work spans science, policy, media, and the environment. 

    Distinguished Alumni Awards – Social Sciences and Humanities  

    Bryan Pollard ’85 (CLAS) graduated magna cum laude in political science as a UConn Honors Scholar and Phi Beta Kappa member. He earned his JD from Yale and led a 35-year legal career, including roles at Crowell & Moring in Washington, D.C., Day, Berry & Howard in Hartford, CT, and United Technologies Corporation (now RTX Corporation). He has served on multiple nonprofit boards and two terms on Middletown’s Ethics Commission. A Past President of the UConn Alumni Association, he is now serving a second term as Alumni Trustee. In 2021, he and his wife established a UConn CLAS scholarship fund and support the annual Alumni and Student of Color Networking Night.

    Bryan Pollard ’85 (CLAS) received a CLAS Distinguished Alumni Award in the Social Sciences and Humanities. (Photo courtesy of UConn Foundation)

    Mike Soltys ’81 (CLAS) began his career as an intern at ESPN in 1980 and went on to serve in corporate communications for 43 years, including 20 as vice president. He led strategic publicity and issue management for ESPN’s networks and platforms, helped launch ESPN’s corporate blog and media site, and managed major campaigns such as ESPN’s 25th anniversary. He served as a registered lobbyist for Connecticut issues and was ESPN’s longest-serving Editorial Board member. Mike holds a master’s from the University of Hartford and now serves as ESPN Historian. He was recognized in 2024 with a Lifetime Achievement Award from UConn’s Department of Communication. In memory of their parents, Mike and his sisters have established an annual scholarship at UConn for students pursuing careers in athletic communications. 

    Mike Soltys ’81 (CLAS) received a CLAS Distinguished Alumni Award in the Social Sciences and Humanities. (Photo courtesy UConn Foundation)

    Distinguished Alumni Awards – Life and Physical Sciences  

    Kevin Bohacs ’76 (CLAS) is a sedimentary geologist who earned his Ph.D. from MIT and spent over 40 years in industry research, primarily at ExxonMobil. His work has focused on mudstone systems, basin analysis, and Earth systems modeling, with applications on Earth and Mars. He has conducted research in over 40 countries, published more than 100 scientific works, co-authored and edited several books, and is listed as co-inventor on three patents. He has held roles in scientific lecturing and field training, and supports student education through the Earth Sciences Nugget Fund at UConn. 

    Kevin Bohacs ’76 (CLAS) received a CLAS Distinguished Alumni Award in the Life and Physical Sciences. (Photo courtesy UConn Foundation)

    Richard Piacentini MS ’84 (CLAS) is President and CEO of Phipps Conservatory and Botanical Gardens in Pittsburgh, where he has led initiatives in sustainability and regenerative design since 1994. Under his leadership, Phipps Conservatory built the Center for Sustainable Landscapes, which is one of the greenest buildings in the world and produces as much energy and water as it uses. Among other accomplishments, he oversaw the creation of the first LEED certified greenhouse, a zero-energy modular classroom called the Nature Lab, and the highly sustainable Exhibit Staging Center, which meets the highest green building standards. Piacentini holds an MS in Botany from UConn, an MBA from Virginia Commonwealth University, and a BS in Pharmacy from the University of Rhode Island.

    Richard Piacentini MS ’84 (CLAS) received a CLAS Distinguished Alumni Award in the Life and Physical Sciences. (Photo courtesy of UConn Foundation)

    Emerging Leader Award – Humanities and Social Sciences  

    Prabhas KC ’22 (CLAS) At UConn, economics major Prabhas KC served as a Board Member and Student Representative on the Mansfield Downtown Partnership, received the Department of Economics’ Dr. Joseph W. McAnneny, Jr. Award, and delivered the commencement address at his graduation in 2022.  He joined tech firm ServiceNow after graduation and earned the company’s “Hungry and Humble” Award. KC is the self-published author of “Nani, Let’s Count to 10!,” a bestselling bilingual children’s book, and founded Babu’s Books to promote cultural identity among second-generation immigrants through partnerships with schools and nonprofits. 

    Prabhas KC ’22 (CLAS) won the CLAS Emerging Leader Award in the Humanities and Social Sciences. Photo courtesy UConn Foundation.

    Emerging Leader Awards – Life and Physical Sciences 

    Tanisha Williams ’19 Ph.D. is Assistant Professor of Plant Biology at the University of Georgia and Director of the UGA Herbarium. She studies plant conservation, climate change adaptation, and the role of Indigenous knowledge in ecosystem resilience, and her work spans the U.S., South Africa, and Australia. Williams previously held a postdoctoral fellowship at Bucknell University, where she described two new plant species and mentored more than 40 students. A Fulbright Fellow and Alumni Ambassador, she also founded Black Botanists Week and has received honors including the ASPT Peter Raven Award and the Linnaean Society’s Bicentenary Medal. 

    Tanisha Williams ’19 Ph.D. won the CLAS Emerging Leader Award in the Life and Physical Sciences. (Photo courtesy of UConn Foundation)

    Learn more about the CLAS Alumni Awards.

    MIL OSI USA News

  • MIL-OSI USA: Commencement Speaker: Servant Leadership Distinguishes Top Companies, Stellar Executives from the Rest

    Source: US State of Connecticut

    Alumnus Rich Eldh ’81, an entrepreneur who created a $300 million global research and advisory firm, told business undergraduates that servant leadership is one of the most important, and misinterpreted, components of business success.

    “Servant leadership means leading with strength, for the benefit of others,’’ he told more than 700 graduates, their family and friends, during the Commencement ceremony on Saturday at Gampel Pavilion. “It means empowering your team, fostering growth, and creating environments where others can shine.’’

    Eldh is the co-founder of SiriusDecisions, Inc., a B2B research and advisory firm, which he ran from 2001 until its sale in 2018. The company, which employed 400, provided advisory, consulting, and learning services to help executives improve the performance of their sales, marketing, and product strategies. Clients included Adobe, IBM, GE, Cisco, and Motorola.

    “Servant leadership has been misinterpreted over the last 10 to 15 years,’’ Eldh said prior to his Commencement address. “So-called leadership gurus have considered it passive or weak. That is a total misinterpretation.’’

    “Servant leadership is doing what is right by three constituencies: your employees, your customers/clients, and your shareholders,’’ he said. Honesty, integrity, selflessness, curiosity, respectfulness, and humility are some of the traits of a servant leader, Eldh said. Those values spread through an organization and create a culture that’s a joy to work in and to lead.

    At SiriusDecisons, that philosophy was paramount.

    “We displayed our values through our business decisions,’’ he said. For example, to retain its talent, the company provided an environment that respected them as individuals and paid well for high performance.

    “For many years, even as a startup company, we paid for all employee benefit premiums,’’ he continued. “This seemingly simple, but expensive, decision was one of the top reasons people with families chose to stay versus pursue jobs at other companies. If it is critical to one’s security and peace of mind, why wouldn’t we, as an employer, pay for our associates’ insurance?’’

    Trust Yourself and Your Journey

    Richard Eldh Jr. ’81 (BUS) gives the address at the School of Business Commencement ceremony at Gampel Pavilion on May 10, 2025. (Peter Morenus/UConn Photo)

    Eldh also reassured the new graduates that almost all of their experiences will be valuable and that nothing happens by chance.

    “The universe has your back—and will conspire, inspire and guide you, as long as you’re listening,’’ he said.

    As a sophomore at UConn, Eldh shattered his ankle playing intramural basketball.

    “I was in a brace and on crutches for nine months,’’ he recalled. “All my classes were across campus, and most days that felt like too much effort. Needless to say, that year was difficult academically.’’

    By the end of the year, he felt like he was wasting his time and his parents’ money. He convinced a friend to leave UConn with him and move to Germany. His adviser thought he was crazy and his parents were shocked, but that September he began his adventure.

    “I have to be honest, I was scared,’’ he said. “I remember thinking, ‘What have I done?’ I truly thought I had made a huge mistake.’’

    But he had mentioned his plans to a friend’s father who helped him get a job in Kempten, Germany, writing code for a manufacturing firm.

    “That job, and that year abroad, changed my life,’’ Eldh recalled. “I was completely out of my comfort zone and I discovered my love for technology. I discovered a love for travel, and for the world.’’

    “That experience, which began with what seemed like a rash decision, became the foundation for my life and career,’’ he said. A year later, he returned to UConn and completed his degree, majoring in finance.

    “I don’t pretend to have all the answers, but I do believe—with all my heart—that if you make decisions that feel right for you, the universe will put you in the right place at the right time,’’ he said.

    He also told the graduates to work hard and not believe the myth of overnight success. Consistent hard work, like compound interest, leads to greater knowledge, promotions, a bigger income, and a competitive edge, he said.

    “Graduates of the UConn School of Business, you have the brains, you have the insight, you have the passion…and more than anything, you have the power to shift the world!,’’ he said.

    MIL OSI USA News

  • MIL-OSI Europe: Text adopted – Discharge 2023: European Public Prosecutor’s Office (the ‘EPPO’) – P10_TA(2025)0087 – Wednesday, 7 May 2025 – Strasbourg

    Source: European Parliament

    The European Parliament,

    –  having regard to its decision on discharge in respect of the implementation of the budget of the European Public Prosecutor’s Office for the financial year 2023,

    –  having regard to Rule 102 of and Annex V to its Rules of Procedure,

    –  having regard to the opinion of the Committee on Civil Liberties, Justice and Home Affairs,

    –  having regard to the report of the Committee on Budgetary Control (A10-0051/2025),

    A.  whereas the EPPO is the independent public prosecution office of the Union, responsible for investigating and prosecuting crimes against the financial interests of the Union, for significantly enhancing the Union’s capacity to safeguard taxpayer funds, and for bringing to judgment the perpetrators of, and accomplices to, criminal offences provided for in Directive (EU) 2017/1371(1) and indicated by Regulation (EU) 2017/1939(2);

    B.  whereas the competence of the EPPO encompasses several types of fraud, and includes cross-border VAT fraud with a total damage of at least EUR 10 million, money laundering, corruption, organised crime and other offences for which the EPPO performs prosecutorial functions before the competent courts of the participating Member States;

    C.  whereas the EPPO is one of the component of the Union’s anti-fraud architecture and, as such, its actions are coordinated with and complementary to those of the other components of the architecture, to achieve streamlined, efficient coordination that enhances the overall effectiveness of the architecture;

    D.  whereas the EPPO intervenes when national authorities could investigate and prosecute crimes but where the prerogatives of national authorities stop at the borders of their country, and other organisations like Eurojust, OLAF and Europol do not have the necessary powers to carry out the relevant criminal investigations and prosecutions;

    E.  whereas the procedural acts of the EPPO are subject to judicial review by the national courts and the Court of Justice of the European Union (the ‘Court of Justice’) has, by way of preliminary rulings or judicial reviews of those acts, residual power to ensure a consistent application of Union law;

    F.  whereas the EPPO is composed of a central level, with its headquarters in Luxembourg, consisting of the European Chief Prosecutor, 22 European Prosecutors (one per participating Member State), the Administrative Director, and a decentralised, national- level consisting of the European delegated prosecutors (EDPs) in the 22 participating Member States;

    G.  whereas at the central level the European Chief Prosecutor and the 22 European Prosecutors compose the College of the EPPO (the ‘College’) and supervise the investigations and prosecutions carried out by the EDPs at the national level, who operate with complete independence from their national authorities;

    H.  whereas, under Article 93 of Regulation (EU) 2017/1939, the EPPO Administrative Director, acting as the authorising officer of the EPPO, is to implement its budget under its own responsibility and within the limits authorised in the budget and shall send each year to the budgetary authority all information relevant to the findings of any evaluation procedures;

    I.  whereas, in accordance with Article 50(2) of the EPPO’s Financial Rules, the Accounting Officer of the Commission is also to act as Accounting Officer of the EPPO and is responsible for the preparation of the annual accounts, which are consolidated with those of the Union;

    J.  whereas, under the current framework, the final annual accounts are scrutinised by the Court of Auditors (the ‘Court’) and it is with the Council to recommend and to the European Parliament to decide whether to grant discharge to EPPO’s Administrative Director in respect of the implementation of the budget for a given financial year;

    K.  whereas the scrutiny over the management of the EPPO resources and related expenditure cannot ignore the examination of operational activities, their consequences and impact and the methods of their execution;

    L.  whereas the EPPO has been operating autonomously in the implementation of its budget only since 24 June 2021 and it has started its operational activities, necessitating continuous evaluation to ensure resources align with operational effectiveness, on 1 June 2021, which is also the dies a quo for the five-year term indicated in Article 119 of Regulation (EU) 2017/1939 upon reaching which the Commission will have to submit to the European Parliament and to the Council and to national parliaments an evaluation report on the implementation and impact of such Regulation, and on the effectiveness and efficiency of the EPPO and its working practices, together with its conclusions;

    M.  whereas, in accordance with Article 119(2) of Regulation (EU) 2017/1939, the Commission is to submit legislative proposals to the European Parliament and to the Council if it concludes that it is necessary to have additional or more detailed rules on the setting up of the EPPO, its functions or the procedure applicable to its activities, including its cross-border investigations;

    1.  Welcomes the positive opinion of the Court on the reliability of the EPPO’s accounts for the year ended 31 December 2023 and on the legality and regularity of the underlying revenue and payments;

    2.  Recalls the Parliament’s strong support for the establishment of the EPPO; acknowledges the EPPO as an independent Union body; stresses the EPPO’s important role in the protection of the Union’s financial interests and as an essential component of the Union’s anti-fraud architecture and of a wider Union system based on integrity, accountability, transparency and the sound financial management of resources; commends the EPPO for its work in investigating, prosecuting, and ensuring justice for crimes affecting the Union budget, such as fraud, corruption, and cross-border VAT fraud;

    3.  Highlights the critical necessity of promptly dedicating necessary resources to ensure the timely conclusion of the ongoing investigation into the acquisition of the COVID-19 vaccine in the Union, especially considering the substantial public interest in this matter, coupled with the fact that the investigation already commenced in 2022 and to this date no decision has been publicly announced;

    4.  Notes that it is possible to compare only the two most recent budgetary and operational performances of the EPPO, for the period 2022 to 2023, following the EPPO’s financial autonomy in June 2021; observes that, in that context, the budgetary increases related to the EPPO’s activities remain very difficult to estimate because of the EPPO’s recent establishment, the unique characteristics of the EPPO and its main activities, the unpredictable level of fraud detection, the wide variety of its cases, its lack of discretion with regard to pursuing prosecutions coupled with its reliance on the resources and procedural constraints of national judicial systems, the lack of a fixed correlation between the number and the costs of investigations, and the magnitude of the Union’s financial interests that are to be protected; also observes that it is difficult to estimate the expenditure for the caseload related to the Recovery and Resilience Facility (RRF) because of its unprecedented manner of implementation and high volume of resources;

    Budgetary and financial management

    5.  Notes that the overall final budget allocated to the EPPO for 2023 was EUR 65,9 million, substantially increased (by 14,7 %) from the EUR 51,2 million that was allocated in 2022, while the 2021 budget (EUR 26,2 million) related to a period prior to the EPPO’s financial autonomy; observes that the EPPO’s budget includes the reinforcement, granted by the budgetary authority at the request of the EPPO in June 2023, by EUR 500 000 (the request also included human resources related to the essential enhancement of the EPPO’s security capacity, leading to the grant of eight additional establishment plan posts); appreciates that no budget was returned in 2023, compared to 10 % (EUR 5,9 million) of the initial budget in 2022 and 21 % (EUR 9,5 million) in 2021; re-iterates the need for the EPPO to be provided with sufficient resources to adequately fulfil its mandate;

    6.  Welcomes the increasing level of budget implementation, which was 99,6 % in 2023 (compared to 98,1 % in 2022 and 97,4 % in 2021); appreciates that the overall execution rate for payments progressed in 2023 reaching 85,3 % (compared to 76,6 % and 71 % in 2022 and 2021) and the average payment time decreased to 17 days compared to 23,8 in 2022 and 21,0 in 2021); observes that the electronic invoicing module (e-invoicing) was rolled out in June 2023 and it will contribute to further reducing administrative burdens, time-to-payment and the overall processing costs; encourages a further refinement of operational processes to maximise efficiency;

    7.  Understands that, because the budget endowment requests were only partially met, the EPPO focused its financial resources on the intake of additional EDPs, which has an impact on the EPPO’s capacity to lead the increasing number of investigations and prosecutions, on the need to improve the security standing of the organisation and on the maintenance of its case-management System (CMS), which could have negatively affected the management of cross-border investigations; underlines the importance of additional funding and strengthening its staffing to enable the EPPO to effectively combat organised crime, protect the Union’s financial interests, and uphold the rule of law, which are key Union priorities; calls for a dedicated increase in funding within the next Multiannual Financial Framework (MFF) to ensure it can continue to meet its objectives and obligations;

    8.  Is aware that, following the achievement of its financial autonomy, in June 2021, the EPPO prioritised the operational expenditure related to investigation, prosecution and security measures, and that this has resulted in limiting the non-operational expenditure to essential level support services; remarks that, in this context, a total of EUR 28 312 075 was allocated on operational expenditure lines (Title 3), representing 43 % of the EPPO’s final budget 2023 (compared to EUR 21 047 346, which was 41 % in 2022); observes that the main cost drivers for these activities were the EDPs’ remuneration (51 % of the operational activities compared to 42 % in 2022), followed by operational ICT activities like maintenance and development of the EPPO’s CMS (19 % compared to 28 % in 2022), and the linguistic services (translation and interpretation related activities) (14 %, the same as in 2022);

    9.  Notes that the remuneration of the EDPs reached EUR 14,5 million (compared to EUR 8,7 million in 2022), which represents the main operational expenditure because of the increased number of EDPs in place over 2023; welcomes the accession of Poland and Sweden to the EPPO, which was announced in 2024; notes that it did not affect the 2023 expenditure and concerns the 2024 budget only marginally, due to the late and gradual intake of two European Prosecutors and a number of EDPs; understands that a more solid cost estimation will not be possible until 2025; welcomes the inclusion in the programme of the objective of the new Irish Government to join the EPPO; calls on the Hungarian government, as the sole remaining Member State that has not yet joined the EPPO, despite the absence of any legal or constitutional impediment, to join the EPPO without further delay;

    10.  Observes that costs for missions and operational meetings increased further in 2023 (mission costs were EUR 1 175 000 in 2023 and EUR 980 000 in 2022; operational meeting in 2023 were EUR 659 752 compared to EUR 170 000 in 2022), in line with the increasing level of intensity of investigations;

    11.  Is aware that the costs for translation services are expected to further increase, in line with the EPPO’s increasing caseload, and recognises the need for additional resources for translation; welcomes both the internal guidance developed on the use of translation services, with a view to reinforcing control over costs and including the recommendation to use machine translation services whenever possible, and the use of national service providers of the limit allowed by the current Regulation to address the problem; observes, in that regard, that while Article 107 of Regulation (EU) 2017/1939 provides for translation services required for the administrative functioning of the EPPO at the central level to be provided by the Union’s Translation Centre for the Bodies of the European Union, it also provides for different handling of operational and urgent matters and empowers EDPs to decide on the arrangements for translations for the purpose of investigations in accordance with applicable national law;

    12.  Notes that in 2023 the EPPO signed 234 specific contracts under existing framework contracts, for a total of more than EUR 11 million, with a significant increase in the use of EPPO framework contracts (82 specific contracts for a value of more than EUR 6,5 million) due, to a great extent, to the use of the EPPO’s framework contract for the Provision of Services in the Field of Information Systems; observes that only one contract, concerning the EPPO’s CMS, was awarded via a negotiated procedure without prior publication of a contract notice for reasons of extreme urgency;

    13.  Observes that carry-over of appropriations from the previous exercise in 2022 amounted to EUR 10 969 680 (24,4 % of the EPPO’s 2022 final budget), of which 84,8 % was consumed (EUR 9 307 392) and 15,2 % was cancelled (compared to 21,4 % in 2022) and notes that forecasts indicate another carry-over in 2024, pending completion of the deliverables, for payment appropriations (the carry-over from 2023 to 2024 amounted to EUR 9 392 989); understands that partial cancellation is a consequence of the progressive establishment of the EPPO’s administrative practices following the financial autonomy it achieved in 2021; notes that carry-over appropriations cancelled for approved budgets of 2022 and 2023 could be neither used with existing or new contracts nor synchronised with the principle of annuality, while the planning of the corresponding expenses, mainly related to translation, meetings, missions and external contractors, could not be accurate due to a lack of any historical data and figures and the rapid evolving of the organisation; appreciates that the continuous strengthening of the EPPO’s administrative capacity is progressively addressing those issues and that, while a fully estimation cannot be made in advance because of the nature of the EPPO’s operational activity, the expected level of cancelled appropriations will diminish in 2024;

    14.  Notes that in 2023 two budget transfers were adopted by the European Chief Prosecutor, on a proposal drawn up by the Administrative Director, and that they were notified to the College for information, for a total transferred between titles of EUR 1,2 million;

    15.  Acknowledges the need for adequate budget flexibility, to address unexpected operational needs such as, in 2023, the war in Ukraine, inflationary pressures, or other global challenges and understands that the EPPO made use of its Financial Rules by timely reallocation of appropriations via budget amendments (one in June and one in November) and via budget transfers (one in September and one in December);

    16.  Reiterates its observation on the obsolete 2017 Legislative Financial Statement which is deemed to be no longer fit-for-purpose due to a significantly underestimated workload; recalls its previous resolution, underlining that the absence of a mid-term budgetary review obliges the EPPO to wait until the very end of the budgetary adoption process to have clarity on what resource level it can implement in the subsequent year, and it limits the EPPO’s capacity to anticipate budget implementation preparatory activities as well as the options that should be made available to achieve maximum flexibility in the development of an organisational infrastructure for a project as innovative as the EPPO; notes that this, in particular, affects the early launch of recruitment, delaying the progress towards full occupancy among others and the overall absorption capacity of the EPPO;

    17.  Maintains that the budgetary and human resources allocated to the EPPO are expected to be adequate to allow the efficient and successful carrying out of its mandate and the normal handling of the related administrative procedures; reiterates its call on the Commission to review the EPPO budgetary framework in close cooperation with the EPPO to find adequate ways to support it in its work; calls on the Commission to allocate additional resources, justified by the growing number of complex cases, and emphasises that these should not be dependent on the revision of Regulation (EU) 2017/1939 or of the EPPO mandate, but rather on the importance of the fight against organised crime and the protection of the Union’s financial interests in the next MFF;

    18.  Emphasises that the activities of the EPPO contribute to the protection of the Union’s financial interests and are also expected to recover amounts from the Union’s budget that were not used for its intended purpose due to criminal activities; believes that the amounts resulting from seizing and confiscating measures adopted by the EDPs in the Member States could, after the deduction of costs incurred by the Member States’ authorities to implement those measures, flow back into the Union Budget in accordance with Article 38 of Regulation (EU) 2017/1939; considers that the potential revenue resulting from seizing and confiscating measures should be accounted for in the Union Budget as non-assigned revenue; calls on the Commission to make the necessary arrangements with the relevant national authorities to allow those amounts to enter into the Union Budget;

    19.  Acknowledges that the EPPO clearly contributes to European added value in terms of coordination and cooperation with the Member States in investigating and prosecuting crimes against the financial interests of the Union and that the EPPO has been achieving the goals set out in Regulation (EU) 2017/1939 in that regard; expects Member States to comply with legal obligations and to report all relevant cases to the EPPO; notes with concern that in several instances Member States have been declaring criminal offences affecting the financial interests of the Union as national cases, which are within the competence of the EPPO; notes that questions of competence between the national authorities and the EDPs have come up in several cases across several countries; is aware that, according to Article 25(6) of Regulation (EU) 2017/1939, cases of disagreement about the EPPO’s competences are to be decided by the same national judicial authority who is responsible for determining the competent body for prosecution at national level; regrets that in many participating Member States the procedures in force and the national authorities entrusted with the decisions on such cases regarding conflicts of competence are not set in compliance with Regulation (EU) 2017/1939, stresses that in cases of conflicts of competence between the EPPO and a national prosecution authority, the national authority competent to decide on the attribution of competence could come to a conclusion without requesting a preliminary ruling of the Court of Justice and could, instead adopt a decision that is binding on the EPPO and points out that this is against the spirit of Regulation (EU) 2017/1939, which provides that, in accordance with Article 267 TFEU, the Court of Justice has jurisdiction to give a preliminary ruling on the interpretation of the provision on conflicts of competence between the EPPO and national authorities; believes that the current situation lacks legal clarity; encourages all Member States to work more closely with the EPPO; emphasises that the competence of the EPPO is clearly outlined in Article 22(1) and (2), and in Article 23 of Regulation (EU) 2017/1939, and that all Member States are to comply with that Regulation; notes that when Member States have doubts about the competence of the EPPO in a particular case, there is the possibility of submitting a preliminary question to the Court of Justice for a preliminary ruling pursuant to Article 267 TFEU and Article 42(2), point (c), of Regulation (EU) 2017/1939 ; urges the Commission, where there is a breach of Regulation (EU) 2017/1939, to submit the case to the Court of Justice; notes with concern that the question of competence can cause a halt to the investigation; is concerned about potential loss of evidence when cases are paused; calls on the Commission to collect information regarding cases regarding conflicts of competence for the evaluation report that will be submitted in 2026;

    20.  Reiterates that Article 91(6) of Regulation (EU) 2017/1939 is to be implemented properly and underlines that the peculiar characteristics of prosecution and investigation expenditure, including the exceptional cases of the EPPO’s operational expenditure governed by that provision, have to be taken into account; understands that, in 2023, a first financing agreement was signed in the framework of a pilot for the reimbursement of claims made under Article 91(6) of Regulation (EU) 2017/1939, to cover exceptionally costly investigation measures carried out at national level on behalf of the EPPO; appreciates that the corresponding payment was audited by the Court during the 2023 audit and was deemed legal and regular;

    Internal management, performance and internal control

    21.  Welcomes that, during 2023, the College met 22 times and adopted 73 decisions, among which are the anti-fraud strategy 2023-2025, the anti-harassment policy for staff and for members of the College or the EDPs;

    22.  Acknowledges that the EPPO continued its efforts to set in place a system to monitor efficiency gains and cost savings, and notes that in 2023 it launched a review of the budget and activities’ strategic and operational planning and monitoring processes and of the recruitment processes, to make gains in speed and acquired competences; points out that, overall, the internal control systems in force are effective;

    23.  Notes that, to further develop the EPPO’s assurance framework, the internal auditor of the EPPO for non-operational matters (IAS) initiated, in 2023, a limited review of the EPPO’s building blocks of assurance; believes that this engagement, scheduled to be finalised during the course of 2024, will provide recommendations to build a stronger capacity for the Authorising Officer to issue a credible declaration of assurance;

    24.  Welcomes the benchmarking exercise carried out by the Internal Audit Capability (IAC) by comparing the deployed human resources of the EPPO with a set of other Union entities and national prosecution offices, against a standardised set of pillars which includes administrative support and operational activities; observes that, in 2023, the IAC tested the internal oversight environment and ran the first internal audit as an analysis of the working environment and internal controls of the EPPO’s decentralised office in Sofia, Bulgaria;

    25.  Reiterates its view that the IAS and the IAC should coordinate their actions with a view to advising and assisting the EPPO in the establishment of its main core processes and the achievement of its objectives;

    26.  Notes that the EPPO has developed its own purchase capacity, resulting from its own specifically run procurement processes launched in 2023, and manages its own specific contracts and order forms with regard to the implementation of existing framework contracts that were signed in 2023; observes that the EPPO continues, in parallel, to operate its purchase capacity through service level agreements with other Union institutions, bodies, offices and agencies, and by joining inter-institutional contracts with various market operators;

    27.  Is aware that in 2023 the Administrative Director established the minimum standards (assessment criteria) for each of the 17 internal control principles based on the COSO 2013 Control-Integrated Framework and established by the EPPO Internal Control Framework (ICF) as building blocks of the EPPO internal control system; observes that out of 72 compliance criteria, 51 are observed as fulfilled, 20 have some elements in place but further development is desirable and only in the case of one criterion has no significant implementation has been noted; appreciates that, since its adoption by the College on March 2021, 71 % of the adopted ICF assessment have been successfully implemented whereas additional effort needs to be made for the full implementation of the remaining 29 %;

    28.  Welcomes that, on 1 March 2023, an updated version of the EPPO Anti-Fraud Strategy 2023-2025 was adopted setting the objectives to counter fraud at all levels of the organisation in connection with a dedicated action plan which is part of the EPPO internal control environment and is monitored on a regular basis; appreciates the annual review of the Anti-Fraud Strategy action plan by the EPPO Internal Control Officer, reporting the results of that review to the Administrative Director;

    29.  Is aware that, in line with the EPPO’s financial rules, the EPPO ensures an adequate level of financial transactions and procurement procedures via ex post controls on financial transactions (payments, commitments and recovery orders) and on procurement procedures for the period 1 January to 31 December 2023;

    30.  Observes the increase in crime reports submitted to the EPPO (4 187 in 2023 compared to 3 318 in 2022 and 2 832 in 2021) and, as a result, the increase in open investigations (1 371 in 2023 compared to 865 in 2022 and 567 in 2021) and in the estimation of damage (EUR 19,27 billion in 2023 compared to 14,1 billion in 2022 and 5,4 billion in 2021); remarks that reports from private parties (2 494, which is 29 % more than in 2022) and from national authorities (1 562, which is 24 % more than in 2022) represent the biggest share of operational input received, while regrets that reports from other Union institutions, bodies, offices and agencies remained very low (108), suggesting that no significant improvement in terms of detection and reporting was achieved from their side; notes that the number of indictments (139 in 2023 compared to 87 in 2022 and 5 in 2021) together with the freezing orders obtained by the EPPO (EUR 1,5 billion compared to EUR 359,1 million in 2022 and EUR 147 million in 2021) are indicative of the growing performance level of the EPPO;

    31.  Notes that, compared with 2022, the caseload of the EPPO almost doubled in 2023, reaching up to 1 927 active investigations; commends the fruitful activities of the EPPO in 2023, which included 139 indictments, 339 VAT-related cases and over 200 investigations on the implementation of NextGenerationEU; further notes that the EPPO started to bring more perpetrators of Union fraud to justice in front of national courts;

    32.  Notes that, in 2023, 48 cases concluded with a court conviction (compared to 20 cases in 2022) and that EUR 60 million was the amount confiscated (compared to EUR 2 million in 2021); underlines the importance of a systematic reporting on the follow-up to these cases in terms of the financial measures adopted (confiscation and recovery) to get a clearer understanding of the impact of the EPPO’s actions; welcomes the actions undertaken by the EPPO and the Commission to streamline their communications and make them adequate in relation to the needs of possible administrative procedures for the adoption of measures to restore the Union’s budget affected by financial crimes; reiterates its call on the Commission to assist the EPPO in monitoring and follow-up activities, in such a way that the EPPO’s limited resources are not diverted from their investigative and prosecutorial tasks; encourages the EPPO, where possible and appropriate, to engage in better cooperation with other components of the Union’s anti-fraud architecture, such as Eurojust and Europol, or using – via OLAF- the Anti-Fraud Coordination Services established in the Member States to monitor the results of its investigations;

    33.  Underlines the essential role of asset recovery in the creation of a credible deterrent to organised crime; welcomes the EPPO’s participation in international networks to advance its asset recovery operations further; stresses the need for the Commission to invite the EPPO to participate in the newly created cooperation network on asset recovery and confiscation; notes that the timely and effective investigation and prosecution of fraud-related crimes can generate significant savings for the budget of the Union and the budgets of the Member States;

    34.  Is concerned about the increasing number of EPPO investigations regarding the implementation of Recovery and Resilience Plans (RRPs) (there were 233 investigations at the end of 2023, compared to 15 investigations at the end of 2022) and their relevant estimated financial damage (EUR 1,86 billion); is particularly concerned that, despite the high number of investigations, there is currently no obligation on Member States to report RRF cases to the Commission through the Irregularity Management System (IMS); recalls the obligation to report all the cases of fraud affecting RRF to the EPPO and stresses that such cases are also relevant for EDES-related measures; stresses that the EPPO’s workload, initially underestimated, has significantly increased and is expected to continue growing particularly due to the rising number of RRF-related cases and that relevant analyses suggest a possible exponential grow in the number of cases of fraud, corruption, double funding and conflicts of interest in the coming years; calls on the EPPO to systematically analyse and identify fraud patterns in Member States where multiple RRF cases have been detected, and to communicate these patterns to Member States, the Commission and the Recovery and Resilience Task Force, with the objective of enhancing preventative measures to mitigate the risk of fraud; calls on the EPPO, the Commission and OLAF to cooperate closely with the aim of minimising, as much as possible, the impact of such fraudulent misbehaviours on the Union’s budget and safeguarding the achievements of the RRF’s goals; recalls the call on the Commission to provide adequate guidance to the EPPO on how to support and foster the adoption of the remedial measures which follow the EPPO’s independent investigation and prosecution of fraud affecting the RRF and to keep the budgetary authority informed regarding the available options;

    35.  Understands that the EPPO reacted to Parliament’s call for a better monitoring system and enhanced follow-up of investigations and prosecutions by launching a project on digital statistical tools which would allow better use of the data that it processes, and the development of a strategic analysis capacity to identify the patterns of fraud; shares the EPPO’s view that the success of those efforts are directly linked to the available resources and calls on the Commission to take these activities and the related costs into consideration for the future proposals on Regulation (EU) 2017/1939 and on budgetary endowments;

    36.  Appreciates the EPPO’s efforts in the setting up key performance indicators (KPIs) for both operational and administrative activities with specific targets due to its peculiar business model; maintains its remark on the need for operational activities to include reference to the amounts seized, confiscated and eventually recovered to the Union’s budget, the safeguard of which is ultimately the raison d’être of the Union’s anti-fraud architecture of which the EPPO is an important component; understands that monitoring and follow-up action, including reporting on the recovery results, are not in the EPPO’s remit and require resources and specific prerogatives that are not part of the EPPO’s mission; asks the Commission to support the EPPO in identifying indicators linked to the achievement of that essential task, stressing that a better monitoring system, and more data of good granularity and aggregated in cluster per typology of misconduct, sector of interest or geographical area, could allow making more tangible the impact of the EPPO’s investigations and allow the identification of patterns of fraud;

    Human resources, equality and staff well-being

    37.  Observes the upward trend in the number of staff, increasing from 58 in 2020, to 122 in 2021, 217 by the end of 2022 and 238 by the end of 2023; is aware that, for 2023, the EPPO requested from the budgetary authority the suppression of 20 contract agent posts and the creation of 20 temporary agent posts, which was granted and implemented by the EPPO in the same year, resulting in the total number of staff remaining unchanged (248, out of with 171 TAs, 48 CAs and 29 SNEs), with a different allocation of posts (191 TAs, 28 CAs and 29 SNEs); points out, however, that following certain security weaknesses identified, the EPPO requested in May 2023 an amending budget and additional posts to enhance the physical, information and cyber security at central and decentralised levels and that out of 21 security posts identified, only eight posts (1 AD 9, 4 AD 6 and 3 AST 3) were granted in November 2023 for further security implementations which was finalised in 2024;

    38.  Points out that, in 2023, the occupancy rate at the central office was 92,97 %, of which 238 were members of staff compared to 256 budgeted posts; notes that out of 140 posts for the EDPs, 130 were on the post at the end of 2023 and another 10 started at the beginning of 2024, reaching 100 % of occupancy rate; observes that the EPPO reinforced its capacity to run timely and transparent recruitment procedures by concluding 24 selection procedures in 2023, on-boarding 45 statutory staff members and 8 new European Prosecutors while 35 new EDPs were appointed;

    39.  Notes that, by December 2023, staff turnover (TAs and CAs) was at 4,62 %(3), recording a total of 11 resignations throughout the year, mainly justified by leaving to another institution (four cases) and for more senior positions offered in other Union institutions (seven cases); observes that the main underlying cause for this turnover is the specificity of the Luxembourg labour market, which has a very limited talent pool and small offer of specialised skills;

    40.  Acknowledges the Commission’s efforts to satisfy the EPPO’s requests for additional posts; believes that the workload perspectives indicates that further resources are needed, especially considering the backlog and additional RRF-related cases and far-reaching VAT fraud and also considering that the administrative and central support functions are expected to grow, in line with the larger operational population; points out the risk of underestimating needs and capacities; remarks that the cost of interim staff and external service providers working intra-muros in 2023 reached EUR 4 235 242; encourages the Commission and the EPPO to find a sustainable long-term solution which allows for continuity, preserves confidentiality and retains built-in competences; appreciates that the EPPO’s additional operational needs are exhaustively integrated in the EPPO Single Programming Document 2024-2026 and in EPPO budget requests;

    41.  Notes with concern that the Luxembourg labour market is very competitive, that the financial conditions offered by the Union administration are not attractive compared to the local market (subject to diverse salary indexations throughout the year), and do not take due account of the high cost of living in Luxembourg, which has become even more difficult because of the inflation rate and the increased cost of housing; notes that the EPPO cannot offer a career path for its members of staff to become Union Officials and that its posts are therefore even less attractive than those in the four other Union institutions operating from Luxembourg; emphasises that this results either in a very limited number of applications for vacant posts or in the rejection by the selected candidates of the employment offer once received, due to the high cost of living; calls on the EPPO and the Commission to implement measures that enhance the EPPO’s attractiveness for highly skilled professionals with international experience, such as the housing allowance for lower-grade staff approved by the budgetary authority for 2025, as recommended by the High-Level Interinstitutional Group; notes the overrepresentation of certain nationalities among staff;

    42.  Notes that, at the end of 2023, geographical and gender balance was adequately pursued overall across the 238 members of staff (with 137 men and 101 women); maintains that the nationality breakdown of the EPPO population is constantly monitored by those hiring new members of staff, in seeking to ensure balance, especially, in light of the uneven distribution of applicants, and with Italy (34), Romania (33), Greece (26) and Belgium (24) being more represented across the 26 different nationalities; encourages the EPPO to adopt proactive measures to ensure a balanced representation of nationalities among its staff, reflecting the diversity of the participating Member States; expresses concerns over the gender distribution among senior management positions (four men to one woman) and calls for this issue to be addressed in the framework of the overall diversity strategy; calls for the publication of an annual report, disaggregated by gender, nationality, and employment category, including concrete measures to close gaps in recruitment and career advancement and to monitor and address imbalances;

    43.  Is aware that the decision to implement a strategy on Diversity and Inclusion was made in 2023, with the development of the strategy to be executed in the course of 2024; encourages the EPPO to progress with its adoption and to periodically launch surveys among its staff, by promoting peer-review with other components of the Union’s anti-fraud architecture, such as Eurojust, OLAF and Europol; understands that the EPPO’s policy on Diversity & Inclusion will be based on the EU Agencies Network Charter on Diversity & Inclusion, adopted in March 2023, and believes that it will in general encourage diversity to make the workplace more attractive to candidates with specific needs; reiterates its request to the EPPO to adopt its Charter on Diversity and Inclusion without delay, in light of the increase in staff during 2023;

    44.  Remarks that, including TAs, CAs, SNEs and EDPs, 341 out of 396 staff (compared to 275 out of 332 in 2022) were deployed in investigative activities by the end of 2023 (that is 86,10 % compared to 82,83 % in 2022 and 86 % in 2021) while 55 members of staff (compared to 57 in 2022) were engaged in administrative support and control functions;

    45.  Welcomes the appointment of 8 new European Prosecutors and 35 new EDP’s to the EPPO in 2023; reiterates that the EPPO can fulfil its role only if it enjoys full judicial independence, which flows from a merit-based and objective appointment procedure; encourages Member States to contribute to the full independence of the EPPO in that regard;

    46.  Maintains that the appointment of EDPs is a shared responsibility of the EPPO and the Member States; stresses that the appointment procedure must always comply with Article 17 of Regulation (EU) 2017/1939 and the principle of national procedural autonomy;

    47.  Underlines the need for greater career development opportunities for EDPs to attract and retain experienced professionals; calls for improved employment conditions, including a clear career progression path and the standardisation of social security and pension arrangements across participating Member States, ensuring that national salary discrepancies do not deter qualified candidates from applying;

    48.  Appreciates that, in the course of 2023 and beginning 2024, the number of EDPs reached the initially foreseen number of 140; welcomes the decision to align the remuneration of EDPs with that of EU Officials of equivalent level of responsibility, rather than 80 % of the salary of EU Officials, as originally provided for; takes the view that this decision increases the attractiveness of the EDP’s function, paving the way to the recruitment of more experienced national prosecutors whose national salary was higher than the remuneration offered by the EPPO, and in the meantime reduces the administrative burden on the EPPO for the implementation of Article 16(1) of the Conditions of Employment of the EDPs, which provides that, in the case of total net remuneration lower than the national salary, a top-up amount is provided to ensure that the remuneration matches the previous level;

    49.  Underlines that the selection process for European Prosecutors and EDPs is not managed autonomously by the EPPO, because European Prosecutors are nominated by the Member States and then appointed by the European Council, whereas EDPs are nominated by the Member States and appointed by the College; maintains that the application of qualified candidates to the EDP positions could increase and the process could become more selective by adopting a clear career perspective and more favourable administrative discipline on social security and health insurance coverage; reiterates that the creation of a specific status for EDPs would be consistent with the nature of their judicial function and contribute on making those posts more appealing; calls on the Commission to propose adequate solutions in the event of amending Regulation (EU) 2017/1939;

    50.  Understands that each Member State is obliged (under Article 96(6) of Regulation (EU) 2017/1939) to put in place arrangements of legislative or administrative nature to maintain the affiliation and coverage of the EDPs, including any contributions to the relevant national social security, pension and insurance schemes, but a number of Member States have not yet fully complied with this obligation; therefore calls on the Commission to propose an effective solution to the social security and health insurance coverage gap of the EDPs at the revision of Regulation (EU) 2017/1939;

    51.  Notes that five complaints about the appointment of EDPs were introduced before the Court of Justice until 2023, of which three were closed (either dismissed or withdrawn) and one was dismissed, but an appeal is currently pending before the Court of Justice, and the last action for annulment of the decision of the College rejecting the nomination as EDP of a person nominated by a Member State was admitted in July 2024 on the grounds of a lack of sufficient reasoning in the College’s decision and an analysis is on-going on the manner in which the annulment is to be implemented; observes that there are no new complaints before the General Court concerning appointments to the EPPO;

    52.  Notes that the EPPO’s learning and development strategy was launched in 2023, aiming to promote a culture of continuous learning and facilitate the continuous assessment and adaptation of the staff’s evolving learning needs, together with the pilot learning needs analysis;

    53.  Notes, as regards measures and policies in place to safeguard the physical and mental well-being of staff, that in 2023 all measures were subject to revision and consultation by all involved stakeholders (the staff committee, members of staff in general, and management), seeking to find a balance between expectations and reality of the EPPO as a growing and rapidly changing organisation; observes that there the EPPO operates a flexitime scheme and a work-from-home standard scheme, which provides for one day of telework per week as a basis and a maximum of three days per week, plus extensions accepted in light of serious health or family constraints; remarks that current framework also includes 10 days’ work from outside the place of employment in a given year, to be used without link to other days of leave; believes that the EPPO’s current working conditions allow staff to take advantage of digital solutions by integrating a good level of autonomy in the management of working patterns, facilitating the conciliation of private and work life and promoting team morale and spirit; welcomes the on-going development of a policy on well-being which shall contain a section on well-being for staff benefiting from telework;

    54.  Highlights that, as suggested by Parliament, in the second semester of 2023 an open consultation on flexible working arrangements took place, and the decisions adopted in 2021 and 2022 underwent an ex post revision; notes that in consideration of the input of all stakeholders, on December 2023 the Administrative Director incorporated updates to the provisions; notes that changes included the enlargement of the notion of ‘place of telework’ (from 2 to 2,5 hours’ time/distance radius around the EPPO’s central office), and the introduction of hybrid working arrangements for interim agency staff; observes that no further change was adopted by College decisions, taking into account that the Administrative Director decisions had already enacted the conclusions of the staff consultations;

    55.  Notes that, following Parliament’s calls, a staff satisfaction (engagement) survey is planned in the first quarter of 2025; understands that the EPPO’s staff committee has also run a staff priorities survey, and encourages a more intensive dialogue to enhance the work-life conditions;

    56.  Welcomes that no case of burnout or harassment have been reported and that the number of long-term sick leave is very limited; welcomes the EPPO’s awareness of its duty to ensure promotion and preservation of health and wellbeing across staff, as well as the monitoring practices to earn such understanding which take into account untaken annual leave, the carry-over of annual leave and absences, the number of staff on long-term sick leave and the length of the absences; recalls the importance of establishing a clear and structured procedure for reporting cases of harassment by the European Chief Prosecutor and by the European Prosecutors, as well as its divulgation to all the staff;

    57.  Observes that, in early 2023, the EPPO’s central office carried out a traineeship pilot and the EPPO legal service sector hosted two trainees followed by two more in March and September 2023 for remunerated, in-person, five-month traineeships; notes that, based on the positive conclusions of the pilot, a traineeship policy was drafted and has been approved in 2024, followed by a first cycle of effective trainees the same year; welcomes the initiative to launch an experimental relationship-building with the local university and if successful, calls for its expansion to additional universities across the EU, which could offer interesting perspectives to further develop the early talent programmes for diversity; stresses that the high cost of living in Luxembourg poses a considerable obstacle for potential trainees; emphasizes that traineeships should be remunerated in compliance with the European Parliament’s resolution of 14 June 2023 with recommendations to the Commission on quality traineeships in the Union (2020/2005(INL)), which calls for all internships in the Union to be paid;

    58.  Welcomes the intense activity of the staff committee, the final adoption of its internal rules of procedure, the launch of the first staff committee open day, the launch of the first EPPO-wide staff survey, the participation of its representatives in the selection procedures, the retroactive revision of all general implementing provisions adopted by the EPPO before the establishment of the staff committee, the submission of input on internal reorganisation, working time and hybrid working, implementing rules and the improvement of working conditions;

    59.  Understands that the EPPO is progressing towards the finalisation of a business continuity plan, which is included in the Union’s administration management standards, and urges the EPPO to adopt it without further delay;

    Ethical framework and transparency

    60.  Understands that the EPPO’s ethical framework is being gradually built up; observes that the core values of that ethical framework are clearly set out in codes of conduct, which outline the standards of behaviour expected of employees at all levels; also observes that the ethical framework depends on the EPPO’s code of good administrative behaviour, its anti-fraud strategy and a training programme on ethics, which encompasses harassment, whistleblowing, the prevention of conflicts of interest and other ethical issues; regrets that members of staff of the EPPO are not required to attend that training programme, which would ensure a consistent understanding and application of the EPPO’s codes of conduct; calls on the EPPO to remedy the situation;

    61.  Notes the EPPO’s engagement in awareness-raising actions among staff about ethical framework and related matters; encourages the EPPO to make mandatory the attendance of such sessions by European Prosecutors and EDPs at their taking over of duties; believes that internal dialogue needs to be intensified;

    62.  Notes that no effective cases of conflict of interest were detected in 2023; is aware that dedicated conflict of interest declaration forms have been established and conflict of interest rules are in force for the members of College, the EDPs, the members of staff of the operational units, and other sensitive posts; welcomes the ongoing development of a structured conflict of interest policy and calls on the EPPO to finalise its adoption; calls for the implementation of a mandatory annual refreshment of an ethics and integrity training course for all EPPO personnel;

    63.  Urges the EPPO to enhance its internal integrity framework by mandating public disclosure of all financial interests and external activities of senior officials, including members of the College; calls for a periodic audit of these disclosures to identify and mitigate potential risks of undue influence;

    64.  Understands that the EPPO seeks to prevent revolving doors in particular by endorsing the strict application of the provisions of the Staff Regulations, which are set out in all contracts of the EPPO, including ad hoc exit forms that indicate the obligations that apply after termination of engagement; welcomes in this regard the adoption, in 2023, of the Guidelines for the EPPO Staff on Outside Activities and Assignments, which apply to activities that are not considered to relate to hobbies of leisure activities outside the remit of the EPPO;

    65.  Calls for the introduction of a more robust revolving door policy, including an extended cooling-off period of at least two years for senior EPPO officials before they can engage in private-sector employment related to EPPO investigations; requests that the EPPO conducts an annual review of compliance with these post-employment restrictions;

    66.  Calls the EPPO to adopt a dedicated whistleblowing and anti-retaliation procedure to integrate the implementing rules to the Staff Regulations adopted by the College (College Decision 2021/077 laying down guidelines on whistleblowing applicable within the EPPO) and to accompany Article 45.12 of the EPPO Financial Rules (establishing the actions to be undertaken in the circumstances) in order to ensure a safe and protected workplace; welcomes the initiative of intensifying internal communication on the first network of confidential counsellors and on the anti-harassment provisions and to all National European Delegated Prosecutors’ Assistants (NEDPAs) on whistleblowing mechanism for breaches against the EPPO mandate;

    Digitalisation, Cybersecurity and data protection

    67.  Deplores the situation of the EPPO in the area of its IT autonomy, which is adversely affected by the decision of the Commission’s Directorate-General for Digital Services (‘DG Digital Services’, formerly DIGIT) to discontinue the provision of digital workplace services; points out that EPPO IT autonomy requires additional human and financial resources which so far have not been granted because of the limitation imposed by the overall available budgetary resources in the concerned lines; regrets that, on grounds of the risks to its operational activities, the EPPO had to establish its own digital service capacity to accommodate the additional human resources that it was granted in light of the participation of Poland and Sweden;

    68.  Notes that the EPPO’s initial approach was to prioritise resources on the setting and working of essential digital services linked to its operational activities, such as its case-management system, while acknowledging that the EPPO’s digital services, which, at least in part, diverge from those of the Commission, would have needed, in the mid-term, a tailored approach; observes that the interruption of service by the Commission occurs in the crucial phase of the consolidation of the EPPO’s establishment;

    69.  Understands that, in 2023, the EPPO’s IT, Security and Corporate Services unit continued the implementation of two major programmes: the IT Autonomy Programme, to offer a complete catalogue of administrative IT services fully managed internally, and the EPPO’s CMS programme, to further develop the digitalisation of the organisation in its core business area; acknowledges that in 2023 the EPPO continued to prepare to gradually transition from a digital workplace provided by DG Digital Services to an EPPO-owned and operated solution; is aware that the resources needed to implement this change, although were included in the EPPO’s budget request for 2023, were not granted by the budgetary authority; notes that following DG Digital Service’s announcement, the EPPO started negotiation to seek a solution which has not yet been achieved;

    70.  Appreciates that Commission has temporarily extended the provision of IT services until June 2025 but maintains that the outsourcing of those services is a suboptimal solution in the current situation; understands that not only security and confidentiality-related arguments, but also purely financial aspects, suggest to reconsider the decision, because the outsourcing would appear much more costly than the in-house solution, and the adoption of the latter, after DG Digital Services cease providing their services, would be managed by the EPPO; stresses that, to implement the preferable in-house solution, the complex administrative aspects, the EPPO lack of experience and the de-centralised configuration of the EPPO with EDPs and NEDPAs in several locations across the Union, will require a more relevant budget and a lengthy transition period;

    71.  Reiterates its call on DG Digital Services to not interrupt its support to the EPPO until such a time as the EPPO has its own reliable IT system; deems it to be essential to avoid loss of data and to keep the EPPO fully operational in the transition between IT services providers; maintains that clear communication and operational coordination on the transition is to be ensured involving the highest decision-making levels of the Commission and the EPPO; asks the Commission and the EPPO to agree upon a gradual passage of competences for a smooth and continuous transition in the period after the extension, which could be extended beyond June 2025;

    72.  Observes that EPPO’s requests for permanent additional posts to fill the gap stemming from the discontinuation of DG Digital Services were refused, in January 2023, when EPPO requested 45 establishment plan, and at the end of February 2024, when a request for an amending budget 2024 for EUR 2,98 million and 37 established plan posts was also rejected; notes that the solution of recruiting intra-muros contractors could be a part of an interim solution to address DG Digital Service’s discontinuation, but while that approach would offer immediate operational continuity, it should not be conceived as a definitive solution for the EPPO, taking into account the extremely sensitive nature of its activities and the need to ensure continuity and reliability of its digital services, as well as the highest level of security of its IT infrastructure, systems and equipment; shares the view that the rejection of the EPPO’s budgetary requests is indicative of differences in the assessment of the problem, which has an adverse impact on the EPPO’s operational activities and represents a potential reputational risk for the Union in the case it results in weakening the EPPO’s operational capacity;

    73.  Understands that each EDP has to use any national and the EPPO’s CMS, which are different data bases governed by different access rights; believes that this situation increases the daily complexity in the data management; is also aware that to make it possible the processing and exchange of information between the central services of the EDPs and the EPPO, all the casefiles need to be digitalised by the EDPs using national digital tools and in compliance with national law; appreciates, in this regard, the formal creation of the NEDPA status in the official organisation chart which allows granting access to NEDPAs (staff of the national office) directly to the EPPO’s CMS, like that unburdening the EDPs of administrative tasks and creating the basis for more accuracy and consistency of case data between the two case-management systems; takes the view that the way towards integration between the EPPO’s CMS and national case-management systems would be facilitated by appropriate revision of regulation and that these steps would increase the effectiveness of EPPO investigations; notes, however, that such integration could be primarily a matter of compatible technological solutions used in the different Member States and linked to the actual level of digitalisation of judiciary proceedings in those Member States; observes that the burden of the inherent costs is currently shared, with the national budget covering the costs of the equipment needed for interaction with the national case-management systems, and the EPPO budget covering hardware and the setting of a digital working environment that is secured to the same standard as EPPO central office staff and which is considered part of the operational communication costs provided for by Regulation (EU) 2017/1939;

    74.  Understands that interoperability is material to achieving efficient data exchange and cooperation and that in order to adopt minimum common data exchange agreements and the implementation of judicial interoperability tools, an e-CODEX EPPO Use Case Project, initiated in 2023, involved several workshops with the e-CODEX Consortium to align on technical and functional requirements; regrets that, after several workshops with e-CODEX Consortium, the project was paused to allow the transition to the new e-CODEX programme manager, eu-LISA, and due to lack of EPPO resources with expertise in this area; calls on the Commission to act as a facilitator for further progressing in the project and to factor also those actions in the EPPO’s budgetary needs estimate;

    75.  Is aware of the increased threat to the EPPO’s IT structural integrity stemming from the aggressiveness of organised crime, combatted by the EPPO, and resulting in the need to step up physical and digital security; notes that in 2023 the EPPO focused on enhancing its security governance; appreciates the EPPO decision to create a dedicated unit to address cyber and physical security; observes that the EPPO prepared a framework including new processes, roles and responsibilities and policies to increase the security of the digital systems used for the handling of operational and administrative data; understands that several risk assessments were carried out to assess the security framework of the digital systems which suggested the implementation of additional technical and governance measures to enhance the EPPO’s security environment; remarks that the policy framework was improved in the circumstance, with a security strategy and global information security policy proposed in 2023 and formally approved and adopted in 2024;

    76.  Observes that the EPPO completed, in 2023, the set-up of security contact points in all participating Member States to enhance cooperation on security matters for staff and EPPO offices located in those Member States; welcomes the service level agreement is in place with CERT-EU that provides support and monitoring for specific services for incident response-related matters; underlines that the deployed system to assess risk and to report incidents is well structured and training is provided effectively; appreciates the external assessment performed for physical security whose findings translated in a roadmap for improvement by the host country;

    77.  Praises the significant progress made in 2023 towards the implementation of a backup data centre and the deployment of an associated disaster recovery scenario; appreciates, in that regard, the EPPO’s development of its own case-management ecosystem the components of which are all hosted in the EPPO data centre and managed by the EPPO’s staff, guaranteeing the EPPO control, retention and ownership of systems and data processed;

    78.  Acknowledges the EPPO’s need for up-to-date equipment and IT systems to deal with increasingly complicated crimes frequently involving digital elements and digital methodologies; stresses as well the urgency of developing a strong cybersecurity framework, given the growing risks posed by highly tech-savvy criminal networks and potential foreign interferences, through cyberattacks; supports the EPPO in its request for resources to be allocated to protecting its cybersecurity and calls for the swift implementation of a robust cybersecurity strategy to safeguard EPPO’s operations and data integrity;

    79.  Stresses that the nature of the EPPO’s activities entails the need for specific oversight and dedicated attention to the protection of personal data; takes the view that the EPPO and the EDPS should engage in continuous dialogue to ensure the usability of the data for the investigation and prosecution and, at the same time, ensure respect for the protection of personal data; understands that the requirements relating to data protection handling stems from Regulation (EU) 2017/1939 and from Regulation (EU) 2018/1725(4) and that those requirements are complemented and implemented by College decisions, adopted after consulting the EDPS; appreciates the decision to provide mandatory training for all members of staff, including dedicated data protection training essential to the access to the EPPO’s CMS;

    Buildings and security

    80.  Observes that, thanks to the lease agreement by which Luxembourg authorities provide the building currently hosting the EPPO’s headquarters (the TOB building) on a rent-free basis, the costs are limited to a service charge fee of EUR 716 724 per year; notes that, in 2023, EUR 248 103 was paid to the same Luxembourg authorities for security installations in the two additional floors (9 and 10) delivered to the EPPO in Q1 2023;

    81.  Welcomes, having regard to physical security, the allocation – with amending budget 2023 and the budget 2024 – of the resources needed to have a proportionate capacity to deliver enhanced security services (21 additional posts to enhance its security capability) and the EPPO’s efforts towards the continuous improvement and efficiency alignment of the physical security processes; maintains the proper functioning of the EPPO implies that prosecutors and staff have to be protected to be able to pursue their mission to its full extent, without threats, influence or pressure;

    Environment and sustainability

    82.  Believes that the Luxembourg authorities providing the EPPO’s headquarters should consider their sustainability and energetic performance; calls on the EPPO to engage in discussions with the Luxembourg authorities to explore specific actions for improving the environmental footprint of its premises, including the installation of renewable energy sources such as solar panels, the introduction of CO2 offsetting measures and implementation of the Eco-Management and Audit Scheme to evaluate, report, enhance organisations’ environmental performance and to save energy; calls on the Commission to facilitate dialogue between the EPPO and the local host authorities to ensure the optimal use of resources and the alignment of EPPO’s operations with the Union’s sustainability;

    83.  Notes that the EPPO’s central office is integrated in the Luxembourg network of free public transport making it easily reachable through low environmental impact means, at no cost for staff and visitors and that the central office underground car park provides a dedicated zone for bike parking; understands that exchanges are ongoing concerning the installation of charging stations for e-vehicles in the same underground car park;

    Interinstitutional cooperation

    84.  Maintains that the EPPO’s role as a major operational component of the Union’s anti-fraud architecture can be effectively pursued only with intense cooperation with and support from its partners and stakeholders; reiterates that the EPPO can fulfil its role only if it enjoys full judicial independence; encourages Member States to contribute to the full independence of the EPPO in that regard and encourages the EPPO to continue its communication and coordination efforts with the several partners whose action has been designed to be reciprocal and complementary;

    85.  Welcomes the initiatives launched by OLAF and the EPPO to intensify and streamline their operational cooperation and share knowledge amongst the involved actors; appreciates the first international conference allowing exchange of views between EPPO prosecutors and OLAF investigators, hosted by Parliament in 2024; emphasises that the revision of the regulatory frameworks of OLAF and EPPO provides the opportunity to reconsider many aspects of their working together in the light of the experiences earned in those first years of EPPO operational activity, having specific regard to the opening of complementary OLAF investigations and administrative investigations in support of the EPPO, as well as OLAF’s increased role in detecting and reporting fraud to the EPPO in support of the recovery of the damage to the Union budget; believes that the dialogue and cooperation within the antifraud architecture could be made more effective by the setting of a regular inter-institutional forum with a view to optimising the efficiency and efficacy of the available resources in action;

    86.  Welcomes the initiatives launched by OLAF and the EPPO to intensify operational dialogue and improve coordination; underlines the importance of full and effective data-sharing between the EPPO, OLAF, Eurojust, and Europol to ensure seamless cooperation in the fight against cross-border fraud; calls for the establishment of a joint working group to oversee data integration and case management efficiency among these bodies;

    87.  Encourages continued and enhanced cooperation between the EPPO and OLAF, in line with their respective regulations, and the obligation on OLAF to report, without undue delay, suspicions of criminal contact to the EPPO, in order to enable it to tackle fraud, corruption and financial crime affecting the Union’s financial interests; supports the further development of joint initiatives, information sharing and coordinated actions between the EPPO and OLAF, as such cooperation is vital in strengthening the protection of the Union’s financial interests and the Union’s fight against financial crime and to ensuring the effective and efficient use of Union resources;

    88.  Commends the close cooperation in 2023 between the EPPO and the Court of Auditors, resulting in the timely transmission of information on suspicions of criminal offences falling within the EPPO’s competences;

    89.  Expects that the working group established with the Commission, and the meetings on the implementation of the Commission-EPPO Working Arrangement, will ensure that EPPO notifications for the purpose of administrative recovery, as provided for by Article 103(2), point (c), of Regulation (EU) 2017/1939 will duly and effectively enable the Commission to maximise recovery to the Union budget, while complying with the confidentiality and proper conduct of the investigative actions; stresses that, in this specific regard, no feedback has been yet provided by either party, preventing the legislators from earning a comprehensive understanding of the underlying issues, including the specific amounts recovered annually by the Commission from Member States in cases of damage to the Union budget; highlights that the recovery of funds by national authorities remains under the Commission’s responsibility, as mentioned in the Mission Letter to the Commissioner for Budget, Anti-Fraud and Public Administration, while the EPPO does not hold a mandate to follow up on the recovery process; calls on the Member States to strengthen cooperation and inform both the Commission and the EPPO of final confiscations; urges a revision of the relevant Regulations to clarify the EPPO’s role in the recovery process; and urges the EPPO and the Commission to adopt an agreed upon form of reporting to Parliament; understands that this could require appropriate development of the EPPO’s CMS, and asks the Commission to prioritise the allocation of resources to the EPPO to meet that need;

    90.  Welcomes the strengthened cooperation with Europol; observes that the ODIN (Operational Digital Infrastructure Network) programme would enable the full exploitation of the amount of data collected by the EPPO in its investigations (more than 1000 terabytes and growing); notes that, in that framework, the EPPO has identified possible crimes outside its competences, including organised crime, drug trafficking, illicit cigarette production, investment fraud, illegal gambling and prostitution (non-PIF offences), and others which have resulted in the transmission of several files as key evidence to ongoing national investigations and that 28 new cases have been initiated by national prosecution offices to further investigate those non-PIF offences, which are outside the EPPO’s remit; understands that for this and other analyses, however, cooperation with Europol suffers from limitations stemming from national procedural criminal law and accessibility of the EPPO data owned; underlines that the EPPO’s existing competence to investigate organised crime and money laundering linked to fraud affecting the Union’s financial interests should be supported through adequate resources and efficient cooperation with Europol; considers that while cooperation with Europol needs to be even further enhanced, it cannot fully substitute the development of the EPPO’s internal analytical platform, which remains vital to a fast interpretation of the data collected during its investigations and the setting of operational strategies in cross-border cases requiring access to the EPPO’s entire CMS; recalls that, in its upcoming evaluation report, the Commission should carefully analyse to which categories of crimes the EPPO’s mandate needs to be extended, in order to take full advantage of its potential; welcomes the EPPO’s call for enhanced cooperation with Union institutions;

    91.  Is concerned about the increasing number of cases concerning the RRF; appreciates the timely information provided to the Commission and to the relevant Parliament Committees on this matter; believes that the large number of active cases involving RRF funds justifies an intensification of the exchanges held with, in particular, the Recovery and Resilience Task Force, with the aim of identifying possible oversight or control gaps or fraud patterns and to allow the Commission to keep up to date its performance monitoring mechanisms and to enforce the reduction and recovery measures recently designed; reiterates that RRF funds are Union and not national funds and are under the jurisdiction of the EPPO and encourages the Commission and other Union’s bodies and authorities to increase the detection efforts and report to the EPPO every relevant situation;

    92.  Welcomes that the EPPO signed Working Arrangement with Parliament in November 2024, establishing clear modalities of cooperation for the purpose of protecting the Union’s financial interests;

    93.  Notes that, in 2023, the EPPO continued to rely on inter-institutional contracts and bilateral agreements (SLAs) to purchase goods and services at a lower cost; observes that, at the end of 2023, the EPPO had 80 active membership in inter-institutional framework contracts and 22 service-level agreement or other bilateral agreements with other Union’s entities with the aim of maximising budgetary savings from the contractual instruments in place, in line with the principles of sound financial management;

    94.  Strongly welcomes the participation of Poland and Sweden in the EPPO; is aware that this will have an impact on the EPPO’s budgetary needs, and supports the EPPO’s request which aims to equip the EPPO with the necessary resources to take advantage of the participation of Poland and Sweden to its operational activities; notes that while Ireland and Denmark continue to exercise their opt-out from the EPPO under Protocols No 21 and 22 TFEU, Hungary is the sole remaining Member State that has not yet joined the EPPO; calls on the Hungarian government to join the EPPO without further delay; recalls the collection of 680 000 signatures in favour of joining the EPPO, underscoring a strong societal demand for enhanced legal safeguards against fraud and corruption affecting the Union’s financial interests;

    95.  Observes that, in 2023, no major improvement towards participation into the EPPO has occurred with the Irish authorities; reminds that their refusal to cooperate with the EPPO in executing several requests for mutual legal assistance sent by the EDPs had resulted in the EPPO reporting the situation to the Commission in accordance with Regulation (EU, Euratom) 2020/2092(5); appreciated the following decision of the Irish authorities to amend their domestic legislation providing the legal framework for mutual legal assistance to the EPPO and underlines that from 1 November 2023 it provides mutual legal assistance to the EPPO based on this unilateral recognition; notes that no exchanges occurred with the Irish inter-agency working group established to examine Ireland’s potential future participation in the EPPO; urges the Commission, the EPPO and the Irish authorities to engage in a constructive dialogue to find an effective way of cooperation;

    96.  Maintains that any lack of cooperation with the EPPO by any of the Member States, whether they are participating in the enhanced cooperation that established the EPPO, creates niches of immunity and privilege that make the defence of the financial interests of the Union uneven and inefficient at best; reiterates its call on the Commission and the Member States concerned to make any possible effort to integrate the current scenario with the few but still very important missing components, promoting the extension of the participation in the EPPO by the other still non-participating Member States in such a way that strengthens the effectiveness of the protection of the Union and national budgets; calls on the Commission to closely monitor Member States’ level of cooperation with the EPPO and urges the Commission to initiate infringement proceedings against any Member State that systematically obstructs EPPO-led investigations; takes the view that membership of the EPPO should be a precondition for receiving Union funds;

    97.  Condemns the recently reported systematic espionage organized by the Hungarian government against OLAF staff during an investigative mission into the potential misuse of Union funds by ELIOS, a company linked to the Hungarian Prime Minister’s son-in-law; emphasizes that OLAF and the EPPO, as cornerstone institutions of the Union’s anti-fraud architecture, are regrettably exposed to such threats not only from third countries but also within EU Member States; stresses that such actions gravely undermine the rule of law and the integrity of Union institutions; calls for the swift establishment of robust protection measures to safeguard Union’s institutional staff on mission in Member States and to prevent such unacceptable violations in the future;

    Communication

    98.  Observes that the EPPO engages in continuous efforts to enhance internal and external communication; appreciates the actions carried out via social network platforms and encourages the EPPO to maintain its proactive and transparent approach;

    99.  Believes that explanations about the EPPO’s interventions and operations and about their background, when reported in the media and posted on social networks, would contribute to reinforcing the reputation of the institutions amongst citizens and raise awareness in taxpayers about the complexity of the protection of the Union’s financial interests;

    100.  Maintains that proper and accurate communication from the EPPO would also increase the involvement of civil society and increase submission of potential investigative input; understands that the EPPO asks to have the reporting option included in every standard presentation for external audiences or at conferences and seminars, when possible and appropriate; notes that, in 2023, the EPPO’s corporate website underwent a complete redesign, with the primary focus on enhancing accessibility and user-friendliness, and that the option to report a crime is now prominently displayed at the top of every webpage together with a banner highlighting this feature in the homepage;

    101.  Observes that the level of the EPPO’s resources that are devoted to communication are limited, and that, in view of the need to establish the EPPO’s digital autonomy, management of the EPPO website will have to be brought in-house, requiring additional resources, after DG Digital Services cease providing that service; underlines that the increasing volume and the sensitivity of EPPO investigations calls for attention in exchanges with the media, journalists, citizens and academia; reiterates its call on the EPPO to clearly strike the best possible balance between transparency and public interest on the one hand and confidentiality and proper conduct of the investigation on the other, and to ensure the neutrality of its communications about its activities;

    102.  Recalls the importance of transparency in the EPPO’s interactions with external actors; calls for the establishment of a mandatory public register of all meetings between EPPO officials and representatives of third parties, including lobbyists and national government representatives, in order to prevent undue influence and reinforce public trust in the EPPO’s independence;

    Effect of Russia’s war of aggression against Ukraine

    103.  Recalls that EPPO competences extend to Union funds even when used in third countries; believes that the working arrangements with the Ukrainian competent authorities could effectively enhance the level of protection of the Union’s financial interests following the relevant commitments undertaken to support Ukraine and its population; welcomes the efforts undertaken by the Ukrainian authorities on anti-corruption measures, but recalls that the country is still subject to high rate of corruption and fraud, demanding extra precaution to be taken and further anti-corruption measure in order to successfully reach transparency goals; is aware that transmission of evidence has occurred in execution of mutual legal assistance requests and welcomes the perspective of activating a joint task force with the Ukrainian authorities to coordinate investigations; reminds the Commission and other Union institutions bodies, offices and agencies of the importance of detection and timely submission of investigative input to the EPPO.

    (1) Directive (EU) 2017/1371 of the European Parliament and of the Council of 5 July 2017 on the fight against fraud to the Union’s financial interests by means of criminal law (OJ L 198, 28.7.2017, p. 29, ELI: http://data.europa.eu/eli/dir/2017/1371/oj).
    (2) Council Regulation (EU) 2017/1939 of 12 October 2017, implementing enhanced cooperation on the establishment of the European Public Prosecutor’s Office (‘the EPPO’) (OJ L 283, 31.10.2017, p. 1, ELI: http://data.europa.eu/eli/reg/2017/1939/oj).
    (3) According to the Consolidated Annual Activity Report 2023, the turnover rate was 5,9 % for temporary and contract agents.
    (4) Regulation (EU) 2018/1725 of the European Parliament and of the Council of 23 October 2018 on the protection of natural persons with regard to the processing of personal data by the Union institutions, bodies, offices and agencies and on the free movement of such data, and repealing Regulation (EC) No 45/2001 and Decision No 1247/2002/EC (OJ L 295, 21.11.2018, p. 39, ELI: http://data.europa.eu/eli/reg/2018/1725/oj).
    (5) Regulation (EU, Euratom) 2020/2092 of the European Parliament and of the Council of 16 December 2020 on a general regime of conditionality for the protection of the Union budget (OJ L 433I, 22.12.2020, p. 1, ELI: http://data.europa.eu/eli/reg/2020/2092/oj).

    MIL OSI Europe News

  • MIL-OSI Europe: Text adopted – Banking Union – annual report 2024 – P10_TA(2025)0105 – Thursday, 8 May 2025 – Strasbourg

    Source: European Parliament

    The European Parliament,

    –  having regard to its resolution of 16 January 2024 on Banking Union – annual report 2023(1),

    –  having regard to the Commission’s follow-up to Parliament’s resolution of 16 January 2024 on Banking Union – annual report 2023,

    –  having regard to document published by the European Central Bank (ECB) on 25 March 2024, entitled ‘Feedback on the input provided by the European Parliament as part of its resolution on Banking Union 2023’,

    –  having regard to the ECB’s 2023 Annual Report on supervisory activities, published in March 2024,

    –  having regard to the 2023 Annual Report of the Single Resolution Board (SRB), published on 28 June 2024,

    –  having regard to the adoption of the Anti-Money Laundering Directive (AMLD)(2) and the Anti-Money Laundering Regulation (AMLR)(3), and to the establishment of the Anti-Money Laundering Authority (AMLA)(4),

    –  having regard to the implementation of the Basel III standards, namely to the adoption of amendments to the Capital Requirements Directive(5) and to the Capital Requirements Regulation(6),

    –  having regard to the adoption of Commission Delegated Regulation (EU) 2024/2795 of 24 July 2024 amending Regulation (EU) No 575/2013 of the European Parliament and of the Council with regard to the date of application of the own funds requirements for market risk(7),

    –  having regard to its position at first reading of 24 April 2024 on the proposal for a Regulation of the European Parliament and of the Council amending Regulation (EU) No 806/2014 as regards early intervention measures, conditions for resolution and funding of resolution action(8),

    –  having regard to its position at first reading of 24 April 2024 on the proposal for a Directive of the European Parliament and of the Council amending Directive 2014/59/EU as regards early intervention measures, conditions for resolution and financing of resolution action(9),

    –  having regard to its position at first reading of 24 April 2024 on the proposal for a Directive of the European Parliament and of the Council amending Directive 2014/49/EU as regards the scope of deposit protection, use of deposit guarantee schemes funds, cross-border cooperation, and transparency(10),

    –  having regard to the report of its Committee on Economic and Monetary Affairs of 23 April 2024 on the proposal for a regulation of the European Parliament and of the Council amending Regulation (EU) 806/2014 in order to establish a European Deposit Insurance Scheme,

    –  having regard to the Commission proposal of 14 March 2018 for a directive of the European Parliament and of the Council on credit servicers, credit purchasers and the recovery of collateral (COM(2018)0135),

    –  having regard to the Five Presidents’ Report of 22 June 2015 entitled ‘Completing Europe’s Economic and Monetary Union’,

    –  having regard to Enrico Letta’s report of 10 April 2024 entitled ‘Much more than a market – Speed, security, solidarity: empowering the Single Market to deliver a sustainable future and prosperity for all EU Citizens’,

    –  having regard to Mario Draghi’s report of 9 September 2024 entitled ‘The future of European competitiveness’,

    –  having regard to the Eurogroup statement of 11 March 2024 on the future of Capital Markets Union, and to the Eurogroup statement of 16 June 2022 on the future of the Banking Union and the Eurogroup follow-up thereto of 28 April 2023,

    –  having regard to the Basel Committee on Banking Supervision’s disclosure framework for banks’ cryptoasset exposures and to the targeted amendments to its prudential standard on banks’ exposures to cryptoassets, both published on 17 July 2024,

    –  having regard to the Basel Committee on Banking Supervision’s core principles for effective banking supervision, published on 25 April 2024,

    –  having regard to the ECB’s Financial Stability Review of May 2024,

    –  having regard to the ECB Occasional Paper No 328 of 2023 entitled ‘The Road to Paris: stress testing the transition towards a net-zero economy’,

    –  having regard to the Financial Stability Board publication of 9 November 2015 entitled ‘Principles on Loss-absorbing and Recapitalisation Capacity of G-SIBs in Resolution’,

    –  having regard to the Financial Stability Board report of 10 October 2023 entitled ‘2023 Bank Failures – Preliminary lessons learnt for resolution’,

    –  having regard to Peterson Institute for International Economics Working Paper No 24-15 of 25 June 2024 entitled ‘Europe’s banking union at ten: unfinished yet transformative’(11),

    –  having regard to the Single Supervisory Mechanism supervisory priorities for 2024-2026, published in December 2023,

    –  having regard to the SRB’s biannual reporting note to the Eurogroup of 13 May 2024,

    –  having regard to the outcome of the 2023 EU-wide transparency exercise of the European Banking Authority, published on 28 July 2023,

    –  having regard to Special Report 12/2023 of the European Court of Auditors of 12 May 2023 entitled ‘EU supervision of banks’ credit risk – The ECB stepped up its efforts but more is needed to increase assurance that credit risk is properly managed and covered’,

    –  having regard to the statements by Claudia Buch, Chair of the Supervisory Board of the ECB, at the hearings conducted by Parliament’s Committee on Economic and Monetary Affairs on 21 March 2024 and 2 September 2024,

    –  having regard to the statements by Dominique Laboureix, Chair of the SRB, at the hearings conducted by Parliament’s Committee on Economic and Monetary Affairs on 21 March 2024 and 23 September 2024,

    –  having regard to the European Banking Authority’s risk assessment reports of July 2024 and December 2024,

    –  having regard to its resolution of 14 March 2019 on gender balance in EU economic and monetary affairs nominations(12),

    –  having regard to its resolution of 25 March 2021 on strengthening the international role of the euro(13),

    –  having regard to Rule 55 of its Rules of Procedure,

    –  having regard to the report of the Committee on Economic and Monetary Affairs (A10-0044/2025),

    A.  whereas the Banking Union (BU) encompasses the Single Supervisory Mechanism, the Single Resolution Mechanism and a European deposit insurance that is still missing;

    B.  whereas the main objective of the BU is to safeguard the stability of the banking sector in Europe and prevent the need to bail out banks at risk of failure with taxpayers’ money;

    C.  whereas a completed BU would be a positive development for citizens and the EU economy, as it would improve the competitiveness and stability of the banking sector, reduce systemic risk, improve supply and consumer choice and offer increased opportunities for cross-border banking that enhances access to financing for households and businesses, thereby reducing costs for banks’ customers, while ensuring that public funds are not used to bail out the banking sector; whereas the ‘too big to fail’ risk has not yet been fully addressed;

    D.  whereas concluding the reform of the EU frameworks for bank crisis management and deposit insurance, focusing particularly on small and medium-sized banks, is fundamental in order to provide Europe’s banking sector with security, stability and resilience; whereas a complete BU with a true European deposit insurance scheme is a basic condition for ensuring that citizens trust European banks;

    E.  whereas fragmentation and the lack of cross-border consolidation of the EU banking sector is affecting its global competitiveness; whereas the profitability gap between EU and US banks has widened;

    F.  whereas a strong and diversified banking sector is key to delivering economic growth, increasing the possibility of home ownership, fostering investment and job creation, financing small and medium-sized enterprises (SMEs) and start-ups and ensuring the transition to a green and digital economy;

    G.  whereas around 80 % of external financing for EU companies comes from banks, while only 20 % comes from the capital markets; whereas only 30 % of credit for US firms comes from banks, while 70 % is funded via capital markets, including corporate bond holdings and shares;

    H.  whereas the EUR 356,1 billion in non-performing loans recorded at the 110 supervised institutions in 2024, compared with EUR 988,9 billion in non-performing loans recorded at the 102 supervised institutions in the second quarter of 2015, reflects a significant downward trajectory, leaving the total non-performing loan stock at 36 % of its 2015 level; whereas further efforts are required;

    I.  whereas in April 2024, it adopted its position on the review of the crisis management and deposit insurance framework;

    J.  whereas in April 2024, its Committee on Economic and Monetary Affairs adopted a report on the Commission’s proposal to establish a European deposit insurance scheme;

    K.  whereas financial institutions rely increasingly on the use of information and communications technology (ICT); whereas the digitalisation of finance provides key opportunities for the banking sector and has brought about significant technological advances in the EU banking sector through increased efficiency in the provision of banking services and a greater appetite for innovation; whereas it also poses challenges, including with regard to data protection, reputational risks, anti-money laundering and consumer protection concerns; whereas the EU banking sector must increase its cyber resilience to ensure that ICT systems can withstand various types of cyber security threats; whereas the ECB is currently studying the establishment of a digital euro;

    L.  whereas EU banks have withstood the impact of Russian aggression; whereas they play a pivotal role in ensuring the ongoing implementation of and compliance with the sanctions imposed by the EU against Russia in response to the invasion; whereas further coordination is needed to avoid circumvention of sanctions;

    M.  whereas climate change, environmental degradation and the transition to a low-carbon economy are factors to be taken into account when assessing the risks on banks’ balance sheets, as a source of risk potentially impacting investments across regions and sectors;

    General considerations

    1.  Acknowledges the progress made over the last 10 years through the establishment of the Single Supervisory Mechanism (SSM) and Single Resolution Mechanism (SRM); notes that the BU will not be completed without the establishment of its third pillar, the European deposit insurance scheme;

    2.  Asks the Commission to ensure that the completion of the BU and the Capital Markets Union remains a key priority; highlights that these projects offer households and SMEs access to broader funding, reduce the high reliance on bank credit to foster investments and job creation, increase financial stability, reduce the impact of economic downturns, support competitiveness, give additional investment opportunities, fund the transition to a green and digital economy and unlock the EU’s growth potential; notes that the Commission is requested to take into consideration the specificities of the different banking models, while preserving a level playing field;

    3.  Notes the need to be prepared for episodes of banking stress that could potentially lead to bank runs such as those witnessed in some jurisdictions outside the EU in March 2023, and the need to ensure the stability of deposits;

    4.   Points out that cyber resilience is a key element for the competitiveness of the EU banking sector, in particular taking into account the geopolitical situation and the need to preserve financial stability;

    5.  Notes that a more integrated BU would help to make the EU banking sector more resilient, improve access to credit and reduce costs; notes that better cross-border integration of banking business would increase the potential for private risk sharing and ensure diversification in the EU banking market; points out that a more integrated BU is not necessarily the same as a more consolidated banking market and that there are benefits for competition in a diversified banking market; stresses that a fully developed BU would allow EU banks to grow and put them in a better position to compete in the international arena;

    6.  Regrets that EU banks’ ability to finance major investments is constrained by lower profitability that is not sufficient to ensure their competitiveness; notes that the profitability gap as compared with other jurisdictions is due to both structural and regulatory factors and calls for a review to streamline the regulatory framework; notes that the specific character of the EU banking system, with its large number of smaller banks, calls for proportionate solutions that take this into account and are tailored to its characteristics, without undermining financial stability; remains mindful of the ‘too big to fail’ risk;

    7.  Calls on the Commission to assess the need to develop targeted frameworks within the BU to enhance access to finance for SMEs and start-ups, recognising their role as the backbone of the EU economy;

    8.  Regrets that EU banks’ cross-border activity is still rather limited, particularly with regard to granting loans; takes the view, therefore, that it is important to complete the BU in order to uphold the free movement of capital in a fully integrated internal market;

    9.  Calls on the EU banks still operating in Russia to exit the Russian market as soon as possible; calls on supervisory institutions to ensure that those banks push ahead with exiting the Russian market swiftly;

    10.  Invites the Commission to further explore whether the creation of a separate jurisdiction for EU banks with substantial cross-border operations(14) could help to complete the BU or whether this would increase banking sector fragmentation;

    11.  Notes that a review of the securitisation framework to strengthen European markets and the introduction of European Secured Notes as a dual-recourse funding instrument for SMEs for long-term financing could be explored, taking due account of financial stability risks;

    12.  Underlines that financial literacy is essential in modern economies, contributing to the resilience of the banking systems across Member States and encouraging cross-border financial activity;

    13.  Underlines that a high level of consumer protection will make the BU more resilient;

    14.  Takes the view that the Commission should focus on aspects that contribute to achieving the goals of digitalisation, modernisation, simplification, streamlining and increased competitiveness; maintains that legal certainty, security, predictability and stability are essential for EU banks to be able to operate under favourable conditions;

    15.  Notes that, in addition to traditional loans, diverse sources of financing can be beneficial for EU growth and EU competitiveness, and recognises the low-risk nature of asset-backed financing solutions;

    16.   Notes the ECB’s progress on the digital euro and the parliamentary dialogue being held with the ECB on the topic; understands existing reservations, such as with regard to its offline functionality, given that offline transactions reduce visibility and impair financial crime prevention; recalls that the digital euro should complement, not replace, cash; considers that the decision on whether or not to introduce a digital euro is ultimately a political decision that has to be taken by the EU’s co-legislators, given the profound potential impact of this decision on a wide range of EU domains, including privacy, consumer protection, financial stability, financial policy and other areas that go beyond the strict remit of monetary policy;

    17.  Regrets the failure of some financial institutions to ensure gender balance, especially in their management bodies; stresses that gender balance on boards and in the workforce brings both societal and economic returns; calls on financial institutions to regularly update their diversity and inclusion policies and help to foster healthy working cultures that prioritise inclusivity; calls on private and public entities to address the lack of diversity and gender balance in the management bodies of financial institutions;

    Supervision

    18.  Welcomes the adoption by the co-legislators of the new banking package implementing Basel III standards in the EU; notes the current lack of clarity concerning the implementation of the Basel III standards in some other jurisdictions and the potential risk for an international level playing field; stresses that the Commission should evaluate whether targeted changes could help to maintain the international competitiveness of EU banks without weakening their resilience; recalls that the delegated act on the date of application of the own funds requirements for market risk postponed the date of application of the new market risk framework by one year to 1 January 2026; calls on the Commission to assess whether the equivalence decisions taken with the jurisdictions not implementing the Basel III standards need to be reviewed in order to preserve the financial stability of the EU financial sector;

    19.  Acknowledges the growing phenomenon of bank branch closures, which contributes to the risk of ‘bank desertification’ in certain regions, with a particularly negative impact on vulnerable citizens without digital access; emphasises the critical role smaller banks play in ensuring access to essential banking services, especially in rural and remote areas, thereby supporting households, SMEs and local economies; notes that the high supervisory costs and regulatory burdens can pose significant challenges for smaller banks; underscores the need to apply the principle of proportionality in banking supervision, ensuring that the intensity of regulation is tailored to the size, risk profile and business model of institutions, while taking into account the essential territorial role of smaller banks and their specific characteristics;

    20.  Recalls that the Banking Package contains a high number of mandates to the European Banking Authority; calls on the European Banking Authority to respect these mandates;

    21.  Notes that even within the existing regulatory framework the banking sector has shown its resilience during the market events of recent years, and that the average Common Equity Tier 1 ratio has remained at high levels, at 15,81 %;

    22.  Notes that the non-performing loans ratio has remained stable at 2,30 % and the liquidity coverage ratio at 159,39 %;

    23.  Notes the varying levels of exposure to non-performing loans and recalls that there are Member States which have exposure levels in the order of 1 % or even lower, while other Member States have exposure levels exceeding 4 %; considers that efforts to reduce European banks’ exposure to this type of loan should continue as good risk management practice;

    24.  Highlights the fact that adverse macroeconomic conditions, geopolitical headwinds and the rapid development of deferred payment services may lead to a deterioration in asset quality and affect the level of non-performing loans in the future; highlights, therefore, the importance of prudent risk management and appropriate provisioning;

    25.  Notes that the current levels of banking sector profitability may provide an opportunity for an increase in macroprudential buffers and help to preserve banking sector resilience; invites the Commission to further explore this option and carefully evaluate how to revise the macroprudential framework, taking into consideration the potential impact on capital requirements and bearing in mind a level playing field with other jurisdictions;

    26.   Notes that the banking sector plays a role in supporting the transition to a digitalised and carbon neutral economy, in channelling funds to renewable energy sources and in supporting the achievement of the objectives of the EU Green Deal and the EU Climate Law;

    27.  Notes that the ECB takes account of climate- and nature-related financial risks in its supervisory practices and monitors growing physical and transition risks closely;

    28.  Welcomes the idea of increasing venture capital and unlocking capital to finance fast-growing companies in the EU; notes Commission President Ursula von der Leyen’s commitment to put forward risk-absorbing measures to make it easier for commercial banks, investors and venture capital to finance fast-growing companies(15); notes that this must be done in a way that does not pose a systemic risk or moral hazard;

    29.  Welcomes the creation of the new Authority for Anti-Money Laundering and Countering the Financing of Terrorism, which will allow more effective ways to combat money laundering and terrorist financing via direct supervision of certain financial entities and better cooperation, a better flow of information between national authorities and better coordination among sanctions enforcement authorities in Members States to help close gaps in the implementation of targeted sanctions;

    30.  Stresses the need to enhance the resilience of non-bank financial intermediaries, including by designing specific regulatory and supervisory tools; points out that such measures must guarantee the security of the financial system and be in the best interests of the customer; welcomes the Commission consultation on macroprudential policies for non-bank financial intermediaries; supports the Eurosystem’s recommendation to introduce system-wide stress tests to identify and quantify risks to the resilience of core markets; invites the Commission to investigate whether there are any gaps in the supervisory toolkit, including in relation to potential liquidity crunches and implications for systemic risk;

    31.  Notes that crypto-assets create new challenges and opportunities for the financial system but also pose risks to it, and that these require attention from the national supervisors, the SSM and the European Systemic Risk Board;

    Resolution

    32.  Recalls that the position adopted by Parliament in April 2024 on the crisis management and deposit insurance framework ensures a more consistent approach across all Member States to the application of resolution tools and deposit protection to enhance financial stability, taxpayer protection and depositor confidence; notes that small banks have some specificities that may warrant a proportionate approach; stresses that European and national competent authorities should have at their disposal appropriate and sufficient tools to respond effectively to bank failures and safeguard financial stability, and that banks need to operate in an effective regulatory environment that fosters their development;

    33.  Highlights the importance of preserving shareholders’ and creditors’ primary responsibility for bearing losses in the event of a bank’s failure; stresses that resorting to using taxpayers’ money must be avoided, which is still a key lesson learned from the global financial crisis; stresses that the bail-in of shareholders and creditors must remain the main source for resolution financing before any recourse is made to industry-funded sources;

    34.  Recalls that a sufficient minimum requirement for own funds and eligible liabilities (MREL) is crucial for a credible resolution framework and for ensuring that resolution authorities have sufficient flexibility to effectively apply the resolution strategies needed in a specific crisis situation; underlines that this minimum requirement should be sufficient to effectively implement any of the resolution strategies included in a bank’s resolution plan; recalls that the resolution framework should avoid undue increases in MREL calibration and disproportionate contributions to the Single Resolution Fund;

    35.  Stresses that if a bank’s eligible liabilities are issued to non-EU investors, the write-down or conversion of these liabilities should be enforceable with full certainty to safeguard the effective application of resolution tools;

    36.  Notes that any reliance on taxpayer money for the resolution of banks, including for liquidity support, should be avoided, in keeping with the principles of fiscal and social responsibility and market discipline;

    37.  Recalls that banks need to continue to meet their obligations and perform their key functions after the implementation of a resolution decision;

    38.  Recalls the importance of clarifying the role of the ECB as liquidity provider in resolution, paying due attention to appropriate guarantees and the ECB’s mandate;

    39.  Underlines the SRB’s announcement that it will enhance its capabilities for launching enforcement action to remove substantive impediments to resolvability; calls for the publication, at the end of each resolution planning cycle, of an anonymised list of identified impediments to resolvability and the actions adopted to address them;

    40.  Welcomes the ‘SRM Vision 2028’ strategic review initiated by the SRB to set its long-term goals, address new challenges and further strengthen collaboration with the national resolution authorities and other stakeholders; notes, in particular, the SRB’s intention to identify areas where sustainability can be embedded further in its daily operations and core business; highlights the need to ensure efficiency and cost-effectiveness in the implementation of the new strategy;

    41.  Welcomes the SRB plan to streamline the annual resolution planning cycle to ensure that it is increasingly efficient and has a greater focus on testing banks’ resolvability and the operationalisation of resolution strategies;

    42.  Welcomes the fact that the Single Resolution Fund has now been built up; calls for the full ratification of the Amending Agreement to the ESM Treaty by all Member States, including the establishment of a common backstop to the Single Resolution Fund;

    43.  Highlights the need for additional efforts to ensure full resolvability for all banks falling under the scope of resolution; recalls that achieving resolvability cannot be considered a ‘moving target’ and therefore calls for more standardisation and harmonisation of the resolvability assessment; recalls, nonetheless, the important role played by national resolution authorities in the assessment of resolvability;

    Deposit insurance

    44.  Underlines the fact that the Commission’s proposal to establish a European deposit insurance scheme was published back in 2015 and that the landscape has changed significantly since then;

    45.  Recalls that the position of its Committee on Economic and Monetary Affairs on a European deposit insurance scheme was adopted in April 2024; notes that that position deviates from the Commission’s 2015 proposal and adopts a new approach; is waiting for, and encourages the Council to move forward with, the negotiations on a European deposit insurance scheme;

    46.  Notes that national deposit guarantee schemes were introduced successfully and have proved their functionality in a number of cases; underlines the need to take specific national characteristics into account and to preserve the well-functioning systems for smaller banks that are already in place in some Member States, such as institutional protection schemes, in a way that ensures a level playing field across the BU;

    o
    o   o

    47.  Instructs its President to forward this resolution to the Council, the Commission, the European Central Bank, the Single Resolution Board and the European Banking Authority.

    (1) OJ C, C/2024/5706, 17.10.2024, ELI: http://data.europa.eu/eli/C/2024/5706/oj.
    (2) Directive (EU) 2024/1640 of the European Parliament and of the Council of 31 May 2024 on the mechanisms to be put in place by Member States for the prevention of the use of the financial system for the purposes of money laundering or terrorist financing, amending Directive(EU) 2019/1937, and amending and repealing Directive (EU) 2015/849 (OJ L, 2024/1640, 19.6.2024, ELI: http://data.europa.eu/eli/dir/2024/1640/oj).
    (3) Regulation (EU) 2024/1624 of the European Parliament and of the Council of 31 May 2024 on the prevention of the use of the financial system for the purposes of money laundering or terrorist financing (OJ L, 2024/1624, 19.6.2024, ELI: http://data.europa.eu/eli/reg/2024/1624/oj).
    (4) Regulation (EU) 2024/1620 of the European Parliament and of the Council of 31 May 2024 establishing the Authority for Anti-Money Laundering and Countering the Financing of Terrorism and amending Regulations (EU) No 1093/2010, (EU) No 1094/2010 and (EU) No 1095/2010 (OJ L, 2024/1620, 19.6.2024, ELI: http://data.europa.eu/eli/reg/2024/1620/oj).
    (5) Directive (EU) 2024/1619 of the European Parliament and of the Council of 31 May 2024 amending Directive 2013/36/EU as regards supervisory powers, sanctions, third-country branches, and environmental, social and governance risks (OJ L, 2024/1619, 19.6.2024, ELI: http://data.europa.eu/eli/dir/2024/1619/oj).
    (6) Regulation (EU) 2024/1623 of the European Parliament and of the Council of 31 May 2024 amending Regulation (EU) No 575/2013 as regards requirements for credit risk, credit valuation adjustment risk, operational risk, market risk and the output floor (OJ L, 2024/1623, 19.6.2024, ELI: http://data.europa.eu/eli/reg/2024/1623/oj).
    (7) OJ L 2024/2795, 31.10.2024, ELI: http://data.europa.eu/eli/reg_del/2024/2795/oj.
    (8) Texts adopted, P9_TA(2024)0326.
    (9) Texts adopted, P9_TA(2024)0327.
    (10) Texts adopted, P9_TA(2024)0328.
    (11) Véron, N., ‘Europe’s banking union at ten: unfinished yet transformative’, Peterson Institute for International Economics Working Paper No 24-15, June 2024.
    (12) OJ C 23, 21.1.2021, p. 105.
    (13) OJ C 494, 8.12.2021, p. 118.
    (14) Draghi report, p. 61.
    (15) Von der Leyen, Ursula, Europe’s Choice: Political Guidelines for the next European Commission 2024-2029, p. 11.

    MIL OSI Europe News

  • MIL-OSI Europe: Text adopted – Ninth report on economic and social cohesion – P10_TA(2025)0098 – Thursday, 8 May 2025 – Strasbourg

    Source: European Parliament

    The European Parliament,

    –  having regard to Articles 2 and 3 of the Treaty on European Union,

    –  having regard to Articles 4, 162, 174 to 178, and 349 of the Treaty on the Functioning of the European Union (TFEU),

    –  having regard to Regulation (EU) 2021/1060 of the European Parliament and of the Council of 24 June 2021 laying down common provisions on the European Regional Development Fund, the European Social Fund Plus, the Cohesion Fund, the Just Transition Fund and the European Maritime, Fisheries and Aquaculture Fund and financial rules for those and for the Asylum, Migration and Integration Fund, the Internal Security Fund and the Instrument for Financial Support for Border Management and Visa Policy(1) (Common Provisions Regulation),

    –  having regard to Regulation (EU) 2021/1058 of the European Parliament and of the Council of 24 June 2021 on the European Regional Development Fund and on the Cohesion Fund(2),

    –  having regard to Regulation (EU) 2021/1059 of the European Parliament and of the Council of 24 June 2021 on specific provisions for the European territorial cooperation goal (Interreg) supported by the European Regional Development Fund and external financing instruments(3),

    –  having regard to Regulation (EU) 2021/1057 of the European Parliament and of the Council of 24 June 2021 establishing the European Social Fund Plus (ESF+) and repealing Regulation (EU) No 1296/2013(4),

    –  having regard to Regulation (EU) 2021/1056 of the European Parliament and of the Council of 24 June 2021 establishing the Just Transition Fund(5),

    –  having regard to Regulation (EU) 2021/2115 of the European Parliament and of the Council of 2 December 2021 establishing rules on support for strategic plans to be drawn up by Member States under the common agricultural policy (CAP Strategic Plans) and financed by the European Agricultural Guarantee Fund (EAGF) and by the European Agricultural Fund for Rural Development (EAFRD) and repealing Regulations (EU) No 1305/2013 and (EU) No 1307/2013(6),

    –  having regard to Regulation (EU) 2020/460 of the European Parliament and of the Council of 30 March 2020 amending Regulations (EU) No 1301/2013, (EU) No 1303/2013 and (EU) No 508/2014 as regards specific measures to mobilise investments in the healthcare systems of Member States and in other sectors of their economies in response to the COVID-19 outbreak (Coronavirus Response Investment Initiative)(7),

    –  having regard to Regulation (EU) 2020/558 of the European Parliament and of the Council of 23 April 2020 amending Regulations (EU) No 1301/2013 and (EU) No 1303/2013 as regards specific measures to provide exceptional flexibility for the use of the European Structural and Investments Funds in response to the COVID-19 outbreak(8),

    –  having regard to Regulation (EU) 2020/461 of the European Parliament and of the Council of 30 March 2020 amending Council Regulation (EC) No 2012/2002 in order to provide financial assistance to Member States and to countries negotiating their accession to the Union that are seriously affected by a major public health emergency(9),

    –  having regard to Regulation (EU) 2020/2221 of the European Parliament and of the Council of 23 December 2020 amending Regulation (EU) No 1303/2013 as regards additional resources and implementing arrangements to provide assistance for fostering crisis repair in the context of the COVID-19 pandemic and its social consequences and for preparing a green, digital and resilient recovery of the economy (REACT-EU)(10),

    –  having regard to Regulation (EU) 2022/562 of the European Parliament and of the Council of 6 April 2022 amending Regulations (EU) No 1303/2013 and (EU) No 223/2014 as regards Cohesion’s Action for Refugees in Europe (CARE)(11),

    –  having regard to Regulation (EU) 2022/2039 of the European Parliament and of the Council of 19 October 2022 amending Regulations (EU) No 1303/2013 and (EU) 2021/1060 as regards additional flexibility to address the consequences of the military aggression of the Russian Federation FAST (Flexible Assistance for Territories) – CARE(12),

    –  having regard to the URBACT programme for sustainable urban cooperation, established in 2002,

    –  having regard to the Urban Agenda for the EU of 30 May 2016,

    –  having regard to the Territorial Agenda 2030 of 1 December 2020,

    –  having regard to the 9th Cohesion Report, published by the Commission on 27 March 2024(13), and the Commission communication of 27 March 2024 on the 9th Cohesion Report (COM(2024)0149),

    –  having regard to the study entitled ‘The future of EU cohesion: Scenarios and their impacts on regional inequalities’, published by the European Parliamentary Research Service in December 2024,

    –  having regard to the Commission report of February 2024 entitled ‘Forging a sustainable future together – Cohesion for a competitive and inclusive Europe’(14),

    –  having regard to the opinion of the European Economic and Social Committee of 31 May 2024 on the 9th Cohesion Report(15),

    –  having regard to the opinion of the Committee of the Regions of 21 November 2024 entitled ‘A renewed Cohesion Policy post 2027 that leaves no one behind – CoR responses to the 9th Cohesion Report and the Report of the Group of High-Level Specialists on the Future of Cohesion Policy’,

    –  having regard to the report entitled ‘The future of European competitiveness – A competitiveness strategy for Europe’, published by the Commission on 9 September 2024,

    –  having regard to the agreement adopted at the 21st Conference of the Parties to the UN Framework Convention on Climate Change (COP21) in Paris on 12 December 2015 (the Paris Agreement),

    –  having regard to the study entitled ‘Streamlining EU Cohesion Funds: addressing administrative burdens and redundancy’, published by its Directorate-General for Internal Policies of the Union in November 2024(16),

    –  having regard to a Regulation of the European Parliament and of the Council of 7 May 2025 on the Border Regions’ Instrument for Development and Growth in the EU (BRIDGEforEU)(17),

    –  having regard to the Commission communication of 3 May 2022 entitled ‘Putting people first, securing sustainable and inclusive growth, unlocking the potential of the EU’s outermost regions’ (COM(2022)0198),

    –  having regard to the opinion in the form of a letter from the Committee on Agriculture and Rural Development(18),

    –  having regard to its resolution of 25 March 2021 on cohesion policy and regional environment strategies in the fight against climate change(19),

    –  having regard to its resolution of 20 May 2021 on reversing demographic trends in EU regions using cohesion policy instruments(20),

    –  having regard to its resolution of 14 September 2021 entitled ‘Towards a stronger partnership with the EU outermost regions(21),

    –  having regard to its resolution of 15 September 2022 on economic, social and territorial cohesion in the EU: the 8th Cohesion Report(22),

    –  having regard to its resolution of 21 November 2023 on possibilities to increase the reliability of audits and controls by national authorities in shared management(23),

    –  having regard to its resolution of 23 November 2023 on harnessing talent in Europe’s regions(24),

    –  having regard to its resolution of 14 March 2024 entitled ‘Cohesion policy 2014-2020 – implementation and outcomes in the Member States(25),

    –  having regard to Rule 55 of its Rules of Procedure,

    –  having regard to the report of the Committee on Regional Development (A10-0066/2025),

    A.  whereas cohesion policy is at the heart of EU policies and is the EU’s main tool for investments in sustainable economic, social and territorial development, and contributing to the Green Deal objectives, across the EU under its multiannual financial frameworks for the periods of 2014-2020 and 2021-2027; whereas cohesion policy, as mandated by the Treaties, is fundamental for a well-functioning and thriving internal market by promoting the development of all regions in the EU, and especially the less developed ones;

    B.  whereas cohesion policy has fostered economic, social and territorial convergence in the EU, notably by increasing the gross domestic products, for example, of central and eastern EU Member States, which went from 43 % of the EU average in 1995 to around 80 % in 2023; whereas the 9th Cohesion Report highlights that, by the end of 2022, cohesion policy supported over 4,4 million businesses, creating more than 370 000 jobs in these companies; whereas it also underlines that cohesion policy generates a significant return on investment, and that each euro invested in the 2014–2020 and 2021–2027 programmes will have generated 1,3 euros of additional GDP in the Union by 2030; whereas cohesion policy constituted, on average, around 13 % of total public investment in the EU(26);

    C.  whereas the Commission report entitled ‘The long-term vision for the EU’s rural areas: key achievements and ways forward’, presented alongside the ninth Cohesion Report, underlines that EUR 24,6 billion, or 8 % of the rural development pillar of the common agricultural policy, is directed towards investments in rural areas beyond farming investments, setting the scene for a debate on the future of rural areas;

    D.  whereas between 2021 and 2027, cohesion policy will have invested over EUR 140 billion in the green and digital transitions(27), to help improve networks and infrastructure, support nature conservation, improve green and digital skills and foster job creation and services for the public;

    E.  whereas despite the widely acknowledged and proven positive impact of cohesion policy on social, economic and territorial convergence, significant challenges remain, marked notably by development disparities at sub-national level, within regions and in regions caught in a development trap, and by the impact of climate change, in terms of demography, the digital and green transitions, and connectivity, but also in terms of sustainable economic development, in particular in least developed regions and rural and remote areas;

    F.  whereas cohesion policy and sectoral programmes of the EU have repeatedly and efficiently helped regions to respond effectively to emergencies and asymmetric shocks such as the COVID-19 crisis, Brexit, the energy crisis and the refugee crisis caused by Russia’s invasion of Ukraine, as well as natural disasters, even though it is a long-term, structural policy and not a crisis management instrument or the ‘go-to’ emergency response funding mechanism; whereas such crises have delayed the implementation of the European Structural and Investment Funds and whereas a considerable number of projects financed with Recovery and Resilience Facility (RRF) funds have been taken for the most part from projects that had been slated for investment under cohesion policy;

    G.  whereas despite measures already taken for the 2014-2020 and 2021-2027 periods, the regulatory framework governing the use and administration of cohesion policy instruments and funds should be further simplified and interoperable digital tools better used and developed, including the establishment of one-stop digitalised service centres, with the objective of streamlining procedures, enhancing stakeholder trust, reducing the administrative burden, increasing flexibility in fund management and speeding up payments, not only for the relevant authorities but also for the final beneficiaries; whereas it is necessary to increase the scope for using funds more flexibly, including the possibility of financing the development of dual-use products; whereas it is of utmost importance to formulate any future cohesion policy with a strategic impetus throughout the funding period, which could, however, be reassessed at midterm;

    H.  whereas the low absorption rate of the 2021-2027 cohesion policy funds, currently at just 6 %, is not because of a lack of need from Member States or regions, but rather stems from delays in the approval of operational programmes, the transition period between financial frameworks, the prioritisation of NextGenerationEU by national managing authorities, limited administrative capacity and complex bureaucratic procedures; whereas Member States and regions may not rush to absorb all available funds as they anticipate a possible extension under the N+2 or N+3 rules;

    I.  whereas radical modifications to the cohesion regulatory framework, from one programming period to the next, contribute to generating insecurity among the authorities responsible and beneficiaries, gold-plating legislation, increasing error rates (and the accompanying negative reputational and financial consequences), delays in implementation and, ultimately, disaffection among beneficiaries and the general population;

    J.  whereas there is sometimes competition between cohesion funds, emergency funds and sectoral policies;

    K.  whereas demographic changes vary significantly across EU regions, with the populations of some Member States facing a projected decline in the coming years and others projected to grow; whereas demographic changes also take place between regions, including movement away from outermost regions, but are generally observed as movement from rural to urban areas within Member States, wherein women are leaving rural areas in greater numbers than men, but also to metropolitan areas, where villages around big cities encounter difficulties in investing in basic infrastructure; whereas the provision of essential services such as healthcare, education and transportation must be reinforced in all regions, with a particular focus on rural and remote areas; whereas a stronger focus is needed on areas suffering from depopulation and inadequate services, requiring targeted measures to encourage young people to remain through entrepreneurship projects, high-quality agriculture and sustainable tourism;

    L.  whereas taking account of the ageing population is crucial in order to ensure justice among the generations and thereby to strengthen participation, especially among young people;

    M.  whereas urban areas are burdened by new challenges resulting from the population influx to cities, as well as rising housing and energy prices, requiring the necessary housing development, new environmental protection and energy-saving measures, such as accelerated deep renovation to combat energy poverty and promote energy efficiency; whereas the EU cohesion policy should help to contribute to an affordable and accessible housing market for all people in the EU, especially for low- and middle-income households, urban residents, families with children, women and young people;

    N.  whereas effective implementation of the Urban Agenda for the EU can enhance the capacity of cities to contribute to cohesion objectives, thereby improving the quality of life of citizens and guaranteeing a more efficient use of the EU’s financial resources;

    O.  whereas particular attention needs to be paid to rural areas, as well as areas affected by industrial transition and EU regions that suffer from severe and permanent natural or demographic handicaps, brain drain, climate-related risks and water scarcity, such as the outermost regions, and in particular islands located at their peripheries or at the periphery of the EU, sparsely populated regions, islands, mountainous areas and cross-border regions, as well as coastal and maritime regions;

    P.  whereas Russia’s war of aggression against Ukraine has created a new geopolitical reality that has had a strong impact on the employment, economic development and opportunities, and general well-being of the population living in regions bordering Ukraine, Belarus and Russia, as well as candidate countries such as Ukraine and Moldova, which therefore require special attention and support, including by accordingly adapting cohesion policy; whereas this war has led to an unprecedented number of people seeking shelter in the EU, placing an additional burden on local communities and services; whereas the collective security of the EU is strongly dependent on the vitality and well-being of regions situated at the EU’s external borders;

    Q.  whereas the unique situation of Northern Ireland requires a bespoke approach building on the benefits of PEACE programmes examining how wider cohesion policy can benefit the process of reconciliation;

    R.  whereas 79 % of citizens who are aware of EU-funded projects under cohesion policy believe that EU-funded projects have a positive impact on the regions(28), which contributes to a pro-EU attitude;

    S.  whereas overall awareness of EU-funded projects under cohesion policy has decreased by 2 percentage points since 2021(29), meaning that greater decentralisation should be pursued to bring cohesion policy even closer to the citizen;

    1.  Insists that the regional and local focus, place-based approach and strategic planning of cohesion policy, as well as its decentralised programming and implementation model based on the partnership principle with strengthened implementation of the European code of conduct, the involvement of economic and civil society actors, and multi-level governance, are key and positive elements of the policy, and determine its effectiveness; is firmly convinced that this model of cohesion policy should be continued in all regions and deepened where possible as the EU’s main long-term investment instrument for reducing disparities, ensuring economic, social and territorial cohesion, and stimulating regional and local sustainable growth in line with EU strategies, protecting the environment, and as a key contributor to EU competitiveness and just transition, as well as helping to cope with new challenges ahead;

    2.  Calls for a clear demarcation between cohesion policy and other instruments, in order to avoid overlaps and competition between EU instruments, ensure complementarity of the various interventions and increase visibility and readability of EU support; in this context, notes that the RRF funds are committed to economic development and growth, without specifically focusing on economic, social and territorial cohesion between regions; is concerned about the Commission’s plans to apply a performance-based approach to the European Structural and Investment Funds (ESIF); acknowledges that performance-based mechanisms can be instrumental in making the policy more efficient and results-orientated, but cautions against a one-size-fits-all imposition of the model and expresses serious doubt about ideas to link the disbursement of ESIF to the fulfilment of centrally defined reform goals, even more so if the reform goals do not fall within the scope of competence of the regional level;

    3.  Is opposed to any form of top-down centralisation reform of EU funding programmes, including those under shared management, such as the cohesion policy and the common agricultural policy, and advocates for greater decentralisation of decision-making to the local and regional levels; calls for enhanced involvement of local and regional authorities and economic and civil society actors at every stage of EU shared management programmes, from preparation and programming to implementation, delivery and evaluation, keeping in mind that the economic and social development of, and territorial cohesion between, regions can only be accomplished on the basis of good cooperation between all actors;

    4.  Emphasises that the European Agricultural Fund for Rural Development (EAFRD) plays a key role, alongside cohesion policy funds, in supporting rural areas; stresses that the EAFRD’s design must align with the rules of cohesion policy funds to boost synergies and facilitate multi-funded rural development projects;

    5.  Is convinced that cohesion policy can only continue to play its role if it has solid funding; underlines that this implies that future cohesion policy must be provided with robust funding for the post-2027 financial period; stresses that it is necessary to provide funding that is ambitious enough and easily accessible to allow cohesion policy to continue to fulfil its role as the EU’s main investment policy, while retaining the flexibility to meet potential new challenges, including the possibility of financing the development of dual-use products, and to enable local authorities, stakeholders and beneficiaries to effectively foster local development; is of the firm opinion that the capacity to offer flexible responses to unpredictable challenges should not come at the expense of the clear long-term strategic focus and objectives of cohesion policy;

    6.  Underlines the importance of the next EU multiannual financial framework (MFF) and the mid-term review of cohesion policy programmes 2021-2027 in shaping the future of cohesion policy; reiterates the need for a more ambitious post-2027 cohesion policy in the next MFF 2028-2034; calls, therefore, for the upcoming MFF to ensure that cohesion policy continues to receive at least the same level of funding as in the current period in real terms; furthermore calls for cohesion policy to remain a separate heading in the new MFF; stresses that cohesion policy should be protected from statistical effects that may alter the eligibility of regions by changing the average EU GDP; reiterates the need for new EU own resources;

    7.  Proposes, therefore, that next MFF be more responsive to unforeseen needs, including with sufficient margins and flexibilities from the outset; emphasises in this regard, however, that cohesion policy is not a crisis instrument and that it should not deviate from its main objectives, namely from its long-term investment nature; calls for the European Union Solidarity Fund to be strengthened, including in its pre-financing, making it less bureaucratic and more easily accessible, in order to develop an appropriate instrument capable of responding adequately to the economic, social and territorial consequences of future natural disasters or health emergencies; emphasises the need for Parliament to have adequate control over any emergency funds and instruments;

    8.  Recognises the need to also use nomenclature of territorial units for statistics (NUTS) 3 classification for specific cases, in a manner that recognises that inequalities in development exist within all NUTS 2 regions; is of the opinion that regional GDP per capita must remain the main criterion for determining Member States’ allocations under cohesion policy; welcomes the fact that, following Parliament’s persistent calls, the Commission has begun considering additional criteria(30) such as greenhouse gas emissions, population density, education levels and unemployment rates, in order to provide a better socio-economic overview of the regions;

    9.  Stresses that the rule of law conditionality is an overarching conditionality, recognising and enforcing respect for the rule of law, also as an enabling condition for cohesion policy funding, to ensure that Union resources are used in a transparent, fair and responsible manner with sound financial management; considers it necessary to reinforce respect for the rule of law and fundamental rights, and to ensure that all actions are consistent with supporting democratic principles, gender equality and human rights, including workers’ rights, the rights of disabled people and children’s rights, in the implementation of cohesion policy; highlights the important role of the European Anti-Fraud Office and the European Public Prosecutor’s Office in protecting the financial interests of the Union;

    10.  Calls for further efforts to simplify, make more flexible, strengthen synergies and streamline the rules and administrative procedures governing cohesion policy funds at EU, national and regional level, taking full advantage of the technologies available to increase accessibility and efficiency, building on the existing and well-established shared management framework, in order to strengthen confidence among users, thus encouraging the participation of a broader range of economic and civil society actors in projects supported and maximising the funds’ impact; calls for further initiatives enabling better absorption of cohesion funds, including increased co-financing levels, higher pre-financing and faster investment reimbursements; calls for local administration, in particular representing smaller communities, to be technically trained for better administrative management of the funds; stresses, therefore, the importance of strengthening the single audit principle, further expanding simplified cost options and reducing duplicating controls and audits that overlap with national and regional oversight for the same project and beneficiary, with a view to eliminating the possibility of repeating errors in subsequent years of implementation;

    11.  Calls on the Commission and the Member States to give regions greater flexibility already at the programming stage, in order to cater for their particular needs and specificities, emphasising the need to involve the economic and civil society actors; underlines that thematic concentration was a key element in aligning cohesion policy with Europe 2020 objectives; asks the Commission, therefore, to present all findings related to the implementation of thematic concentration and to draw lessons for future legislative proposals;

    12.  Acknowledges that the green, digital and demographic transitions present significant challenges but, at the same time, opportunities to achieve the objective of economic, social and territorial cohesion; recognises that, statistically, high-income areas can hide the economic problems within a region; is aware of the risk of a widening of regional disparities, a deepening of social inequalities and a rising ‘geography of discontent’ related to the transition process; underlines the need to reach the EU’s sustainability and climate objectives, and to maintain shared economic growth by strengthening the Union’s competitiveness; calls, therefore, for a European strategy that guarantees harmonious growth within the Union, meeting the respective regions’ specific needs; reaffirms its commitment to pursuing the green and digital transitions, as this will create opportunities to improve the EU’s competitiveness; underlines the need to invest in infrastructure projects that enhance connectivity, particularly in sustainable, intelligent transport, and in energy and digital networks, ensuring that all regions, including remote and less-developed ones, are fully integrated into the single market and benefit equitably from the opportunities it provides; emphasises, in this context, the need to support the development of green industries, fostering local specificities and traditions to increase the resilience of the economic environment and civil society to future challenges;

    13.  Urges that the cohesion policy remain consistent with a push towards increasing innovation and completing the EU single market, in line with the conclusions of the Draghi report on European competitiveness; underlines, in the context of regional disparities, the problem of the persisting innovation divide and advocates for a tailored, place-based approach to fostering innovation and economic convergence across regions and reducing the innovation gap; calls for a stronger role for local and regional innovation in building competitive research and innovation ecosystems and promoting territorial cohesion; points to new EU initiatives, such as regional innovation valleys and partnerships for regional innovation, that aim to connect territories with different levels of innovation performance and tackle the innovation gap; considers that this approach will reinforce regional autonomy, allowing local and regional authorities to shape EU policies and objectives in line with their specific needs, characteristics and capacities, while safeguarding the partnership principle;

    14.  Is convinced that cohesion policy needs to continue to foster the principle of just transition, addressing the specific needs of regions, while leaving no territory and no one behind; calls for continued financing of the just transition process, with the Just Transition Fund being fully integrated into the Common Provisions Regulation and endowed with reinforced financial means for the post-2027 programming period; emphasises, nonetheless, the need to assess the impact of the Just Transition Fund on the transformation of eligible regions and, while ensuring it remains part of cohesion policy, refine its approach in the new MFF on the basis of the findings and concrete measures to ensure the economic and social well-being of affected communities;

    15.  Underlines the need to improve the relationship between cohesion policy and EU economic governance, while avoiding a punitive approach; stresses that the European Semester should comply with cohesion policy objectives under Articles 174 and 175 TFEU; calls for the participation of the regions in the fulfilment of these objectives and for a stronger territorial approach; calls for a process of reflection on the concept of macroeconomic conditionality and for the possibility to be explored of replacing this concept with new forms of conditionality to better reflect the new challenges ahead;

    16.  Is concerned about the growing number of regions in a development trap, which are stagnating economically and are suffering from sharp demographic decline and limited access to essential services; calls, therefore, for an upward adjustment in co-financing for projects aimed at strengthening essential services; stresses the role of cohesion policy instruments in supporting different regions and local areas that are coping with demographic evolution affecting people’s effective right to stay, including, among others, challenges related to depopulation, ageing, gender imbalances, brain drain, skills shortages and workforce imbalances across regions; recognises the need for targeted economic incentives and structural interventions to counteract these phenomena; in this context, calls for the implementation of targeted programmes to attract, develop and retain talent, particularly in regions experiencing significant outflows of skilled workers, by fostering education, culture, entrepreneurship and innovation ecosystems that align with local and regional economic needs and opportunities;

    17.  Recognises the importance of supporting and financing specific solutions for regions with long-standing and serious economic difficulties or severe permanent natural and demographic handicaps; reiterates the need for maintaining and improving the provision of quality essential services (such as education and healthcare), transport and digital connectivity of these regions, fostering their economic diversification and job creation, and helping them respond to challenges such as rural desertification, population ageing, poverty, depopulation, loneliness and isolation, as well as the lack of opportunities for vulnerable people such as persons with disabilities; underlines the need to prioritise the development and adequate funding of strategic sectors, such as renewable energy, sustainable tourism, digital innovation and infrastructure, in a manner that is tailored to the economic potential and resources of each region, in order to create broader conditions for endogenous growth and balanced development across all regions, especially rural, remote and less-developed areas, border regions, islands and outermost regions; recalls the importance of strong rural-urban linkages and particular support for women in rural areas;

    18.  Emphasises the need for a tailored approach for the outermost regions, as defined under Article 349 TFEU, which face unique and cumulative structural challenges due to their remoteness, small market size, vulnerability to climate change and economic dependencies; underlines that these permanent constraints, including the small size of the domestic economy, great distance from the European continent, location near third countries, double insularity for most of them, and limited diversification of the productive sector, result in additional costs and reduced competitiveness, making their adaptation to the green and digital transition particularly complex and costly; underlines their great potential to further develop, inter alia through improved regional connectivity, key sectors such as blue economy, sustainable agriculture, renewable energies, space activities, research or eco-tourism; reiterates its long-standing call on the Commission to duly consider the impact of all newly proposed legislation on the outermost regions, with a view to avoiding disproportionate regulatory burdens and adverse effects on these regions’ economies;

    19.  Underlines the fact that towns, cities and metropolitan areas have challenges of their own, such as considerable pockets of poverty, housing problems, traffic congestion and poor air quality, generating challenges for social and economic cohesion created by inharmonious territorial development; emphasises the need for a specific agenda for cities and calls for deepening their links with functional urban areas, encompassing smaller cities and towns, to ensure that economic and social benefits are spread more evenly across the entire territory; highlights the need to strengthen coordination between the initiatives of the Urban Agenda for the EU and the instruments of cohesion policy, favouring an integrated approach that takes into account territorial specificities and emerging challenges; calls, furthermore, for more direct access to EU funding for regional and local authorities, as well as cities and urban authorities, by inter alia widening the use of integrated territorial investments (ITI);

    20.  Stresses the need to continue and strengthen investments in affordable housing within the cohesion policy framework, recognising its significance for both regions and cities; highlights the need to foster its changes relevant to investing in housing beyond the two current possibilities (energy efficiency and social housing); emphasises the important role that cohesion policy plays in the roll-out and coordination of these initiatives; believes, furthermore, that it is important to include housing affordability in the URBACT initiative;

    21.  Stresses the strategic importance of strong external border regions for the security and resilience of the EU; calls on the Commission to support the Member States and regions affected by Russia’s war of aggression against Ukraine, in particular the regions on the EU’s eastern border, by revising the Guidelines on regional State aid(31), through tailor-made tools and investments under the cohesion policy, as well as supporting them to make the most of the possibilities offered by the cohesion policy funds, including Interreg, in a flexible way, to help cope with the detrimental socio-economic impact of the war on their populations and territories; calls, furthermore, for support to be given to regions bordering candidate countries such as Ukraine and Moldova to strengthen connections and promote their EU integration;

    22.  Highlights the added value of territorial cooperation in general and cross-border cooperation in particular; underlines the importance of Interreg for cross-border regions, including outermost regions; emphasises its important role in contributing to their development and overcoming cross-border obstacles, including building trust across borders, developing transport links, identifying and reducing legal and administrative obstacles and increasing the provision and use of cross-border public services, among others; considers Interreg as the main EU instrument for tackling the persistent cross-border obstacles faced by emergency services, and proposes that there be a more prominent focus on these services; underlines the fact that cross-border areas, including areas at the EU’s external borders, bordering aggressor countries often face specific challenges; believes that EU border regions, facing multiple challenges, must be supported and is of the opinion that they must be provided with increased means; welcomes the new regulation on BRIDGEforEU; emphasises the importance of small-scale and cross-border projects and stresses the need for effective implementation on the ground; calls on the Commission to encourage Member States to actively support awareness-raising campaigns in bordering regions to maximise the impact of cross-border cooperation;

    23.  Recalls the need to ‘support cohesion’, rather than just rely on the ‘do no harm to cohesion’ principle, which means that no action should hamper the convergence process or contribute to regional disparities; calls for a stronger integration of these principles as cross-cutting in all EU policies, to ensure that they support the objectives of social, economic and territorial cohesion, as set out in Articles 3 and 174 TFEU; calls, furthermore, on the Commission to issue specific guidelines on how to implement and enforce these principles across EU policies, paying particular attention to the impact of EU laws on the competitiveness of less developed regions; reiterates that new legislative proposals need to take due account of local and regional realities; suggests that the Commission draw on innovative tools such as RegHUB (the network of regional hubs) to collect data on the impact of EU policies on the regions; to this end, underlines the need to strengthen the territorial impact assessment of EU legislation, with a simultaneous strengthening of the territorial aspects of other relevant policies; insists that promoting cohesion should also be seen as a way of fostering solidarity and mutual support among Member States and their regions; calls on the Commission and the Member States to continue their efforts regarding communication and visibility of the benefits of cohesion policy, demonstrating to citizens the EU’s tangible impact and serving as a key tool in addressing Euroscepticism; welcomes the launch of the multilingual version of the Kohesio platform;

    24.  Notes with concern the severe decline in recent years of adequate levels of national funding by Member States towards their poorer regions; recalls the importance of respecting the EU rule on additionality; calls on the Commission to ensure that national authorities take due account of internal cohesion in drafting and implementing structural and investment fund projects;

    25.  Insists that, in addition to adjusting to regional needs, cohesion policy must be adapted to the smallest scale, i.e. funds must be accessible to the smallest projects and project bearers; points out that their initiatives are often the most innovative and have a significant impact on rural development; reiterates that these funds should be accessible to all, regardless of their size or scope; approves of the Cohesion Alliance’s call for ‘a post-2027 Cohesion Policy that leaves no one behind’;

    26.  Stresses that delays in the MFF negotiations, together with the fact that Member States have placed a greater focus on the programming of the RRF funds, led to considerable delays in the programming period 2021-2027; stresses the importance of a timely agreement in the next framework, and therefore calls for the Common Provisions Regulation (CPR) and the budget negotiations to be finalised at least one year before the start of the new funding period so that Member States can develop their national and regional funding strategies in good time to ensure a successful transition to the next funding period and the continuation of existing ESIF projects;

    27.  Instructs its President to forward this resolution to the Council, the Commission, the European Economic and Social Committee, the European Committee of the Regions and the national and regional parliaments of the Member States.

    (1) OJ L 231, 30.6.2021, p. 159, ELI: http://data.europa.eu/eli/reg/2021/1060/oj.
    (2) OJ L 231, 30.6.2021, p. 60, ELI: http://data.europa.eu/eli/reg/2021/1058/oj.
    (3) OJ L 231, 30.6.2021, p. 94, ELI: http://data.europa.eu/eli/reg/2021/1059/oj.
    (4) OJ L 231, 30.6.2021, p. 21, ELI: http://data.europa.eu/eli/reg/2021/1057/oj.
    (5) OJ L 231, 30.6.2021, p. 1, ELI: http://data.europa.eu/eli/reg/2021/1056/oj.
    (6) OJ L 435, 6.12.2021, p. 1, ELI: http://data.europa.eu/eli/reg/2021/2115/oj.
    (7) OJ L 99, 31.3.2020, p. 5, ELI: http://data.europa.eu/eli/reg/2020/460/oj.
    (8) OJ L 130, 24.4.2020, p. 1, ELI: http://data.europa.eu/eli/reg/2020/558/oj.
    (9) OJ L 99, 31.3.2020, p. 9, ELI: http://data.europa.eu/eli/reg/2020/461/oj.
    (10) OJ L 437, 28.12.2020, p. 30, ELI: http://data.europa.eu/eli/reg/2020/2221/oj.
    (11) OJ L 109, 8.4.2022, p. 1, ELI: http://data.europa.eu/eli/reg/2022/562/oj.
    (12) OJ L 275, 25.10.2022, p. 23, ELI: http://data.europa.eu/eli/reg/2022/2039/oj.
    (13) European Commission: Directorate-General for Regional and Urban Policy, Ninth report on economic, social and territorial cohesion, 2024.
    (14) European Commission: Directorate-General for Regional and Urban Policy, Forging a sustainable future together: Cohesion for a competitive and inclusive Europe – Report of the High-Level Group on the Future of Cohesion Policy, February 2024.
    (15) OJ C, C/2024/4668, 9.8.2024, ELI: http://data.europa.eu/eli/C/2024/4668/oj.
    (16) European Parliament: Policy Department for Structural and Cohesion Policies, Directorate-General for Internal Policies, Streamlining EU Cohesion funds – addressing administrative burdens and redundancy, 2024.
    (17) Not yet published in the Official Journal.
    (18) Not yet published in the Official Journal.
    (19) OJ C 494, 8.12.2021, p. 26.
    (20) OJ C 15, 12.1.2022, p. 125.
    (21) OJ C 117, 11.3.2022, p. 18.
    (22) OJ C 125, 5.4.2023, p. 100.
    (23) OJ C, C/2024/4207, 24.7.2024, ELI: http://data.europa.eu/eli/C/2024/4207/oj.
    (24) OJ C, C/2024/4225, 24.7.2024, ELI: http://data.europa.eu/eli/C/2024/4225/oj.
    (25) OJ C, C/2024/6562, 12.11.2024, ELI: http://data.europa.eu/eli/C/2024/6562/oj.
    (26) European Commission, Ninth report on economic, social and territorial cohesion, op.cit.
    (27) European Commission: Ninth report on economic, social and territorial cohesion, op. cit.
    (28) European Commission: Directorate-General for Regional and Urban Policy and Directorate-General for Communication, Citizens’ awareness and perceptions of EU Regional Policy, Flash Eurobarometer 531, 2023.
    (29) Flash Eurobarometer 531, op. cit.
    (30) European Court of Auditors, Rapid case review – Allocation of Cohesion policy funding to Member States for 2021-2027, March 2019.
    (31) Commission communication of 29 April 2021 entitled ‘Guidelines on regional State aid’ (OJ C 153, 29.4.2021, p. 1).

    MIL OSI Europe News

  • MIL-OSI Europe: Text adopted – Old challenges and new commercial practices in the internal market – P10_TA(2025)0107 – Thursday, 8 May 2025 – Strasbourg

    Source: European Parliament

    The European Parliament,

    –  having regard to its resolution of 18 January 2023 on the 30th anniversary of the single market: celebrating achievements and looking towards future developments(1),

    –  having regard to the report by Enrico Letta of 17 April 2024 entitled ‘Much more than a Market’ (the Letta report),

    –  having regard to the report by Mario Draghi of 9 September 2024 entitled ‘The future of European competitiveness’ (the Draghi report),

    –  having regard to the Commission communication of 29 January 2025 entitled ‘the 2025 Annual Single Market and Competitiveness Report’ (COM(2025)0026),

    –  having regard to the Commission communication of 29 January 2025 entitled ‘A Competitiveness Compass for the EU’ (COM(2025)0030),

    –  having regard to the Commission communication of 11 February 2025 entitled ‘A simpler and faster Europe: Communication on implementation and simplification (COM(2025)0047),

    –  having regard to the question to the Commission on the old challenges and new commercial practices in the internal market (O-000012/2025 – B10‑0264/2025),

    –  having regard to Rules 142(5) and 136(2) of its Rules of Procedure,

    A.  whereas the European Union’s ability to compete and prosper in the global economy is vital, especially amid the current geopolitical challenges and climate and other environmental crises; whereas its current, medium and long-term competitiveness relies on a fully integrated and efficient single market that allows European businesses to innovate and prosper and prioritises the reduction of administrative burdens;

    B.  whereas the single market, comprising nearly 450 million citizens and 23 million businesses, generates a gross domestic product (GDP) of EUR 17 trillion, positioning the EU among the world’s three largest economies and contributing approximately one-sixth of global economic output;

    C.  whereas the Draghi report demonstrated that compliance costs resulting from various pieces of legislation remain very high for European companies, therefore hindering European innovation capacity;

    D.  whereas it remains crucial to improve the functioning of the single market by addressing persisting fragmentation through common, harmonised EU policies, more efficient implementation and enforcement, and the simplification of EU rules; whereas reducing administrative burdens and costs, especially for small and medium-sized enterprises (SMEs), can help foster innovation and support European businesses; whereas unlocking the full potential of the single market requires overcoming persistent barriers to the free movement of goods and services;

    E.  whereas the rapid expansion of digital platforms and e-commerce has introduced new market dynamics and whereas evolving trends in global e-commerce are exerting additional pressure on customs controls, market surveillance and consumer protection authorities;

    F.  whereas geopolitical shifts and global economic transformations are reshaping supply chains, requiring the EU to adapt its single market policies; whereas the EU has set the highest standards for product safety and consumer protection, both offline and online;

    G.  whereas attention has been drawn to a growing number of cases reported across the EU in which goods and services offer reduced quantity or quality, despite stable or rising prices;

    Old and enduring challenges

    1.  Reaffirms that the single market has been a cornerstone of European economic integration, enabling the free movement of goods, services, capital and people; stresses, however, that there are long-standing and emerging challenges that necessitate ambitious reforms without harming European competitiveness or imposing unnecessary administrative burdens on companies; calls on the Commission and the Member States to accelerate efforts towards implementing these reforms and to eliminate remaining unjustified obstacles to the free movement of goods and services, while ensuring a high level of consumer protection;

    2.  Calls on the Commission and the Member States to maintain strong consumer protection while also providing for competition rules that are innovation-friendly, future-proof and proportionate; emphasises the need to ensure legal certainty and consistency and minimise regulatory complexity and fragmentation, which could disproportionately affect SMEs, start-ups and scale-ups;

    3.  Highlights that ongoing barriers and regulations have constrained the development of the single market, as noted in the Draghi report; calls for a shift towards a regulatory approach that empowers companies to grow, innovate and lead internationally, thereby restoring the single market as a true engine of growth and competitiveness;

    4.  Calls on the Commission to ensure that future legislative initiatives are consistently guided by the strategic priorities outlined in its communications and competitiveness strategy;

    5.  Underscores that, as demonstrated by the Letta and Draghi reports, there is still untapped potential in the services sector; calls for further action in this sector to address the significant obstacles that persist, starting from setting ambitious targets in the upcoming single market strategy; notes that services account for three quarters of EU GDP, represent two thirds of employment and create 9 out of 10 new jobs in the EU economy; notes also, however, that services are still the least developed segment of the EU single market;

    6.  Welcomes the proposal for a regulation on a public interface connected to the Internal Market Information System for the declaration of posting of workers and amending Regulation (EU) No 1024/2012 (COM(2024)0531), which should lead to simplification and strengthened enforcement; notes also that digitalisation could significantly reduce administrative burdens for cross-border services and ensure better access for businesses and consumers; calls, in this regard, for a single declaration portal and the digitalisation of A1 forms for cross-border services;

    7.  Stresses the importance of the effective recognition of professional qualifications and the removal of unjustified barriers to the free movement of professionals in order to make EU professional services globally competitive in future decades; encourages the Commission to remain vigilant in pursuing infringement procedures where Member States do not comply with EU legislation on the recognition of qualifications;

    8.  Stresses that single market rules should safeguard access to public services and preserve consumer rights as well as other overriding reasons of public interest; adds that any assessment to evaluate restrictions in the single market for services should include qualitative criteria;

    9.  Notes the role that EU public procurement can play in overcoming barriers to market entry, supporting sustainable and resilient industrial ecosystems, high quality jobs and value creation in the EU;

    10.  Acknowledges that the new legislative framework (NLF) has contributed to consistency in EU product legislation and that since its adoption, the industry sector, supply chains and products have experienced important transformations in the light of the digital and green transition, but also changes in market dynamics; notes that the 2022 evaluation of the NLF identified critical challenges, such as potential foreign influence, illegal practices, inadequacies in addressing digitalisation and the circular economy, and potential updates to obligations and definitions for certain economic operators to reflect new market realities;

    11.  Stresses that addressing these issues and making the NLF future-proof is essential to ensure coherence, reduce costs and ensure free movement of goods; calls, therefore, for an update to the NLF in order to streamline product rules, promote digitalisation and simplify compliance and market surveillance procedures; considers that the NLF should promote the use of Digital Product Passports as a means of demonstrating product conformity and complying with information requirements;

    12.  Calls on the Commission and the Member States to simplify EU rules and make them easier to implement, and to significantly reduce administrative burdens, in particular for SMEs, which play a vital role in sustaining local communities and economies; stresses the importance of ensuring legal certainty and consistency for businesses, as well as predictability for long-term investments, which are essential to boost competitiveness, innovation and resilience and to deliver fast and meaningful improvements for consumers and businesses; calls, furthermore, on the Member States to prevent actions that could compromise the level playing field in the internal market;

    13.  Calls on the Commission to facilitate the activities of SMEs and small mid-caps within the single market, notably with a dedicated simplification omnibus;

    14.  Recognises that inconsistent and fragmented enforcement of EU laws across the Member States continues to distort competition and undermine the single market’s integrity; adds that primary responsibility for enforcement of EU rules lies with the Member States; invites the Commission to make full use of its enforcement powers; calls for improved monitoring and enforcement mechanisms at EU level, such as harmonised rules on minimum levels of checks, harmonised methodologies to conduct these checks and joint inspections, in order to ensure the uniform application of EU law and, where applicable, swift redress for consumers;

    15.  Stresses the importance of maintaining a competitive and dynamic economic environment by safeguarding consumers’ rights and enforcing digital competition rules to address unfair business practices that distort market conditions; calls, furthermore, on the Member States to increase the capacity of market surveillance authorities and customs authorities to ensure effective enforcement of single market rules, particularly in respect of e-commerce and imports from non-EU countries;

    16.  Recalls that territorial supply constraints in the retail and wholesale segments fragment the single market, limit consumer choice and contribute to significant price disparities across the Union, particularly affecting the prices of basic consumer goods; highlights that while competition law penalises some of these practices effectively, many fall outside its scope; calls, therefore, on the Commission to propose measures to address the issue, including stronger enforcement against anti-competitive distribution agreements, in order to safeguard fair competition, thereby ensuring the integrity of the single market;

    17.  Calls on the Commission to investigate the causes for the differentiated levels of the inflation of basic goods and consumer price increases observed in some EU Member States;

    18.  Considers that the single market is a key tool in times of crisis if the Member States can act in a coordinated way; considers that the recently adopted Internal Market Emergency and Resilience Act(2) will be crucial to ensure coordination in order to prevent shortages and ensure the smooth functioning of the single market, including the free movement of essential goods and services throughout the EU;

    19.  Calls on the Commission to empower consumers to easily exercise their passenger rights by establishing national enforcement bodies, which should be granted harmonised investigation and enforcement powers and which should be able to efficiently process individual complaints and related fines;

    20.  Highlights that e-commerce measures targeting geo-blocking, notably the Geoblocking Regulation(3), have been successful in creating a framework for a less fragmented single market and enhancing consumer choice for online shopping; notes with concern that the implementation of the regulation has been inadequate;

    21.  Notes that the European Accessibility Act(4) will become applicable across all EU Member States as of 28 June 2025; stresses the importance of its full and effective implementation by the Member States in order to ensure the harmonisation of accessibility requirements for products and services, thereby guaranteeing their accessibility to persons with disabilities across the EU internal market;

    Emerging commercial practices

    22.  Highlights that the rapid expansion of digital platforms and e-commerce has introduced new market dynamics and has created advanced opportunities and challenges and risks for users; acknowledges that the Digital Markets Act(5) (DMA) and the Digital Services Act(6) (DSA) constitute key legislative instruments ensuring fair competition, contestability and fairness in digital platforms, while also fostering consumer protection and a safer, more trustworthy and more transparent digital environment in the digital economy; calls for proper enforcement of the EU’s new technology legislation to ensure genuine, autonomous and informed consumer choice, protection and fair competition;

    23.  Considers it essential to ensure the effective implementation and enforcement of these two legislative acts and urges the Commission to conclude its ongoing investigations in the framework of the DSA and the DMA;

    24.  Stresses that the implementation of the DSA must fully respect freedom of expression; underlines that actions against illegal content must not restrict lawful speech and calls for transparent enforcement to protect an open and democratic digital space;

    25.  Calls on the Commission and the Member States to ensure that the Artificial Intelligence (AI) Act(7) maintains a risk-based, innovation-friendly approach, ensuring that compliance requirements are proportionate to the actual risks posed by AI applications while respecting the need to ensure a high level of protection of health, safety and fundamental rights;

    26.  Welcomes the Commission’s ‘digital fairness’ fitness check of consumer law and the upcoming public consultation; underlines that some issues remain unaddressed concerning the protection of consumers online, leading to an imbalance between consumers and traders within the digital economy; calls on the Commission to address these issues in the upcoming Digital Fairness Act; believes that digital addiction, online gambling, protection of minors online and persuasive technologies used by online actors, such as targeted advertising, influencer advertising and dark patterns, should fall under the Digital Fairness Act, which should close legal loopholes and be consistent with current legal instruments in order to better protect consumers online, taking into account the need to avoid unnecessary regulatory burdens;

    27.  Notes that evolving trends in global e-commerce and supply chain restructuring are placing greater pressure on customs controls, market surveillance and consumer protection authorities; highlights that the volume of unsafe and illicit products sold on e-commerce platforms, in particular from non-EU countries, has been increasing in recent years; highlights the significance of Digital Product Passports in these processes; calls, therefore, for a reinforced market surveillance framework and a revision of the Consumer Protection Cooperation Regulation(8) and calls on the Council to swiftly adopt its position in order to enable the adoption of the revised Union Customs Code and the establishment of an EU customs authority in 2026;

    28.  Calls on the Member States to allocate sufficient technical, human and financial resources to national authorities; calls on the Member States and the Commission to ensure sufficient funds and expertise to strengthen customs authorities and market surveillance across the Union and to intensify joint activities and EU testing;

    29.  Emphasises the need to strengthen consumer protection in both online and offline markets, ensuring transparency in advertising and pricing, especially concerning dynamic pricing, ensuring fair business practices and stronger safeguards against fraud to foster consumer trust in cross-border commerce and the highest level of protection;

    30.  Stresses that attention has increasingly been drawn to instances where goods and services offer less in terms of quantity or quality while prices remain the same or increase; calls on the Commission to assess the scale and underlying causes of such practices and to explore appropriate measures to enhance transparency and consumer awareness;

    31.  Underlines that environmental sustainability and fair-trade considerations are increasingly shaping commercial practices by playing an important role in consumers’ purchasing decisions and consequently driving businesses towards sustainability; adds that transparency and information for consumers on environmental aspects as well as on socially-responsible and ethical production processes allow consumers to adopt sustainable consumption patterns;

    32.  Calls on the Commission and the Member States to maintain their level of ambition in this regard and work further on EU-wide labelling schemes; recalls that the objective of the Green Claims Directive is to establish a tool to protect consumers against greenwashing by establishing requirements for substantiation and verification;

    33.  Highlights the need to further combat misleading advertising and greenwashing and to strengthen the second-hand market; notes, however, that restrictive sustainability rules may have a negative impact on European competitiveness;

    34.  Highlights that some growing trends in e-commerce raise concerns with regard to goods from non-EU countries not fulfilling EU safety and sustainability requirements, thus negatively impacting SMEs in the EU; welcomes the Commission communication on ‘A comprehensive EU toolbox for safe and sustainable e-commerce’ and asks the Commission to swiftly implement the recommendations contained therein;

    35.  Emphasises that harmonised technical standards are essential for the free movement of goods within the single market, ensuring product safety, quality and performance across the Member States; highlights that standards must reflect the interests, policy objectives and values of the Union by taking into account the views of all stakeholders; adds that the recent Court of Justice of the European Union ruling(9) acknowledges the added value of harmonised standards that form part of EU law because of their legal effects and establishes that they should be made freely accessible; underlines the need to improve the agility of the standardisation framework, particularly for emerging green and digital value chains, and to help industry to maintain competitive positions in key technology markets;

    36.  Considers that the EU must increase its efforts to set up a new mechanism with the Member States and national standardisation bodies to share information, coordinate and strengthen the European approach to international standardisation activities; calls for swift action to update the EU standardisation framework in order to speed up the standardisation process to ensure the rapid publication of harmonised standards that grant presumption of conformity and are aligned with international standards to support global trade while encouraging greater industry participation, particularly from SMEs;

    37.  Stresses the need to reinforce the external dimension of the single market to safeguard the EU’s strategic autonomy and global influence and welcomes the gradual integration of EU candidate countries to the single market with a view to their future EU membership; emphasises that the EU’s high regulatory standards can serve as a global benchmark and must be effectively enforced to ensure a level playing field for European businesses; calls on the Commission to intensify regulatory dialogues and political cooperation with other relevant non-EU countries in order to identify common challenges and try to build joint actions, especially concerning e-commerce, digital rules and consumers;

    38.  Reiterates its call for innovative, complementary and flexible interaction between the ongoing work on the implementation of the EU-Ukraine Association Agreement currently in force and the accession negotiation process, thus allowing for Ukraine’s gradual integration into the EU single market and sectoral programmes;

    Conclusions

    39.  Recognises that geopolitical tensions, climate change, challenges to EU competitiveness and economic disparities pose significant risks to the integrity of the single market; calls for a robust, coordinated and strategic policy response to strengthen the single market;

    40.  Calls for the continued evolution of the single market to address both remaining unjustified barriers and emerging commercial challenges; takes the view that eliminating regulatory fragmentation, promoting simplification, significantly reducing administrative burdens, enhancing enforcement and ensuring resilient supply chains are critical to maintaining the EU’s competitive edge and fair market conditions and enhancing the single market; underlines the importance of consulting all relevant stakeholders in these processes;

    41.  Emphasises the importance of digital transformation, the circular economy and adaptability to global economic shifts in securing the EU’s long-term economic dynamism;

    42.  Reiterates that strengthening the internal and external dimensions of the single market is essential for preserving the EU’s strategic autonomy and competitiveness;

    43.  Urges the Commission, therefore, to reflect the foregoing in the forthcoming new single market strategy, scheduled for June 2025, in the 2030 consumer agenda, scheduled for the end of 2025, and in the Digital Fairness Act, scheduled for 2026;

    o
    o   o

    44.  Instructs its President to forward this resolution to the Council and the Commission.

    (1) OJ C 214, 16.6.2023, p. 8.
    (2) Regulation (EU) 2024/2747 of the European Parliament and of the Council of 9 October 2024 establishing a framework of measures related to an internal market emergency and to the resilience of the internal market and amending Council Regulation (EC) No 2679/98 (OJ L, 2024/2747, 8.11.2024, ELI: http://data.europa.eu/eli/reg/2024/2747/oj).
    (3) Regulation (EU) 2018/302 of the European Parliament and of the Council of 28 February 2018 on addressing unjustified geo-blocking and other forms of discrimination based on customers’ nationality, place of residence or place of establishment within the internal market and amending Regulations (EC) No 2006/2004 and (EU) 2017/2394 and Directive 2009/22/EC (OJ L 60I, 2.3.2018, p. 1, ELI: http://data.europa.eu/eli/reg/2018/302/oj).
    (4) Directive (EU) 2019/882 of the European Parliament and of the Council of 17 April 2019 on the accessibility requirements for products and services (OJ L 151, 7.6.2019, p. 70, ELI: http://data.europa.eu/eli/dir/2019/882/oj).
    (5) Regulation (EU) 2022/1925 of the European Parliament and of the Council of 14 September 2022 on contestable and fair markets in the digital sector and amending Directives (EU) 2019/1937 and (EU) 2020/1828 (OJ L 265, 12.10.2022, p. 1, ELI: http://data.europa.eu/eli/reg/2022/1925/oj).
    (6) Regulation (EU) 2022/2065 of the European Parliament and of the Council of 19 October 2022 on a Single Market For Digital Services and amending Directive 2000/31/EC (OJ L 277, 27.10.2022, p. 1, ELI: http://data.europa.eu/eli/reg/2022/2065/oj).
    (7) Regulation (EU) 2024/1689 of the European Parliament and of the Council of 13 June 2024 laying down harmonised rules on artificial intelligence and amending Regulations (EC) No 300/2008, (EU) No 167/2013, (EU) No 168/2013, (EU) 2018/858, (EU) 2018/1139 and (EU) 2019/2144 and Directives 2014/90/EU, (EU) 2016/797 and (EU) 2020/1828 (OJ L, 2024/1689, 12.7.2024, ELI: http://data.europa.eu/eli/reg/2024/1689/oj).
    (8) Regulation (EU) 2017/2394 of the European Parliament and of the Council of 12 December 2017 on cooperation between national authorities responsible for the enforcement of consumer protection laws and repealing Regulation (EC) No 2006/2004 (OJ L 345, 27.12.2017, p. 1, ELI: http://data.europa.eu/eli/reg/2017/2394/oj).
    (9) Judgment of 5 March 2024, Public.Resource.Org Inc. v Right to Know CLG, C‑588/21 P, EU:C:2024:201.

    MIL OSI Europe News

  • MIL-OSI Europe: Text adopted – The European Water Resilience Strategy – P10_TA(2025)0091 – Wednesday, 7 May 2025 – Strasbourg

    Source: European Parliament

    The European Parliament,

    –  having regard to the Treaty of the Functioning of the European Union (TFEU), in particular Article 191 thereof,

    –  having regard to the Agreement adopted at the 21st Conference of the Parties to the UNFCCC (COP21) in Paris on 12 December 2015 (the Paris Agreement),

    –  having regard to the United Nations 2030 Agenda for Sustainable Development and the Sustainable Development Goals (SDGs), with particular emphasis on the SDG 6 on clean water and sanitation,

    –  having regard to the Kunming-Montreal Global Biodiversity Framework, adopted in December 2022,

    –  having regard to the Stockholm Convention on Persistent Organic Pollutants of 22 May 2001,

    –  having regard to the precautionary principle and the principles that preventive action should be taken, that environmental damage should, as a priority, be rectified at source and that the polluter should pay, as enshrined in Article 191(2) TFEU,

    –  having regard to Regulation (EU) 2021/1119 of the European Parliament and of the Council of 30 June 2021 establishing the framework for achieving climate neutrality and amending Regulations (EC) No 401/2009 and (EU) 2018/1999 (European Climate Law)(1),

    –  having regard to Directive 2000/60/EC of the European Parliament and of the Council of 23 October 2000 establishing a framework for Community action in the field of water policy(2) (Water Framework Directive),

    –  having regard to Directive 2006/118/EC of the European Parliament and of the Council of 12 December 2006 on the protection of groundwater against pollution and deterioration(3) (Groundwater Directive),

    –  having regard to Directive 2008/105/EC of the European Parliament and of the Council of 16 December 2008 on environmental quality standards in the field of water policy, amending and subsequently repealing Council Directives 82/176/EEC, 83/513/EEC, 84/156/EEC, 84/491/EEC, 86/280/EEC and amending Directive 2000/60/EC of the European Parliament and of the Council(4) (Environmental Quality Standards Directive),

    –  having regard to Directive 2007/60/EC of the European Parliament and of the Council of 23 October 2007 on the assessment and management of flood risks(5),

    –  having regard to Directive (EU) 2020/2184 of the European Parliament and of the Council of 16 December 2020 on the quality of water intended for human consumption(6) (Drinking Water Directive),

    –  having regard to Regulation (EU) 2020/741 of the European Parliament and of the Council of 25 May 2020 on minimum requirements for water reuse(7) (Water Reuse Regulation),

    –  having regard to Directive 2008/56/EC of the European Parliament and of the Council of 17 June 2008 establishing a framework for community action in the field of marine environmental policy (Marine Strategy Framework Directive)(8),

    –  having regard to Directive (EU) 2024/3019 of the European Parliament and of the Council of 27 November 2024 concerning urban wastewater treatment(9) (revised Urban Wastewater Treatment Directive),

    –  having regard to Directive (EU) 2024/1785 of the European Parliament and of the Council of 24 April 2024 amending Directive 2010/75/EU on industrial emissions (integrated pollution prevention and control) and Council Directive 1999/31/EC on the landfill of waste(10),

    –  having regard to Council Directive 91/676/EEC of 12 December 1991 concerning the protection of waters against pollution caused by nitrates from agricultural sources(11),

    –  having regard to Regulation (EU) 2024/1991 of the European Parliament and of the Council of 24 June 2024 on nature restoration and amending Regulation (EU) 2022/869(12),

    –  having regard to Directive (EU) 2022/2557 of the European Parliament and of the Council of 14 December 2022 on the resilience of critical entities and repealing Council Directive 2008/114/EC(13) (Critical Entities Resilience Directive),

    –  having regard to Directive (EU) 2022/2555 of the European Parliament and of the Council on 14 December 2022 on measures for a high common level of cybersecurity across the Union, amending Regulation (EU) No 910/2014 and Directive (EU) 2018/1972, and repealing Directive (EU) 2016/1148 (NIS 2 Directive)(14),

    –  having regard to Directive 2009/128/EC of the European Parliament and of the Council of 21 October 2009 establishing a framework for Community action to achieve the sustainable use of pesticides(15),

    –  having regard to Regulation (EU) 2021/2115 of the European Parliament and of the Council of 2 December 2021 establishing rules on support for strategic plans to be drawn up by Member States under the common agricultural policy (CAP Strategic Plans) and financed by the European Agricultural Guarantee Fund (EAGF) and by the European Agricultural Fund for Rural Development (EAFRD) and repealing Regulations (EU) No 1305/2013 and (EU) No 1307/2013(16),

    –  having regard to Commission Regulation (EU) 2024/3190 of 19 December 2024 on the use of bisphenol A (BPA) and other bisphenols and bisphenol derivatives with harmonised classification for specific hazardous properties in certain materials and articles intended to come into contact with food, amending Regulation (EU) No 10/2011 and repealing Regulation (EU) 2018/213(17),

    –  having regard to the Commission communication of 19 February 2021 entitled ‘A Vision for Agriculture and Food’ (COM(2025)0075),

    –  having regard to the Commission communication of 11 December 2019 on the European Green Deal (COM(2019)0640),

    –  having regard to the Commission communication of 29 January 2025 entitled ‘A Competitiveness Compass for the EU’ (COM(2025)0030),

    –  having regard to the Commission communication of 12 May 2021 entitled ‘Pathway to a Healthy Planet for All – EU Action Plan: ‘Towards Zero Pollution for Air, Water and Soil’’ (COM(2021)0400),

    –  having regard to the Commission communication of 24 February 2021 entitled ‘Forging a climate-resilient Europe – the new EU Strategy on Adaptation to Climate Change’ (COM(2021)0082),

    –  having regard to the Commission communication of 18 July 2007 on addressing the challenge of water scarcity and droughts in the European Union (COM(2007)0414),

    –  having regard to the Commission communication of 11 March 2020 entitled ‘A new Circular Economy Action Plan: For a cleaner and more competitive Europe’ (COM(2020)0098),

    –  having regard to the Commission communication of 14 November 2012 entitled ‘A Blueprint to Safeguard Europe’s Water Resources’ (COM(2012)0673),

    –  having regard to the EU biodiversity strategy for 2030,

    –  having regard to the COP29 Declaration on Water for Climate Action, endorsed by the European Union,

    –  having regard to the European Oceans Pact announced by Commission President von der Leyen in her political guidelines for the next European Commission (2024-2029) on 18 July 2024,

    –  having regard to the European climate adaptation plan and the European water resilience strategy announced by Commission President von der Leyen in her political guidelines for the next European Commission (2024-2029) on 18 July 2024,

    –  having regard to the EU’s 8th environment action programme,

    –  having regards to its resolution of 5 October 2022 entitled ‘Access to water as a human right – the external dimension’(18),

    –  having regard to its resolution of 19 September 2024 on the devastating floods in central and eastern Europe, the loss of lives and the EU’s preparedness to act on such disasters exacerbated by climate change(19),

    –  having regard to its resolution of 6 October 2022 on momentum for the ocean: strengthening ocean governance and biodiversity(20),

    –  having regard to its resolution of 28 November 2019 on the climate and environment emergency(21),

    –  having regard to its resolution of 14 November 2024 on the UN climate change conference in Baku, Azerbaijan (COP29)(22),

    –  having regard to the Commission report of 4 February 2025 on the implementation of the Water Framework Directive (2000/60/EC) and the Floods Directive (2007/60/EC) entitled ‘Third river basin management plans – Second flood risk management plans’ (COM(2025)0002),

    –  having regard to the European Court of Auditors special report 15/2024 of 16 October 2024 entitled ‘Climate adaptation in the EU – action not keeping up with ambition’,

    –  having regard to former Finnish President Sauli Niinistö’s report of 30 October 2024 entitled ‘Safer Together – Strengthening Europe’s civil and military preparedness and readiness’,

    –  having regard to Enrico Letta’s report of April 2024 entitled ‘Much more than a market’,

    –  having regard to its resolution of 17 December 2020 on the implementation of the EU water legislation(23),

    –  having regard to the European Court of Auditors special report 33/2018 of 18 December 2018 entitled ‘Combating desertification in the EU: a growing threat in need of more action,

    –  having regard to the European citizens’ initiative (ECI) on the right to water,

    –  having regard to its resolution of 8 September 2015 on the follow-up to the European Citizens’ Initiative Right2Water(24),

    –  having regard to UN General Assembly Resolution 64/292 of 28 July 2010, which recognises the human right to water and sanitation,

    –  having regard to the Strategic Dialogue on the future of EU agriculture,

    –  having regard to the European Court of Auditors special report 20/2024 of 30 September 2024 entitled ‘Common Agricultural Policy Plans – Greener, but not matching the EU’s ambitions for the climate and the environment’,

    –  having regard to European Environment Agency report 07/2024 of 15 October 2024 entitled ‘Europe’s state of water 2024: the need for improved water resilience’ (EEA Report 07/2024),

    –  having regard to the Environment Council conclusions of 17 June 2024 on the 8th environment action programme,

    –  having regard to European Court of Auditors special report 20/2021 of 28 September 2021 entitled ‘Sustainable water use in agriculture: CAP funds more likely to promote greater rather than more efficient water use’,

    –  having regard to the European Economic and Social Committee declaration of 26 October 2023 for an EU Blue Deal,

    –  having regard to the Commission proposal of 5 July 2023 for a directive of the European Parliament and of the Council on Soil Monitoring and Resilience (Soil Monitoring Law) (COM(2023)0416),

    –  having regard to its position at first reading of 24 April 2024 on the proposal for a directive of the European Parliament and of the Council amending Directive 2000/60/EC establishing a framework for Community action in the field of water policy, Directive 2006/118/EC on the protection of groundwater against pollution and deterioration and Directive 2008/105/EC on environmental quality standards in the field of water policy(25),

    –  having regard to Rule 55 of its Rules of Procedure,

    –  having regard to the opinion of the Committee on Agriculture and Rural Development,

    –  having regard to the report of the Committee on the Environment, Climate and Food Safety (A10-0073/2025),

    A.  whereas water is essential for life and humanity; whereas the EU has to manage current and future water resources efficiently and respond effectively to the current water challenges, as they directly affect human health, the environment and its ecosystems, strategic socio-economic activities such as energy production, agriculture and food security, and the EU’s competitiveness;

    B.  whereas water is a scarce and limited resource and, while 70 % of the earth’s surface is water-covered, available and usable fresh water accounts for only 0,5 % of water on earth(26); whereas mountains are real water towers and important freshwater reservoirs in Europe, the Alps alone providing 40 % of Europe’s fresh water(27);

    C.  whereas groundwater supplies two thirds of the EU’s drinking water and supports many ecosystems(28); whereas the services provided by freshwater ecosystems are worth over EUR 11 trillion in Europe, and provide considerable health and recreational benefits, such as from angling(29);

    D.  whereas water stress is already occurring in Europe, affecting approximately 20 % of Europe’s territory and 30 % of the population on average every year, figures that are likely to increase in the future on account of climate change(30), despite the fact that total water abstraction at the EU-27 level appeared to decrease by 15 % between 2000 and 2019; whereas the increase in the number and recurrence of extreme weather events such as droughts and floods, and the fact that they are expected to become yet more frequent in the near future, poses a risk to human life and the EU’s food sovereignty and could lead to regions in Europe becoming uninhabitable;

    E.  whereas 78 % of Europeans consider that the EU should propose additional measures to address water-related issues in Europe and 21 % of Europeans consider pollution to be the main threat linked to water in their country(31);

    F.  whereas the human right to water and sanitation was recognised as a human right in a resolution adopted by the UN General Assembly on 28 July 2010;

    G.  whereas the European Citizens’ Initiative Right2Water was the first ever to gather the required number of signatories, calling for the EU to ensure the right to water for all;

    H.  whereas the provisions of Article 14 TFEU and Protocol No 26 thereto on Services of General Interest are key elements to be prominently taken into account in all aspects of the design and implementation of the European water resilience strategy (EWRS), thus safeguarding the status of Europe’s water services as essential public services, and ensuring accessibility, equity, affordability and the maintenance of high quality standards;

    I.  whereas the Member States should follow up on the recommendations of the Commission report of November 2023(32) in order to improve water balances as the knowledge basis for making decisions about water allocation;

    J.  whereas substantive corporate value may be at risk owing to worsening water insecurity, with a decrease in the capacity of production or its complete halt as a consequence; whereas assets in water-stressed regions could become stranded, temporarily or permanently, if assumptions made about water availability and access prove inaccurate, if regulatory responses are unanticipated or if risk mitigation and stewardship plans are not put in place(33);

    K.  whereas the deadline set by the Water Framework Directive (WFD) for European rivers, lakes, transitional waters, coastal waters and groundwaters to achieve ‘good’ status was 2015, with a possible postponement to 2027 under certain conditions; whereas the objective of achieving good chemical status for all EU water bodies by 2027 remains far from being achieved, primarily due to substances such as mercury, brominated flame retardants and polycyclic aromatic hydrocarbons(34);

    L.  whereas the 2025 report on the implementation of the WFD shows that delays in meeting the WFD’s targets are not due to a deficiency in the legislation but to a lack of funding, slow implementation and insufficient integration of environmental objectives into sectoral policies; whereas analysis has shown that the Member States are not meeting the annual investment needs, which are estimated to be EUR 77 billion, with a financing gap currently estimated at around EUR 25 billion a year; whereas the report also shows the clear need for the Member States to increase their level of ambition and accelerate action to reduce the compliance gap as much as possible before 2027, to increase investment and ensure adequate financing, including via EU funds, to achieve the objectives of their programmes of measures, as well as to put in place additional measures to reduce current persistent environmental challenges to and improve transboundary cooperation;

    M.  whereas the water legislation has been evaluated as fit for purpose; whereas it establishes a framework for the protection of inland surface waters, transitional waters, coastal waters and groundwater; whereas, at the same time, it allows for less stringent environmental objectives to be achieved if socio-economic needs served by such human activity cannot be achieved by other means and it allows for a failure to achieve the objectives for water bodies if the reason for the failure is overriding public interest; whereas the legislation is proportionate and mandates the authorities of the Member States, in line with the principle of subsidiarity, to decide on the overriding public interest; whereas in some cases this may be the protection of the environment and in others a socio-economic activity;

    N.  whereas industry accounts for approximately 40 % of total water abstraction in Europe; whereas the largest categories of the annual water abstraction in the EU-27, according to the statistical classification of economic activities in the European Community (NACE), are abstraction for cooling in electricity generation (34 %), followed by abstraction for agriculture (29 %), public water supply (21 %) and manufacturing (15 %)(35); whereas data on water abstraction and use in the EU is historical and poor(36);

    O.  whereas electricity production is the largest water-abstracting sector, but most of the water is returned to the environment after cooling or turbine propulsion; whereas overall, agriculture is the highest net water-consuming sector at the EU level, as most of the water is consumed by the crop or evaporates; whereas other uses, such as industry and water utilities, abstract and consume comparatively less water, but they can represent significant pressures at a local level, especially on groundwater(37);

    P.  whereas all industrial activity requires water to produce its end products or to support production activities; whereas businesses depend on water for their daily operations, and as water scarcity increases, it can disrupt operations, raise costs and create regulatory and reputational risks;

    Q.  whereas the energy sector relies heavily on water resources; whereas this dependency poses a serious risk as water scarcity can impact energy production processes and supply security, especially where water is used as feedstock or for cooling; whereas the transition to renewable energy, particularly wind and solar energy, offers sustainable and water-efficient decarbonisation pathways and the opportunity to halt or reverse the trend of increasing water consumption;

    R.  whereas water is an essential resource for agriculture in the production of high-quality food, feed and renewable raw materials; whereas agriculture depends on water availability and irrigation helps to shield farmers from irregular rainfall and to increase the viability, yield and quality of the crops, but is a significant drain on water resources; whereas in view of climate change, changing weather patterns and increased frequency of floods and droughts, the importance of water as a resource for the production of high-quality agricultural products and of the need for water to be used efficiently will therefore be fundamental to the security of food supply and to the solutions to address water scarcity; whereas reducing pressure on surface water and groundwater from agriculture must go hand in hand with investment aimed at the use of reclaimed water and innovative desalination technologies, thereby achieving a better water balance as well as promoting clean alternative energies such as green hydrogen;

    S.  whereas global population growth requires increased food production, and the EU must guarantee food sovereignty, as laid down in Article 39 TFEU;

    T.  whereas reliable data on water accounting, that is, the systematic study of the current status and trends in water supply, demand, accessibility and use in domains that have been specified(38), is crucial for an assessment of the current situation in the EU and for European competitiveness;

    U.  whereas the potential of wastewater as an alternative water supply is underestimated, given that 60-70 % of the potential value of wastewater across the EU is currently unexploited(39) and less than 3 % of treated wastewater is reused in the EU(40); whereas there is significant potential for circular approaches to water in households, as only a small amount of the water in households is used for drinking and eating and therefore requires the highest quality standards;

    V.  whereas a very large quantity of water is lost due to obsolete or ageing water networks and the lack of necessary maintenance; whereas investment in the maintenance, improvement and development of resilient innovative irrigation infrastructures is essential for reducing and improving the efficiency of water consumption in agriculture; whereas such improvements in efficiency enable the water saved to be used for other purposes or enable the natural flow rates of watercourses to be maintained;

    W.  whereas clean and sufficient water is an essential element in implementing and achieving a real sustainable circular economy in the EU;

    X.  whereas water leakage is an underestimated global issue, which significantly exacerbates water scarcity, with an average of 23 % of treated water lost during distribution in the EU due to leaky pipes, outdated treatment facilities and insufficient reservoirs(41); whereas the revised Drinking Water Directive included measures to reduce water leakages, as well as risk assessment and management of the catchment areas for drinking water abstraction;

    Y.  whereas in 2021, 91 % of Europe’s groundwater bodies were reported as having achieved ‘good quantitative status’, while 77 % were reported as having ‘good chemical status’(42);

    Z.  whereas in 2021, only 37 % of Europe’s surface water bodies were reported as being in ‘good’ or ‘high’ ecological status, while 29 % achieved ‘good chemical status’(43);

    AA.  whereas the European Environment Agency emphasises that the proportion of surface waters failing to achieve good ecological status is uneven across Europe, and that these are more prevalent in parts of central and western Europe, and stresses that differences in water status between the Member States may be caused by different pressures, but that those differences may also result from varying approaches to monitoring and assessment(44);

    AB.  whereas the quality of surface waters across the continent reflects continuing and combined pressures, in particular diffuse pollution and the degradation of their natural flow and physical features; whereas pollution by nutrients and persistent priority substances, as well as by substances newly emerging as pollutants, continues; whereas groundwaters are affected by diffuse pollution and also suffer from intensive abstraction(45);

    AC.  whereas groundwater supplies 65 % of water for drinking and 25 % of water for agricultural irrigation in the EU(46); whereas it is a finite resource that needs to be protected from pollution and over-exploitation(47);

    AD.  whereas monitoring data from the European Environment Agency indicates widespread pollution by per- and polyfluoralkyl substances (PFAS), commonly referred to as ‘forever chemicals’, in European waters, posing significant risks to aquatic ecosystems and human health; whereas short-chain PFAS trifluoroacetic acid (TFA) has been detected in drinking water all over Europe; whereas PFAS persist in the environment, bioaccumulate in living organisms and cause adverse (eco)toxicological effects; whereas from a group of 6 000 to 10 000 individual substances, only a few have been extensively studied and their impact on human health and environment is known; whereas 99 % of PFAS remain undetected in the environment as a result of limits in monitoring;

    AE.  whereas the lack of EU-wide quality standards for PFAS in groundwater and insufficient monitoring of less-studied PFAS compounds exacerbate the challenge of achieving good chemical status for EU waters in line with the WFD and pose a substantial technical and financial burden on health systems and on water service providers while jeopardising applications of water and sewage sludge reuse;

    AF.  whereas hazardous chemicals, including heavy metals and other pollutants, released into water bodies by industrial activities, significantly impact water quality and aquatic ecosystems(48);

    AG.  whereas pharmaceutical substances are increasingly identified in surface water and groundwater; whereas pollution caused by pharmaceutical residues necessitates advanced water treatment technologies, including membrane filtration, activated carbon treatment, advanced oxidation processes and other innovative purification techniques;

    AH.  whereas Directive 2010/75/EU(49) mandates that the potential aggravation of the impact of industrial discharges on the state of water bodies due to variations of water flow dynamics should be explicitly taken into account in the granting and reviewing of permits; whereas the best available techniques will newly incorporate notions of environmental performance levels related to water and permits, which translate the use of these techniques into environmental performance limit values; whereas this is a welcome change with a potential improvement to the industry’s resilience, as EU installations may already face a lower production capacity seasonally due to water scarcity;

    AI.  whereas urban wastewater is one of the main sources of water pollution, if not properly collected and treated; whereas the objectives of the Urban Wastewater Treatment Directive should not be lowered, and its scope should be extended to other sectors and substances that contribute to water pollution;

    AJ.  whereas nutrient pollution in EU water bodies leads to eutrophication, loss of biodiversity, and degradation of aquatic ecosystems(50); whereas pesticide run-off contaminates surface water and groundwater, threatening water quality and human health;

    AK.  whereas research indicates that exposure in Europe to the synthetic chemical bisphenol A (BPA), which is used in products ranging from plastic and metal food containers to reusable water bottles, is well above acceptable health safety levels(51);

    AL.  whereas soil and nutrient management lies at the basis of improving water quality and availability; whereas the EWRS should focus on improving nutrient management, with the aim of closing nutrient loops to reduce nutrient emissions to waterways; whereas the safe use of sewage sludge in agriculture will also reduce the EU’s very high dependency on the import of phosphorus mineral fertiliser, for example, from Russia; whereas the safe use of sludge should therefore also be considered as contributing to European resilience and strategic autonomy;

    AM.  whereas climate change represents a major threat to water resources and aquatic ecosystems; whereas many impacts of climate change are felt through water, such as more intense and frequent droughts, more extreme flooding and more erratic seasonal rainfall; whereas floods and water scarcity compromise food and water security, and the health of the general population, ultimately affecting social cohesion, economic prosperity and stability, as well as jeopardising the long-term availability of this valuable resource;

    AN.  whereas the European climate risk assessment recognised that Europe’s policies and adaptation actions are not keeping pace with the rapidly growing risks that threaten ecosystems, infrastructure, food and water supply and people’s health, as well as the economy and finance(52);

    AO.  whereas assessments by the Intergovernmental Panel on Climate Change show that the sea level rise due to climate change is leading to an increase in the salinity of soils and freshwaters, compromising ecosystem health and water quality, as well as affecting 80 million Europeans living in low elevation coastal zones and flood plains; whereas freshwater and marine ecosystems are interconnected as riverine pollution, disruption to sediment flows and water shortages all have a very strong impact on the health of marine ecosystems, particularly the coastal ones, as well as on the viability of social and economic activities that depend on them, such as transport, fisheries, agriculture, aquaculture and tourism;

    AP.  whereas prolonged drought, extreme heat and large-scale flooding events, caused by changing weather patterns, will intensify and become more frequent throughout the continent, damaging ecosystems and human health and leading to major disruption to economic activities and decreasing the overall quantity and quality of available water; whereas preserving water resources and the natural functions of rivers, while supplying sufficient water of good quality, is becoming a major challenge that will require increased climate change mitigation and adaptation efforts, effective management and innovative measures to increase water availability; whereas managing water scarcity and flood risks affordably and sustainably will increasingly become important across the EU;

    AQ.  whereas in 2022, Europe experienced its hottest summer and the second warmest year on record, leading to drought impacting over 15 % of EU territory; whereas the average annual economic loss caused by droughts in the EU between1981 and 2010 was estimated at around EUR 9 billion per year; whereas with no adaptation measures, it is estimated that annual drought losses in Europe and the UK could increase to EUR 45 billion per year up to 2100 with warming of 3°C(53); whereas in the period of 1998-2020, floods comprised 43 % of all disaster events in Europe; whereas climate change impacts and socio-economic developments are leading to more frequent flooding, affecting an increasing number of people and causing increasing damage; whereas 12 % of Europe’s population lives in floodplains(54);

    AR.  whereas the cost of inaction in addressing water-related challenges is extremely high, given that 90 % of disasters are related to water(55); whereas without policy action, the cost of economic losses from coastal floods alone could exceed EUR 1 trillion per year by the end of the century in the EU(56) and the economic cost of droughts in Europe could exceed EUR 65 billion a year by 2100(57);

    AS.  whereas significant differences exist between the Member States in water availability, management strategies and usage patterns, and vulnerability to climate change impacts can vary considerably; whereas a tailored approach is required to enhance water resilience and ensure sustainable water management;

    AT.  whereas droughts constitute one of the chief catastrophic consequences of climate change; whereas around 23 % of the EU’s territory is moderately susceptible to desertification and 8 % is highly susceptible to it; whereas Hungary, Bulgaria, Spain and Italy are among the countries most affected, and 74 % of Spain’s surface area is at risk of desertification; whereas the EWRS should look beyond prolonged droughts, but rather address the reality that the semi-arid line is moving north, resulting in increasing areas in the EU that will face chronic long-term unavailability of sufficient freshwater resources;

    AU.  whereas policies related to desertification, water consumption and climate change are closely interconnected; whereas as part of the United Nations Convention to Combat Desertification, the EU reaffirmed in 2015 and later re-confirmed in 2024(58) its commitment to achieving land degradation neutrality by 2030, which, according to the European Court of Auditors special report on desertification, is unlikely to be achieved;

    AV.  whereas water infrastructure can help maintain a constant and predictable flow and supply of water; whereas in 2022, the annual average river discharge across Europe was the second lowest since records began in 1991(59);

    AW.  whereas downstream areas are particularly dependent on upstream water management and abstraction; whereas the Member States should refrain from implementing measures that significantly increase flood risks upstream or downstream of other countries in the same river basin, in accordance with the WFD;

    AX.  whereas nature-based solutions are pertinent interventions that, when tailored to specific ecosystems and needs, can increase resilience in the water cycle and provide multiple benefits in terms of biodiversity protection, carbon sequestration, improved water quality, nutrient retention, supply of drinking water, wildfire prevention and flood risk mitigation; whereas nature-based solutions can enhance the effectiveness and the operable life of water infrastructure, therefore ensuring, in many cases, complementarity of both solutions;

    AY.  whereas natural water retention measures are nature-based solutions that aim to store water in natural, agricultural, forested and urban landscapes;

    AZ.  whereas water is not a commercial product like any other but, rather, a heritage which must be protected, defended and treated as such; whereas, under Directive (EU) 2024/1203 on the protection of the environment through criminal law(60), abstraction of surface water or groundwater within the meaning of the WFD constitutes a criminal offence where such conduct is unlawful and intentional, and causes, or is likely to cause, substantial damage to the ecological status or the ecological potential of surface water bodies or to the quantitative status of groundwater bodies;

    BA.  whereas soil biodiversity and soil organic carbon affect water retention capacity; whereas soil erosion, compaction and certain soil management practices that cause soil degradation lead to a steady decrease in the water retention capacity of soil, which as a consequence exacerbates drought and flood events with a direct negative impact on farming; whereas healthy soil is therefore one of the drivers of water resilience, which itself should be approached and managed at river basin level; whereas better land management is key to preventing disasters;

    BB.  whereas the current multiannual financial framework (MFF) includes an ambitious but non-binding target of dedicating at least 7,5 % of annual EU spending to the biodiversity objectives in 2024 and 10 % in both 2026 and 2027; whereas the new financial framework should incorporate a water perspective with a view to allocating sufficient resources to the future EWRS in order to ensure resilient water ecosystems and infrastructure, and security of water supply, and to facilitate investments in innovative solutions;

    BC.  whereas cohesion funding has played a crucial role in improving water and sanitation services across the Member States; whereas continued support is required to ensure their long-term resilience and compliance with increasingly stringent quality standards;

    BD.  whereas pricing policies can improve the efficiency of water use; whereas such policies are a national competence and account for the regional differences in water availability and the source of water supply; whereas pricing can play a significant role in prompting households and other economic sectors to optimise consumption, as well as in ensuring that water users effectively participate in recovering the costs of water services; whereas pricing policies should also consider affordability for households and small businesses;

    BE.  whereas digitalisation and innovation can effectively assist the Member States, regional bodies and the Commission in collecting data on and monitoring water management; whereas the EU is at the forefront of new technological developments in the water sector, accounting for 40 % of all international patent families in this sector between 1992 and 2021(61), a position that needs to be fostered and nurtured, and the potential of the internal market fully exploited; whereas hurdles for the introduction and scaling-up of new water technologies need to be examined and a just European level playing field guaranteed; whereas continued support for research in water technology innovation is needed to secure and to create jobs and boost European competitiveness;

    BF.  whereas innovation is a crucial tool to help the water sector meet the challenges of the United Nation’s SDGs, adapt to climate change and become more water-efficient;

    BG.  whereas deployment of monitoring and modelling technologies is still lagging behind in many Member States, and the digitalisation of the sector is too slow; whereas provisions on the river basin management plans in the WFD do not explicitly include concrete measures to digitise the water sector; whereas common shortcomings for the current policies harnessing the potential digital solutions are related to the lack of technology guidance, monitoring standards, policy integration, standardisation and public involvement;

    BH.  whereas the water sector is vulnerable to various threats, including physical attacks, cyberattacks and contamination with harmful agents; whereas such incidents could result in widespread illness, casualties and service disruptions, significantly impacting public health, the environment and economic stability; whereas the digitalisation of water management might introduce further security risks in a context of increasing hostile attacks on critical infrastructure; whereas the implementation of the NIS2 Directive and Critical Entities Resilience Directive can contribute to mitigating security risks to vital (drinking) water systems and (drinking) water infrastructure, arising from geopolitical tensions;

    BI.  whereas advances in sensor technology, computing, artificial intelligence (AI) and big data management can help monitor water quantity and quality and inform the operational decisions of the policymakers and water management companies; whereas innovations in nature-based systems to manage water are available and can contribute to resilient water management;

    BJ.  whereas water is a vital component in the life cycle of AI, both in the operation of data centres and the manufacture of hardware; whereas the rapid expansion of AI could result in an exponential increase in water demand; whereas that dependency on an increasingly scarce resource poses significant challenges in terms of sustainability; whereas strategic technologies, such as semiconductors, hydrogen, electric vehicle batteries and data centres, play a key role in achieving a competitive and autonomous EU;

    BK.  whereas chiller and cooling tower systems, based on innovative cooling technologies such as evaporative and closed-loop cooling, are already available and can contribute to reducing water consumption in industrial, heating, ventilation and air conditioning systems applications;

    BL.  whereas research must be promoted with a view to producing alternative active ingredients to combat pests, to ensure greater plant health and reduce the use of inputs and phytosanitary products;

    BM.  whereas water resilience is crucial in education and teaching, and in raising awareness and giving information about the functioning of the water cycle;

    BN.  whereas limited access to water and related infrastructure has a negative impact, especially on women, as it undermines the realisation of other human rights, such as self-determination, economic independence and education;

    BO.  whereas 60 % of European river basin districts are transnational, which makes effective transboundary cooperation crucial; whereas 20 European countries depend on other countries for more than 10 % of their water resources, with five countries relying on more than 75 % of their resources coming from abroad via rivers(62); whereas this cooperation should be strengthened to account for current and future climate challenges such as droughts and floods;

    BP.  whereas United Nations Secretary-General António Guterres appointed a Special Envoy on Water, aiming to enhance international cooperation and synergies among international water processes;

    BQ.  whereas clean water access and sustainable and resilient sanitation infrastructure are key components of the One Health approach, recognising the interconnection between the health of humans and water pollution;

    BR.  whereas water cooperation across borders and sectors generates many benefits, including enhancing food security, sustaining healthy livelihoods and ecosystems, helping address resilience to climate change, contributing to disaster risk reduction, providing renewable energy, supporting cities and industry, and fostering regional integration and peace;

    BS.  whereas geopolitical developments demonstrate that the EU should be ready to withstand the challenges that go beyond the environmental sphere; whereas non-environmental threats, such as recent accidents related to the damaged cable in the Baltic Sea, send the EU a strong message that strengthening transboundary cooperation is key in addressing both the environmental and security-related objectives;

    BT.  whereas about 41 000 kilometres of inland waterways flow through 25 of the Member States; whereas inland waterways, which rely on the availability of water resources, perform a crucial role in optimising water supply and mitigating the impact of droughts and floods, as well as supporting the economic activities and the development of regions;

    BU.  whereas the increasing water scarcity, inequalities in access to water, and external shocks to the water sector have heightened interdependencies, increasing competition for water and leading to complex economic repercussions;

    General remarks

    1.  Welcomes and supports President von der Leyen’s announcement in the political guidelines for the next European Commission (2024-2029) on putting forward a European Water Resilience Strategy (EWRS) addressing water efficiency, scarcity, pollution and water-related risks, as well as the recognition that water is an indispensable resource that is increasingly under stress from climate change and increasing demands;

    2.  Believes that while implementing legislation, economic competitiveness should be taken into account in line with the Competitiveness Compass; calls for the implementation of EU environmental legislation in order to build a resilient and competitive Europe, mitigate and adapt to climate change, halt biodiversity loss, prevent pollution, ensure food security, limit resource use and waste, and strive towards efficient use of resources, including water, while taking into account the precautionary principle, the control-at-source principle and the polluter-pays principle; highlights the fact that water availability impacts the quantity, quality, variety and seasonal availability of foods that can be produced;

    3.  Calls for the EU to integrate its commitments to the COP29 Baku Dialogue on Water for Climate Action and the UN 2023 Water Conference into the international dimension of the strategy;

    4.  Stresses the urgent need to enhance water resilience and management to ensure sustainable freshwater supplies for people, the economy and the environment; emphasises that the EWRS should be developed in coordination with the European Oceans Pact, ensuring a cohesive and integrated approach to managing freshwater and ocean resources, addressing interconnected challenges, enhancing competitiveness and promoting sustainable water management across inland and marine environments, while ensuring a holistic ‘source-to-sea’ approach;

    5.  Insists on the need for a comprehensive and holistic EWRS that integrates water quality, quantity, security, infrastructure, technology and management aspects and includes the restoration of the water cycle as a key element, as it underpins economic activities, ensures resource availability and contributes to climate regulation;

    6.  Stresses the importance of water supply, in particular drinking water, as well as water security of supply; points out that all environmental restoration projects should take into account the water security aspects, prioritising solutions that not only provide environmental benefits, but also guarantee the supply and efficient management of water; emphasises, furthermore, that ecological restoration measures should be carried out in synergy with the development of the EU’s renewable energy potential and not impact the overall energy resilience;

    7.  Recommends that lakes and other freshwater-dependent habitats be included in the strategy, alongside rivers, transitional waters and groundwater, as essential components of the EU’s water resilience efforts;

    8.  Stresses the urgent need to improve crisis-warning systems with regard to heavy water incidents, as well as to improve preventive measures;

    9.  Calls on the Commission to present a European climate adaptation plan, including concrete legislative proposals and actions, particularly regarding infrastructure resilience, water management and nature-based solutions, while prioritising the protection of vulnerable communities, to make the EU more resilient and to lead by example;

    10.  Reiterates that access to clean and safe drinking water and sanitation is a human right; emphasises that this right must be unequivocally ensured, with everyone having access to affordable and good quality water services, including the inhabitants of islands and outermost regions;

    11.  Stresses that no one, whether in public places or private establishments, should be denied access to water supplied from a distribution network intended for human consumption, where available;

    12.  Notes that industrial activities and agricultural production require water to produce their end products or to support production activities, with the amount of water used varying depending on the type of activity; highlights the fact that ensuring Europe’s competitiveness and strategic autonomy requires a water-smart society where technology and data enhance a circular economy, fostering sustainable and water-efficient practices; calls on all relevant actors to accelerate the transition towards water-efficient, circular industry and agriculture by promoting and investing in innovative solutions, including digital tools and technologies, resource recovery, water reuse, renewable energy production, infrastructure, nature-based solutions and inclusive governance mechanisms;

    13.  Urges the Commission to integrate and mainstream the water dimension into internal and external EU policies through a cross-sectoral approach in order to ensure that water resilience, sustainability and security is woven into the fabric of European policies; calls on the Commission, in particular, to carry out a water-related assessment of any regulatory measure, including related to energy, as part of the socio-economic and environmental impact assessment; emphasises that assessing how each EU policy, and EU-funded projects and infrastructure, can impact water resources in terms of quantity, quality and accessibility would ensure that water resilience is a cornerstone of policy formulation and implementation, thus shifting the paradigm from treating water as an infinite resource to recognising its intrinsic value for humanity and for the EU’s ecological and socio-economic landscape and its competitiveness;

    Water efficiency

    14.  Stresses that efficient water use is essential for preserving the EU’s water resources and that water efficiency should be a key objective of the EU; calls, in this regard, for a consequential reduction in water demand, including by addressing excessive leakage levels, investing in research and innovative solutions, modernising industrial and production processes, upgrading water infrastructure, managing water resources and peak demands sustainably, prioritising uses and ensuring that higher water efficiency results in a reduction in overall freshwater consumption as well as in an increase in water availability in water-stressed areas at the local and regional levels; believes that areas affected by prolonged drought and desertification should be given priority;

    15.  Calls for a legislative framework setting sectoral water efficiency and water abstraction targets at basin level, based on up-to-date assessments of water availability and climate risks, including a water valuation approach that accounts for ecosystem services and long-term sustainability, and covering all water uses, including industry, energy, agriculture, public institutions and households; underlines the fact that these targets should be ambitious yet adaptable, taking into account the specific circumstances and progress already achieved by each Member State to ensure continued efforts towards efficiency gains across all regions; stresses the importance of efficient and uniform data collection practices across the Member States and all sectors, including through the use of innovative technologies, as well as real-time data collection points for more transparency on water consumption; emphasises the need to carry out an appropriate assessment of the environmental and socio-economic impacts of water use; stresses that the strategic importance of food production must not be compromised; emphasises that science, research and technology are important for water efficiency and water use as well as for the circular economy in this regard; calls for the creation and promotion of new smart and high-performance irrigation systems, rainwater retention and water from reuse, as well as water-efficient irrigation systems;

    16.  Reiterates the need to develop a common EU methodology for setting water efficiency and water abstraction targets to ensure the sustainable use of available renewable water resources within an integrated water resources management framework which gives due consideration to linkages beyond the water sector through the water-energy-food-ecosystems nexus, thus enabling decision-makers and economic actors to plan the necessary investment to ensure water supply security in an increasingly sustainable manner, while giving due consideration to the characteristics of the water bodies concerned;

    17.  Calls for close collaboration on integrated energy and water resource planning and related technologies across all sectors at national, regional and local levels, including between all stakeholders, in order to establish mechanisms for ensuring coherence across water and energy policies;

    18.  Calls on the Commission to put forward a comprehensive policy on sustainable water management for industry based on reducing, recovering, reusing and recycling, including a focus on the use of water-efficient and circular technologies, water recycling, pollutant reduction strategies and the promotion of closed-loop systems;

    19.  Recalls that the growing threat of water scarcity is jeopardising industries and projects that are key to Europe’s competitiveness drive, including semiconductors, data centres, renewable hydrogen and electric vehicle battery production; notes that these industries will increasingly face pressure to reduce their environmental impact and improve water resource efficiency, including both direct and indirect water usage; calls on the Member States to support water-intensive industries in setting up water-efficiency plans aimed at saving, reusing and recycling water, preventing water pollution and implementing water-efficient technologies; calls on the Commission to incorporate comprehensive water management strategies into relevant EU industrial policies and sector-specific transition pathways, with a particular focus on strategic water-intensive sectors;

    20.  Stresses that knowledge, data, research and technology are key for efficient water use; calls for adequate financial and technical support to be given to the Member States to implement efficient water management measures, including by means of innovative and modern technologies;

    21.  Welcomes the recommendations of the final report of the Strategic Dialogue on the future of EU agriculture underlining that sustainable farming practices and new business models need to be scaled up to promote more efficient use of natural resources, especially water;

    22.  Calls for the transition to a more sustainable and competitive farming model, assisted by the implementation of sustainable practices and innovative solutions that promote biodiversity, reduce chemical inputs and enable water resources to be managed efficiently, including nature-based solutions, regenerative management, smart precision irrigation technologies, digital monitoring systems, advanced treatment methods and smart water distribution networks, optimising consumption and preventing water resource depletion, and that help ensure continued productivity while enabling agriculture to reduce pollution, use pesticides and fertilisers efficiently, improve the hydrological cycle, enhance groundwater recharge and adapt to lower water use; considers that technological solutions can also include measures that can increase water absorption, infiltration and retention in agricultural systems, which are important amid increasing occurrences of both drought and heavy rains;

    23.  Points out that innovative irrigation solutions and practices can enhance water efficiency in agriculture, gaining an economic advantage while also reducing environmental burdens; notes that farmers generally lack sufficient means and incentives to know about water use by crops, actual irrigation applications, the yield responses of crops to different water management practices, and thus current on-farm water-efficiency levels; calls on the Commission and the Member States to incentivise the uptake and support the maintenance of innovative irrigation solutions such as drip irrigation to allow for an active management of water levels and efficient use of water resources, as well as to promote continuous knowledge exchange, so that all relevant stakeholders can share greater responsibility across the entire water supply chain;

    24.  Recalls that the use of nutrients such as nitrate and phosphate is essential for food production, as this activity would not be possible without their use; recommends better consideration of the nutrient cycle in agricultural production and the exploitation of the value in urban wastewater; calls for more research into the effective use of nutrients and the development of nutrient recovery technologies, in order to decrease the Union’s dependence on imported raw materials; recognises the high potential for nutrient recovery from water and calls on the Member States to support the agricultural sector to optimise their nutrient consumption including by using resources (nitrate and phosphorus) recovered from wastewater treatment plants; calls on the Commission to propose an integrated nutrient management action plan to effectively address loss of valuable agricultural inputs, recycling of nutrients, nutrient pollution and inefficiencies in the nutrient cycle; calls for the proper and safe recovery of phosphorus from organic sources and for incentivising investments in its recovery and circular nutrient management in accordance with the Commission’s JRC publication(63);

    25.  Stresses that the current Nitrates Directive is due for revision, as outdated provisions promote the use of artificial fertilisers rather than organic manure; calls for an urgent review of the Nitrates Directive before the end of this year, and its revision to promote circular nutrient management;

    26.  Emphasises, in line with the final report of the Strategic Dialogue on the future of EU agriculture, the need to support the transition to regionally adapted crop and seed varieties and the switch to different crops, with reduced water requirements and greater drought resistance, as well as the need to support the adoption of appropriate soil management practices; considers the need for stronger support for scientific research and technological development related to the breeding of new species, to enable the production and supply of foodstuffs to be diversified and their quality enhanced, while raising the level of protection for human health and the environment; notes the potential of plant varieties that are more resistant to water stress and pests and could play a role in reducing water use and could reduce the environmental footprint of crops;

    27.  Calls for financial and technical support for farmers and rural communities, particularly in water-stressed areas, to help them adopt sustainable land management practices that improve soil and water quality, contribute to biodiversity and mitigate climate change; emphasises the need for special attention to be given to regions that are particularly vulnerable to soil degradation and water scarcity;

    28.  Acknowledges the significant efforts made by farmers to enhance water quality and emphasises the need for an appropriate timeframe to allow the effects of these measures to be accurately assessed;

    29.  Points to the success of the agricultural European Innovation Partnership EIP‑AGRI and calls for the continuation of knowledge exchange, expertise and peer-to-peer learning via the EU’s Common Agricultural Policy (CAP) Network;

    30.  Notes the links between carbon sinking and water availability, and calls for coherence between the water resilience strategy and carbon farming schemes;

    31.  Reiterates that the Water Reuse Regulation aims at reducing the pressure on water bodies by setting out provisions on reusing water after appropriate treatment extends its life cycle, thereby preserving water resources; emphasises, however, that regulatory, financial and technological barriers, including the economic competitiveness of reclaimed wastewater, risk management planning and the sharing of responsibilities, contribute to the slow uptake of reuse of reclaimed water for agriculture; calls, therefore, on the Commission and the Member States to adopt supportive policies, at both the EU and the local level, that incentivise water reuse practices, taking into account the importance of adapting wastewater treatment and quality requirements to the intended water use; notes that treated wastewater also finds valuable applications in various industrial processes and urban contexts, contributing to reducing the pressure on freshwater resources and the conservation of drinking water; calls therefore on the Commission to assess a possible extension of the scope of the Water Reuse Regulation in order to establish, at EU level, minimum water quality standards for safe water reuse for industrial and urban purposes;

    32.  Calls on the Commission and the Member States to specify systems of regulatory and financial incentives for the reuse of treated wastewater in water-intensive sectors and to provide specific funding for the construction of infrastructure connecting wastewater treatment plants and refined water distribution networks; urges a streamlined approach in EU legislation to remove administrative barriers and promote safe and efficient water recycling across the Member States; calls on the Member States to set up national water reuse and saving plans to incentivise cross-sectoral cooperation in water management;

    33.  Reiterates that reused water could alleviate abstraction from rivers, lakes and groundwater for irrigated agriculture; underlines the fact that reused water can contribute to maintaining base flows and minimum water levels during dry periods;

    34.  Highlights the potential of the building sector to save water, for example, with the help of smart sub-metering systems, efficient greywater systems, reuse of domestic wastewater or rainwater harvesting; stresses that the energy performance of buildings can be enhanced by water efficiency, reducing greenhouse gas emissions; calls on the Member States and local authorities to incentivise water-saving features in new buildings; stresses, in this regard, that water-efficient practices should be factored into urban planning; highlights the fact that harvesting rain water as well as using and reusing water efficiently can improve climate adaptation in cities;

    35.  Calls for the transition, in industry and in the energy and digital sectors, to optimised cooling efficiency and alternative cooling methods that are less water-dependent, in order to ensure significant water savings in these sectors;

    36.  Points out that, while households represent 10 % of the overall water consumption in the EU, action on improving domestic water efficiency is also necessary; notes that water-saving technological solutions are readily available and can reduce water consumption in households without compromising comfort or requiring high investment; calls on the Member States to support consumers in transitioning towards such technologies and to strengthen consumer awareness of water consumption and potential efficiency gains by anchoring domestic water efficiency in water, building and consumer policies across the EU;

    37.  Notes that the leakage rates from pipes are high in some Member States, which increases the total share of domestic water consumption; welcomes the provisions of the new Drinking Water Directive on leakage rates and the ongoing work of the Commission to evaluate those rates and set threshold values that will trigger action in the Member States concerned; calls on the Member States to urgently tackle leakage in water supply networks and to fully implement the monitoring and reporting requirements of the Drinking Water Directive, so that the Commission can set a threshold value for leakage by January 2028; emphasises the need for sustainable urban irrigation networks to be modernised, to curb leakages and reduce their water footprint; calls on the Member States to regularly inform the public about the efficiency and effectiveness of their water supplies;

    38.  Points out that public sector organisations provide significant untapped potential for saving water by virtue of their size or their nature as public organisations; believes that the public sector should act as a role model for other sectors;

    39.  Calls on the Commission and the Member States to promote easily accessible and free information, training, advisory programmes and information campaigns aimed at raising public awareness of sustainable water resource management;

    40.  Recommends that water-efficiency aspects, such as reductions in water loss and reuse of water, be integrated in the upcoming revision of the public procurement framework;

    Water pollution

    41.  Underlines the fact that the existing EU water policy framework is designed to address the effective management of water resources and the protection and restoration of freshwater and marine ecosystems, but that its poor implementation and enforcement, insufficient funding and lack of proper cost-benefit analyses of the implementation measures undermine its effectiveness;

    42.  Calls on the Commission and the Member States to implement and enforce the current legislation, in particular the WFD and its ‘daughter’ directives (the Groundwater Directive and the Environmental Quality Standards Directive), with a particular focus on strengthening the monitoring and reporting mechanisms to ensure that all Member States consistently implement the required water protection measures; recalls the need for sufficient funding to implement these acts;

    43.  Stresses that the chemical pollution of surface water and groundwater poses a threat to the aquatic environment, with effects such as acute and chronic toxicity in aquatic organisms, accumulation of pollutants in the ecosystem and loss of habitats and biodiversity, as well as to human health;

    44.  Calls for the establishment of comprehensive EU-wide quality standards for PFAS in groundwater and surface water; stresses that respective updates of the relevant directives are essential for safeguarding water quality and achieving good chemical status for water bodies as mandated under the WFD;

    45.  Insists that essential uses of PFAS in critical sectors, such as medical devices, pharmaceuticals and products necessary for the twin transition to a climate neutral and digital economy, are not endangered in the context of upcoming legislative and non-legislative proposals; calls on the Commission to propose to phase out forever chemicals (PFAS) – starting with consumer goods – linked to harmful effects on human health and the environment, based on scientific evidence, allowing their use where there are no safe alternatives; underlines the need to scale up investments and accelerate the research and development of equivalent and safe alternatives;

    46.  Calls on the Commission to propose updated limits on PFAS in drinking water, taking into account the latest scientific knowledge;

    47.  Emphasises the urgency of addressing, primarily at the source, and effectively monitoring pollution from pharmaceuticals, bisphenols, antimicrobial resistance genes, persistent organic pollutants and other existing and emerging pollutants, to align with the EU’s zero pollution ambition and the goal of achieving good chemical status for all water bodies;

    48.  Calls on the Commission to close the gaps with enhanced funding and the enforcement of current laws, and the integration of circular economy principles to mitigate pollution at its source and safeguard water ecosystems for future generations; underscores the fact that antibiotic-resistant bacteria and certain emerging pollutants remain insufficiently addressed, necessitating further innovation and investment; emphasises the need for all sectors to apply sustainable production processes and circular practices, proactively preventing pollutants from entering water systems;

    49.  Recalls that microplastics may enter drinking water sources in a number of ways: from surface run-off (for example, after a rain event) to wastewater effluent (both treated and untreated), combined sewer overflows, industrial effluent, degraded plastic waste and atmospheric deposition; calls on the Commission to put forward, in line with the requirements of the Drinking Water Directive, a full risk assessment of microplastics in drinking water, while continuously working on reliable and robust sampling and analytical methods in order to appropriately address the potential threat of this emerging pollutant to sources of water intended for human consumption;

    50.  Emphasises the need to improve the monitoring and regulation of plastic pollution in freshwater and marine environments, with particular attention to microplastics and single-use plastics; encourages the Commission to assess current enforcement mechanisms and consider further measures to protect water quality;

    51.  Calls on the stakeholders to develop safe water contact materials, to substitute BPA and other bisphenols and ensure compliance with Regulation (EU) 1935/2004 on materials and articles intended to come into contact with food(64) and the recently adopted provisions as regards the use of BPA and other bisphenols and bisphenol derivatives (Commission Regulation (EU) 2024/3190);

    52.  Recalls that the revised Urban Wastewater Treatment Directive, in effect since 1 January 2025, imposes new obligations regarding water purification, requiring pharmaceutical and cosmetic producers to cover at least 80 % of the costs of removing micropollutants from wastewater, with the aim of reducing harmful substances in the environment; notes the existence of differing figures and assessments regarding the impact this would have on the pharmaceutical sector and, consequently, on the availability and affordability of medicines, and therefore calls on the Commission to conduct a new and comprehensive assessment of the impact on this sector;

    53.  Calls for increased EU support for local authorities for the modernisation of wastewater treatment plants and the promotion of water reuse, to align with the EU’s zero pollution ambition, ensuring that municipal wastewater management contributes effectively to good chemical and ecological water status;

    54.  Calls for increased monitoring of pesticide residues in water bodies and enforcement of pesticide application regulations to mitigate their impact on water quality; stresses the need for increased funding to support farmers in the adoption of low-input and organic farming practices that reduce reliance on chemical pesticides and fertilisers, as well as to provide appropriate training and independent advisory services to farmers and other operators on the use, effectiveness and toxicity of pesticides, as well as best practice;

    55.  Insists on the integration of circular economy principles to reduce hazardous chemical use in industrial processes; stresses the need for additional funding to support industries in transitioning to clean technologies that minimise water pollution(65);

    56.  Recognises the role of treated sludge as a local and circular source of fertiliser, contributing to soil health, nutrient recycling and reduced dependency on synthetic fertilisers; emphasises the importance of preventing PFAS, heavy metals, microplastics and other harmful substances from entering sewer networks in order to enable the safe and sustainable use of high-quality sewage sludge in agriculture;

    57.  Calls on the Commission to include an overview of measures in an annex to the EWRS, with a timeline for achieving the objectives in question;

    Adaptation to climate change: floods, droughts, stress areas, disaster preparedness

    58.  Calls for the climate adaptation proofing of all new EU legislative and non-legislative acts in order to ensure the integration of climate adaptation into sectoral plans and policy measures affecting water and land use; highlights, in this regard, the need for increased climate ambition as part of the fight against climate change, while urging the Member States to ensure that all climate adaptation measures affecting water use contribute to long-term, improved water resilience; calls on the Commission to take fully into account the geographical and environmental conditions in the Member States, as well as the specific situation of islands, outermost regions and other areas of high vulnerability, such as areas affected by desertification, when adopting new legislative and non-legislative proposals; asks the Commission to present a roadmap for current and ongoing legislative and non-legislative policy measures, including targets and monitoring requirements affecting water and land use;

    59.  Emphasises the need for tailored climate adaptation measures for the Mediterranean region, which faces unique challenges such as prolonged droughts and saline intrusion into freshwater resources;

    60.  Stresses the specific challenges faced by island areas due to the scarcity of drinking water and calls for targeted measures to protect island water resources, including improving rainwater collection and storage infrastructure, and implementing alternative water sources, while enhancing water resource monitoring and management systems; calls, further, on the Member States to take better account of mountainous regions in national adaptation plans in order to meet the specific challenges of water management in mountainous areas;

    61.  Reiterates that climate change mitigation and adaptation solutions should not come at the cost of ecosystem degradation, and should avoid increasing the demand for water- and energy-intensive activities, and should instead prioritise energy- and water-efficient innovation and technologies as part of moving towards a more resource-efficient economy, without undermining its productivity, while ensuring equitable access to water for all; points out that, in order to be effective, climate change mitigation and adaptation solutions should be tailored to national circumstances, while enhancing competitiveness and productivity in the short and long term; points out the possibilities of synergies, in this regard, with innovative energy production such as photovoltaics and biogas, as it can also contribute to an increase in agricultural income;

    62.  Recognises the importance of reserving water for nature and the need to maintain healthy freshwater ecosystems, for the good functioning of the water cycle, for human activities and for mitigating the impacts of droughts and water scarcity; underlines, in the context of restoring freshwater ecosystems and the natural functions of rivers, the importance of removing ‘obsolete barriers’, namely artificial barriers that no longer fulfil their original purpose or are no longer needed, wherever such opportunities exist, on the basis of current knowledge and experience; calls for the establishment of specific programmes for the cleaning and conservation of river channels, ensuring minimum flow and reducing the accumulation of debris and sediment that can affect water storage and distribution capacity;

    63.  Insists that, with climate change impact becoming more persistent, flood and drought management must fully integrate the arising risks, including changing weather patterns, such as increased rain patterns leading to excess of water; is convinced that a combination of monitoring and data collection, preparedness, emergency and recovery responses taking into account the principle of ‘building back better’(66)on the one hand, and adapting societal and economic activities on the other, is essential to reduce vulnerability and increase resilience, especially in the light of the quantitative aspect of water becoming more prominent; stresses, in this regard, the need for climate-resilient nature-based solutions and infrastructure that take into account the impact of extreme climate events in their development to ensure their viability in the face of extreme climate events;

    64.  Recalls that in 2007, the WFD was supplemented by Directive 2007/60/EC on the assessment and management of flood risks, which aims to establish a framework to reduce the adverse consequences of flooding on human health, the environment, cultural heritage and economic activity; notes that making the two directives mutually compatible is achieved through risk management plans and river basin flood management plans as the components of an integrated water management system in which coordination is crucial; recalls that flood prevention is closely connected to urban green spaces, soil protection strategies and investment in drainage networks;

    65.  Stresses that preparedness for water scarcity and drought can be significantly improved in the EU, considering that no drought management plans are in place in several Member States(67); calls on the Member States and, where applicable, competent regional and local authorities, to develop drought management plans, particularly with a view to ensuring the provision of drinking water, ensuring food production and integrating digitalised monitoring, control and early warning systems in order to support effective and data-based decisions on protection, response and communication measures with clearly defined areas of responsibility; points out the need to introduce EU-level provisions as regards drought management plans, similar to the ones on flood management plans;

    66.  Insists, in view of the numerous climatic events, such as floods, droughts and cyclones, which have affected Europe, on the importance of the EU having a robust mechanism for responding to such crises, including systems for warning and providing assistance to the civilian population; points out that digital monitoring, adequate public display of relevant data and early warning systems are key to developing effective drought and flood management plans at the level of the Member States; emphasises, further, the importance of fully using the available EU tools, such as the flood forecasts of the European Flood Awareness System and the Global Flood Awareness System, and the Global Flood Monitoring tool, as part of the Copernicus Emergency Management Service;

    67.  Stresses the importance of the Union Civil Protection Mechanism (UCPM) in helping countries hit by water-related disasters such as flood and droughts; calls for increased funding to provide the UCPM with sufficient and upgraded resources in order to increase preparedness and improve capacity building;

    68.  Calls on the Commission and the Member States to enhance citizen preparedness in the event of water-related disasters or crisis; stresses the importance of information campaigns and demonstration exercises in education facilities, public administration and businesses in order to build a ‘preparedness culture’ for citizens;

    69.  Calls on the Member States to systematically renew and upgrade their water infrastructure, including drinking water and sanitation infrastructure, as well as infrastructure regulating river flows, and to invest in innovative solutions based on good practice, making water systems more resilient to climate change, ensuring stable drinking water supply, enabling the early detection of losses and reducing water leakages and waste, while optimising water transport and storage systems; highlights the fact that funding for innovative water infrastructure is insufficient compared to the investment needs across the EU; calls, in this regard, for dedicated funding, on national, regional or EU level, to ensure adequate financing for the development, maintenance and modernisation of water-resilient infrastructure, to foster innovative solutions and technologies and ensure long-term sustainability of that water infrastructure;

    70.  Regrets that, despite the threat that desertification poses to water quality and availability, soil fertility and food production, and despite the fact that 13 Member States have declared themselves to be affected by desertification in the context of the United Nations Convention to Combat Desertification, the Commission is not addressing desertification effectively and efficiently; urges the Commission, therefore, in line with the Council conclusions of 14 October 2024 on desertification, land degradation and drought, to present an integrated EU-wide action plan to combat desertification, land degradation and drought, aiming at building resilience to drought and achieving land degradation neutrality in the EU by 2030, based on a full impact assessment;

    71.  Insists that the agricultural sector be further supported in implementing new technologies to reduce the demand for water, while at the same time increasing access to water, including by supporting water retention and groundwater recharge; calls for research results, for example on seawater desalination, to be made accessible and to facilitate the deployment of innovative desalination solutions; calls on the Member States to create natural water reserves based on up-to-date assessments of climate risks to protect critical water supplies and their catchments, and taking into consideration the environmental and socio-economic impact of developing such reserves; points out that such natural water reserves would complement the WFD’s requirement for Member States to identify water bodies used for drinking water abstraction, making sure they meet the objectives set out in Article 4 WFD and in the Drinking Water Directive, and would ensure their necessary protection; notes that such natural water reserves already exist under different forms in various Member States; stresses that assistance should be given to Member States or local and regional governments to help them develop natural water reserves;

    72.  Notes the potential of retention infrastructure as an example of water generation systems created using the best available, cost-effective techniques that have the lowest environmental impact, including by means of wastewater reuse or rainwater collection, in order to reduce the risks of droughts and floods, increase water security and foster circularity, water reclamation and reuse; believes that water retention facilities may be useful tools provided that they are authorised by local or national authorities under clear conditions, including the capacity of local groundwater to sustain such activities and the need for farmers accessing the water resource to adapt their practices to more sustainable practices, in particular in terms of water needs and water quality; calls on the Commission to use its available tools, including financial support, to streamline this approach among the Member States;

    73.  Deplores the unlawful or intentional abstraction of water, which is likely to cause substantial damage to water bodies; calls for strong dissuasive measures to be applied, including through the criminal law, to protect the ecological status or the ecological potential of surface water bodies or of the quantitative status of groundwater bodies; notes that additional support for training and knowledge transfer for national enforcement capacities is needed;

    74.  Notes the important cross-cutting role of nature-based solutions in addressing the challenges of the triple planetary crisis and restoring the natural water cycle; calls on the Commission and the Member States to prioritise, taking into account the environmental and socio-economic impacts, the deployment of nature-based solutions for water resilience in their policy actions and recommendations, such as the re-wetting of wetlands and peatlands to increase ground water availability and surrounding soil moisture, the restoration and protection of floodplains, natural water retention measures, revegetation as a barrier against floods, and rainwater conservation, in order to strengthen water availability, mitigate climate change risks and support long-term resilience for communities, businesses and food production; underlines that, in addition to nature-based solutions, complementary investment in engineering solutions remains necessary to ensure successful climate adaptation and water resilience in the long term;

    Funding and pricing

    75.  Notes that nature-based solutions and natural water retention measures have the potential to restore groundwater levels and support ecological flows while reducing water-related risks from water scarcity, floods and droughts; notes that in flood management, nature-based solutions cannot usually replace existing solutions and may not be effective for the most extreme events; points out, however, that nature-based solutions can enhance the effectiveness and operable life of grey infrastructure by increasing water absorption capacity, reducing water velocity and regulating peak flows; reiterates, in this regard, that the effectiveness of nature-based solutions is context-specific and must be adapted to the local situation; emphasises in this regard that a ‘one solution that fits all’ does not exist;

    76.  Stresses the need to provide financial support for sustainable innovative methods and solutions, while having due regard to public-private partnerships;

    77.  Stresses, in the context of climate adaptation, the importance of healthy soils in ensuring water security and circularity; emphasises that the natural water retention of soils must be improved through measures to enhance soil health, minimising carbon losses, as well as actions at the level of the water body, such as the stabilisation of riverbanks, including through re-naturalisation, and the restoration of the retention capacities of aquifers;

    78.  Notes that thoroughly designed forest management measures can improve watershed health, regulate water flow and reduce drought and flood stress, given the essential role of trees and forests in water cycle regulation, through their ability to purify water, increase the availability of water resources and improve soil moisture retention; proposes that this be duly considered when the Commission, in cooperation with the Member States, develops Union disaster resilience goals and that it be considered in the development and refinement of disaster risk management and contingency planning; highlights the need, in this regard, for more research, data collection, innovation and funding to support land managers in preventing the impact of environmental stressors such as drought floods and diminishing watershed function;

    79.  Recognises that urban areas are increasingly vulnerable to water-related climate risks such as flooding, water shortages and heat stress; calls for the integration of urban water resilience planning into climate adaptation strategies, including investment in green roofs, permeable infrastructure, rainwater harvesting and storm water retention systems, as well as measures aimed at increasing green and blue spaces in urban areas, in order to mitigate extreme weather impacts and to reduce the risks to human life and property; calls further for the maintenance of, and regained access to, urban waterways in cities;

    80.  Emphasises that the EWRS should ensure adequate funding from public and private sources in order to support the modernisation, upgrading, adaptation and maintenance of resilient water infrastructure, sustainable water management, data collection, research, effective monitoring, digitalisation, upskilling, nature-based solutions, the development and the uptake of innovative water-efficient technologies, as well as to ensure environmental and socio-economic sustainability in line with the goals set by the new European Competitiveness Compass;

    81.  Calls on the Commission to create a separate and dedicated fund for water resilience within the upcoming MFF; believes that specific financial mechanisms should also be established within the European Regional Development Fund and the Cohesion Fund to support water-smart technologies and water investment; strongly believes that, in the interim, water should be prioritised in existing funding frameworks, including the Cohesion Fund; stresses that EU funding mechanisms must incorporate considerations of social equity and affordability, in particular in the context of providing water services to the population, ensuring support for Member States and citizens with greater financial constraints and specific realities, while meeting water management obligations; highlights the importance of adjusting existing funding, subsidies and financing streams related to water management and other related land uses, moving away from outdated engineering solutions to innovative ones, as well as nature-based solutions or a combination thereof;

    82.  Calls for targeted funding, via Horizon Europe and the EIP-AGRI, for field trials on the water relations of different cropping systems; calls for the recognition of the role of women in water policies and for specific funding to be identified to promote their access to agriculture;

    83.  Recalls that the lack of dedicated funding for water or binding funding targets within the current MFF limits the EU’s capacity to direct targeted investment towards essential water resilience measures, including infrastructure modernisation, innovation, climate adaptation measures and the implementation of nature-based solutions, and thus its competitive capacity, as the absence of a water balance creates an additional burden for the economy of the regions; notes that outermost and mountainous regions and islands in the EU are particularly struggling to access funding or public-private partnerships to support local and regional investment in water management and infrastructure;

    84.  Stresses the important role of the European Investment Bank (EIB) in water financing; highlights the fact that the EIB is actively investing in and supporting the water sector; stresses that the EU should collaborate with the EIB to share best practice and calls, further, on the EIB and other financial institutions to strengthen their role in the funding of innovative and resilient water infrastructure, improved sanitation and drinking water infrastructure, digitalisation, as well as to support projects aimed at flood risk reduction, erosion prevention and the revitalization of watercourses, by facilitating favourable conditions for water investment;

    85.  Urges the Commission to explore and promote innovative financing mechanisms, including payments for ecosystem services and green bonds, while ensuring regulatory clarity and safeguards to prevent market distortions; calls on the EIB and other financial institutions to prioritise low-interest loans and credits for Member States and regional and local authorities undertaking large-scale restoration projects, with specific provisions to support economically disadvantaged regions;

    86.  Highlights the importance of public-private partnerships as a source of funding for water investment; calls on the Commission to incentivise private investment in the water sector by creating a supportive regulatory framework that may include co-financing opportunities and public-private partnerships in order to drive innovation, improve infrastructure and ensure sustainable water management solutions across the Member States; underlines, nevertheless, that the involvement of private investment in the EU water sector must not undermine the status of water as a public good and a public service, and that the long-term resilience of the sector, as well as the principles of accessibility, affordability and sustainability must be ensured;

    87.  Calls on the Member States to adopt governance frameworks that clearly define the roles and responsibilities of stakeholders in planning, financing and implementing nature-based solutions; believes that these frameworks should integrate funding from diverse sources, including philanthropic contributions and private-sector partnerships, while ensuring equitable access to resources for small-scale projects, particularly managed at local or regional levels;

    88.  Urges the Commission and the Member States to address water aspects in their budgets and to improve governance within the regions in the use of EU funds;

    89.  Underlines the need to provide targeted financial and technical assistance to municipalities to facilitate compliance with water-related legislation;

    90.  Encourages the Member States to accelerate the granting of authorisations for sustainable and innovative resilient water infrastructure projects to enable their rapid implementation in the face of the urgent challenges;

    91.  Notes that the application of the cost recovery principle on water services, which provides that all water users effectively and proportionately participate financially in the recovery of the costs of water services, remains low to non-existent in several Member States; calls on the Member States and their regional authorities to implement adequate water pricing policies and apply the cost recovery principle for both environmental and resource costs in line with the WFD; calls on the Member States to take into account the long investment cycles when implementing the cost recovery principle and to ensure sufficient funding is available for needed (re)investment;

    92.  Stresses the importance of ensuring that water pricing supports long-term water security by reflecting the economic, environmental and resource costs of water use; encourages the Member States and competent regional and local authorities to ensure that water pricing is economically sustainable, socially fair and promotes efficient water use, and that it reflects the availability of water across different Member States and regions, particularly in water-stressed regions, while safeguarding affordability for households and small businesses; calls on the Member States and competent regional and local authorities to insure transparent water prices and to raise awareness of the value of water services;

    93.  Points out that competent national water authorities will play a central role in implementing new water management and conservation plans at the level of the Member States; calls, therefore, on the Members States to financially and technically increase the capacity of those competent authorities to play a more significant enabling and advisory role in sustainable and future-proof water management and storage infrastructure; believes that EU funds, such as the Just Transition Fund, should be used to further assist Member States and water agencies in implementation;

    Digitalisation, security and technological innovation

    94.  Stresses the potential and the necessity for digitalisation and AI in improving the management and monitoring of bodies of water and water infrastructure, as well as in reporting and ensuring the comparability of data reflecting different geographical flow conditions;

    95.  Calls on the Commission, the Member States and water providers to mainstream transparency and digitalisation as fundamental principles in water management and to enhance the use of management and metering data, with the aim of strengthening monitoring, assessment, accountability and decision-making, while optimising and simplifying reporting obligations; calls for digitally enabled water technologies to facilitate real-time, sample-based and distance monitoring and reporting on water quality, leakages, usage and resources; calls for improved efficiency in the use of public funds and public spending in this area; recognises that widespread deployment of innovative digital technologies needs to be accompanied by digital skills training;

    96.  Emphasises the need to promote digitalisation and data-centric solutions in building a water-smart society; stresses the need to develop digital solutions for monitoring water consumption and optimising the use of water resources across all sectors; calls on the Commission, in cooperation with the Member States, to provide financial support for the implementation of smart water management systems, focusing on the needs of small and medium-sized enterprises (SMEs);

    97.  Points out that water systems, including water treatment and distribution systems, are considered one of the nation’s critical infrastructures and security pillars, and hence key for the EU’s strategic autonomy, and require increased protection and the ability of utilities to detect, respond to, and recover from physical and cyberthreats and cyberattacks; notes that a higher level of digitalisation comes with new vulnerabilities; points out that, in the event of a threat or an attack, water system operators can lose their ability to control the flow and quality of the water or lose the ability to track the true status of the water system; insists that vulnerability assessments and an emergency response plan should be an integral part of the water management system in every Member State; encourages the promotion of information sharing about threats to cybersecurity and procedures to exchange best practice among operators, as well as to establish a cybersecurity culture through technical security measures, competence building and awareness creation and communication; draws attention to the measures and provisions in the NIS2 Directive and the Critical Entities Resilience Directive which could help mitigate the arising security risks; calls on the Commission to take the lead in reinforcing the EU-level coordination formats and to propose effective tools in the upcoming Preparedness Union Strategy with the aim of ensuring timely preparedness to tackle environmental and non-environmental risks to the water bodies that are threatening the EU’s overall security;

    98.  Calls on the Commission and the Member States to increase the involvement of women in decisions regarding water resilience; calls for the adoption of a methodological approach that effectively considers gender-related needs in the implementation of water supply projects, by implementing monitoring, reporting and tracking that use tools and indicators disaggregated by gender;

    99.  Notes that better data and data analysis are key to evidence-based decision-making and the swift identification of small changes in water quality that could present a threat to bodies of water, together with the evaluation of best practice and identification of the most cost-effective and impactful measures;

    100.  Stresses that improved, reliable and interoperable data on water supply, demand, distribution, accessibility and use are needed and that data points need to be established; urges the Commission and the Member States to enhance data collection and improve data interoperability across all levels to support the implementation of current water legislation, as well as to facilitate circular economy and water-smart industrial symbiosis strategies; highlights the fact that data and AI could be used in modelling water and energy consumption as well as reuse and recycling capacities;

    101.  Calls on the Commission to better recognise the fundamental role of the water sector in bolstering EU competiveness by fostering research and innovation and promoting entrepreneurship and talent; emphasises, in this regard, the importance of ramping up innovation in the water sector; points out that the European Innovation Centre for Industrial Transformation and Emissions, created as part of Directive 2010/75/EU, could play a role in this regard, as it evaluates the environmental performance of industrial technologies and gathers information on innovative industrial environmental techniques; points, further, to existing partnerships like the Water4All Partnership, a funding programme for scientific research;

    102.  Believes that there is a need to build and nurture multi-stakeholder platforms to promote innovation uptake at all levels, local and national; recommends that these platforms involve a wide range of participants – the public and private sectors, and civil society associations – to build a coalition of partners to bring about change; supports the promotion of knowledge sharing on how digital water technologies can support the implementation of existing EU water legislation, as well as capacity building at local, regional and national levels; calls on the Commission and the Members States to expand digital skills, and research and development (R&D) programmes targeting water, including through collaboration with universities, research centres and SMEs;

    103.  Acknowledges the critical role of data centres in the digital economy; notes with concern that the rapid expansion of the technology could lead to a substantial increase in AI’s demand for water resources associated with their operations, which could undermine the environmental benefits that AI promises to deliver, such as resource optimisation and carbon emission reductions, and stresses the need to integrate water efficiency measures in their design and operation; urges the Commission to address the use of water resources by information and communications technologies (ICT) and, in particular, by AI and data centres in its EWRS, in particular by encouraging data centres to reuse treated water and to promote the design of more efficient chips and components to reduce the need for cooling; recommends that the Member States prioritise water resilience strategies that address the specific challenges posed by data centres to ensure the sustainability of both the digital and the environmental agendas;

    104.  Recalls that seawater desalination is the process of removing salt from sea or brackish water to make it useable for a range of ‘fit for use’ purposes, including drinking, and that it is thus an important technological solution for people’s livelihoods; notes that, at the same time, desalination is an energy-intensive process and should ideally be done using renewable energy, whenever possible, in order to minimise environmental impacts; reiterates that desalination produces a by-product, brine (a concentrated salt solution), that must be properly disposed of to avoid adverse impacts on the marine environment; considers, therefore, that desalination based on reverse osmosis or thermal technologies should be applied, if other more environmentally sustainable options are not available or cannot be implemented, particularly in remote areas and islands; highlights, in this regard, the ongoing work on new technological solutions, such as microbial desalination cells, offering an environmentally sustainable and innovative alternative to traditional desalination methods, particularly to provide clean water and wastewater treatment to small, isolated locations without electricity;

    105.  Stresses the need for increased funding and R&D into technologies such as innovative desalination techniques in order to increase the efficiency, sustainability and the scaling up of such technologies; calls for research into the possibilities of using such technologies in agriculture to diversify the water supply points and therefore decrease the vulnerability of the sector to water stress;

    106.  Notes that in the last decade, there have been many scientific breakthroughs for making water treatment smarter and more circular, with these solutions offering opportunities for using digital solutions, AI and remote sensing to use water more efficiently and by reusing treated wastewater for irrigation and recovering energy and nutrients from wastewater;

    107.  Calls on the Commission and the Member States to address the regulatory obstacles within the single market to facilitate the development, scaling-up, and placing on the market of innovative biotechnology and biomanufacturing solutions and the promotion of cleaner manufacturing and circularity;

    108.  Calls for the funding, development and authorisation of innovative solutions for crop protection and fertilisation, including biological control agents and active substances with lower impact on the environment, which are needed for a just transition to more sustainable agricultural systems;

    109.  Calls for specific programmes to be established for the cleaning and conservation of river channels, ensuring adequate flow and reducing the accumulation of debris and sediment that can affect water storage and distribution capacity;

    Cross-border and international cooperation

    110.  Stresses the need for a comprehensive EWRS that fosters cross-border cooperation, more uniform data collection and reporting, sharing best practice between local, regional and national actors, ensuring sustainable water management and equitable resource distribution among the Member States, preventing water challenges such as scarcity and flood risk from being passed on to other Member States;

    111.  Emphasises that climate change represents a major threat to water resources and aquatic ecosystems; notes that floods and water scarcity compromise food and water security and the health of the general population, ultimately affecting social cohesion and stability; recognises that water resilience is crucial for preventing and addressing current and future health, food, energy and security crises; emphasises that water resilience promotes transboundary water cooperation, serving as a catalyst for peace and security, as countries are interconnected through shared rivers and groundwater resources;

    112.  Calls for increased cross-border cooperation between the Member States in the management of shared river basins and groundwater aquifers and in the effective collection and sharing of data on water quality, pollution levels and water levels; recommends the establishment of regional cooperation centres to coordinate the implementation of joint water resilience strategies, taking into account the climate, social and economic challenges of each territory;

    113.  Calls for enhanced international cooperation, including at the level of river basins, to address the growing water crisis, ensure clean and high-quality water, promote sustainable water management and implement various innovative water technologies, including nature-based solutions; calls for the anchoring of cooperation across borders at operational, tactical and strategic levels;

    114.  Calls for the establishment of cross-border projects under Interreg and other EU funds to improve regional cooperation in the management of water resources, with a particular focus on ensuring the fair distribution of water between sectors and Member States;

    115.  Stresses the need to strengthen EU monitoring capacities through digitalisation and modern technologies, including satellite surveillance and real-time pollution tracking, which are essential for preventing and combating cross-border pollution;

    116.  Urges the Commission to implement a specific diplomatic role dedicated to resolving water-related conflicts, promoting water cooperation and protecting water sources and systems, particularly during armed conflicts and in transboundary contexts;

    117.  Urges the EU to lead international efforts to protect and restore water ecosystems in line with the SDG 6 on clean water and sanitation;

    o
    o   o

    118.  Instructs its President to forward this resolution to the Council and the Commission.

    (1) OJ L 243, 9.7.2021, p. 1, ELI: http://data.europa.eu/eli/reg/2021/1119/oj.
    (2) OJ L 327, 22.12.2000, p. 1, ELI: http://data.europa.eu/eli/dir/2000/60/oj.
    (3) OJ L 372, 27.12.2006, p. 19, ELI: http://data.europa.eu/eli/dir/2006/118/oj.
    (4) OJ L 348, 24.12.2008, p. 84, ELI: http://data.europa.eu/eli/dir/2008/105/oj.
    (5) OJ L 288, 6.11.2007, p. 27, ELI: http://data.europa.eu/eli/dir/2007/60/oj.
    (6) OJ L 435, 23.12.2020, p. 1, ELI: http://data.europa.eu/eli/dir/2020/2184/oj.
    (7) OJ L 177, 5.6.2020, p. 32, ELI: http://data.europa.eu/eli/reg/2020/741/oj.
    (8) OJ L 164, 25.6.2008, p. 19, ELI: http://data.europa.eu/eli/dir/2008/56/oj.
    (9) OJ L, 2024/3019, 12.12.2024, ELI: http://data.europa.eu/eli/dir/2024/3019/oj.
    (10) OJ L, 2024/1785, 15.7.2024, ELI: http://data.europa.eu/eli/dir/2024/1785/oj.
    (11) OJ L 375, 31.12.1991, p. 1, ELI: http://data.europa.eu/eli/dir/1991/676/oj.
    (12) OJ L, 2024/1991, 29.7.2024, ELI: http://data.europa.eu/eli/reg/2024/1991/oj.
    (13) OJ L 333, 27.12.2022, p. 164, ELI: http://data.europa.eu/eli/dir/2022/2557/oj.
    (14) OJ L 333, 27.12.2022, p. 80, ELI: http://data.europa.eu/eli/dir/2022/2555/oj.
    (15) OJ L 309, 24.11.2009, p. 71, ELI: http://data.europa.eu/eli/dir/2009/128/oj.
    (16) OJ L 435, 6.12.2021, p. 1, ELI: http://data.europa.eu/eli/reg/2021/2115/oj.
    (17) OJ L, 2024/3190, 31.12.2024, ELI: http://data.europa.eu/eli/reg/2024/3190/oj.
    (18) OJ C 132, 14.4.2023, p. 54.
    (19) OJ C, C/2024/7216, 10.12.2024, ELI: http://data.europa.eu/eli/C/2024/7216/oj.
    (20) OJ C 132, 14.4.2023, p. 106.
    (21) OJ C 232, 16.6.2021, p. 28.
    (22) OJ C, C/2025/808, 11.2.2025, ELI: http://data.europa.eu/eli/C/2025/808/oj.
    (23) OJ C 445, 29.10.2021, p. 126.
    (24) OJ C 316, 22.9.2017, p. 99.
    (25) Texts adopted, P9_TA(2024)0358.
    (26) World Meteorological Organization, 2021 State of Climate Services – Water, WMO-No 1278, WMO, Geneva, 2021.
    (27) European Environment Agency, Water resources across Europe – confronting water scarcity and drought, EEA Report 2/2009.
    (28) EEA Report 07/2024.
    (29) WWF, High Cost of Cheap Water, WWF, Gland, 2021.
    (30) EEA Report 07/2024.
    (31) European Commission, Attitudes of Europeans towards the environment, Special Eurobarometer 550, May 2024.
    (32) European Commission: Directorate-General for Environment, et al., Implementation of water balances in the EU – Final report, Publications Office of the European Union, 2024.
    (33) Disclosure Insight Action (CDP) and Planet Tracker, High and Dry. How Water Issues Are Stranding Assets, 2022.
    (34) EEA Report 07/2024.
    (35) European Environment Agency, ‘Water abstraction by economic sector in the 27 EU Member States, 2000-2022’, European Environment Agency website, 5 December 2024, https://www.eea.europa.eu/en/analysis/indicators/water-abstraction-by-source-and/water-abstraction-by-economic?activeTab=8a280073-bf94-4717-b3e2-1374b57ca99d.
    (36) Eurostat, ‘Archive: Water use in industry’, Eurostat website, https://ec.europa.eu/eurostat/statistics-explained/index.php?title=Archive:Water_use_in_industry&oldid=196132#Further_Eurostat_information.
    (37) EEA Report 07/2024.
    (38) Food and Agriculture Organization of the United Nations, Water accounting and auditing, A sourcebook, FAO Water Reports 43, FAO, Rome, 2016.
    (39) European Investment Bank, Wastewater as a resource, EIB, 2022.
    (40) European Commission: Directorate-General for Environment, ‘Water reuse: New EU rules to improve access to safe irrigation’, European Commission website, 26 June 2023, https://environment.ec.europa.eu/news/water-reuse-new-eu-rules-improve-access-safe-irrigation-2023-06-26_en.
    (41) European Commission: Directorate-General for Environment, ‘Zero pollution: Improved quality and access to drinking water’, European Commission website, 12 January 2023, https://environment.ec.europa.eu/news/improved-quality-and-access-drinking-water-all-europeans-2023-01-12_en.
    (42) EEA Report 07/2024.
    (43) Ibid.
    (44) Ibid.
    (45) Ibid.
    (46) Ibid.
    (47) Ibid.
    (48) European Environment Agency, ‘Industrial pollutant releases to water in Europe’, European Environment Agency website, 30 May 2024, https://www.eea.europa.eu/en/analysis/indicators/industrial-pollutant-releases-to-water.
    (49) Directive 2010/75/EU of the European Parliament and of the Council of 24 November 2010 on industrial emissions (integrated pollution prevention and control) (OJ L 334, 17.12.2010, p. 17, ELI: http://data.europa.eu/eli/dir/2010/75/oj).
    (50) European Commission ‘Nitrates’, European Commission website, https://environment.ec.europa.eu/topics/water/nitrates_en#implementation.
    (51) European Environment Agency, ‘Public exposure to widely used Bisphenol A exceeds acceptable health safety levels’, European Environment Agency website, 14 September 2023, https://www.eea.europa.eu/en/newsroom/news/public-exposure-to-bisphenol-a.
    (52) European Environment Agency, European Climate Risk Assessment, EEA Report 01/2024.
    (53) Cammalleri, C. et al., Global warming and drought impacts in the EU, JRC Technical Report , Publications Office of the European Union, Luxembourg.
    (54) EEA Report 07/2024.
    (55) Feyen, L. et al., Climate change impacts and adaptation in Europe, JRC PESETA IV final report, Publications Office of the European Union, Luxembourg.
    (56) European Environment AgencyEuropean Climate Risk Assessment, EEA Report 01/2024.
    (57) United Nations Office for Disaster Risk Reduction, GAR Special Report on Drought 2021, Geneva, UNDRR, 2021.
    (58) Council conclusions of 14 October 2024 on Desertification, Land Degradation and Drought.
    (59) EEA Report 07/2024.
    (60) Directive (EU) 2024/1203 of the European Parliament and of the Council of 11 April 2024 on the protection of the environment through criminal law and replacing Directives 2008/99/EC and 2009/123/EC (OJ L, 2024/1203, 30.4.2024, ELI: http://data.europa.eu/eli/dir/2024/1203/oj).
    (61) European Patent Office, Innovation in water-related technologies, EPO, Munich 2024.
    (62) EEA Report 07/2024.
    (63) European Commission JRC Science for Policy Report, ‘Technical proposals for the safe use of processed manure above the threshold established for Nitrate Vulnerable Zones by the Nitrates Directive (91/676/EEC)’, 2020.
    (64) Regulation (EC) No 1935/2004 of the European Parliament and of the Council of 27 October 2004 on materials and articles intended to come into contact with food and repealing Directives 80/590/EEC and 89/109/EEC (OJ L 338, 13.11.2004, p. 4, ELI: http://data.europa.eu/eli/reg/2004/1935/oj).
    (65) European Environment Agency,‘Industrial pollutant releases to water in Europe, European Environment Agency website, 30 May 2024, https://www.eea.europa.eu/en/analysis/indicators/industrial-pollutant-releases-to-water.
    (66) United Nations Office for Disaster Risk Reduction, Build Back Better in recovery, rehabilitation and reconstruction, UNISDR, Geneva, 2019.
    (67) European Commission: Directorate-General for Environment et al. Stock-taking analysis and outlook of drought policies, planning and management in EU Member States – Final Report, Publications Office of the European Union, 2023.

    MIL OSI Europe News

  • MIL-OSI Europe: Text adopted – A revamped long-term budget for the Union in a changing world – P10_TA(2025)0090 – Wednesday, 7 May 2025 – Strasbourg

    Source: European Parliament

    The European Parliament,

    –  having regard to Articles 311, 312, 323 and 324 of the Treaty on the Functioning of the European Union (TFEU),

    –  having regard to Council Regulation (EU, Euratom) 2020/2093 of 17 December 2020 laying down the multiannual financial framework for the years 2021 to 2027(1) and to the joint declarations agreed between Parliament, the Council and the Commission in this context and the related unilateral declarations,

    –  having regard to Council Decision (EU, Euratom) 2020/2053 of 14 December 2020 on the system of own resources of the European Union and repealing Decision 2014/335/EU, Euratom(2),

    –  having regard to the amended Commission proposal of 23 June 2023 for a Council decision amending Decision (EU, Euratom) 2020/2053 on the system of own resources of the European Union (COM(2023)0331),

    –  having regard to the Interinstitutional Agreement of 16 December 2020 between the European Parliament, the Council of the European Union and the European Commission on budgetary discipline, on cooperation in budgetary matters and on sound financial management, as well as on new own resources, including a roadmap towards the introduction of new own resources(3) (the IIA),

    –  having regard to Regulation (EU, Euratom) 2024/2509 of the European Parliament and of the Council of 23 September 2024 on the financial rules applicable to the general budget of the Union (recast)(4) (the Financial Regulation),

    –  having regard to Regulation (EU, Euratom) 2020/2092 of the European Parliament and of the Council of 16 December 2020 on a general regime of conditionality for the protection of the Union budget(5) (the Rule of Law Conditionality Regulation),

    –  having regard to its position of 27 February 2024 on the draft Council regulation amending Regulation (EU, Euratom) 2020/2093 laying down the multiannual financial framework for the years 2021 to 2027(6),

    –  having regard to its resolution of 10 May 2023 on own resources: a new start for EU finances, a new start for Europe(7),

    –  having regard to its resolution of 15 December 2022 on upscaling the 2021-2027 multiannual financial framework: a resilient EU budget fit for new challenges(8),

    –  having regard to its position of 16 December 2020 on the draft Council regulation laying down the multiannual financial framework for the years 2021 to 2027(9),

    –  having regard to the Interinstitutional Proclamation on the European Pillar of Social Rights of 13 December 2017(10) and to the Commission Action Plan of 4 March 2021 on the implementation of the European Pillar of Social Rights (COM(2021)0102),

    –  having regard to the Agreement adopted at the 15th Conference of the Parties to the Convention on Biological Diversity (COP 15) in Montreal on 19 December 2022 (Kunming-Montreal Global Biodiversity Framework),

    –  having regard to the Agreement adopted at the 21st Conference of the Parties to the UNFCCC (COP 21) in Paris on 12 December 2015 (the Paris Agreement),

    –  having regard to the United Nations Sustainable Development Goals,

    –  having regard to the report of 30 October 2024 by Sauli Niinistö entitled ‘Safer together – strengthening Europe’s civilian and military preparedness and readiness’ (the Niinistö report),

    –  having regard to the report of 9 September 2024 by Mario Draghi entitled ‘The future of European competitiveness’ (the Draghi report),

    –  having regard to the report of 4 September 2024 of the Strategic Dialogue on the Future of EU Agriculture entitled ‘A shared prospect for farming and food in Europe’,

    –  having regard to the report of 17 April 2024 by Enrico Letta entitled ‘Much more than a market – speed, security, solidarity: empowering the Single Market to deliver a sustainable future and prosperity for all EU Citizens’ (the Letta report),

    –  having regard to the report of 20 February 2024 of the High-Level Group on the Future of Cohesion Policy entitled ‘Forging a sustainable future together – cohesion for a competitive and inclusive Europe’,

    –  having regard to the Budapest Declaration on the New European Competitiveness Deal,

    –  having regard to the joint communication of 26 March 2025 entitled ‘European Preparedness Union Strategy’ (JOIN(2025)0130),

    –  having regard to the joint white paper of 19 March 2025 entitled ‘European Defence Readiness 2030’ (JOIN(2025)0120),

    –  having regard to the Commission communication of 7 March 2025 entitled ‘A Roadmap for Women’s Rights’ (COM(2025)0097),

    –  having regard to the Commission communication of 26 February 2025 entitled ‘The Clean Industrial Deal: a joint roadmap for competitiveness and decarbonisation’ (COM(2025)0085),

    –  having regard to the Commission communication of 19 February 2025 entitled ‘A Vision for Agriculture and Food’ (COM(2025)0075),

    –  having regard to the Commission communication of 11 February 2025 entitled ‘The road to the next multiannual financial framework’ (COM(2025)0046),

    –  having regard to the Commission communication of 29 January 2025 entitled ‘A Competitiveness Compass for the EU’ (COM(2025)0030),

    –  having regard to the Commission communication of 9 December 2021 entitled ‘Building an economy that works for people: an action plan for the social economy’ (COM(2021)0778),

    –  having regard to the European Council conclusions of 20 March 2025, 6 March 2025 and 19 December 2024,

    –  having regard to the political guidelines of 18 July 2024 for the next European Commission 2024-2029,

    –  having regard to the opinion of the Committee of the Regions of 20 November 2024 entitled ‘EU budget and place-based policies: proposals for new design and delivery mechanisms in the MFF post-2027’(11),

    –  having regard to Rule 55 of its Rules of Procedure,

    –  having regard to the opinions of the Committee on Foreign Affairs, the Committee on Development, the Committee on Budgetary Control, the Committee on Economic and Monetary Affairs, the Committee on Employment and Social Affairs, the Committee on the Environment, Climate and Food Safety, the Committee on Industry, Research and Energy, the Committee on Internal Market and Consumer Protection, the Committee on Transport and Tourism, the Committee on Regional Development, the Committee on Agriculture and Rural Development, the Committee on Culture and Education, the Committee on Civil Liberties, Justice and Home Affairs, the Committee on Constitutional Affairs, and the Committee on Women’s Rights and Gender Equality,

    –  having regard to the report of the Committee on Budgets (A10-0076/2025),

    A.  whereas, under Article 311 TFEU, the Union is required to provide itself with the means necessary to attain its objectives and carry through its policies;

    B.  whereas the Union budget is primarily an investment tool that can achieve economies of scale unattainable at Member State level and support European public goods, in particular through cross-border projects; whereas all spending through the Union budget must provide European added value and deliver discernible net benefits compared to spending at national or sub-national level, leading to real and lasting results;

    C.  whereas spending through the Union budget, if effectively targeted, aligned with the Union’s political priorities and better coordinated with spending at national level, helps to avoid fragmentation in the single market, promote upwards convergence, decrease inequalities and boost the overall impact of public investment; whereas public investment is essential as a catalyst for private investment in sectors where the market alone cannot drive the required investment;

    D.  whereas the NextGenerationEU recovery instrument (NGEU) established in the wake of the COVID-19 pandemic enabled significant additional investment capacity of EUR 750 billion in 2018 prices – beyond the Union budget, which amounts to 1,1 % of the EU-27’s gross national income (GNI) – prompting a swift recovery and return to growth and supporting the green and digital transitions; whereas NGEU will not be in place post-2027;

    E.  whereas in 2022 Member States spent an average of 1,4 % of gross domestic product (GDP) on State aid – significantly more than their contribution to the Union budget – with over half of the State aid unrelated to crises;

    F.  whereas the Union budget, bolstered by NGEU and loans through the SURE scheme, has been instrumental in alleviating the economic and social impact of the COVID-19 crisis and in responding to the effects of Russia’s war of aggression against Ukraine; whereas the Union budget remains ill-equipped, in terms of size, structure and rules, to fully play its role in adjusting to evolving spending needs, addressing shocks and responding to crises and giving practical effect to the principle of solidarity, and to enable the Union to fulfil its objectives as established under the Treaties;

    G.  whereas people rightly expect more from the Union and its budget, including the capacity to respond quickly and effectively to evolving needs and to provide them with the necessary support, especially in times of crisis;

    H.  whereas, since the adoption of the current multiannual financial framework (MFF), the political, economic and social context has changed beyond recognition, compounding underlying structural challenges for the Union and leading to a substantial revision of the MFF in 2024;

    I.  whereas the context in which the Commission will prepare its proposals for the post-2027 MFF is every bit as challenging, with the established global and geopolitical order changing quickly and radically, the return of large-scale warfare in the Union’s immediate neighbourhood, a highly challenging economic and social backdrop and the worsening climate and biodiversity crisis; whereas, as the Commission has made clear, the status quo is not an option and the Union budget will need to change accordingly;

    J.  whereas the US administration has decided to retreat from the country’s post-war global role in guaranteeing peace and security, in leading on global governance in the rules-based, multilateral international order and in providing essential development and humanitarian aid to those most in need around the world; whereas the Union will therefore have to step up to fill part of the void the US appears set to leave, placing additional demands on the budget;

    K.  whereas the Union has committed to take all the steps needed to achieve climate neutrality by 2050 at the latest and to protect nature and reverse biodiversity loss; whereas delivering on the policy framework put in place to achieve this objective will require substantial investment; whereas the Union budget will have to play a key role in providing and incentivising that investment;

    L.  whereas, in order to compensate for the budget’s shortcomings, there have been numerous workaround solutions that make the budget more opaque, leaving the public in the dark about the real volume of Union spending, undermining the longer-term predictability of investment the budget is designed to provide and undercutting not only the principle of budget unity, but also Parliament’s role as a legislator and budgetary and discharge authority and in holding the executive to account;

    M.  whereas the Union is founded on the values of respect for human dignity, freedom, democracy, equality, the rule of law and respect for human rights, including the rights of persons belonging to minorities; whereas breaches of those values undermine the cohesion of the Union, erode the rights of Union citizens and weaken mutual trust among Member States;

    1.  Insists that, in a fast changing world where people rightly expect more from the Union and its budget and where the Union is confronted with a growing number of crises, the next MFF must be endowed with increased resources compared to the 2021-2027 period, moving away from the historically restrictive, self-imposed level of 1 % of GNI;

    2.  Underscores that the next MFF must focus on financing European public goods with discernible added value compared to national spending; highlights the need for enhanced synergies and better coordination between Union and national spending; emphasises that spending will have to address major challenges, such as the return of large-scale warfare in the Union’s immediate neighbourhood, a highly challenging economic and social backdrop, a competitiveness gap and the worsening climate and biodiversity crisis;

    3.  Considers that the ‘one national plan per Member State’ approach as envisaged by the Commission, with the Recovery and Resilience Facility model as a blueprint, cannot be the basis for shared management spending post-2027; underlines that the design of shared management spending under the next MFF must fully safeguard Parliament’s roles as legislator and budgetary and discharge authority and be designed and implemented through close collaboration with regional and local authorities and all relevant stakeholders;

    4.  Calls for the next MFF to continue support for economic, social and territorial cohesion in order to help bind the Union together, deepen the single market, promote convergence and reduce inequality, poverty and social exclusion;

    5.  Considers that the idea of an umbrella Competitiveness Fund merging existing programmes as envisaged by the Commission is not fit for purpose; stresses that the fund should instead be a new instrument taking advantage of a toolbox of funding based on lessons learned from InvestEU and the Innovation Fund and complementing existing, highly successful programmes;

    6.  Stresses that, in particular in the light of the US’s retreat from its role as a global guarantor of peace and security, there is a clear need to progress towards a genuine Defence Union, with the next MFF supporting a comprehensive security approach through an increase in investment; stresses that defence spending cannot come at the expense of nor lead to a reduction in long-term investment in the economic, social and territorial cohesion of the Union;

    7.  Calls for genuine simplification for final beneficiaries by avoiding programmes with overlapping objectives, diverging eligibility criteria and different rules governing horizontal provisions; underlines that simplification cannot mean more leeway for the Commission without the necessary checks and balances and must therefore be achieved with full respect for the institutional balance provided for in the Treaties;

    8.  Insists on enhanced in-built crisis response capacity in the next MFF and sufficient margins under each heading; stresses that, alongside predictability for investment, spending programmes should retain a substantial in-built flexibility reserve, with allocation to specific policy objectives to be decided by the budgetary authority; underlines that flexibility for humanitarian aid should be ring-fenced; considers that the post-2027 MFF should include two special instruments – one dedicated to ensuring solidarity in the event of natural disasters and one for general-purpose crisis response;

    9.  Underlines that compliance with Union values and fundamental rights is an essential pre-requisite to access EU funds; insists that the Union budget be protected against misuse, fraud and breaches of the principle of the rule of law and calls for a stronger link between the rule of law and the Union budget post-2027;

    10.  Underlines that the repayment of NGEU borrowing must not endanger the financing of EU policies and priorities; stresses, therefore, that all costs related to borrowing backed by the Union budget or the budgetary headroom be treated distinctly from appropriations for EU programmes within the future MFF architecture;

    11.  Calls on the Council to adopt new own resources as a matter of urgency in order to enable sustainable repayment of NGEU borrowing; stresses that new genuine own resources, beyond the IIA, are essential for the Union’s higher spending needs; considers that all instruments and tools should be explored in order to provide the Union with the necessary resources, and considers, in this respect, that joint borrowing presents a viable option to ensure that the Union has sufficient resources to respond to acute Union-wide crises, such as the ongoing crisis in the area of security and defence;

    12.  Stands ready to work constructively with the Council and Commission to deliver a long-term budget that addresses the Union’s needs; highlights that the post-2027 MFF is being constructed in a far from ‘business as usual’ context and takes seriously its institutional role as enshrined in the Treaties; insists that it will only approve a long-term budget that is fit for purpose for the Union in a changing world and calls for swift adoption of the MFF to enable timely implementation of spending programmes from 1 January 2028;

    A long-term budget with a renewed spending focus

    13.  Considers that, in view of the structural challenges facing the Union, the post-2027 MFF should adjust its spending focus to ensure that the Union can meet its strategic policy aims as detailed below;

    Competitiveness, strategic autonomy, social, economic and territorial cohesion and resilience

    14.  Is convinced that boosting competitiveness, decarbonising the economy and enhancing the Union’s innovation capacity are central priorities for the post-2027 MFF and are vital to ensure long-term, sustainable and inclusive growth and a thriving, more resilient economy and society;

    15.  Considers that the Union must develop a competitiveness framework in line with its own values and political aims and that competitiveness must foster not only economic growth, but also social, economic and territorial cohesion and environmental sustainability as underlined in both the Draghi and Letta reports;

    16.  Underlines that, as spelt out in the Letta and Draghi reports, the European economy and social model are under intense strain, with the productivity, competitiveness and skills gap having knock-on effects on the quality of jobs and on living standards for Europeans already grappling with high housing, energy and food prices; is concerned that a lack of job opportunities and high costs of living increase the risk of a brain drain away from Europe;

    17.  Points out that Draghi puts the annual investment gap with respect to innovation and infrastructure at EUR 750-800 billion per year between 2025 and 2030; underlines that the Union budget must play a vital role but it cannot cover that shortfall alone, and that the bulk of the effort will have to come from the private sector – points to the need to exploit synergies between public and private investment, in particular by simplifying and harmonising the EU investment architecture;

    18.  Stresses that the Union budget must be carefully coordinated with national spending, so as to ensure complementarity, and must be designed such that it can de-risk, mobilise and leverage private investment effectively, enabling start-ups and SMEs to access funds more readily; calls, therefore, for programmes such as InvestEU, which ensures additionality and follows a market-based, demand-driven approach, to be significantly reinforced in the next MFF; considers that financial instruments and budgetary guarantees are an effective use of resources to achieve critical Union policy goals and calls for them to be further simplified;

    19.  Insists that more must be done to maximise the potential of the role of the European Investment Bank (EIB) Group – together with other international and national financial institutions – in lending and de-risking in strategic policy areas, such as climate and, latterly, security and defence projects; calls for an increased risk appetite and ambition from the EIB Group to crowd in investment, based on a strong capital position, and for a reinforced investment partnership to ensure that every euro spent at Union level is used in the most effective manner;

    20.  Emphasises that funding for research and innovation, including support for basic research, should be significantly increased, should be focused on the Union’s strategic priorities, should continue to be determined by the principle of excellence and should remain merit-based; considers that there should be sufficient resources across the MFF and at national level to fund all high-quality projects throughout the innovation cycle and to achieve the 3 % GDP target for research and development spending by 2030;

    21.  Stresses that the next MFF, building on the current Connecting Europe Facility, should include much greater, directly managed funding for energy, transport and digital infrastructure, with priority given to cross-border connections and national links with European added value; considers that such infrastructure is an absolute precondition for a successful deepening of the single market and for increasing the Union’s resilience in a changing geopolitical order;

    22.  Points out that a secure and robust space sector is critical for the Union’s autonomy and sovereignty and therefore needs sustained investment;

    23.  Underlines that a more competitive, productive and socially inclusive economy helps to generate high-quality, well-paid jobs, thus enhancing people’s standard of living; emphasises that, through programmes such as the European Social Fund+ and Erasmus+, the Union budget can play an important role in supporting education and training systems, enhancing social inclusion, boosting workforce adaptability through reskilling and upskilling, and thus preparing people for employment in a modern economy;

    24.  Insists that the Union budget should continue to support important economic and job-creating sectors where the Union is already a world leader, such as tourism and the cultural and creative sectors; underscores the need for dedicated funding for tourism, including to implement the EU Strategy for Sustainable Tourism, in the Union budget post-2027; points to the importance of Creative Europe in contributing to Europe’s diversity and competitiveness and in supporting vibrant societies;

    25.  Stresses that, in order to compete with other major global players, the European economy must also become more competitive and resilient on the supply side by investing more in the Union’s open strategic autonomy through enhanced industrial policy and a focus on strategic sectors, resource-efficiency and critical technologies to reduce dependence on third countries;

    26.  Considers that, in light of the above, the idea of an umbrella Competitiveness Fund merging existing programmes as envisaged by the Commission is not fit for purpose; stresses that the fund should instead be a new instrument taking advantage of a toolbox of funding based on lessons learned from InvestEU and the Innovation Fund; recalls that, under Article 182 TFEU, the Union is required to adopt a framework programme for research;

    27.  Notes that, in the Commission communication on the competitiveness compass, the Commission argues that a new competitiveness coordination tool should be established in order to better align industrial and research policies and investment between EU and national level; notes that the proposed new tool is envisaged as part of a ‘new, lean steering mechanism’ designed ‘to reinforce the link between overall policy coordination and the EU budget’; insists that Parliament must play a full decision-making role in both mechanisms;

    28.  Emphasises that food security is a vital component of strategic autonomy and that the next MFF must continue to support the competitiveness and resilience of the Union’s farming and fisheries sectors, including small-scale and young farmers and fishers, and help the sectors to better protect the climate and biodiversity, as well as the seas and oceans; highlights that a modern and simplified common agricultural policy is crucial for increasing productivity through technical progress, ensuring a fair standard of living for farmers, guaranteeing food security and the production of safe, high-quality and affordable food for Europeans, fostering generational renewal and ensuring the viability of rural areas;

    29.  Points out that the farming sector is particularly vulnerable to inflationary shocks which affect farmers’ purchasing power; calls for an increased and dedicated budget for the CAP in the next MFF, safeguarding it from possible cuts, in order to maintain its integrity and commonality, as well as the coherence and interconnection between its first and second pillar, and therefore opposes the idea of integrating the CAP into a single fund for each Member State; calls for additional dedicated funding sources to be explored where appropriate, including outside of the CAP, in order to cope with natural disasters and provide incentives to farmers and foresters to contribute to climate change mitigation, biodiversity recovery and nature protection, without measures causing a regression in EU agricultural production;

    30.  Stresses that the new global challenges facing EU farmers, including the present geopolitical situation, climate change and rising input prices, require sound financial allocation in the next CAP; emphasises that, in order to address these challenges, taking into account the lessons learned from the COVID-19 crisis, and to avoid reductions to farmers’ support, the CAP urgently needs an increased budget in the next MFF that is indexed to inflation through annual re-evaluation; underlines, in that respect, that direct payments in the current form generate clear EU added value and should continue to strengthen income security, production and protection against price volatility, better targeting persons actively engaged in agricultural production and the provision of public goods, while respecting realistic and balanced EU environmental and social standards; calls for a fair and efficient distribution of CAP support within and among the Member States; calls for the continuation and reinforcement of measures that maintain production in vulnerable areas and guarantee the viability of rural communities and the adequacy of public infrastructure, specifically regarding digitalisation and particularly through the European Agricultural Fund for Rural Development, and the renewed involvement of local and regional authorities in the management of such measures; stresses the need to increase and reform the agricultural reserve in order to respond effectively and rapidly to future crises that the European agricultural sector will have to deal with, and to establish new tools for managing natural, market and sanitary risks, such as an EU reinsurance scheme to better mitigate the effects of future crises and provide greater stability for farmers; emphasises that specific solutions must be found for the farmers in eastern Europe who are most affected by the cascade effects of Russia’s war against Ukraine, such as high input prices, inflation and market disturbances; urges the Commission to continue to set up the necessary financial and legal framework for the food supply chain in order to strengthen the position of farmers and better combat unfair trading practices; calls on the Commission to support EU farmers by promoting agri-food products inside and outside the Union through a dynamic and stronger EU promotion policy; regrets the funding cuts made to the programme on the promotion of agricultural products during the review of the current MFF; emphasises that the next MFF must include dedicated funds for agri-tourism, female entrepreneurship, vocational training and technological innovation in agriculture;

    31.  Recalls that social, economic and territorial cohesion is a cornerstone of European integration and is vital in binding the Union together and deepening the single market; reaffirms, in that respect, the importance of the convergence process; underlines that a modernised cohesion policy must follow a decentralised, place-based, multilevel governance approach and be built around the shared management and partnership principle, fully involving local and regional authorities and relevant stakeholders, ensuring that resources are directed where they are most needed to reduce regional disparities;

    32.  Stresses that cohesion policy funding must tackle the key challenges the Union faces, such as demographic change and depopulation, and target the regions and people most in need; calls, furthermore, for enhanced access to EU funding for cities, regions and urban authorities; recalls that, under Article 349 TFEU, the Union is required to put in place specific measures for the outermost regions and stresses, therefore, the need for continued, targeted support for these regions in the next MFF, including via a reinforced programme of options specifically relating to remoteness and insularity (POSEI);

    33.  Recalls the importance of the social dimension of the European Union and of promoting the implementation of the European Pillar of Social Rights, its Action Plan and headline targets; emphasises that the Union budget should, therefore, play a pivotal role in reducing inequality, poverty and social exclusion, including by supporting children, families and vulnerable groups; recalls that around 20 million children in the Union are at risk of poverty and social exclusion; stresses that addressing child poverty across the Union requires appropriately funded, comprehensive and integrated measures, together with the efficient implementation of the European Child Guarantee at national level; emphasises that Parliament has consistently requested a dedicated budget within the ESF+ to support the Child Guarantee as a central pillar of the EU anti-poverty strategy;

    34.  Highlights, in this regard, the EU-wide housing crisis affecting millions of families and young people; stresses the need for enhanced support for housing through the Union budget, in particular via cohesion policy, and through other funding sources, such as the EIB Group and national promotional banks; acknowledges that, while Union financing cannot solve the housing crisis alone, it can play a crucial role in financing urgent measures and complementing broader Union and national efforts to improve housing affordability and enhance energy efficiency of the housing stock;

    35.  Points out that Russia’s war of aggression against Ukraine has had substantial economic and social consequences, in particular in Member States bordering Russia and Belarus; insists that the next MFF provide support to these regions;

    The green and digital transitions

    36.  Highlights that the green and digital transitions are inextricably linked to competitiveness, the modernisation of the economy and the resilience of society and act as catalysts for a future-oriented and resource-efficient economy; insists therefore, that the post-2027 MFF must continue to support and to further accelerate the twin transitions;

    37.  Recalls that the Union budget is an essential contributor to achieving climate neutrality by 2050, including through support for the 2030 and 2040 targets; underlines that the transition will require a decarbonisation of the economy, in particular through the deployment of clean technologies, improved energy and transport infrastructure and more energy-efficient housing; notes that the Commission estimates additional investment needs to achieve climate neutrality by 2050 at 1,5 % of GDP per year compared to the decade 2011-2020 and that, while the Union budget alone cannot cover the gap, it must remain a vital contributor; calls, therefore, for increased directly managed support for environment and biodiversity protection and climate action building on the current LIFE programme;

    38.  Underlines that industry will be central in the transition to net zero and the establishment of the Energy Union, and that support will be needed in helping some industrial sectors and their workers to adapt; stresses the importance of a just transition that must leave no one behind, requiring, inter alia, investment in regions that are heavily fossil-fuel dependent and increased support for vulnerable households, in particular through the Just Transition Mechanism and the Social Climate Fund;

    39.  Points to the profound technological shift under way, with technologies such as artificial intelligence and quantum both creating opportunities, in terms of the Union’s economic potential and global leadership and improvements to citizens’ lives, and posing reliability, ethical and sovereignty challenges; stresses that the next MFF must support research into, and the development and safe application of digital technologies and help people to hone the knowledge and skills they need to work with and use them;

    Security, defence and preparedness

    40.  Recalls that peace and security are the foundation for the Union’s prosperity, social model and competitiveness, and a vital pillar of the Union’s geopolitical standing; stresses that the next MFF must support a comprehensive security approach by investing significantly more in safeguarding the Union against the myriad threats it faces;

    41.  Underlines that, as the Niinistö report makes clear, multiple threats are combining to heighten instability and increase the Union’s vulnerability, chief among them the fragmenting global order, the security threat posed by Russia and Belarus, growing tensions globally, hostile international actors, the globalisation of criminal networks, hybrid campaigns – which include cyberattacks, foreign information manipulation, disinformation and interference and the instrumentalisation of migration – increasingly frequent and intense extreme weather events as a result of climate change, and health threats;

    42.  Points out that the Union has played a vital role in achieving lasting peace on its territory and must continue to do so by adjusting to the reality of war on its doorstep and the need to vastly boost defence infrastructure, capabilities and readiness, including through the Union budget, going far beyond the current allocation of less than 2 % of the MFF;

    43.  Notes that European defence capabilities suffer from decades of under-investment and that, according to the Commission, the defence spending gap currently stands at EUR 500 billion for the next decade; underlines that the Union budget alone cannot fill the gap, but has an important role to play, in conjunction with national budgets and with a focus on clear EU added value; considers that the Union budget and lending through the EIB Group can help incentivise investment in defence; stresses that defence spending must not come at the expense of social and environmental spending, nor must it lead to a reduction in funding for long-standing Union policies that have proved their worth over time;

    44.  Underlines the merits of the defence programmes and instruments put in place during the current MFF, which have enhanced joint research, production and procurement in the field of defence, providing a valuable foundation on which to build further Union policy and investment;

    45.  Emphasises that, given the geopolitical situation, there is a clear need to act and to progress towards a genuine Defence Union, in coordination with NATO and in full alignment with the neutrality commitments of individual Member States; concurs, in that regard, with the Commission’s analysis that the next MFF must provide a comprehensive and robust framework in support of EU defence;

    46.  Underscores the importance of a competitive and resilient European defence technological and industrial base; considers that enhanced joint EU-level investment in defence in the next MFF backed up by a clear and transparent governance structure can help to avoid duplication, generate economies of scale, and thus significant savings for Member States, reduce fragmentation and ensure the interoperability of equipment and systems; underscores the importance of technology in modern defence systems and therefore of investing in research, cyber-defence and cybersecurity and in dual-use products; points to the need to direct support towards the defence industry within the Union, thus strengthening strategic autonomy, creating quality high-skilled jobs, driving innovation and creating cross-border opportunities for EU businesses, including SMEs;

    47.  Points to the importance of increasing support in the budget for military mobility, which upgrades infrastructure for dual-use military and civilian purposes, enabling the large-scale movement of military equipment and personnel at short notice and thus contributing to the Union’s defence capabilities and collective security; highlights, in that regard, the importance of financing for the trans-European transport networks to enable their adaptation for dual-use purposes;

    48.  Emphasises that the Union needs to ramp up funding for preparedness across the board; is alarmed by the growing impact of natural disasters, which are often the result of climate change and are therefore likely to occur with greater frequency and intensity in the future; points out that, according to the 2024 European Climate Risk Assessment Report, cumulated economic losses from natural disasters could reach about 1,4 % of Union GDP;

    49.  Underlines, therefore, that, in addition to efforts to mitigate climate change through the green transition, significant investment is required to adapt to climate change, in particular to prevent and reduce the impact of natural disasters and severe weather events; considers that support for this purpose, such as through the current Union Civil Protection Mechanism, must be significantly increased in the next MFF and made available quickly to local and regional authorities, which are often on the frontline;

    50.  Emphasises that reconstruction and recovery measures after natural disasters must be based on the ‘build back better’ approach and prioritise nature-based solutions; stresses the importance of sustainable water management and security and hydric resilience as part of the Union’s overall preparedness strategy;

    51.  Recalls that the COVID-19 pandemic wreaked economic and social havoc globally and that a key lesson from the experience is that there is a need to prioritise investment in prevention of, preparedness for and response to health threats, in medical research and disease prevention, in access to critical medicines, in healthcare infrastructure, in physical and mental health and in the resilience and accessibility of public health systems in the Union; recalls that strategic autonomy in health is key to ensuring the Union’s preparedness in this area;

    52.  Considers that the next MFF must build on the work done in the current programming period by ensuring that the necessary investment is in place to build a genuine European Health Union that delivers for all citizens;

    53.  Underlines that, with technological developments, it has become easier for malicious and opportunistic foreign actors to spread disinformation, encourage online hate speech, interfere in elections and mount cyberattacks against the Union’s interests; insists that the next MFF must invest in enhanced cybersecurity capabilities and equip the Union to counter hybrid warfare in its various guises;

    54.  Stresses that a free, independent and pluralistic media is a fundamental component of Europe’s resilience, safeguarding not only the free flow of information but also a democratic mindset, critical thinking and informed decision-making; points to the importance of investment in independent and investigative journalism, fact-checking initiatives, digital and media literacy and critical thinking to safeguard against disinformation, foreign information manipulation and electoral interference as part of the European Democracy Shield initiative and therefore to guarantee democratic resilience; underscores the need for continued Union budget support for initiatives in these areas;

    55.  Underscores the importance of continued funding, in the next MFF, for effective protection of the EU’s external borders; underlines the need to counter transnational criminal networks and better protect victims of trafficking networks, and to strengthen resilience and response capabilities to address hybrid attacks and the instrumentalisation of migration, by third countries or hostile non-state actors; highlights, in particular, the need for support to frontline Member States for the purposes of securing the external borders of the EU;

    56.  Underlines that the EU’s resilience and preparedness are inextricably linked to those of its regional and global partners; emphasises that strengthening partners’ capacity to prevent, withstand and effectively respond to extreme weather events, health crises, hybrid campaigns, cyberattacks or armed conflict also lowers the risk of spill-over effects for Europe;

    External action and enlargement

    57.  Insists that, in a context of heightened global instability, the Union must continue to engage constructively with third countries and support peace, and conflict prevention, stability, prosperity, security, human rights, the rule of law, equality, democracy and sustainable development globally, in line with its global responsibility values and international commitments;

    58.  Regrets the fact that external action in the current MFF has been underfunded, leading to significant recourse to special instruments and substantial reinforcements in the mid-term revision; notes, in particular, that humanitarian aid funding has been woefully inadequate, prompting routine use of the Emergency Aid Reserve;

    59.  Underlines that the US’s retreat from its post-war global role in guaranteeing peace, security and democracy, in leading on global governance in the rules-based, multilateral international order and in providing essential development and humanitarian aid to those most in need around the world will leave an enormous gap and that the Union has a responsibility and overwhelming strategic interest in helping to fill that gap; calls on the Commission to address the consequences of the US’s retreat at the latest in its proposal for the post-2027 MFF;

    60.  Stresses that the next MFF must continue to tackle the most pressing global challenges, from fighting climate change, to providing relief in the event of natural disasters, preventing and addressing violent conflict and guaranteeing global security, ensuring global food security, improving healthcare and education systems, reducing poverty and inequality, promoting democracy, human rights, the rule of law and social justice and boosting competitiveness and the security of global supply chains, in full compliance with the principle of policy coherence for development; emphasises, in particular, the need for support for the Union’s Southern and Eastern Neighbourhoods;

    61.  Underlines that, in particular in light of the drastic cuts to the USAID budget, the budget must uphold the Union’s role as the world’s leading provider of development aid and climate finance in line with the Union’s global obligations and commitments; recalls, in that regard, that the Union and its Member States have collectively committed to allocating 0,7 % of their GNI to official development assistance and that poverty alleviation must remain its primary objective; insists that the budget must continue to support the Union in its efforts to defend the rules-based international order, democracy, multilateralism, human rights and fundamental values;

    62.  Insists that, given the unprecedented scale of humanitarian crises, mounting global challenges and uncertainty of US assistance under the current administration, humanitarian aid funding must be significantly enhanced and that its use must remain solely needs-based and respect the principles of neutrality, independence and impartiality; emphasises that the needs-based nature of humanitarian aid requires ring-fenced funding delivered through a stand-alone spending programme, distinct from other external action financing; underscores, furthermore, that effective humanitarian aid provision is contingent on predictability through a sufficient annual baseline allocation;

    63.  Emphasises that humanitarian aid, by its very nature, requires substantial flexibility and response capacity; considers, therefore, that, in addition to an adequate baseline figure, humanitarian aid will require significant ring-fenced flexibility in its design to enable an effective response to the growing crises;

    64.  Emphasises that, in a context in which global actors are increasingly using trade interdependence as a means of economic coercion, the Union must bolster its capacity to protect and advance its own strategic interests, develop more robust tools to counter coercion and ensure genuine reciprocity in its partnerships; stresses that such an approach requires the strategic allocation of external financing so as to support, for example, economic, security and energy partnerships that align with the Union’s values and strategic interests;

    65.  Considers that enlargement represents an opportunity to strengthen the Union as a geopolitical power and that the next MFF is pivotal for preparing the Union for enlargement and the candidate countries for accession; recalls that the stability, security and democratic resilience of the candidate countries are inextricably connected to those of the EU and require sustained strategic investment, linked to reforms, to support their convergence with Union standards; underlines the important role that citizens and civil society organisations play in the process of enlargement;

    66.  Points to the need for strategically targeted support for pre-accession and for growth and investment; is of the view that post-2027 pre-accession assistance should be provided in the form of both grants and loans; believes, in that context, that the future framework should allow for innovative financing mechanisms, as well as lending to candidate countries backed by the budgetary headroom (the difference between the own resources and the MFF ceilings);

    67.  Stresses that financial support must be conditional on the implementation of reforms aligned with the Union acquis and policies and adherence to Union values; emphasises, in this regard, the need for a strong governance model that ensures parliamentary accountability, oversight and control and a strong, effective anti-fraud architecture;

    68.  Reiterates its full support for Ukrainians in their fight for freedom and democracy and deplores the terrible suffering and impact resulting from Russia’s unprovoked and unjustifiable war of aggression; welcomes the decision to grant Ukraine and the neighbouring Republic of Moldova candidate country status and insists on the need to deploy the necessary funds to support their accession processes;

    69.  Underlines that pre-accession support to Ukraine has to be distinct from and additional to financial assistance for macroeconomic stability, reconstruction and post-war recovery, where needs are far more substantial and require a concerted international effort, of which support through the Union budget should be an important part;

    70.  Is convinced that the existing mandatory revision clause in the event of enlargement should be maintained in the next framework and that national envelopes should not be affected; underlines that the next MFF will also have to put in place appropriate transitional and phasing-in measures for key spending areas, such as cohesion and agriculture, based on a careful assessment of the impacts on different sectors;

    Fundamental rights, Union values and the rule of law

    71.  Emphasises the importance of the Union budget and programmes like Erasmus+ and Citizens, Equality, Rights and Values in promoting and protecting democracy and the Union’s values, fostering the Union’s common cultural heritage and European integration, enhancing citizen engagement, civic education and youth participation, safeguarding and promoting fundamental rights enshrined in the Charter of Fundamental Rights and the rule of law; calls, in this regard, for increased funding for Erasmus+ in the next MFF; points to the importance of the independence of the justice system, the sound functioning of national institutions, de-oligarchisation, robust support for and, in line with article 11(2) TEU, an active dialogue with civil society, which is vital for fostering an active civic space, ensuring accountability and transparency and informing policymakers about best practices from the ground;

    72.  Highlights, in that connection, that the recast of the Financial Regulation requires the Commission and the Member States, in the implementation of the budget, to ensure compliance with the Charter of Fundamental Rights and to respect the values on which the Union is founded, which are enshrined in Article 2 TEU; expects the Commission to ensure that the proposals for the next MFF, including for the spending programmes, are aligned with the Financial Regulation recast;

    73.  Stresses that instability in neighbouring regions and beyond, poverty, underlying trends in economic development, demographic changes and climate change, continue to generate migration flows towards the Union, placing significant pressure on asylum and migration systems; underlines that the post-2027 MFF must support the full and swift implementation of the Union’s Asylum and Migration Pact and effective return and readmission policies, in line with fundamental rights and EU values, including the principle of solidarity and fair sharing of responsibility; underlines, moreover, that, in line with the Pact, the EU must pursue enhanced cooperation and mutually beneficial partnerships with third countries on migration, with adequate parliamentary scrutiny, and that such cooperation must abide by EU and international law;

    74.  Underlines that compliance with Union values and fundamental rights is an essential pre-requisite to access EU funds; highlights the importance of strong links between respect for the rule of law and access to EU funds under the current MFF; believes that the protection of the Union’s financial interests depends on respect for the rule of law at national level; welcomes, in particular, the positive impact of the Rule of Law Conditionality Regulation in protecting the Union’s financial interests in cases of systemic and persistent breaches of the rule of law; calls on the Commission and the Council to apply the regulation strictly, consistently and without undue delay wherever necessary; emphasises that decisions to suspend or reduce Union funding over breaches of the rule of law must be based on objective criteria and not be guided by other considerations, nor be the outcome of negotiations;

    75.  Points to the need for a stronger link between the rule of law and the Union budget post-2027 and welcomes the Commission’s commitment to bolster links between the recommendations in the annual rule of law report and access to funds through the budget; calls on the Commission to outline, in the annual rule of law report from 2025 onwards, the extent to which identified weaknesses in rule of law regimes potentially pose a risk to the Union budget; welcomes, furthermore, the link between respect for Union values and the implementation of the budget and calls on the Commission to actively monitor Member States’ compliance with this principle in a unified manner and to take swift action in the event of non-compliance;

    76.  Calls for the consolidation of a robust rule of law toolbox, building on the current conditionality provisions under the Recovery and Resilience Facility (RRF), the horizontal enabling conditions in the Common Provisions Regulation and the relevant provisions of the Financial Regulation and insists that the toolbox should cover the entire Union budget; underlines the need for far greater transparency and consistency with regard to the application of tools to protect the rule of law and for Parliament’s role to be strengthened in the application and scrutiny of such measures; insists, furthermore, on the need for consistency across instruments when assessing breaches of the rule of law in Member States;

    77.  Recalls that the Rule of Law Conditionality Regulation provides that final recipients should not be deprived of the benefits of EU funds in the event of sanctions being applied to their government; believes that, to date, this provision has not been effective and stresses the importance of applying a smart conditionality approach so that beneficiaries are not penalised because of their government’s actions; calls on the Commission, in line with its stated intention in the political guidelines, to propose specific measures to ensure that local and regional authorities, civil society and other beneficiaries can continue to benefit from Union funding in cases of breaches of the rule of law by national governments without weakening the application of the regulation and maintaining the Member State’s obligation to pay under Union law;

    A long-term budget that mainstreams the Union’s policy objectives

    78.  Stresses that a long-term budget that is fully aligned with the Union’s strategic aims requires that key objectives be mainstreamed across the budget through a set of horizontal principles, building on the lessons from the current MFF and RRF;

    79.  Recalls that the implementation of horizontal principles should not lead to an excessive administrative burden on beneficiaries and be in line with the principle of proportionality; calls for innovative solutions and the use of automated reporting tools, including artificial intelligence, to achieve more efficient data collection;

    80.  Underlines, therefore, that the next MFF must ensure that, across the board, spending programmes pursue climate and biodiversity objectives, promote and protect rights and equal opportunities for all, including gender equality, support competitiveness and bolster the Union’s preparedness against threats;

    81.  Points out that effective mainstreaming is best achieved through a toolbox of measures, primarily through policy, project and regulatory design, thorough impact assessments and solid tracking of spending and, in specific cases, spending targets based on relevant and available data; welcomes the significant improvements in performance reporting in the current MFF, which allow for much better scrutiny of the impact of EU spending and calls for this to be further developed in the next programing period;

    82.  Welcomes the development of a methodology to track gender-based spending and considers that the lessons learnt, in particular as regards the collection of gender-disaggregated data, the monitoring of implementation and impact and administrative burden, should be applied in the next MFF in order to improve the methodology; calls on the Commission to explore the feasibility of gender budgeting in the next MFF; stresses, in the same vein, the need for a significant improvement in climate and biodiversity mainstreaming methodologies to move towards the measurement of impact;

    83.  Regrets that the Commission has not systematically conducted thorough impact assessments, including gender impact assessments, for all legislation involving spending through the budget and insists that this change;

    84.  Is pleased that the climate mainstreaming target of 30 % is projected to be exceeded in the current MFF; regrets, however, that the Union is not on track to meet the 10 % target for 2026 for biodiversity-related expenditure; insists that the targets in the IIA have nevertheless been a major factor in driving climate and biodiversity spending; calls on the Commission to adapt the spending targets contributing positively to climate and biodiversity in line with the Union policy ambitions in this regard, taking into account the investment needs for these policy ambitions;

    85.  Stresses, furthermore, that the Union budget should be implemented in line with Article 33(2) of the Financial Regulation, therefore without doing significant harm(12) to the specified objectives, respecting applicable working and employment conditions and taking into account the principle of gender equality;

    86.  Welcomes the Commission’s commitment to phase out all fossil fuel subsidies and environmentally harmful subsidies in the next MFF; expects the Commission to come forward with its planned roadmap in this regard as part of its proposal for the next MFF;

    A long-term budget with an effective administration at the service of Europeans

    87.  Underlines the need for Union policies to be underpinned by a well-functioning administration; insists that, post-2027, sufficient financial and staff resources be allocated from the outset so that Union institutions, bodies, decentralised agencies and the European Public Prosecutor’s Office can ensure effective and efficient policy design, high-quality delivery and enforcement, provide technical assistance, continue to attract the best people from all Member States, thus ensuring geographical balance, and have leeway to adjust to changing circumstances;

    88.  Regrets that the Union’s ability to implement policy effectively and protect its financial interests within the current MFF has been undermined by stretched administrative resources and a dogmatic application of a policy of stable staffing, despite increasing demands and responsibilities; points, for example, to the failure to provide sufficient staff to properly implement and enforce the Digital Services(13) and Digital Markets Acts(14), thus undercutting the legislation’s effectiveness and to the repeated redeployments from programmes to decentralised agencies to cover staffing needs; insists that staffing levels be determined by an objective needs assessment when legislation is proposed and definitively adopted, and factored into planning for administrative expenditure from the outset;

    89.  Emphasises that the Commission has sought, to some degree, to circumvent its own stable staffing policy by increasing staff attached to programmes and facilities and thus not covered by the administrative spending ceiling; underscores, however, that such an approach merely masks the problem and may ultimately undermine the operational capacity of programmes; insists, therefore, that additional responsibilities require administrative expenditure and must not erode programme envelopes;

    90.  Stresses that up-front investment in secure and interoperable IT infrastructure and data mining capabilities can also generate longer-term cost savings and hugely enhance policy delivery and tracking of spending;

    91.  Acknowledges that, in the absence of any correction mechanism in the current MFF, high inflation has significantly driven up statutory costs, requiring extensive use of special instruments to cover the shortfall; regrets that the Council elected not to take up the Commission’s proposal to raise the ceiling for administrative expenditure in the MFF revision, thus further eroding special instruments;

    A long-term budget that is simpler and more transparent

    92.  Stresses that the next MFF must be designed so as to simplify the lives of all beneficiaries by cutting unnecessary red tape; underlines that simplification will require harmonising rules and reporting requirements wherever possible, including, as relevant, ensuring consistency between the applicable rules at European, national and regional levels; underlines, in that respect, the need for a genuine, user-friendly single entry point for EU funding and a simplified application procedure designed in consultation with relevant stakeholders; points out, furthermore, that the next MFF must be implemented as close to people as possible;

    93.  Calls for genuine simplification where there are overlapping objectives, diverging eligibility criteria and different rules governing horizontal provisions that should be uniform across programmes; considers that an assessment of which spending programmes should be included in the next MFF must be based on the above aspects, on the need to focus spending on clearly identified policy objectives with clear European added value and on the policy intervention logic of each programme; stresses that reducing the number of programmes is not an end in itself;

    94.  Underlines that simplification cannot mean more leeway for the Commission without the necessary checks and balances and must therefore be achieved with full respect for the institutional balance provided for in the Treaties;

    95.  Insists that simplification cannot come at the expense of the quality of programme design and implementation and that, therefore, a simpler budget must also be a more transparent budget, enabling better accountability, scrutiny, control of spending and reducing the risks of double funding, misuse and fraud; underlines that any reduction in programmes must be offset by a far more detailed breakdown of the budget by budget line, in contrast to some programme mergers in the current MFF, such as the Neighbourhood, Development and International Cooperation Instrument – Global Europe (NDICI – Global Europe), which is an example not to follow; calls, therefore, for a sufficiently detailed breakdown by budget line to enable the budgetary authority to exercise proper accountability and ensure that decision-making in the annual budgetary procedure and in the course of budget implementation is meaningful;

    96.  Recalls that transparency is essential to retain citizens’ trust, and that fraud and misuse of funds are extremely detrimental to that trust; underlines, therefore, the need for Parliament to be able to control spending and assess whether discharge can be granted; insists that proper accountability requires robust auditing for all budgetary expenditure based on the application of a single audit trail; calls on the Commission to put in place harmonised and effective anti-fraud mechanisms across funding instruments for the post-2027 MFF that ensure the protection of the Union’s budget;

    97.  Reiterates its long-standing position that all EU-level spending should be brought within the purview of the budgetary authority, thereby ensuring transparency, democratic control and protection of the Union’s financial interests; calls, therefore, for the full budgetisation of (partially) off-budget instruments such as the Social Climate Fund, the Innovation Fund and the Modernisation Fund, or their successors;

    A long-term budget that is more flexible and more responsive to crises and shocks

    98.  Points out that, traditionally, the MFF has not been conceived with a crisis response or flexibility logic, but rather has been designed primarily to ensure medium-term investment predictability; underlines that, in a rapidly changing political, security, economic and social context, such an approach is no longer tenable; insists on sufficient in-built crisis response capacity in the next MFF;

    99.  Underscores that the current MFF has been beset by a lack of flexibility and an inability to adjust to evolving spending priorities; considers that the next MFF needs to strike a better balance between investment predictability and flexibility to adjust spending focus; highlights that spending in certain areas requires greater stability than in others where flexibility is more valuable; stresses that recurrent redeployments are not a viable way to finance the Union’s priorities as they damage investments and jeopardise the delivery of agreed policy objectives;

    100.  Believes that, while allocating a significant portion of funding to objectives up-front, spending programmes should retain a substantial in-built flexibility reserve, with allocation to specific policy objectives to be decided by the budgetary authority; notes that the NDICI – Global Europe’s emerging challenges and priorities cushion provides a model for such a flexibility reserve, but that the decision-making process for its mobilisation must not be replicated in the future MFF; points to the need for stronger, more effective scrutiny powers of the co-legislators over the setting of policy priorities and objectives and a detailed budgetary breakdown to ensure that the budgetary authority is equipped to make meaningful and informed decisions;

    101.  Underlines that the MFF must have sufficient margins under each heading to ensure that new instruments or spending objectives agreed over the programming period can be accommodated without eroding funding for other policy and long-term strategic objectives or eating into crisis response capacity;

    102.  Underlines that the possibility for budgetary transfers under the Financial Regulation already provides for flexibility to adjust to evolving spending needs in the course of budget implementation; stresses that, under the current rules, the Commission has significant freedom to transfer considerable amounts between policy areas without budgetary authority approval, which limits scrutiny and control; calls, therefore, for the rules to be changed so as to introduce a maximum amount, in addition to a maximum percentage per budget line, for transfers without approval; considers that for transfers from Union institutions other than the Commission that are subject to a possible duly justified objection by Parliament or the Council, a threshold below which they would be exempt from that procedure could be a useful measure of simplification;

    103.  Recalls that the current MFF has been placed under further strain due to high levels of inflation in a context where an annual 2 % deflator is applied to 2018 prices, reducing the budget’s real-terms value and squeezing its operational and administrative capacity; considers, therefore, that the future budget should be endowed with sufficient response capacity to enable the budget to adapt to inflationary shocks;

    104.  Calls for a root-and-branch reform of the existing special instruments to bolster crisis response capacity and ensure an effective and swift reaction through more rapid mobilisation; underlines that the current instruments are both inadequate in size and constrained by excessive rigidity, with several effectively ring-fenced according to crisis type; points out that enhanced crisis response capacity will ensure that cohesion policy funds are not called upon for that purpose and can therefore be used for their intended investment objectives;

    105.  Considers that the post-2027 MFF should include only two special instruments – one dedicated to ensuring solidarity in the event of natural disasters (the successor to the existing European Solidarity Reserve) and one for general-purpose crisis response and for responding to any unforeseen needs and emerging priorities, including where amounts in the special instrument for natural disasters are insufficient (the successor to the Flexibility Instrument); insists that both special instruments should be adequately funded from the outset and able to carry over unspent amounts indefinitely over the MFF period; believes that all other special instruments can either be wound up or subsumed into the two special instruments or into existing programmes;

    106.  Calls for the future Flexibility Instrument to be heavily front-loaded and subsequently to be fed through a number of additional sources of financing: unspent margins from previous years (as with the current Single Margin Instrument), the annual surplus from the previous year, a fines-based mechanism modelled on the existing Article 5 of the MFF Regulation, reflows from financial instruments and decommitted appropriations; underlines that the next MFF should be designed such that the future special instruments are not required to cover debt repayment;

    107.  Underlines that re-use of the surplus, of reflows from financial instruments and surplus provisioning and of decommitments would require amendments to the Financial Regulation;

    108.  Points out that, with sufficient up-front resources and such arrangements for re-using unused funds, the budget would have far greater response capacity without impinging on the predictability of national GNI-based contributions; insists that an MFF endowed with greater flexibility and response capacity is less likely to require a substantial mid-term revision;

    A long-term budget that is more results-focused

    109.  Emphasises that, in order to maximise impact, it is imperative that spending under the next MFF be much more rigorously aligned with the Union’s strategic policy aims and better coordinated with spending at national level; underlines that, in turn, consultation with regional and local authorities is vital to facilitate access to funding and ensure that Union support meets the real needs of final recipients and delivers tangible benefits for people; underscores the importance of technical assistance to implementing authorities to help ensure timely implementation, additionality of investments and therefore maximum impact;

    110.  Underlines that, in order to support effective coordination between Union and national spending, the Commission envisages a ‘new, lean steering mechanism’ designed ‘to reinforce the link between overall policy coordination and the EU budget’; insists that Parliament play a full decision-making role in any coordination or steering mechanism;

    111.  Considers that the RRF, with its focus on performance and links between reforms and investments and budgetary support, has helped to drive national investments and reforms that would not otherwise have taken place;

    112.  Underlines that the RRF can help to inform the delivery of Union spending under shared management; recalls, however, that the RRF was agreed in the very specific context of the COVID-19 pandemic and cannot, therefore, be replicated wholesale for future investment programmes;

    113.  Points out that spending under shared management in the next MFF must involve regional and local authorities and all relevant stakeholders from design to delivery through a place-based and multilevel governance approach and in line with an improved partnership principle, ensure the cross-border European dimension of investment projects, and focus on results and impact rather than outputs by setting measurable performance indicators, ensuring availability of relevant data and feeding into programme design and adjustment;

    114.  Underlines that the design of shared management spending under the next MFF must safeguard Parliament’s role as legislator, budgetary and discharge authority and in holding the executive to account, putting in place strict accountability mechanisms and guaranteeing full transparency in relation to final recipients or groups of recipients of Union spending funds through an interoperable system enabling effective tracking of cash flows and project progress;

    115.  Considers that the ‘one national plan per Member State’ approach envisaged by the Commission is not in line with the principles set out above and cannot be the basis for shared management spending post-2027; recalls that, in this regard, the Union is required, under Article 175 TFEU, to provide support through instruments for agricultural, regional and social spending;

    A long-term budget that manages liabilities sustainably

    116.  Recalls Parliament’s very firm opposition to subjecting the repayment of NGEU borrowing costs to a cap within an MFF heading given that these costs are subject to market conditions, influenced by external factors and thus inherently volatile, and that the repayment of borrowing costs is a non-discretionary legal obligation; stresses that introducing new own resources is also necessary to prevent future generations from bearing the burden of past debts;

    117.  Deplores the fact that, under the existing architecture and despite the joint declaration by the three institutions as part of the 2020 MFF agreement whereby expenditure to cover NGEU financing costs ‘shall aim at not reducing programmes and funds’, financing for key Union programmes and resources available for special instruments, even after the MFF revision, have de facto been competing with the repayment of NGEU borrowing costs in a context of steep inflation and rising interest rates; recalls that pressure on the budget driven by NGEU borrowing costs was a key factor in cuts to flagship programmes in the MFF revision;

    118.  Underlines that, to date, the Union budget has been required only to repay interest related to NGEU and that, from 2028 onwards, the budget will also have to repay the capital; underscores that, according to the Commission, the total costs for NGEU capital and interest repayments are projected to be around EUR 25-30 billion a year from 2028, equivalent to 15-20 % of payment appropriations in the 2025 budget;

    119.  Acknowledges that, while NGEU borrowing costs will be more stable in the next MFF period as bonds will already have been issued, the precise repayment profile will have an impact on the level of interest and thus on the degree of volatility; insists, therefore, that all costs related to borrowing backed by the Union budget or the budgetary headroom be treated distinctly from appropriations for EU programmes within the MFF architecture;

    120.  Points, in that regard, to the increasing demand for the Union budget to serve as a guarantee for the Union’s vital support through macro-financial assistance and the associated risks; underlines that, in the event of default or the withdrawal of national guarantees, the Union budget ultimately underwrites all macro-financial assistance loans and therefore bears significant and inherently unpredictable contingent liabilities, notably in relation to Ukraine;

    121.  Calls, therefore, on the Commission to design a sound and durable architecture that enables sustainable management of all non-discretionary costs and liabilities, fully preserving Union programmes and the budget’s flexibility and response capacity;

    A long-term budget that is properly resourced and sustainably financed

    122.  Underlines that, as described above, the budgetary needs post-2027 will be significantly higher than the amounts allocated to the 2021-2027 MFF and, in addition, will need to cover borrowing costs and debt repayment; insists, therefore, that the next MFF be endowed with significantly increased resources compared to the 2021-2027 period, moving away from the historically restrictive, self-imposed level of 1 % of GNI, which has prevented the Union from delivering on its ambitions and deprived it of the ability to respond to crises and adapt to emerging needs;

    123.  Considers that all instruments and tools should be explored in order to provide the Union with those resources, in line with its priorities and identified needs; considers, in this respect, that joint borrowing through the issuance of EU bonds presents a viable option to ensure that the Union has sufficient resources to respond to acute Union-wide crises such as the ongoing crisis in the area of security and defence;

    124.  Reiterates the need for sustainable and resilient revenue for the Union budget; points to the legally binding roadmap towards the introduction of new own resources in the IIA, in which Parliament, the Council and the Commission undertook to introduce sufficient new own resources to at least cover the repayment of NGEU debt; underlines that, overall, the basket of new own resources should be fair, linked to broader Union policy aims and agreed on time and with sufficient volume to meet the heightened budgetary needs;

    125.  Recalls its support for the amended Commission proposal on the system of own resources; is deeply concerned by the complete absence of progress on the system of own resources in the Council; calls on the Council to adopt this proposal as a matter of urgency; and urges the Commission to spare no effort in supporting the adoption process;

    126.  Calls furthermore, on the Commission to continue efforts to identify additional innovative and genuine new own resources and other revenue sources beyond those specified in the IIA; stresses that new own resources are essential not only to enable repayment of NGEU borrowing, but to ensure that the Union is equipped to cover its the higher spending needs;

    127.  Calls on the Commission to design a modernised budget with a renewed spending focus, driven by the need for fairness, greater simplification, a reduced administrative burden and more transparency, including on the revenue side; underlines that existing rebates and corrections automatically expire at the end of the current MFF;

    128.  Welcomes the decision, in the recast of the Financial Regulation, to treat as negative revenue any interest or other charge due to a third party relating to amounts of fines, other penalties or sanctions that are cancelled or reduced by the Court of Justice; recalls that this solution comes to an end on 31 December 2027; invites the Commission to propose a definitive solution for the next MFF that achieves the same objective of avoiding any impact on the expenditure side of the budget;

    A long-term budget grounded in close interinstitutional cooperation

    129.  Underlines that Parliament intends to fully exercise its prerogatives as legislator, budgetary authority and discharge authority under the Treaties;

    130.  Recalls that the requirement for close interinstitutional cooperation between the Commission, the Council and Parliament from the early design stages to the final adoption of the MFF is enshrined in the Treaties and further detailed in the IIA;

    131.  Emphasises Parliament’s commitment to play its role fully throughout the process; believes that the design of the MFF should be bottom-up and based on the extensive involvement of stakeholders; underlines, furthermore, the need for a strategic dialogue among the three institutions in the run-up to the MFF proposals;

    132.  Calls on the Commission to put forward practical arrangements for cooperation and genuine negotiations from the outset; points, in particular, to the importance of convening meetings of the three Presidents, as per Article 324 TFEU, wherever they can aid progress, and insists that the Commission follow up when Parliament requests such meetings; reminds the Commission of its obligation to provide information to Parliament on an equal footing with the Council as the two arms of the budgetary authority and as co-legislators on MFF-related basic acts;

    133.  Recalls that the IIA specifically provides for Parliament, the Council and the Commission to ‘seek to determine specific arrangements for cooperation and dialogue’; stresses that the cooperation provisions set out in the IIA, including regular meetings between Parliament and the Council, are a bare minimum and that much more is needed to give effect to the principle in Article 312(5) TFEU of taking ‘any measure necessary to facilitate the adoption of a new MFF’; calls, therefore, on the successive Council presidencies to respect not only the letter, but also the spirit of the Treaties;

    134.  Recalls that the late adoption of the MFF regulation and related legislation for the 2014-2020 and 2021-2027 periods led to significant delays, which hindered the proper implementation of EU programmes; insists, therefore, that every effort be made to ensure timely adoption of the upcoming MFF package;

    135.  Expects the Commission, as part of the package of MFF proposals, to put forward a new IIA in line with the realities of the new budget, including with respect to the management of contingent liabilities; stresses that the changes to the Financial Regulation necessary for alignment with the new MFF should enter into force at the same time as the MFF Regulation;

    o
    o   o

    136.  Instructs its President to forward this resolution to the Council and the Commission.

    (1) OJ L 433I, 22.12.2020, p. 11, ELI: http://data.europa.eu/eli/reg/2020/2093/oj.
    (2) OJ L 424, 15.12.2020, p. 1, ELI: http://data.europa.eu/eli/dec/2020/2053/oj.
    (3) OJ L 433I, 22.12.2020, p. 28, ELI: http://data.europa.eu/eli/agree_interinstit/2020/1222/oj.
    (4) OJ L 2024/2509, 26.9.2024, p. 1, ELI: http://data.europa.eu/eli/reg/2024/2509/oj.
    (5) OJ L 433I, 22.12.2020, p. 1, ELI: http://data.europa.eu/eli/reg/2020/2092/oj.
    (6) OJ C, C/2024/6751, 26.11.2024, ELI: http://data.europa.eu/eli/C/2024/6751/oj.
    (7) OJ C, C/2023/1067, 15.12.2023, ELI: http://data.europa.eu/eli/C/2023/1067/oj.
    (8) OJ C 177, 17.5.2023, p. 115.
    (9) OJ C 445, 29.10.2021, p. 240.
    (10) OJ C 428, 13.12.2017, p. 10.
    (11) OJ C, C/2025/279, 24.1.2025, ELI: http://data.europa.eu/eli/C/2025/279/oj.
    (12) Article 9 of Regulation (EU) 2020/852 of the European Parliament and of the Council of 18 June 2020 on the establishment of a framework to facilitate sustainable investment, and amending Regulation (EU) 2019/2088 (OJ L 198, 22.6.2020, p. 13, ELI: http://data.europa.eu/eli/reg/2020/852/oj).
    (13) Regulation (EU) 2022/2065 of the European Parliament and of the Council of 19 October 2022 on a Single Market For Digital Services and amending Directive 2000/31/EC (Digital Services Act) (OJ L 277, 27.10.2022, p. 1, ELI: http://data.europa.eu/eli/reg/2022/2065/oj).
    (14) Regulation (EU) 2022/1925 of the European Parliament and of the Council of 14 September 2022 on contestable and fair markets in the digital sector and amending Directives (EU) 2019/1937 and (EU) 2020/1828 (Digital Markets Act) (OJ L 265, 12.10.2022, p. 1, ELI: http://data.europa.eu/eli/reg/2022/1925/oj).

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